Preview
Filing # 129812938 E-Filed 06/30/2021 01:02:49 PM
IN THE CIRCUIT COURT OF THE
SEVENTH JUDICIAL CIRCUIT
IN AND FOR
FLAGLER COUNTY, FLORIDA
CASE NO.: 2017-CA-000537
IRENE MAYER, individually and on
behalf of others similarly situated,
Plaintiff,
Vv.
PERFECT PIZZA PIE, INC., a Florida
Corporation,
Defendant.
NOTICE OF FILING
Plaintiff, IRENE MAYER, hereby gives this Court notice of filing Waters v.
Pizza to You, LLC, 2021 WL 1839974 (S.D. Ohio May 7, 2021) in response to
Defendant’s Notice of Filing dated June 29, 2021 and in support of Plaintiff's Motion
for Class Certification.
DATED this 30th day of June, 2021.
/s/ C. RYAN MORGAN
C. Ryan Morgan, Esq.
FBN 0015527
Morgan & Morgan, P.A.
20 N. Orange Ave., 15th Floor
P.O. Box 4979
Orlando, FL 32802-4979
Telephone: (407) 420-1414
Facsimile: (407) 245-3401
Email: RMorgan@forthepeople.com
Attorneys for Plaintiff
Electronically Received in the Office of the Clerk of the Circuit Court - Flagler County, Florida - 06/30/2021 01:10 PM
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on June 30, 2021, a true and correct copy of the
foregoing has been filed with the Clerk of the Court using the E-Portal Filing System,
which will serve the following counsel of record via E-mail: Adam G. Prom, Esq.,
HALL BOOTH SMITH, P.C., BB&T Tower 200 W. Forsyth Street, Suite 400,
Jacksonville, FL 32202, E-mail: aprom@hallboothsmith.com, Attorney for Defendant.
/s/ C. RYAN MORGAN
C. Ryan Morgan, Esq.
EXHIBIT “A”
Waters v. Pizza to You, LLC,
2021 Wag: Hour Cas.2
— F.Supp.3d
NAY
07) se on
[6] proper measure of minimum-wage compliance in context
of pizza delivery drivers is reimbursement of drivers' actual
2021 WL 1839974
expenses or payment of IRS mileage reimbursement rate.
United States District Court,
S.D. Ohio, Western Division,
at Dayton. Motion granted.
Kirk WATERS, on behalf of himself
Procedural Posture(s): Motion for Summary Judgment.
and those similarly situated, Plaintiffs,
v.
PIZZA TO YOU, LLC, et al., Defendants. West Headnotes (40)
Case No. 3:19-cv-372
I fy Labor and Employment =
Signed 05/07/2021 FLSA mandates payment of statutory minimum
hourly wage, and Department of Labor
Synopsis regulations require that minimum wage be paid
Background: Pizza delivery drivers brought action against “finally and unconditionally” or “free and clear.”
pizza companies, alleging that companies purported practice
of under-reimbursing drivers for expenses they incurred in
Fair Labor Standards Act of 1938 § 6, 29
US.C.A. § 206(a); 29 CER. § 531.35.
using their own vehicles to deliver pizzas violated minimum
wage requirements under FLSA and state law. Drivers filed
motion for partial summary judgment, requesting District
Court to define the law governing their claims. Ri Labor and Employment 2
Anti-kickback regulation implementing FLSA
prohibits any employment arrangement tending
to shift part of employer's business expense to
Holdings: The District Court, Thomas M. Rose, Senior
employees to extent that it reduces employee's
District Judge, held that:
wage below statutory minimum. Fair Labor
[1] companies were required to reimburse drivers for their Standards Act of 1938 § 6, © 29 USCA. §
vehicle expenses at rate set by Internal Revenue Service 206(a); 29 CER. § $31.35,
(IRS);
[2] letter published by Department of Labor stating that pizza 13] Labor and Employment
companies could comply with minimum-wage requirements
Minimum wage requirements of FLSA will not
by reimbursing “reasonable approximation” of drivers’
be met where employee kicks back directly
expenses did not involve Department's expertise, and thus was
or indirectly to employer or to another person
not entitled to” Auer deference; for employer's benefit whole or part of wage
delivered to employee. Fair Labor Standards Act
[3] letter was unreasonable, and thus not entitled to "Auer 0f 1938 § 6, 29 U.S.C.A. § 206(a); 29 CER.
deference; $531.35.
[4] letter was merely a convenient litigation position;
{4 Labor and Employment ¢=
{5] letter was inconsistent with Department's recently- In pizza delivery context, employee's cost
expressed opinions on same issue; and associated with using his or her own vehicle
to deliver food for employer is, unless fully
reimbursed, kickback capable of violating
FLSA's minimum wage requirement. Fair Labor
es
Waters v. Pizza to You, LLC,
2021 Wag Hour Cas.2
— F.Supp.3d
NAY
07) se on
Standards Act of 1938 § 6, 29 USCA. § Fair Labor Standards Act of 1938 § 6, 29
206(a); 29 CER. § 531.35. US.C.A. § 206(a).
1S} Labor and Employment 19] Labor and Employment o=
Generally, employers are not permitted to guess Minimum wage violations under FLSA
or approximate minimum-wage employee's generally must be proven on week-by-week
expenses for purposes of reimbursement, as basis; burden for proper payment, however, falls
guess or approximate would result in some on employer. Fair Labor Standards Act of 1938
employees receiving less than minimum wage
$6, 29US.C.A. § 206(a).
in violation of FLSA mandate; instead, as
general proposition, FLSA requires employers
to reimburse actual expenses incurred by
[10] Labor and Employment <=
employees. Fair Labor Standards Act of 1938 §
Once minimum-wage violation under FLSA is
6. > 29 U.S.C.A. § 206(a); 29 CER. § 531.35,
shown, it is employer's burden to prove it acted
with good faith and reasonable belief that it
complied with law. Fair Labor Standards Act of
{6} Administrative Law and Procedure <=»
1938 § 6, 29 US.C.A. § 206(a).
Under Skidmore, weight to begiven
to agency's interpretations, opinions, and
explanatory guidelines regarding a regulation 1] Labor and Employment o«
will depend upon thoroughness evident in its
In meeting burden of proving performance of
consideration, validity of its reasoning, its
work that was not properly compensated under
consistency with agency's earlier and later
FLSA, delivery drivers who used their own
pronouncements, and all those factors which give
vehicles may rely on reasonable company-wide
it power to persuade.
estimate of per-mile vehicle costs, and IRS
mileage rate is one such estimate. Fair Labor
Standards Act of 1938 § 6, 29 USCA, §
{7} Labor and Employment
206(a).
Anti-kickback regulation implementing FLSA,
prohibiting employers from reducing employees’
wage below statutory minimum by shifting
business expenses to employees, provides no [12] Labor and Employment
method for calculating mileage rate to reimburse To comply with FLSA's minimum-wage
delivery drivers who use their own vehicles, requirement, pizza companies were required
thus supporting deference to methodology set to reimburse vehicle expenses incurred by
forth by Department of Labor's field operations delivery drivers who used their own vehicles
handbook. Fair Labor Standards Act of 1938 § 6, to deliver pizzas at mileage reimbursement rate
set by Internal Revenue Service (IRS), where
29 US.C.A. § 206(a); 29 C.F.R. § 531.35,
companies chose not to track and compensate
drivers for the actual expenses drivers incurred
in delivering pizzas with their own vehicles. Fair
13} Labor and Employment
Labor Standards Act of 1938 § 6, - 29US.CA.
FLSA plaintiff must prove by a preponderance of
§ 206(a).
the evidence that he or she performed work for
which he or she was not properly compensated.
es
Waters v. Pizza to You, LLC,
2021 Wag: Hour Cas.2
— F.Supp.3d
NAY
07) se on
policy concerns, courts should defer to agency's
{13] Labor and Employment reasonable interpretation of its regulations.
FLSA is remedial statute designed to protect
covered workers from substandard wages and
oppressive working hours. Fair Labor Standards
[18] Labor and Employment =
Act of 1938, § 1 et seq., 29 U. CA. § 201 Courts defer to methodology set forth by
et seq. Department of Labor's field operations handbook
when valuing vehicle expenses for purposes of
an FLSA minimum-wage claim; methodology,
[14] Labor and Employment ¢« under which employer complies with minimum-
wage requirements by reimbursing employer's
In pizza delivery context, reasonably diligent
actual vehicle expenses or by paying Internal
employer must, in some manner, maintain
Revenue Service's (IRS) mileage reimbursement
records of drivers’ vehicle costs, even if FLSA
rate, provides employers with clear directive and
and Department of Labor's regulations did not
already require employee to do so. Fair Labor
provides employees with clear understanding of
application of minimum wage laws. Fair Labor
Standards Act of 1938, § 1 et seq., 29
US. . § 201 et seq.
Standards Act of 1938 § 6, 29 US.C.A. §
206(a); 29 CER. § 531.35.
{15} Labor and Employment
{19} Labor and Employment o=
Employer's obligation of FLSA compliance is
absolute and cannot be discharged by attempting
Regulations may be genuinely ambiguous
because they do not directly or clearly address
to transfer statutory burdens of accurate record
every issue or when applied to some fact pattems,
keeping and appropriate payment to employee.
they may prove susceptible to more than one
Fair Labor Standards Act of 1938 § 11, “29 reasonable reading.
US.C.A.§ 211).
[20] Administrative Law and Procedure o=
[16] Labor and Employment ©
Courts should defer to agency's reasonable
Anti-kickback regulation, which prohibits reading of genuinely ambiguous regulation.
employer from reducing employee's wage below
statutory minimum by shifting business expense
to employee, does not set forth methodology
121] Administrative Law and Procedure «
for calculating vehicle mileage rates or provide
any guidance as to how to determine value Auer deference to agency's reasonable
of expenses related to operating an automobile reading of genuinely ambiguous regulation is
for work, and thus is ambiguous as applied to based on presumption that Congress would
valuing vehicle expenses. Fair Labor Standards generally want agency to play primary role
in resolving regulatory ambiguities rather than
Act of 1938 § 6, 29 USCA. § 206(a); 29
courts.
CER. § 531.35.
(17) Administrative Law and Procedure & [22] Administrative Law and Procedure
Presumption in favor of agency deference
In situation involving regulatory ambiguity
reflects well-known benefits of uniformity
that entails exercise of judgment grounded in
in interpreting genuinely ambiguous tules,
es
Waters v. Pizza to You, LLC, F.Supp.3d (2021)
20:
particularly in areas that are complex and highly Agency's interpretation of genuinely ambiguous
technical in nature. regulation warrants less deference the further the
subject matter is from agency's area of expertise.
[23] Administrative Law and Procedure &=
[29] Administrative Law and Procedure
Auer deference to agency's reasonable
reading of genuinely ambiguous regulation To be entitled to Auer deference, agency's
imparts predictability to administrative process. interpretation of genuinely ambiguous regulation
must reflect fair and considered judgment.
[24] Administrative Law and Procedure ©
[30] Administrative Law and Procedure &
“Auer deference to agency's interpretation
of regulation is only to be used when, Court should decline to apply * Auer
after exhausting normal modes of regulatory deference to agency's interpretation of genuinely
interpretation, regulation remains genuinely ambiguous regulation that is merely a convenient
ambiguous as to specific scenario; even then, litigation position or post hoc rationalization
agency's interpretation must be reasonable. advanced to defend past agency action against
attack.
25] Administrative Law and Procedure “=
51] Administrative Law and Procedure <=
To be entitled to ©? tuer deference, agency's
interpretation of its own genuinely ambiguous Court may not apply Auer deference
regulation must be actually made by agency; to agency's new interpretation of genuinely
in other words, interpretation must be agency's ambiguous regulation, whether or not
authoritative or official position, rather than mere interpretation is introduced in litigation, that
ad hoc statement not reflecting agency's views. creates unfair surprise to regulated parties, which
may occur when agency substitutes one view of
a rule for another.
[26] Administrative Law and Procedure ys
Ad hoc statements that do not give
132] Administrative Law and Procedure @
rise to Auer deference to agency's
interpretation of genuinely ambiguous regulation Courts donotafford Aver deference to agency
include speeches from mid-level officials, that suddenly reverses course with new rule.
informal memorandum recounting telephone
conversations, and a “guide” that specifically
states that compliance with guide is not required. 133] Labor and Employment o~
Letter published by Department of Labor,
claiming that pizza companies could
27} Administrative Law and Procedure & comply with minimum-wage requirements by
reimbursing “reasonable approximation” of
To be entitled to Auer deference, agency's
vehicle expenses incurred by delivery drivers
interpretation of genuinely ambiguous regulation
who used their own vehicles for deliveries, did
must implicate agency's substantive expertise.
not involve Department's expertise in technical
or complex area, and thus was not entitled
[28] Administrative Law and Procedure o> to Auer deference, upon District Court's
es
&
Waters v. Pizza to You, LLC,
2021 Wag Hour Cas.2
— F.Supp.3d
NAY
07) se on
determination of law that would govern pizza involving that exact issue. Fair Labor Standards
delivery drivers' minimum-wage claims under
Act of 1938 § 6, 29 US.C.A. § 206(a).
FLSA and state law against pizza companies
that allegedly under-reimbursed drivers for their
vehicle expenses. Fair Labor Standards Act of
136} Labor and Employment o=
1938 § 6, 29 US.C.A. § 206(a); 29 CER. §
Letter published by Department of Labor,
531.35.
stating that pizza companies could comply with
minimum-wage requirements by reimbursing
“reasonable approximation” of expenses,
[34] Labor and Employment incurred by delivery drivers who used their
Letter published by Department of Labor, own vehicles for deliveries, was inconsistent
stating that pizza companies could comply with with Department's recently-expressed opinions
minimum-wage requirements by reimbursing on that exact issue, and thus was not entitled
“reasonable approximation” of vehicle expenses
to Auer deference, upon District Court's
incurred by delivery drivers who used their
determination of law that would govern pizza
own vehicles, was unreasonable, and thus
delivery drivers' minimum-wage claims under
was not entitled to Auer deference, upon FLSA and state law against companies that
District Court's determination of law that would allegedly under-reimbursed them for their
govern pizza delivery drivers' minimum-wage vehicle expenses, where Department argued in
claims under FLSA and state law against pizza favor of application of a different methodology
companies; letter provided no real guidance set forth in its field operations handbook merely
for valuing vehicle expenses, as letter omitted six days before letter was published. Fair Labor
several complex factors necessary for accurate
Standards Act of 1938 § 6, i 29 US.CA. §
valuation, and letter's lack of clarity was
206(a); 29 CER. § 531.35.
inconsistent with FLSA's remedial goal of
providing clear guidelines to employers and
providing employees with clear knowledge of
their rights. Fair Labor Standards Act of 1938 § 87] Administrative Law and Procedure
Agency's attempt to replace court decisions with
6, 29 U.S.C.A. § 206(a); 29 CER. § 531.35.
its own legal judgments is agency overreach and
not entitled to any deference.
135] Labor and Employment =
Letter published by Department of Labor, 138] Administrative Law and Procedure
stating that pizza companies could comply with
Courts should not defer to agency's interpretation
minimum-wage requirements by reimbursing
of its own regulation when it is merely
“reasonable approximation” of vehicle expenses
convenient litigating position.
incurred by delivery drivers who used their own
vehicles for deliveries, was merely a convenient
litigation position, and thus was not entitled
39] Administrative Law and Procedure o
to Auer deference, upon District Court's
Agency interpretation that conflicts with
determination of law that would govern pizza
agency's earlier interpretation is entitled to
delivery drivers' minimum-wage claims under
considerably less deference than consistently
FLSA and state law against pizza companies
held agency view.
that allegedly under-reimbursed drivers for their
vehicle expenses, where letter adopted exact
position favored by pizza companies and was
published in midst of several ongoing lawsuits [49] Labor and Employment &=
es
Waters v. Pizza to You, LLC,
2021 Wag Hour Cas.2
— F.Supp.3d
NAY
07) se on
As matter of law, proper measure of minimum- actual vehicle expenses. Id. at 59:2-19; Def. Interrogatory
wage compliance in context of pizza delivery Answer 5. Instead, Defendants picked $1.00/delivery as a
drivers is to either (1) track and pay reimbursement rate because other pizza companies used that
drivers' actual expenses or (2) pay mileage rate. Dep. at 55:15-56:7.
reimbursement rate set by Internal Revenue
Service (IRS). Fair Labor Standards Act of 1938
I. Standard
§6, 29US.C.A. § 206(a); 29 CER. § 531.35. The standard of review applicable to motions for summary
judgment is established by Federal Rule of Civil Procedure
56 and associated case law. Rule 56 provides that summary
judgment “shall be rendered forthwith if the pleadings,
depositions, answers to interrogatories, and admissions on
Attorneys and Law Firms
file, together with the affidavits, if any, show that there is no
Andy Biller, Biller & Kimble, LLC, Columbus, OH, Nathan. genuine issue as to any material fact and that the moving party
B. Spencer, Andrew P. Kimble, Biller & Kimble, LLC, is entitled to a judgment as a matter of law.” Fed. R. Civ. P.
Cincinnati, OH, for Plaintiffs.
56(c). Alternatively, summary judgment is denied “[i]f there
are any genuine factual issues that properly can be resolved
Michael W. Sandner, Pickrel Schaeffer & Ebeling, Dayton, only by a finder of fact because they may reasonably be
OH, for Defendants. resolved in favor of either party.” ~ Hanco' yv. Dodson,
958 F.2d 1367, 1374 (6th Cir, 1992) (quoting ' " Anderson
v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct. 2505,
ENTRY AND ORDER GRANTING PLAINTIFFS’
91 L.Ed.2d 202 (1986)). Thus, summary judgment must
MOTION FOR PARTIAL SUMMARY
be entered “against a party who fails to make a showing
JUDGMENT. ECF 37. THE PARTIES ARE
sufficient to establish the existence of an element essential to
ORDERED TO SUBMIT AN AMENDED
RULE 26(F) REPORT BY MAY 21, 2021. that party's case, and on which that party will bear the burden
of proof at trial.” “elotex Corp. v. Catrett, 477 U.S. 317,
THOMAS M. ROSE, UNITED STATES DISTRICT JUDGE 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).
*1 Pending before the Court is Plaintiffs’ Motion for Partial
Summary Judgment. ECF 37. The motion asks the Court to IIL. Analysis
define the law that will govern the determination of whether {1] The FLSA mandates that “ ‘[e]very employer shall
Defendants are liable on Plaintiffs’ federal and state minimum pay to each of his employees who in any workweek
wage claims. is engaged in commerce or in the production of goods
for commerce’ a statutory minimum hourly wage.... The
Department regulations require that the minimum wage be
I. Background
paid ‘finally and unconditionally’ or ‘free and clear. so»
This case challenges Defendants’ alleged practice of under-
reimbursing pizza delivery drivers for their vehicle-related Stein v. hhgregg, Inc., 873 F.3d 523, 530 (6th Cir. 2017)
expenses. Plaintiff and his fellow delivery drivers provided
(citing : 29 U.S.C. § 206(a) and 29 CLF.R. 1.35).
vehicles for Defendants’ benefit, using their own cars to
deliver pizzas. See ECF 37-2, Transcript from the Rule 30(b)
The “anti-kickback” regulation implementing the FLSA
(6) Deposition of Entity Defendants at 54:25-55:2. During
states:
most of the relevant time period, Defendants reimbursed
the drivers $1.00 per delivery. Dep. at 50:17-24. In 2019,
Defendants raised the reimbursement to $1.25 per delivery.
Whether in cash or in facilities,
Id. at 54:3-14. The delivery radius averaged three miles. Id.
“wages” cannot be considered to
at 53:14-22. Thus, drivers were reimbursed an average of
have been paid by the employer and
less than the IRS mileage rate applicable during the relevant
received by the employee unless they
time period of $0.54, Defendants did not reimburse Plaintiff's
es
Waters v. Pizza to You, LLC,
2021 Wag: Hour Cas.2
— F.Supp.3d
NAY
07) se on
are paid finally and unconditionally the employer or to another person for the employer's benefit.
or “free and clear.” The wage 29 CER. § 531.35. Such an attempt to shift part of the
requirements of the Act will not employer's cost of doing business [cash shortages] to the
be met where the employee “kicks
employee is illegal.”) (citing Mayhue's, 464 F.2d at 1199).
back” directly or indirectly to the
employer or to another person for the
[4] In the pizza delivery context, the cost associated with
employer's benefit the whole or part of
delivering food for an employer is a “kickback” to the
the wage delivered to the employee.
employer unless it is fully reimbursed, lest a minimum wage
This is true whether the “kickback”
violation be triggered. See, e.g., Perrin v. Papa John's Int'l,
made in cash or in other than cash.
Inc., 114 F. Supp. 3d 707 (6.D. Mo. 2015); Graham v.
For example, if it is a requirement
The Word Enters. Perry LC, No. 18-cv-0167, 2018 WL
of the employer that the employee
3036313, *4 (E.D. Mich. Jun. 19, 2018) (“An example of
must provide tools of the trade which
such an expense are tools of the trade that the employee
will be used in or are specifically
must provide which is required to perform the job, such
required for the performance of
as a personal car that an employee operates to make pizza
the employer's particular work, there
would be a violation of the Act in deliveries.”); Ke v: Saigon Grill, Ine., 595 F Supp.2d 240,
any workweek when the cost of such 258 (S.D.N.Y. 2008) (holding that deliverymen's bicycles and
tools purchased by the employee cuts motorbikes were “tools of the trade,” such that costs related
into the minimum or overtime wages to those vehicles had to be reimbursed by the employer where
required to be paid him under the deliverymen otherwise earned minimum wage).
Act. See also in this connection, §
531.32(c). [5] As a general principle, employers are not permitted
to “guess” or “approximate” a minimum wage employee's
expenses for purposes of reimbursing the expenses. This
*2 29 CFR § 531.35. would result in some employees receiving less than minimum
wage, contrary to the FLSA mandate. Instead, as a general
proposition, the FLSA requires employers to pay back
2} [3] The anti-kickback regulation,” prohibits any
arrangement that we tend[s] to shift part of the employer's the actual expenses incurred by the employees. In the
business expense to the employees ... to the extent that it
pizza delivery driver context, however, determining and
reduce[s] an employee's wage below the statutory minimum.’
maintaining records of each employee's actual expenses is
a cumbersome task for the employer. The Department of
” Mayhue's Super Liquor Stores, Inc. v. Hodgson, 464 Labor addressed this in its Field Operations Handbook, by
F.2d 1196, 1199 (Sth Cir, 1972). “The wage requirements of giving employers a choice in order to ease their burden:
the Act will not be met where the employee ‘kicks back’ either (1) keep records of delivery drivers’ actual expenses
directly or indirectly to the employer or to another person and reimburse for them or (2) reimburse drivers at the IRS
for the employer's benefit the whole or part of the wage standard business
Preview
Filing # 129812938 E-Filed 06/30/2021 01:02:49 PM IN THE CIRCUIT COURT OF THE SEVENTH JUDICIAL CIRCUIT IN AND FOR FLAGLER COUNTY, FLORIDA CASE NO.: 2017-CA-000537 IRENE MAYER, individually and on behalf of others similarly situated, Plaintiff, Vv. PERFECT PIZZA PIE, INC., a Florida Corporation, Defendant. NOTICE OF FILING Plaintiff, IRENE MAYER, hereby gives this Court notice of filing Waters v. Pizza to You, LLC, 2021 WL 1839974 (S.D. Ohio May 7, 2021) in response to Defendant’s Notice of Filing dated June 29, 2021 and in support of Plaintiff's Motion for Class Certification. DATED this 30th day of June, 2021. /s/ C. RYAN MORGAN C. Ryan Morgan, Esq. FBN 0015527 Morgan & Morgan, P.A. 20 N. Orange Ave., 15th Floor P.O. Box 4979 Orlando, FL 32802-4979 Telephone: (407) 420-1414 Facsimile: (407) 245-3401 Email: RMorgan@forthepeople.com Attorneys for Plaintiff Electronically Received in the Office of the Clerk of the Circuit Court - Flagler County, Florida - 06/30/2021 01:10 PM CERTIFICATE OF SERVICE I HEREBY CERTIFY that on June 30, 2021, a true and correct copy of the foregoing has been filed with the Clerk of the Court using the E-Portal Filing System, which will serve the following counsel of record via E-mail: Adam G. Prom, Esq., HALL BOOTH SMITH, P.C., BB&T Tower 200 W. Forsyth Street, Suite 400, Jacksonville, FL 32202, E-mail: aprom@hallboothsmith.com, Attorney for Defendant. /s/ C. RYAN MORGAN C. Ryan Morgan, Esq. EXHIBIT “A” Waters v. Pizza to You, LLC, 2021 Wag: Hour Cas.2 — F.Supp.3d NAY 07) se on [6] proper measure of minimum-wage compliance in context of pizza delivery drivers is reimbursement of drivers' actual 2021 WL 1839974 expenses or payment of IRS mileage reimbursement rate. United States District Court, S.D. Ohio, Western Division, at Dayton. Motion granted. Kirk WATERS, on behalf of himself Procedural Posture(s): Motion for Summary Judgment. and those similarly situated, Plaintiffs, v. PIZZA TO YOU, LLC, et al., Defendants. West Headnotes (40) Case No. 3:19-cv-372 I fy Labor and Employment = Signed 05/07/2021 FLSA mandates payment of statutory minimum hourly wage, and Department of Labor Synopsis regulations require that minimum wage be paid Background: Pizza delivery drivers brought action against “finally and unconditionally” or “free and clear.” pizza companies, alleging that companies purported practice of under-reimbursing drivers for expenses they incurred in Fair Labor Standards Act of 1938 § 6, 29 US.C.A. § 206(a); 29 CER. § 531.35. using their own vehicles to deliver pizzas violated minimum wage requirements under FLSA and state law. Drivers filed motion for partial summary judgment, requesting District Court to define the law governing their claims. Ri Labor and Employment 2 Anti-kickback regulation implementing FLSA prohibits any employment arrangement tending to shift part of employer's business expense to Holdings: The District Court, Thomas M. Rose, Senior employees to extent that it reduces employee's District Judge, held that: wage below statutory minimum. Fair Labor [1] companies were required to reimburse drivers for their Standards Act of 1938 § 6, © 29 USCA. § vehicle expenses at rate set by Internal Revenue Service 206(a); 29 CER. § $31.35, (IRS); [2] letter published by Department of Labor stating that pizza 13] Labor and Employment companies could comply with minimum-wage requirements Minimum wage requirements of FLSA will not by reimbursing “reasonable approximation” of drivers’ be met where employee kicks back directly expenses did not involve Department's expertise, and thus was or indirectly to employer or to another person not entitled to” Auer deference; for employer's benefit whole or part of wage delivered to employee. Fair Labor Standards Act [3] letter was unreasonable, and thus not entitled to "Auer 0f 1938 § 6, 29 U.S.C.A. § 206(a); 29 CER. deference; $531.35. [4] letter was merely a convenient litigation position; {4 Labor and Employment ¢= {5] letter was inconsistent with Department's recently- In pizza delivery context, employee's cost expressed opinions on same issue; and associated with using his or her own vehicle to deliver food for employer is, unless fully reimbursed, kickback capable of violating FLSA's minimum wage requirement. Fair Labor es Waters v. Pizza to You, LLC, 2021 Wag Hour Cas.2 — F.Supp.3d NAY 07) se on Standards Act of 1938 § 6, 29 USCA. § Fair Labor Standards Act of 1938 § 6, 29 206(a); 29 CER. § 531.35. US.C.A. § 206(a). 1S} Labor and Employment 19] Labor and Employment o= Generally, employers are not permitted to guess Minimum wage violations under FLSA or approximate minimum-wage employee's generally must be proven on week-by-week expenses for purposes of reimbursement, as basis; burden for proper payment, however, falls guess or approximate would result in some on employer. Fair Labor Standards Act of 1938 employees receiving less than minimum wage $6, 29US.C.A. § 206(a). in violation of FLSA mandate; instead, as general proposition, FLSA requires employers to reimburse actual expenses incurred by [10] Labor and Employment <= employees. Fair Labor Standards Act of 1938 § Once minimum-wage violation under FLSA is 6. > 29 U.S.C.A. § 206(a); 29 CER. § 531.35, shown, it is employer's burden to prove it acted with good faith and reasonable belief that it complied with law. Fair Labor Standards Act of {6} Administrative Law and Procedure <=» 1938 § 6, 29 US.C.A. § 206(a). Under Skidmore, weight to begiven to agency's interpretations, opinions, and explanatory guidelines regarding a regulation 1] Labor and Employment o« will depend upon thoroughness evident in its In meeting burden of proving performance of consideration, validity of its reasoning, its work that was not properly compensated under consistency with agency's earlier and later FLSA, delivery drivers who used their own pronouncements, and all those factors which give vehicles may rely on reasonable company-wide it power to persuade. estimate of per-mile vehicle costs, and IRS mileage rate is one such estimate. Fair Labor Standards Act of 1938 § 6, 29 USCA, § {7} Labor and Employment 206(a). Anti-kickback regulation implementing FLSA, prohibiting employers from reducing employees’ wage below statutory minimum by shifting business expenses to employees, provides no [12] Labor and Employment method for calculating mileage rate to reimburse To comply with FLSA's minimum-wage delivery drivers who use their own vehicles, requirement, pizza companies were required thus supporting deference to methodology set to reimburse vehicle expenses incurred by forth by Department of Labor's field operations delivery drivers who used their own vehicles handbook. Fair Labor Standards Act of 1938 § 6, to deliver pizzas at mileage reimbursement rate set by Internal Revenue Service (IRS), where 29 US.C.A. § 206(a); 29 C.F.R. § 531.35, companies chose not to track and compensate drivers for the actual expenses drivers incurred in delivering pizzas with their own vehicles. Fair 13} Labor and Employment Labor Standards Act of 1938 § 6, - 29US.CA. FLSA plaintiff must prove by a preponderance of § 206(a). the evidence that he or she performed work for which he or she was not properly compensated. es Waters v. Pizza to You, LLC, 2021 Wag: Hour Cas.2 — F.Supp.3d NAY 07) se on policy concerns, courts should defer to agency's {13] Labor and Employment reasonable interpretation of its regulations. FLSA is remedial statute designed to protect covered workers from substandard wages and oppressive working hours. Fair Labor Standards [18] Labor and Employment = Act of 1938, § 1 et seq., 29 U. CA. § 201 Courts defer to methodology set forth by et seq. Department of Labor's field operations handbook when valuing vehicle expenses for purposes of an FLSA minimum-wage claim; methodology, [14] Labor and Employment ¢« under which employer complies with minimum- wage requirements by reimbursing employer's In pizza delivery context, reasonably diligent actual vehicle expenses or by paying Internal employer must, in some manner, maintain Revenue Service's (IRS) mileage reimbursement records of drivers’ vehicle costs, even if FLSA rate, provides employers with clear directive and and Department of Labor's regulations did not already require employee to do so. Fair Labor provides employees with clear understanding of application of minimum wage laws. Fair Labor Standards Act of 1938, § 1 et seq., 29 US. . § 201 et seq. Standards Act of 1938 § 6, 29 US.C.A. § 206(a); 29 CER. § 531.35. {15} Labor and Employment {19} Labor and Employment o= Employer's obligation of FLSA compliance is absolute and cannot be discharged by attempting Regulations may be genuinely ambiguous because they do not directly or clearly address to transfer statutory burdens of accurate record every issue or when applied to some fact pattems, keeping and appropriate payment to employee. they may prove susceptible to more than one Fair Labor Standards Act of 1938 § 11, “29 reasonable reading. US.C.A.§ 211). [20] Administrative Law and Procedure o= [16] Labor and Employment © Courts should defer to agency's reasonable Anti-kickback regulation, which prohibits reading of genuinely ambiguous regulation. employer from reducing employee's wage below statutory minimum by shifting business expense to employee, does not set forth methodology 121] Administrative Law and Procedure « for calculating vehicle mileage rates or provide any guidance as to how to determine value Auer deference to agency's reasonable of expenses related to operating an automobile reading of genuinely ambiguous regulation is for work, and thus is ambiguous as applied to based on presumption that Congress would valuing vehicle expenses. Fair Labor Standards generally want agency to play primary role in resolving regulatory ambiguities rather than Act of 1938 § 6, 29 USCA. § 206(a); 29 courts. CER. § 531.35. (17) Administrative Law and Procedure & [22] Administrative Law and Procedure Presumption in favor of agency deference In situation involving regulatory ambiguity reflects well-known benefits of uniformity that entails exercise of judgment grounded in in interpreting genuinely ambiguous tules, es Waters v. Pizza to You, LLC, F.Supp.3d (2021) 20: particularly in areas that are complex and highly Agency's interpretation of genuinely ambiguous technical in nature. regulation warrants less deference the further the subject matter is from agency's area of expertise. [23] Administrative Law and Procedure &= [29] Administrative Law and Procedure Auer deference to agency's reasonable reading of genuinely ambiguous regulation To be entitled to Auer deference, agency's imparts predictability to administrative process. interpretation of genuinely ambiguous regulation must reflect fair and considered judgment. [24] Administrative Law and Procedure © [30] Administrative Law and Procedure & “Auer deference to agency's interpretation of regulation is only to be used when, Court should decline to apply * Auer after exhausting normal modes of regulatory deference to agency's interpretation of genuinely interpretation, regulation remains genuinely ambiguous regulation that is merely a convenient ambiguous as to specific scenario; even then, litigation position or post hoc rationalization agency's interpretation must be reasonable. advanced to defend past agency action against attack. 25] Administrative Law and Procedure “= 51] Administrative Law and Procedure <= To be entitled to ©? tuer deference, agency's interpretation of its own genuinely ambiguous Court may not apply Auer deference regulation must be actually made by agency; to agency's new interpretation of genuinely in other words, interpretation must be agency's ambiguous regulation, whether or not authoritative or official position, rather than mere interpretation is introduced in litigation, that ad hoc statement not reflecting agency's views. creates unfair surprise to regulated parties, which may occur when agency substitutes one view of a rule for another. [26] Administrative Law and Procedure ys Ad hoc statements that do not give 132] Administrative Law and Procedure @ rise to Auer deference to agency's interpretation of genuinely ambiguous regulation Courts donotafford Aver deference to agency include speeches from mid-level officials, that suddenly reverses course with new rule. informal memorandum recounting telephone conversations, and a “guide” that specifically states that compliance with guide is not required. 133] Labor and Employment o~ Letter published by Department of Labor, claiming that pizza companies could 27} Administrative Law and Procedure & comply with minimum-wage requirements by reimbursing “reasonable approximation” of To be entitled to Auer deference, agency's vehicle expenses incurred by delivery drivers interpretation of genuinely ambiguous regulation who used their own vehicles for deliveries, did must implicate agency's substantive expertise. not involve Department's expertise in technical or complex area, and thus was not entitled [28] Administrative Law and Procedure o> to Auer deference, upon District Court's es & Waters v. Pizza to You, LLC, 2021 Wag Hour Cas.2 — F.Supp.3d NAY 07) se on determination of law that would govern pizza involving that exact issue. Fair Labor Standards delivery drivers' minimum-wage claims under Act of 1938 § 6, 29 US.C.A. § 206(a). FLSA and state law against pizza companies that allegedly under-reimbursed drivers for their vehicle expenses. Fair Labor Standards Act of 136} Labor and Employment o= 1938 § 6, 29 US.C.A. § 206(a); 29 CER. § Letter published by Department of Labor, 531.35. stating that pizza companies could comply with minimum-wage requirements by reimbursing “reasonable approximation” of expenses, [34] Labor and Employment incurred by delivery drivers who used their Letter published by Department of Labor, own vehicles for deliveries, was inconsistent stating that pizza companies could comply with with Department's recently-expressed opinions minimum-wage requirements by reimbursing on that exact issue, and thus was not entitled “reasonable approximation” of vehicle expenses to Auer deference, upon District Court's incurred by delivery drivers who used their determination of law that would govern pizza own vehicles, was unreasonable, and thus delivery drivers' minimum-wage claims under was not entitled to Auer deference, upon FLSA and state law against companies that District Court's determination of law that would allegedly under-reimbursed them for their govern pizza delivery drivers' minimum-wage vehicle expenses, where Department argued in claims under FLSA and state law against pizza favor of application of a different methodology companies; letter provided no real guidance set forth in its field operations handbook merely for valuing vehicle expenses, as letter omitted six days before letter was published. Fair Labor several complex factors necessary for accurate Standards Act of 1938 § 6, i 29 US.CA. § valuation, and letter's lack of clarity was 206(a); 29 CER. § 531.35. inconsistent with FLSA's remedial goal of providing clear guidelines to employers and providing employees with clear knowledge of their rights. Fair Labor Standards Act of 1938 § 87] Administrative Law and Procedure Agency's attempt to replace court decisions with 6, 29 U.S.C.A. § 206(a); 29 CER. § 531.35. its own legal judgments is agency overreach and not entitled to any deference. 135] Labor and Employment = Letter published by Department of Labor, 138] Administrative Law and Procedure stating that pizza companies could comply with Courts should not defer to agency's interpretation minimum-wage requirements by reimbursing of its own regulation when it is merely “reasonable approximation” of vehicle expenses convenient litigating position. incurred by delivery drivers who used their own vehicles for deliveries, was merely a convenient litigation position, and thus was not entitled 39] Administrative Law and Procedure o to Auer deference, upon District Court's Agency interpretation that conflicts with determination of law that would govern pizza agency's earlier interpretation is entitled to delivery drivers' minimum-wage claims under considerably less deference than consistently FLSA and state law against pizza companies held agency view. that allegedly under-reimbursed drivers for their vehicle expenses, where letter adopted exact position favored by pizza companies and was published in midst of several ongoing lawsuits [49] Labor and Employment &= es Waters v. Pizza to You, LLC, 2021 Wag Hour Cas.2 — F.Supp.3d NAY 07) se on As matter of law, proper measure of minimum- actual vehicle expenses. Id. at 59:2-19; Def. Interrogatory wage compliance in context of pizza delivery Answer 5. Instead, Defendants picked $1.00/delivery as a drivers is to either (1) track and pay reimbursement rate because other pizza companies used that drivers' actual expenses or (2) pay mileage rate. Dep. at 55:15-56:7. reimbursement rate set by Internal Revenue Service (IRS). Fair Labor Standards Act of 1938 I. Standard §6, 29US.C.A. § 206(a); 29 CER. § 531.35. The standard of review applicable to motions for summary judgment is established by Federal Rule of Civil Procedure 56 and associated case law. Rule 56 provides that summary judgment “shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on Attorneys and Law Firms file, together with the affidavits, if any, show that there is no Andy Biller, Biller & Kimble, LLC, Columbus, OH, Nathan. genuine issue as to any material fact and that the moving party B. Spencer, Andrew P. Kimble, Biller & Kimble, LLC, is entitled to a judgment as a matter of law.” Fed. R. Civ. P. Cincinnati, OH, for Plaintiffs. 56(c). Alternatively, summary judgment is denied “[i]f there are any genuine factual issues that properly can be resolved Michael W. Sandner, Pickrel Schaeffer & Ebeling, Dayton, only by a finder of fact because they may reasonably be OH, for Defendants. resolved in favor of either party.” ~ Hanco' yv. Dodson, 958 F.2d 1367, 1374 (6th Cir, 1992) (quoting ' " Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, ENTRY AND ORDER GRANTING PLAINTIFFS’ 91 L.Ed.2d 202 (1986)). Thus, summary judgment must MOTION FOR PARTIAL SUMMARY be entered “against a party who fails to make a showing JUDGMENT. ECF 37. THE PARTIES ARE sufficient to establish the existence of an element essential to ORDERED TO SUBMIT AN AMENDED RULE 26(F) REPORT BY MAY 21, 2021. that party's case, and on which that party will bear the burden of proof at trial.” “elotex Corp. v. Catrett, 477 U.S. 317, THOMAS M. ROSE, UNITED STATES DISTRICT JUDGE 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). *1 Pending before the Court is Plaintiffs’ Motion for Partial Summary Judgment. ECF 37. The motion asks the Court to IIL. Analysis define the law that will govern the determination of whether {1] The FLSA mandates that “ ‘[e]very employer shall Defendants are liable on Plaintiffs’ federal and state minimum pay to each of his employees who in any workweek wage claims. is engaged in commerce or in the production of goods for commerce’ a statutory minimum hourly wage.... The Department regulations require that the minimum wage be I. Background paid ‘finally and unconditionally’ or ‘free and clear. so» This case challenges Defendants’ alleged practice of under- reimbursing pizza delivery drivers for their vehicle-related Stein v. hhgregg, Inc., 873 F.3d 523, 530 (6th Cir. 2017) expenses. Plaintiff and his fellow delivery drivers provided (citing : 29 U.S.C. § 206(a) and 29 CLF.R. 1.35). vehicles for Defendants’ benefit, using their own cars to deliver pizzas. See ECF 37-2, Transcript from the Rule 30(b) The “anti-kickback” regulation implementing the FLSA (6) Deposition of Entity Defendants at 54:25-55:2. During states: most of the relevant time period, Defendants reimbursed the drivers $1.00 per delivery. Dep. at 50:17-24. In 2019, Defendants raised the reimbursement to $1.25 per delivery. Whether in cash or in facilities, Id. at 54:3-14. The delivery radius averaged three miles. Id. “wages” cannot be considered to at 53:14-22. Thus, drivers were reimbursed an average of have been paid by the employer and less than the IRS mileage rate applicable during the relevant received by the employee unless they time period of $0.54, Defendants did not reimburse Plaintiff's es Waters v. Pizza to You, LLC, 2021 Wag: Hour Cas.2 — F.Supp.3d NAY 07) se on are paid finally and unconditionally the employer or to another person for the employer's benefit. or “free and clear.” The wage 29 CER. § 531.35. Such an attempt to shift part of the requirements of the Act will not employer's cost of doing business [cash shortages] to the be met where the employee “kicks employee is illegal.”) (citing Mayhue's, 464 F.2d at 1199). back” directly or indirectly to the employer or to another person for the [4] In the pizza delivery context, the cost associated with employer's benefit the whole or part of delivering food for an employer is a “kickback” to the the wage delivered to the employee. employer unless it is fully reimbursed, lest a minimum wage This is true whether the “kickback” violation be triggered. See, e.g., Perrin v. Papa John's Int'l, made in cash or in other than cash. Inc., 114 F. Supp. 3d 707 (6.D. Mo. 2015); Graham v. For example, if it is a requirement The Word Enters. Perry LC, No. 18-cv-0167, 2018 WL of the employer that the employee 3036313, *4 (E.D. Mich. Jun. 19, 2018) (“An example of must provide tools of the trade which such an expense are tools of the trade that the employee will be used in or are specifically must provide which is required to perform the job, such required for the performance of as a personal car that an employee operates to make pizza the employer's particular work, there would be a violation of the Act in deliveries.”); Ke v: Saigon Grill, Ine., 595 F Supp.2d 240, any workweek when the cost of such 258 (S.D.N.Y. 2008) (holding that deliverymen's bicycles and tools purchased by the employee cuts motorbikes were “tools of the trade,” such that costs related into the minimum or overtime wages to those vehicles had to be reimbursed by the employer where required to be paid him under the deliverymen otherwise earned minimum wage). Act. See also in this connection, § 531.32(c). [5] As a general principle, employers are not permitted to “guess” or “approximate” a minimum wage employee's expenses for purposes of reimbursing the expenses. This *2 29 CFR § 531.35. would result in some employees receiving less than minimum wage, contrary to the FLSA mandate. Instead, as a general proposition, the FLSA requires employers to pay back 2} [3] The anti-kickback regulation,” prohibits any arrangement that we tend[s] to shift part of the employer's the actual expenses incurred by the employees. In the business expense to the employees ... to the extent that it pizza delivery driver context, however, determining and reduce[s] an employee's wage below the statutory minimum.’ maintaining records of each employee's actual expenses is a cumbersome task for the employer. The Department of ” Mayhue's Super Liquor Stores, Inc. v. Hodgson, 464 Labor addressed this in its Field Operations Handbook, by F.2d 1196, 1199 (Sth Cir, 1972). “The wage requirements of giving employers a choice in order to ease their burden: the Act will not be met where the employee ‘kicks back’ either (1) keep records of delivery drivers’ actual expenses directly or indirectly to the employer or to another person and reimburse for them or (2) reimburse drivers at the IRS for the employer's benefit the whole or part of the wage standard business