Colon v. EYM Pizza of Illinois, LLC et al

Filing 173

MEMORANDUM Opinion and Order Signed by the Honorable Mary M. Rowland on 3/26/2024. Mailed notice. (dm, )

UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
MARK LOFTON, individually and on
behalf of all others similarly situated,
Plaintiff,

Case No. 18-cv-5743

v.

Judge Mary M. Rowland

EYM PIZZA OF ILLINOIS, LLC and
EDUARDO DIAZ,
Defendants.
MEMORANDUM OPINION AND ORDER
Plaintiff Mark Lofton (“Lofton”), a former delivery driver for one of Defendant
EYM’s Pizza Hut (“EYM Pizza”) stores in Illinois, filed this action against EMY Pizza
and its owner Eduardo Diaz (“Diaz”), (collectively “Defendants”), as a collective
action1 under the Fair Labor Standards Act, 29 U.S.C. § 201 et seq. and as a putative
class action under the Illinois Minimum Wage Law, 820 ILCS § 1051 et seq. Lofton
claims that he and other similarly situated current and former delivery drivers were
illegally denied lawful minimum wage rates because they were not properly
reimbursed for all required expenditures. Before the Court is Defendants’ motion for
summary judgment and Plaintiff’s motion to strike Michael Damasiewicz as an

The Court conditionally certified a collective action of current and former delivery drivers
under 29 U.S.C. 216(b) [43]. The previous class representative, Linda Colon, was compelled
to arbitrate. [120]. Lofton, who was previously serving as an opt-in, agreed to serve as class
representative and replaced Colon in the First Amended Complaint. [124].
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expert. For the reasons stated below, Defendants’ motion for summary judgment
[143] is denied. Plaintiff’s motion to strike [142] is denied without prejudice to be
raised later.
I.

Legal Standard
Summary judgment is proper where “the movant shows that there is no

genuine dispute as to any material fact and the movant is entitled to judgment as a
matter of law.” Fed. R. Civ. P. 56(a); see also Celotex Corp. v. Catrett, 477 U.S. 317,
322 (1986). A genuine dispute as to any material fact exists if “the evidence is such
that a reasonable jury could return a verdict for the nonmoving party.” Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The substantive law controls which facts
are material. Id. After a “properly supported motion for summary judgment is made,
the adverse party must set forth specific facts showing that there is a genuine issue
for trial.” Id. at 250 (internal quotations omitted).
The Court “consider[s] all of the evidence in the record in the light most
favorable to the non-moving party, and [] draw[s] all reasonable inferences from that
evidence in favor of the party opposing summary judgment.” Skiba v. Ill. Cent. R.R.
Co., 884 F.3d 708, 717 (7th Cir. 2018) (internal citation and quotations omitted). The
Court “must refrain from making credibility determinations or weighing evidence.”
Viamedia, Inc. v. Comcast Corp., 951 F.3d 429, 467 (7th Cir. 2020) (citing Anderson,
477 U.S. at 255). In ruling on summary judgment, the Court gives the non-moving
party “the benefit of reasonable inferences from the evidence, but not speculative
inferences in [its] favor.” White v. City of Chicago, 829 F.3d 837, 841 (7th Cir. 2016)
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(internal citations omitted). “The controlling question is whether a reasonable trier
of fact could find in favor of the non-moving party on the evidence submitted in
support of and opposition to the motion for summary judgment.” Id. (citation
omitted).
II.

Background2
Defendant EYM is a franchisee of several Pizza Hut restaurants in Illinois.

[143-2] ¶ 1. Plaintiff Lofton was employed by EYM as a delivery driver from April
2017 until June 2019. Id. ¶ 2. While employed at EYM, Lofton was paid an average
wage of $11.02 per hour. Id. ¶ 3. Lofton’s wage average reflects different wage rates
paid while working in the restaurant versus while making deliveries. Id. ¶ 4. The
parties dispute whether Lofton was paid as little as $6.00 per hour while making
deliveries. [154-4]; [161-1] ¶ 1. Discovery Plaintiffs Christopher Cambell and Antonio
Dean were also employed by EYM as delivery drivers. [143-2] ¶¶ 9, 16. Campbell was
employed from September 2018 until May 2021, and was paid an average wage of
$9.91 per hour in 2018, $10.32 per hour in 2019, $12.56 per hour in 2020, and $14.44
per hour in 2021. Id. ¶¶ 9–10. For his mileage reimbursements, Campbell was
reimbursed $0.33 per mile in 2019, $0.35 per mile in 2020, and $0.36 per mile in 2021.

This Court takes these facts from the Defendants’ Statement of Facts [143-2], Plaintiff’s
Response to Defendants’ Statement of Facts [154-2], Plaintiff’s Statement of Additional Facts
(“SOAF”) [154-3], Defendants’ Response to Plaintiff’s SOAF [161-1], and various exhibits the
parties have submitted in connection with Defendants’ motion for summary judgment. Where
appropriate, the Court notes what evidence it relies upon in making its decision and ignores
evidence that does not comport with the requirements of the Local Rules.
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Id. ¶ 11. Dean was employed from February 2018 until July 2019, was paid an
average wage of $11.25 per hour in 2018 and $12.26 per hour in 2019. Id. ¶¶ 16–17.
The parties dispute whether Cambell and Dean were paid as little as $4.20 and $8.00
per hour while making deliveries, respectively. [161-1] ¶¶ 4, 7.
Lofton, Campbell, and Dean (collectively “Plaintiffs”), as well as other delivery
drivers, were required by Defendants to maintain and pay for operable, safe, and
legally compliant automobiles to use in delivering pizza. Id. ¶¶ 2, 5, 8. To comply with
Defendants’ vehicle requirements, Plaintiffs and other delivery drivers incurred
vehicle-related expenses, which included expenses such as gasoline, oil and other
fluids, vehicle parts, auto repair and maintenance, registration costs, licensing, taxes,
depreciation, and auto insurance. Id. ¶¶ 3, 6, 9.3 Because they used a personally
owned vehicle to make food deliveries to customers, Plaintiffs were paid a per-mile
reimbursement, in addition to their hourly wage. [142-2] ¶ 22. The exact mileage
incurred for each delivery was tracked by Google Maps and the amount of the permile reimbursement was based on calculations supplied by Motus LLC (“Motus”). Id.
¶¶ 23–24.

Plaintiffs’ interrogatory responses state that they “do[] not remember” their “gasoline,
vehicle parts and fluids, repair and maintenance services, insurance, depreciation and other
expenses” incurred while employed by EYM. [143-2] ¶¶ 5, 12, 18. Additionally, Plaintiffs
testified that they do not remember their actual vehicle expenses incurred while employed
by EYM and did not produce any documents evidencing payments made for gas, repairs, or
any other expenses or costs that they incurred in connection with their vehicles while
employed by EYM. Id. ¶¶ 6–7, 13–14, 19–20. It is undisputed that Defendants do not track
nor require their delivery drivers to report or submit vehicle-related expenses during their
employment. [153-4] ¶ 15.
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III.

Analysis
The preliminary issue in this case is what standard applies for calculating

reimbursements of vehicle expenses.
Plaintiff brings his claims under 29 C.F.R. § 531.35, which provides that “the
wage requirements of the [FLSA] will not be met where the employee ‘kicks-back’
directly or indirectly to the employer or to another person for the employer's benefit
the whole or part of the wage delivered to the employee.” 29 C.F.R. § 531.35. Thus, a
kickback occurs when the cost of tools that are specifically required for the
performance of the employee's particular work “cuts into the minimum or overtime
wages required to be paid him under the Act.” Id. “In the pizza delivery context, the
cost associated with delivering food for an employer is a ‘kickback’ to the employer
that must be fully reimbursed, lest a minimum wage violation be triggered.”
Hatmaker v. PJ Ohio, LLC, No. 3:17-CV-146, 2019 WL 5725043, at *2 (S.D. Ohio Nov.
5, 2019) (citing cases).
A.

Reimbursement Rate

Defendants argue that the standard is whether the reimbursement
“reasonably approximates” the delivery-related expenses based on the “plain
language of the relevant regulations.” [143-1] at 10–11. Alternatively, Defendants
argue that they may use the “reasonable approximate” standard based on a 2020
Opinion Letter issued by the Wage and Hour Division of the DOL. [17] at 12–13.
Plaintiff responds that the reimbursement rate should be IRS standard business

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mileage rate (“IRS rate”) based on the DOL’s Field Operations Handbook (“FOH” or
“Handbook”).
The Court begins by examining the text of the regulation and applying the
standard canons of construction. Kisor v. Wilkie, 139 S. Ct. 2400, 2415 (2019). If the
regulation's meaning is plain, “the court must give it effect, as the court would any
law.” Id. If the regulation is genuinely ambiguous, the Court must defer to the
agency's reasonable interpretation of its own regulations. Id.
The text of the regulation at issue—Section 531.35 (“anti-kickback regulation”)
—provides that:
Whether in cash or in facilities, “wages” cannot be considered to have
been paid by the employer and received by the employee unless they are
paid finally and unconditionally or “free and clear.” The wage
requirements of the Act will not be met where the employee “kicks-back”
directly or indirectly to the employer or to another person for the
employer's benefit the whole or part of the wage delivered to the
employee. This is true whether the “kick-back” is made in cash or in
other than cash. For example, if it is a requirement of the employer that
the employee must provide tools of the trade which will be used in or are
specifically required for the performance of the employer's particular
work, there would be a violation of the Act in any workweek when the
cost of such tools purchased by the employee cuts into the minimum or
overtime wages required to be paid him under the Act. See also in this
connection, § 531.32(c).
29 C.F.R § 531.35. The last sentence of the anti-kickback regulation cross-references
Section 531.32, which is titled “Other facilities” and mentions reimbursements like
meals, hotels, and other lodging. 29 C.F.R § 531.32. After discussing items that are
not considered “facilities,” such as safety caps and explosives, Section 531.32 provides
that “[f]or a discussion of reimbursement for expenses such as ‘supper money,’ ‘travel
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expenses,’ etc., see § 778.217 of this chapter.” Id. Therefore, Section 531.32 crossreferences Section 778, which is titled “Overtime Compensation” and subsection 217
is titled “Reimbursement for expenses.” Section 778.217 provides that “the actual or
reasonably approximate amount expended by an employee, who is traveling ‘over the
road’ on his employer's business, for transportation (whether by private car or
common carrier) and living expenses away from home, other travel expenses, such as
taxicab fares, incurred while traveling on the employer's business.” 29 C.F.R. §
778.217 (emphasis added).
Defendants contend that the anti-kickback regulation is not “genuinely
ambiguous” because it cross-references Section 778.217 governing “expense
reimbursement,”

which

in

turn cross-references—or as

Defendants

assert

“implements”—the “reasonably approximate” standard in Section 778.217. [143-1] at
10. The Court disagrees. First, there is no express language tying these the three
subsections together. Thus, “it would strain logic to say the imprecise ‘see also’
language in Section 531.35 is a clear directive that the proper way to calculate
reimbursements to avoid ‘kickbacks’ is found in the referenced section of another
referenced section (i.e. two sections later).” Edwards v. PJ Ops Idaho, LLC, No. 1:17CV-00283-DCN, 2023 WL 4868304, at *4 (D. Idaho July 31, 2023). Additionally, it is
unclear if Section 778.217 applies in this context because it addresses overtime
calculations—not minimum wage—that are excluded as part of the employee’s
regular rate. Finally, Section 778.217’s language addresses “travelling over the road”
and “living expenses away from home,” which courts have interpreted differently in
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the food delivery driver context. Id. (collecting cases). Overall, given the lack of
connection between the three regulations and focus on overtime compensation, the
Court finds that the regulation is genuinely ambiguous.
Because the Court finds that the regulation is genuinely ambiguous, the Court
may defer to the agency's interpretations to resolve the ambiguity, so long as it is
reasonable. See Kisor, 139 S. Ct. at 2422. In determining whether an agency’s
interpretation is entitled to deference, the Court should consider (1) whether the
interpretation is the agency's “authoritative” or “official position,” (2) whether the
interpretation implicates the agency's “substantive expertise,” and (3) whether the
interpretation reflects the agency's “fair and considered judgment” and is not just a
“convenient litigating position.” Id. at 2415–17.
The parties advocate for two separate agency interpretations: Plaintiff points
to the DOL’s FOH and Defendants highlight the 2020 Opinion Letter. The DOL’s
FOH states:
In some cases it is necessary to determine the costs involved when
employees use their cars on their employer's business in order to
determine minimum wage compliance. For example, car expenses are
frequently an issue for delivery drivers employed by pizza or other carryout type restaurants.
(a) As an enforcement policy, the IRS standard business mileage rate
found in IRS Publication 917, “Business Use of a Car” may be used (in
lieu of actual costs and associated recordkeeping) to determine or
evaluate the employer's wage payment practices for FLSA purposes.
U.S.

Dep't

of

Labor,

Field

Operations

Handbook

30c15

https://www.dol.gov/sites/dolgov/files/WHD/legacy/files/FOH_Ch30.pdf

(2016),
(emphasis
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added). More recently, the Wage and Hour Division of the DOL issued an Opinion
Letter on August 31, 2020 that concluded the “regulations permit reimbursement of
a reasonable approximation of actual expenses incurred by employees for the benefit
of the employer by any appropriate methodology; the IRS business standard mileage
rate is not legally mandated by [the] regulations but is presumptively reasonable.”
U.S. Dep't of Labor, Wage & Hour Div., Opinion Letter (Aug. 31, 2020), 2020 WL
5296626 (emphasis added).
Plaintiff argues that the FOH provides employers with two options: (1) keep
records of delivery drivers’ actual expenses and reimburse for them, or (2) reimburse
delivery drivers at the IRS rate. [154-1] at 13. Because Defendants did not keep
records of drivers’ actual expenses, Plaintiff asserts the IRS rate is the only option.
Id. at 14. Defendants respond that a “mandatory imposition” of the IRS rate is
inconsistent with the language of the FOH. [143-1] at 12. The Court agrees with
Defendants on this point. The FOH uses the word “may,” which avails Defendants to
alternate options. Edwards, 2023 WL 4868304, at *8 (D. Idaho July 31, 2023) (citing
Antonin Scalia & Bryan Garner, Reading Law: The Interpretation of Legal Texts §
11, at 112 (2012) (explaining that “may” is “permissive” and grants discretion)). While
Defendants could have used the IRS rate, which is per se reasonable, they chose not
to. The Court concurs with the reasoning in Edwards—both the FOH and 2020
Opinion

Letter

constitute

relevant

agency

guidance

and

are

reasonable

interpretations that are not in tension with one another:

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The FOH states that the IRS rate “may” be used. The Opinion Letter
likewise states the FOH's instruction that the IRS rate “may” be used is
discretionary but “does not foreclose other methods, such as a
reasonable approximation of expenses.” These two documents are not in
conflict with one another. In fact, they lead to the same conclusion: there
are more than two methods employers may use when determining the
appropriate rate of reimbursement under the FLSA if they did not track
employees' actual expenses. One method is the IRS rate. Another
method is a reasonable approximation rate.
Edwards, 2023 WL 4868304, at *8–9. In sum, this Court holds that to comply with
the minimum wage regulations in the pizza delivery driver context, employers have
three options (1) reimburse drivers at the IRS standard business mileage rate; (2)
keep records of delivery drivers’ actual expenses and reimburse for them; or (3)
reasonably approximate.
B.

Reasonable Approximation

Defendants next contend they are also entitled to summary judgment because
they reasonably approximated their delivery drivers’ expenses. Defendants’ expert
argues that Motus “provides tailored, employee-specific reimbursements rates based
on the size and age of the employee’s vehicle, which are updated monthly to reflect
variances in fuel and other costs.” [161] at 5. Plaintiff’s expert responds that the
reimbursement rate was not a reasonable approximation because, among other
things, the calculations were “restricted to a multi-year range,” “general type of
vehicle (compact, midsize, and full-size),” and “fail[ed] to adequately reimburse fixed
vehicle costs, such as insurance, registration fees, and depreciation.” [154-1] at 9.
Overall, the parties vigorously dispute the methodology used by Motus and whether
Defendants’ reasonably approximated vehicle-costs. [154-2] ¶¶ 25–28; [161-1] ¶¶ 10,
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12–14, 16, 18. In sum, there are material factual disputes on whether Defendants’
reimbursement rate reasonably approximated Plaintiff’s vehicle expenses that
preclude summary judgment. See Perrin v. Papa John's Int'l, Inc., 114 F. Supp. 3d
707, 722 (E.D. Mo. 2015) (denying summary judgment and “leav[ing] to the jury the
determination of whether Defendants' reimbursement rate reasonably approximated
Plaintiffs’ vehicle expenses”).
C.

Burden of Proof

Lastly, Defendants argue they are also entitled to summary judgment because
Plaintiffs provided no evidence that the “cost” of their specific vehicle related
expenses exceeded the amount that EYM paid in mileage reimbursement. [143-1] at
15–16. More specifically, Defendants argue that Plaintiffs did not provide specific
evidence of costs involving gasoline and oil, routine maintenance and repairs,
insurance, government taxes and fees relating to the owning and operating of a
vehicle, and depreciation. Id. The Court disagrees with Defendants proposed
interpretation of Plaintiffs’ burden in this case.
Employees who bring an FLSA action have “the burden of proving that [they]
performed work for which he was not properly compensated.” Melton v. Tippecanoe
Cnty., 838 F.3d 814, 818 (7th Cir. 2016) (quoting Anderson v. Mt. Clemens Pottery Co.,
328 U.S. 680, 686–87 (1946)). At the same time, the FLSA requires that employers
have the duty to maintain employment and payment records. 29 U.S.C. § 211(c). In
Anderson, the Supreme Court observed that the employer is in the best position to
“produce the most probative facts concerning the nature and amount of work
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performed.” 328 U.S. at 687. However, “where the employer's records are inaccurate
or inadequate and the employee cannot offer convincing substitutes a more difficult
problem arises.” Id. Therefore, the Court established a burden-shifting test in those
situations, where the employee “‘has carried out his burden if he proves that he has
in fact performed work for which he was improperly compensated and if he produces
sufficient evidence to show the amount and extent of that work as a matter of just
and reasonable inference.’” Melton, 838 F.3d at 818 (quoting Anderson, 328 U.S. at
687). “At that point, ‘[t]he burden then shifts to the employer to come forward with
evidence of the precise amount of work performed or with evidence to negative the
reasonableness of the inference to be drawn from the employee's evidence.’” Melton,
838 F.3d at 818 (quoting Anderson, 328 U.S. at 687).
The Seventh Circuit has applied this FLSA burden-shifting framework in cases
involving overtime wages. Melton, 838 F.3d 814 at 816. The Court finds that the
FLSA burden-shifting framework is also appropriate in this context. See Anderson,
328 U.S. at 687 (highlighting the “remedial nature of [the FLSA] and the great public
policy which it embodies” that “militate against making that burden an impossible
hurdle for the employee.”). It is undisputed that Defendants do not track nor require
their delivery drivers to report or submit vehicle-related expenses during their
employment. [153-4] ¶ 15. Plaintiffs have “the burden of proving that [they]
performed work for which [they were] not properly compensated.” Melton, 838 F.3d
at 818 (quoting Anderson, 328 U.S. at 686–87). Here, Defendants made a choice to
“reasonably approximate,” and their records are “inadequate” because they do not
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account for actual costs. Consequentially, “Plaintiffs can provide approximations of
their expenses as a method of comparison, including the IRS rate or other
calculations, which would lead to a reasonable inference that the drivers were
undercompensated for labor.” Rodriguez v. GC Pizza LLC, No. 4:20-CV-3106, 2022
WL 4368353, at *8 (D. Neb. Sept. 21, 2022). Afterwards, “the burden will shift to the
defendant to rebut the inference proffered by the plaintiffs.” Id. As mentioned, the
Court finds that there is a material dispute of fact on whether the reimbursement
rate was reasonable.
Thus, Defendants’ motion for summary judgment is denied. Because the issue
of the reimbursement rate will be determined at trial, the Court denies Plaintiff’s
motion to strike Defendants’ expert [142] without prejudice to be raised at a later
date.
IV.

Conclusion
For the reasons explained above, Defendants’ motion for summary judgment

[143] is denied. Plaintiff’s motion to strike [142] is denied without prejudice to be
raised at a later date.
E N T E R:
Dated: March 26, 2024
MARY M. ROWLAND
United States District Judge

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