Cornish v. Deli Management, Inc.

Filing 16

MEMORANDUM AND ORDER denying 13 Motion to Dismiss. Signed by Judge William M Nickerson on 10/12/2016. (bmhs, Deputy Clerk)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND

ANDREA CORNISH

*
*
*
v.
*
Civil Action No. WMN-16-672
*
DELI MANAGEMENT, INC., d/b/a *
“JASON’S DELI”
*
*
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *

MEMORANDUM AND ORDER
Before the Court is a motion to dismiss filed by Defendant
Deli Management, Inc.

ECF No. 13.

The motion is fully briefed.

Upon a review of the pleadings and the applicable case law, the
Court determines that no hearing is necessary, Local Rule 105.6,
and that the motion will be denied.
According to the Complaint, Defendant Deli Management, Inc.
operates approximately 253 “Jason’s Deli” restaurants in 29
different states, including Maryland.

Plaintiff Andrea Cornish

was employed as a delivery driver at Defendant’s Jason’s Deli
restaurant in Timonium, Maryland, from the spring of 2013
through April 2014.

Defendant requires its drivers to use their

own vehicles to make their deliveries.

Plaintiff alleges that,

as a result of Defendant’s failure to adequately reimburse her
for car expenses, her wages fell below the federal and state
minimum wage.

She brings this action, individually and on

behalf of other similarly situated delivery drivers, under the
federal Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 201 et
seq., and the Maryland Wage and Hour Law (“MWHL”), Md. Code
Ann., Lab. & Empl. § 3-401 et seq.
Defendant has moved to dismiss the Complaint under Rule
12(b)(6) on the ground that Plaintiff’s allegations are too
vague and speculative to state a plausible claim for relief.
Defendant also argues that Plaintiff’s conclusory allegations
concerning “similarly situated employees” do not support a
plausible claim for either class action or collective action
relief.

In addition, Defendant argues that Plaintiff is not

entitled to liquidated damages under the MWHL because Plaintiff
stopped working for Defendant before July 1, 2014, the effective
date of the amendment that added the remedy of liquidated
damages to the MWHL.

As to the claim for liquidated damages,

Plaintiff acknowledges that she is not entitled to those damages
but suggests that she still has standing to pursue those damages
on behalf of putative class members who were employed after the
effective date of the amendment.
A complaint must be dismissed if it does not allege “enough
facts to state a claim to relief plausible on its face.”
Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007).

Bell

Under the

plausibility standard, a complaint must contain “more than
labels and conclusions” or a “formulaic recitation of the
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elements of a cause of action.”

Id. at 555.

Rather, the

complaint must be supported by factual allegations, “taken as
true," that “raise a right to relief above the speculative
level.”

Id. at 555–56.

The plausibility standard requires that

the pleader show more than a sheer possibility of success,
although it does not impose a “probability requirement.”
Twombly, 550 U.S. at 556.

Instead, “[a] claim has facial

plausibility when the plaintiff pleads factual content that
allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged.”
U.S. at 663.

Iqbal, 556

Thus, a court must “draw on its judicial

experience and common sense” to determine whether the pleader
has stated a plausible claim for relief.

Id. at 664; see also

Brockington v. Boykins, 637 F.3d 503, 505–06 (4th Cir. 2011).
The parties generally agree on the relevant law governing
Plaintiff’s FLSA and MWHL claims.

The FLSA requires covered

employers to pay “nonexempt employees” a minimum wage for each
hour worked.

29 U.S.C. § 206(a).

There is no dispute that

Defendant is a covered employer and that its drivers are
nonexempt.

While Plaintiff was working for Defendant, the

federal minimum wage was $7.25.

The MWHL parallels the FLSA

and, during the relevant time period, also required the payment
of a minimum wage of $7.25.
413.

Md. Code Ann., Lab. & Empl. § 3-

Because MWHL law mirrors the FLSA, claims under MWHL stand
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or fall on the success of a plaintiff’s FLSA claim.

Turner v.

Human Genome Science, Inc., 292 F. Supp. 2d 738, 744 (D. Md.
2003).
Plaintiff acknowledges that she was paid $8.00 per hour, or
75 cents more than the minimum wage, while working for
Defendant.

Compl. ¶ 21.

In addition, Plaintiff was reimbursed

at a rate of $1.75 for each delivery she made, purportedly to
cover the expenses incurred in utilizing her own vehicle, a 2000
Ford Taurus, to make those deliveries.

Id. ¶¶ 24, 25.

She

maintains, however, that her per-delivery expenses exceeded that
reimbursement.

Plaintiff asserts that the average round-trip

delivery distance was 6 miles and she averaged approximately one
delivery event per hour.

Id. ¶¶ 26, 30.

Plaintiff also alleges

that her “actual automobile expenses were at the very least $.44
per mile.”

Id. ¶ 29.

If accurate, that under-reimbursement of

$.89 would result in an effective hourly rate of only $7.11, or
$.14 below the federal and state minimum wage.
While the FLSA itself does not address an employer’s
reimbursement of expenses, the regulations implementing the
statute do.

Those regulations provide 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.”
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29 C.F.R. § 531.35.

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.

As applied in the context of delivery

drivers, the regulations “permit an employer to approximate
reasonably the amount of an employee's vehicle expenses without
affecting the amount of the employee's wages for purposes of the
federal minimum wage law.”

Wass v. WKRP Management, LLC, 688 F.

Supp. 2d 1282, 1285-86 (D. Kan. 2010).

If, however, the

employer makes an unreasonable approximation, the employee can
claim that his wage rate was reduced because her expenses were
not sufficiently reimbursed.

Id. at 1287.

The Complaint asserts that delivery drivers “incur costs
for gasoline, vehicle parts and fluids, repair and maintenance
services, insurance, depreciation, and other expenses.”
¶ 11.

Compl.

While Plaintiff did not track her actual automobile

expenses, she asserts that her “actual automobile expenses were
at the very least $.44 per mile based on the true cost of owning
a car calculated by Edmunds.com for comparable vehicles and
based on driving 15,000 miles per year.”

Id. ¶ 29.

Plaintiff’s

reliance on the Edmunds.com website’s “true cost to own” (TCO)1

1

See “About True Cost to Own®,” http://www.edmunds.com/about/
more-about-tco.html (last visited Sept. 15, 2016). Because
Plaintiff relies on this edmunds.com website in her Complaint,
the Court can consider the information contained on that website
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as a proxy for her own actual expenses is the primary focus of
Defendant’s Motion and Reply.

See ECF No. 13-1 at 9-13; ECF No.

15 at 6-8.
Defendant raises a number of challenges to Plaintiff’s
reliance on Edmunds.com’s TCO.

First, Edmunds generates its TCO

using a proprietary formula that factors in seven cost
categories: depreciation, insurance, financing, taxes & fees,
fuel, maintenance, and repairs.

Because the formula is

proprietary, Defendant proffers that there is no meaningful way
to discern how it is calculated and thus, to assess if
Plaintiff’s expenses are similar to those of the “comparable
vehicles” she references.

As Defendant notes, and Plaintiff

does not contest, Edmunds only calculates TCOs for vehicles
manufactured in or after 2010 and Plaintiff alleges she drove a
2000 Ford Taurus.

Depreciation, insurance, and financing costs

for a 2000 Taurus could be significantly less than those for a
2010 Taurus, assuming that is the comparable vehicle referenced
by Plaintiff.

Furthermore, Edmunds cautions that its TCO is a

in ruling on the motion to dismiss. Phillips v. LCI Int'l,
Inc., 190 F.3d 609, 618 (4th Cir. 1999) (stating that documents
outside of the complaint may be considered by the court upon a
motion to dismiss if “integral to and explicitly relied on in
the complaint”); Virdis Dev. Corp. v. Bd. of Supervisors of
Chesterfield Cty., Va., 92 F. Supp. 3d 418, 421 n.4 (E.D. Va.
2015) (applying the holding of Phillips to a website). Facts
concerning the TCO cited by the Court in the discussion that
follows are all taken from this webpage.
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“comparative tool, not a predictive tool” and that the actual
costs of owning a particular vehicle “will vary depending on
your personal circumstances, such as your driving history and
the number of miles you drive.”
In its motion, Defendant indicated that it was unable to
discern which specific vehicles Plaintiff actually used to
generate a 44 cent per mile TCO.

ECF No. 13-1 at 12.

Defendant

represents that the TCO for a 2010 Ford Taurus is calculated at
39 cents per mile.

Id.

Using that figure, Plaintiff’s

effective wage would be $7.41 per hour, a figure above the
minimum wage.

In opposing the motion, Plaintiff criticizes

Defendant for “blatantly ignoring that Plaintiff does not cite
Edmund’s data for her particular 2000 Ford Taurus,” but “‘for
comparable vehicles.’”

ECF No. 14 at 20-21 (quoting Compl. ¶

29, emphasis added in Opp’n).

Plaintiff, however, provides no

additional information as to what those “comparable vehicles”
might be nor does she explain how her $.44 per mile figure was
generated.
If, in her Complaint, Plaintiff had relied exclusively on
the Edmunds TCO estimate, the Court would be inclined to grant
the motion to dismiss.

Plaintiff, however, also references the

business mileage reimbursement rate published by the Internal
Revenue Service (IRS), which ranged between $.54 and $.575
during the relevant time period, and the American Automobile
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Associations estimate of the “average cost for owning and
operating a sedan,” which ranged “between $.58 and $.608 for
drivers who drive a sedan approximately 15,000 miles per year.”
Compl. ¶ 14.

While it is true, as Defendant asserts, that

employers are not required to reimburse at the IRS rate, at
least some courts have held that, if employers fail to do so,
they must “keep detailed records of the employees’ expenses to
justify another reimbursement rate.”

Zellagui v. MCD Pizza,

Inc., 59 F. Supp. 3d 712, 716 (E.D. Pa. 2014); see also, Gattuso
v. Harte-Hanks Shoppers, Inc., 169 P.3d 889, 896 (Cal. 2007)
(holding, in the context of a California statute mandating
reimbursement of employees’ expenses, that “[i]f an employer
wants to pay less than the established IRS rate, it bears the
cost of proving the employee's cost of operating the vehicle for
work is actually less”).

Furthermore, the Department of Labor

(DOL) Field Operations Handbook instructs that, for minimum wage
purposes, an employer may either reimburse employees who drive a
personal vehicle for business use at the IRS standard business
mileage rate or keep accurate, contemporaneous expense records
and reimburse the employee accordingly.

DOL Field Operations

Handbook § 30c15(a) (issued 6/30/2000).
In opposing the motion to dismiss, Plaintiff relies
primarily on four cases from three federal district courts

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denying motions to dismiss collective actions brought by
delivery drivers.

The cases relied upon are:

Wass v. NPC Int’l, Inc., d/b/a “Pizza Hut,” Case No.
09-2254-JWL (D. Kan.); Complaint (ECF No. 14-1),
Opinion granting motion for leave to file third
amended complaint (2010 WL 7762621 (Sept. 1, 2010));
Perrin v. Papa John’s Int’l, Inc., Case No. 4:09-cv01335 (E.D. Mo.), Complaint (ECF No. 14-2), Opinion
granting in part and denying in part motion to dismiss
(818 F. Supp. 2d 1146 (Mar. 8, 2011));
Darrow v. WKRP Mgmt., d/b/a “Pizza Hut”, Case No. 09cv-01613-CMA-BNB (D. Colo.), Complaint (ECF No. 14-3),
Opinion denying motion to dismiss (2011 WL 2174496
(June 3, 2011)); and
Smith v. Pizza Hut, Inc., Case No. 09-cv-01632-CMA-BNB
(D. Colo), Complaint (ECF No. 14-4), Opinion granting
in part and denying in part motion to dismiss second
amended complaint (2011 WL 2791331 (July 14, 2011)).
Plaintiff closely patterned the instant Complaint after the
complaints in these four cases.
The decisions of these three courts, of course, are not
binding authority on this Court.
them persuasive.

This Court, however, does find

Of note, in two of those four decisions, the

courts found that alleging reimbursement rates below that of the
IRS business mileage reimbursement rate was sufficient to
satisfy the Iqbal/Twombly plausibility standard, rejecting the
same arguments that Defendant advances here.

Perrin, 818 F.

Supp. 2d at 1149 (rejecting challenge to the plaintiff’s
reliance on the IRS business mileage rate and AAA rate); Darrow,
2011 WL 2174496, at *4 (finding that the plaintiff satisfied the
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pleading requirement “by supporting the reasonableness of his
estimate through reference to the IRS business mileage
reimbursement rate”).
In seeking to distinguish this case from those on which
Plaintiff relies, Defendant notes that the gap between what the
defendant employers reimbursed and what the plaintiff employees
alleged their expenses to be was much greater in those cases
than in the instant case.

The cases relied upon by Plaintiff do

reference the magnitude of the reimbursement gap.

In Wass, the

court permitted the claims to go forward after concluding that
the “reimbursement gap of at least $1.50 per hour is
sufficiently large to support a plausible claim that the underreimbursements brought the drivers’ pay below the federal
minimum wage.”

2010 WL 7762621, at *4 (emphasis added).

In Smith, the plaintiff had “documented automobile expenses
of approximately $.35 per mile” during the relevant time period
but also sought to rely on the IRS business mileage rate of $.58
per mile.

The court concluded it did not need to decide if

reliance on that rate was reasonable because it found that the
documented $.35 per mile resulted in an under-reimbursement of
$1.89 per hour and that under-reimbursement was a “large enough
gap” to support the claim that the defendant failed to
reasonably approximate the plaintiff’s expenses.
2791331, at *4.

2011 WL

Because this under-reimbursement also resulted
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in a wage that was $.95 below the federal minimum wage, the
court found that the facts alleged supported a plausible claim
for a minimum wage violation.

Id.

In Perrin, the court found

that the plaintiff’s figures yielded an under-reimbursement of
approximately $2.55 per hour and, because plaintiff’s wage was
only $.25 over the minimum wage, concluded that this underreimbursement rate supported a claim for minimum wage violation.
818 F. Supp. 2d at 1150.

In Darrow, the court found an under-

reimbursement rate of $1.45 per delivery and that plaintiffs
made an average of two or three deliveries per hour and, thus,
this reimbursement gap was ‘significant enough to support a
plausible claim that defendant failed to approximate reasonably
its drivers’ expenses.’”

2011 WL 2174496, at *1, *5 (quoting

Wass, 2010 WL 7762621, at *2).
While Plaintiff’s reimbursement gap based on the Edmunds
TCO figure is smaller than the gap in these other cases, it
still results in a wage below that mandated by the FLSA and
MWHL.

Furthermore, applying the IRS business reimbursement

rate, which is also referenced in the Complaint, results in a
reimbursement gap similar to that in the cases upon which
Plaintiff relies.

While Plaintiff may have a more difficult

task proving her claims than the plaintiff delivery drivers in
these other cases, at this stage of the litigation she has set

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forth sufficient allegations to support plausible FLSA and MWHL
claims.
The Court concludes that she has also sufficiently
established that other delivery drivers employed by Defendant
are similarly situated for purposes of a class or collective
action.

At this stage in the litigation, support for a

collective action requires “nothing more than substantial
allegations that the putative class members were together the
victims of a single decision, policy, or plan.”

Theissen v.

Gen. Elec. Capital Corp., 267 F.3d 1095, 1105 (10th Cir. 2001);
Butler v. DirectSAT USA, LLC, 876 F. Supp. 2d 560, 566 (D. Md.
2012) (noting that “similarly situated” for purposes of a FLSA
collective action “does not mean identical,” but “[r]ather, a
group of potential FLSA plaintiffs is ‘similarly situated’ if
its members can demonstrate that they were victims of a common
policy, scheme, or plan that violated the law”).

Here,

Plaintiff alleges that Defendant’s delivery drivers “were
subject to the same reimbursement policy; received similar
reimbursements; incurred similar automobile expenses; completed
drives to catering events and deliveries of similar distances
and at similar frequencies; and were paid at or near the federal
minimum wage before deducting unreimbursed business expenses.”
ECF No. 1 ¶ 32.

At this stage, that is sufficient.

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Finally, as noted above, the possibility of recovery of
liquated damages under the MWHL was not added to the statute
until July 1, 2014, which was after Plaintiff ceased employment
with Defendant.

Furthermore, this Court has determined that

this amendment “does not apply retroactively.”

McFeeley v.

Jackson Street Entertainment, LLC, Civ. A. No. DKC 12-1019, 2015
WL 570303, at *1 n.2 (D. Md. Feb. 10, 2015).

As also noted

above, Plaintiff acknowledges that she is not entitled to
liquidated damages but contends that she has standing to pursue
those damages on behalf of members of the putative class who
were employed as of or after July 1, 2014.

ECF No. 14 at 21.

Defendant did not respond to this standing argument in its
Reply.

While dates of employment and, thus, potential

entitlement to liquidated damages might result in the need for
subclasses should a conditional or class action be certified,
the Court will permit the prayer for liquidated damages to
remain in the Complaint at this time.
Accordingly, IT IS this 12th day of October, 2016, by the
United States District Court for the District of Maryland,
ORDERED:
(1) That Defendant’s Motion to Dismiss, ECF No. 13, is
DENIED; and
(2) That the Clerk of the Court shall transmit a copy of
this Memorandum and Order to all counsel of record.
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____________/s/___________________
William M. Nickerson
Senior United States District Judge

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