McFarlin v. The Word Enterprises, LLC

          OPINION AND ORDER GRANTING PLAINTIFF'S MOTION FOR PARTIAL SUMMARY JUDGMENT AND DENYING DEFENDANTS' MOTION FOR SUMMARY JUDGMENT

          HON. GERSHWIN A. DRAIN UNITED STATES DISTRICT COURT JUDGE

         I. Introduction

         Presently before the Court is Plaintiff's complaint against Defendant, alleging violations of the Federal Labor Standards Act (FLSA) and the Michigan Minimum Wage Law. Pending before the Court is Defendants' Motion for Summary Judgment and Plaintiff's Motion for Partial Summary Judgment. Dkt. Nos. 89, 90. Defendants argue that there is no genuine dispute of fact that they paid their delivery drivers the minimum wage rate or higher. Plaintiffs move for summary judgment on two issues. First, Plaintiff argues that Defendant Kevin Dittrich is an employer of delivery drivers. Second, Plaintiff argues that Defendants may not use tips to reimburse vehicle expenses. For the reasons discussed below, the Court will deny Defendants' Motion for Summary Judgment and grant Plaintiff's Motion for Partial Summary Judgment.

         II. Factual Background

         This case involves a chain of three Hungry Howie's franchises located in Haslett, Perry, and St. Johns, Michigan. Dkt. No. 75, pg. 5 (Pg. ID 1597). Plaintiff was a delivery driver at the Perry location from July 2015 to September 1, 2016. Id. at pg. 4 (Pg. ID 1596). Defendants required delivery drivers at each location to use their personal vehicles to make pizza deliveries. Id. at pg. 6 (Pg. ID 1598). Defendants paid delivery drivers a cash wage of $5.00 per hour when they were making deliveries. Dkt. No. 93-4, pg. 2 (Pg. ID 2170). Defendants paid delivery drivers a run charge of $.75 per delivery, and Perry drivers received $1.75 for deliveries to Lainsburg, Michigan. Dkt. No. 93-2, pg. 3 (Pg. ID 2157). Delivery drivers also received tips. In all store locations, Defendants posted a “Minimum Wage Notice to Tipped Employees.” Dkt. No. 93-9, pg. 1 (Pg. ID 2193). This notice stated that Defendants would take a tip credit that was exactly the difference between the drivers' cash wage and the Michigan minimum wage. Id. In other words, Defendants would only take just enough tip credit to get their delivery drivers' salary to the exact minimum wage.

         On July 6, 2016, Plaintiff filed a class action complaint against Defendants. Dkt. No. 1. Plaintiff filed his First Amended Complaint on September 19, 2017. Dkt. 75. Plaintiff alleges that throughout his time as a delivery driver at the Perry franchise, Defendants paid him and similarly situated drivers the exact Michigan minimum wage. Id. Plaintiff also alleges that Defendants did not adequately reimburse him and other drivers for vehicle expenses incurred while delivering pizzas for Defendant. Id. at pg. 6 (Pg. ID 1598). Therefore, Defendants actually paid Plaintiff and similarly situated drivers below the federal and Michigan minimum wages. Id. at pg. 15, 18 (Pg. ID 1607, 1610). Defendants deny these allegations. On October 5, 2017, this Court certified Plaintiff's class. Dkt. No. 83.

         On December 29, 2017, Plaintiff filed a Motion for Partial Summary Judgment. Dkt. No. 89. Defendants conceded summary judgment in favor of Plaintiff on the issue of Defendant Dittrich's status as an employer of Plaintiff and other delivery drivers. Dkt. No. 93, pg. 11 (Pg. ID 2134). Defendants opposed Plaintiff's Motion on the issue of Defendants' application of the tip credit. Id. Plaintiff replied on February 2, 2018. Dkt. No. 95. Defendants filed a Motion for Summary Judgment on January 1, 2018. Dkt. No. 90. Plaintiff opposed the Motion on January 23, 2018. Dkt. No. 94. Defendants replied on February 6, 2018. Dkt. No. 96.

         III. Legal Standard

         Federal Rule of Civil Procedure 56(c) governs summary judgment. The Rule states, “summary judgment shall be granted if ‘there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.'” Cehrs v. Ne. Ohio Alzheimer's Research Ctr., 155 F.3d 775, 779 (6th Cir. 1998). “All factual inferences ‘must be viewed in the light most favorable to the party opposing the motion.'” Id. (quoting Matsushita Elec. Indus., Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986)). There is a genuine issue of material fact “if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Id. (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986)). Ultimately, the court evaluates “whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law.” Anderson, 477 U.S. at 251-52.

         IV. Discussion

         Both Plaintiff's and Defendants' Motions contain overlapping issues. The most significant overlapping issue concerns the proper application of the tip credit. Therefore, this Court will discuss Plaintiff's Motion for Partial Summary Judgment first and apply any overlapping analysis to Defendants' Motion for Summary Judgment.

         I. Plaintiff's Motion for Partial Summary Judgment

         a. Kevin Dittrich's Employer Status

         First, Plaintiff moves for summary judgment on Defendant Kevin Dittrich's status as an employer of Plaintiff and similarly situated delivery drivers. Dkt. No. 89, pg. 7 (Pg. ID 1851). Defendants have never contested this issue. Dkt. No. 93, pg. 11 (Pg. ID 2134). Both Plaintiff and Defendants concur that Mr. Dittrich is an employer of Plaintiff and other delivery drivers within the meaning of the FLSA. This Court therefore holds that there is no genuine dispute about ...