Westley v. Cck Pizza Company, LLC

          ORDER GRANTING MOTION AND APPROVING SETTLEMENT AGREEMENT

          THOMAS L. LUDINGTON, UNITED STATES DISTRICT JUDGE

         On November 20, 2018, Plaintiff Paul Westley filed a complaint against Defendants CCK Pizza Company, LLC and Chris Schloemann. ECF No. 1. Plaintiff alleges that Defendants have failed to adequately reimburse Defendants' employees for their labor in violation of the Fair Labor Standards Act (“FLSA”) and the Michigan Wage Law. Id. On January 31, 2019, Plaintiff filed a motion for conditional certification. On June 4, 2019, the motion was granted because potential plaintiffs were sufficiently similarly situated for conditional class certification.

         Plaintiff subsequently filed a “Motion for Approval of FLSA Collective Action Settlement and for Attorneys' Fees and Costs.” ECF No. 51. Plaintiff represents that the motion is unopposed. For the following reasons, the motion will be granted.

         I.

         According to Plaintiff's Amended Complaint, Defendants CCK Pizza Company (“CCK”) and Chris Schloemann own and operate numerous Domino's Pizza franchise stores.^[1] ECF No. 19 at PageID.351. Schloemann is an owner, officer, and director of CCK. Id. While in this capacity, Schloemann implemented the pay rate at issue and has overseen and enforced CCK's pay practices. Id. Defendants' Domino's stores employ delivery drivers primarily to deliver food items to customers. Id. at PageID.352. Defendants require their drivers to maintain and pay for safe, legally operable, and insured automobiles when delivering the food items. Id. The drivers incur costs for gasoline, vehicle parts and fluids, repair and maintenance services, insurance, depreciation, and other expenses while delivering the food items. Id.

         All of Defendants' delivery drivers were subject to reimbursement for these costs. Id. at PageID.355. Since November 20, 2015, Defendants have utilized various methods of reimbursement to account for these expenses. Id. at PageID.352. Plaintiff alleges that none of Defendants' methods have adequately reimbursed the actual vehicle expenses incurred by the delivery drivers. Id. Accordingly, Plaintiff alleges that Defendants have a flawed reimbursement policy that has resulted in the “under-reimbursement” of all of Defendants' delivery drivers' actual automobile expenses. Id. As a result of the flawed reimbursement policy, the drivers' net wages were allegedly diminished beneath the federal minimum wage requirements under the FLSA. Id. at PageID.354.

         While employed as a delivery driver with Defendants, Plaintiff was paid a cash wage of $5.75 per hour, plus a tip credit. Id. The federal minimum wage throughout the duration of Plaintiff's employment by Defendants was $7.25 per hour. 29 U.S.C. § 206(a)(1)(C). During Plaintiff's employment period, he was reimbursed at various rates, with a minimum reimbursement of $.29 per mile. Id. at PageID.355. During Plaintiff's employment period, the IRS business mileage rate ranged between $.535 and $.56 per mile. Id. The IRS mileage rate provides optional “standard mileage rates for taxpayers to use in computing the deductible costs of operating an automobile for business, charitable, medical, or moving expense purposes.” Id. PageID.537. Using the IRS data as a reasonable approximation of Plaintiff's automobile expenses, every mile driven by Plaintiff allegedly decreased his net wages by at least $.245 per mile, or by $.735 per hour. PageID.355. Plaintiff contends that this decrease in net wages diminished his wages beneath the federal minimum wage. Id. at PageID.354.

         On November 20, 2018, Plaintiff filed his complaint. ECF No. 1. On January 31, 2019, Plaintiff filed a motion for FLSA Conditional Certification which the Court granted. ECF Nos. 13, 33. The order provided that potential plaintiffs had to opt into the class on or before September 25, 2019. Prior to the close of the opt in period, the parties reached a settlement agreement. Plaintiff subsequently filed a motion for approval of the settlement agreement. ECF No. 51. The motion will be granted.

         II.

         The parties' settlement agreement (“Agreement”) provides that Defendants will pay Plaintiffs a maximum of $123, 000, the gross settlement amount. ECF No. 51-2 at PageID.959. Each Plaintiff that had opted into the lawsuit will receive a

[P]ro rata share of unreimbursed expenses based on a mileage reimbursement rate of forty cents ($0.40) per mile for every mile driven on behalf of CCK Pizza Company, LLC, at any time since November 20, 2015, pursuant to data provided by Defendants.

         ECF No. 51-2 at PageID.959. The named Plaintiff, Paul Westley, will receive an incentive award of $5, 000 and Plaintiff's counsel will receive attorneys' fees up to $33, 000.00. ECF No. 51-2 at PageID.960.

         III.

         “In reviewing a settlement of an FLSA private claim, a court must scrutinize the proposed settlement for fairness, and determine whether the settlement is a fair and reasonable resolution of a bona fide dispute over FLSA provisions.” Williams v. K&K Assisted Living LLC, 2016 WL 319596 at *1 (E.D. Mich. Jan. 27, 2016) (internal quotation marks and ...