MEMORANDUM AND ORDER
Plaintiff William Timothy Perrin filed this action on August 19, 2009, on behalf of himself and other similarly situated delivery drivers employed by Defendants. Plaintiffs claim that Defendants violated the Fair Labor Standards Act (“FLSA”), 29 U.S.C.- §■ 206, and the minimum wage laws of five states (Missouri, Arizona, Florida, Illinois, and Maryland) that mandate a higher minimum wage than that under federal law, by failing reasonably to approximate the delivery drivers’ automotive expenses for reimbursement purposes, and consequently, effectively failing to pay the minimum wage. The Court has conditionally certified an FLSA collective -action and has also certified Federal Rule of Civil Procedure 23(b)(3) class actions with respect to Plaintiffs’ state law claims.
The parties have filed several motions for partial summary judgment. Plaintiffs move for summary judgment regarding Defendants’ alleged failure to use reasonable vehicle expense reimbursement rates.
For the reasons set forth below, the Court will GRANT Plaintiffs’ motion for summary judgment regarding Defendants’ application of a tip credit; GRANT in part and DENY in part Plaintiffs’ motion for summary judgment on Defendants’ affirmative defenses; and DENY Plaintiffs’ motion for summary judgment regarding Defendants’ reimbursement rates and Defendants’' motions for summary judgment regarding the tip credit and the exclusion of fixed costs. The Court will also DENY as moot Plaintiffs’ motion to strike Matth-iesen’s declaration.
BACKGROUND
Unless otherwise indicated, the facts set forth below are undisputed. Plaintiffs in this case are current or former pizza delivery drivers employed as hourly, non-exempt, employees by Defendants, who are certified members of five'Rule 23 class actions asserting minimum wage claims under state laws of -Missouri, Maryland, Florida, Illinois, and Arizona, and a collective of 3,840 opt-in Plaintiffs under 29 U.S.C. .§ 216(b), asserting claims under the ELSA.
Defendants require delivery drivers, as a condition of their employment, to maintain safe,, legally operable, insured vehicles for making deliveries. During the relevant time period, Defendants compensated delivery drivers using three types of payments: hourly wages, delivery-related vehicle expense payments, and, in some locations, “box bonuses.”
Defendants reimbursed drivers a flat rate for vehicle expenses to compensate thém for costs associated with the use of their personal vehicles to make deliveries. Under Defendants’ vehicle expense reimbursement policy, all drivers were paid a flat rate per delivery, regardless of the actual number of miles driven or actual expenses incurred. Defendants’ per-delivery reimbursement rate for delivery-related vehicle expenses was'at all relevant times less than the standard business mileage rate established by the IRS.
Prior to 2008, Defendants paid delivery drivers a single hourly wage, which was the minimum hourly wage under the FLSA or state law (if higher than the FLSA). However, in 2008, Defendants implemented a “split wage” system, which took. advantage of “tip credits” allowed under the FLSA and state law. Under the split wage system, drivers received two hourly wages: an “in store” rate, equal to or greater than minimum wage under the. FLSA or state law (if higher than.the FLSA), and an “on the road” rate, equal to an hourly cash wage of $4.25, plus. tips. The parties dispute whether the “on the road” rate, including tips, was at or above minimum wage.
Plaintiffs’ minimum wage claims are based on the • Department of Labor (“DOL”) regulations applicable to the FLSA, which state that “the wage requirements of [the FLSA] will not be met where the employee ‘kicks-back’ directly or indirectly to the employer ... the whole or part of the wage delivered to the employee.” 29 C.F.R. § 531.35. A kickback occurs when the cost to the employee of tools specifically required for the performance of the employee’s work “cuts into the minimum or overtime wages required to be paid him under [the FLSA].” Id. As this Court has previously held, although the regulations allow an employer to reasonably approximate the amount of an employee’s vehicle expenses without affecting the amount of the employee’s wages for purposes of minimum wage compliance, if the employer’s approximation is unreasonable, the employee may have a claim that his wage rate was reduced below the minimum as a result of the under-reimbursement. See Doc. No. 299 at 14-15 (citing 29 C.F.R. . § 778.217 and related cases). Thus, Plaintiffs .claim that Defendants’ reimbursement of their vehicle expenses was an unreasonable approximation and that their wages were reduced below the minimum as a result of the under-reimbursement.
ARGUMENTS OF THE PARTIES
Defendants’ Reimbursement Formula
Plaintiffs move for partial summary judgment ordering that Defendants have failed to reasonably approximate vehicle expenses for purposes of minimum wage compliance. ■ Plaintiffs argue that, under the FLSA,
In response, Defendants argue that they are not required to reimburse vehicle expenses at all. Instead, Defendants argue that they are only required to pay weekly wages equal to or above minimum wage, and they may reimburse actual vehicle expenses or a reasonable approximation of these expenses merely to prevent these expenses from cutting into minimum wage. Defendants assert that although the DOL Handbook provides a safe harbor for employers who use the IRS standard business mileage reimbursement rate, it does not mandate the use of that rate or state that the failure to use that rate automatically constitutes a minimum wage violation. Defendants argue that such a mandate would be inconsistent with the FLSA and the DOL’s own regulations. Defendants also note that Plaintiffs’ own expert, Paul Lauria, calculated a purportedly reasonable reimbursement rate for purposes of this litigation that was lower than-the IRS standard business mileage rate. Finally, Defendants note that the IRS itself recognizes and allows alternative reimbursement rates, including fixed and variable rate allowances, which Defendants argue are reflected in ,their own reimbursement methodology.
Defendants ’ Affirmative Defenses
' Plaintiffs next move for summary judgment on Defendants’ affirmative defensés numbered 2, 5, 16, 19, 20, 22-24,
Defendants’ 2nd affirmative defense states that the complaint is “barred in whole, or in part, by all applicable statutes of limitation.” (Doc. No. 137 at 36.) Plaintiffs argue generally that Defendants have failed to identify which class or class members’ claims they believe to be outside of a statute of limitations." Plaintiffs assert that Defendants have only — indirectly, through the rebuttal report of their expert, Dr. Christopher Pflaum — provided evidence and argument for a single statute of limitations issue: that Plaintiffs included damages in the Arizona class that occurred prior to May 28, 2007. Plaintiffs contend, however, that under Arizona law, a class member who commences his claim within three years of'the last violation is Entitled to recover for “all violations that occurred as part of a continuing course of employer conduct regardless of their date.” (Doc. No. 360 at 4, citing Ariz.Rev.Stat. Ann. § 23-364.) Plaintiffs argue that' Defendants have thus misapplied this statute of limitations and that it does not bar Plaintiffs’ claims. Additionally, Plaintiffs argue that including these damages does not violate the class notice, which does not pur
■ Plaintiffs also move for summary judgment on Defendants’ 5th affirmative defense, that the complaint is barred by § 10 of the Portal-to-Portal Act, 29 U.S.C. § 259, because Defendants relied in good faith on, and acted in accordance with, the DOL’s written interpretations of the FLSA, Plaintiffs contend that Defendants fail to specify what “written interpretation of the FLSA” they relied upon, and that this alone justifies summary judgment. Further, to the extent that Defendants suggest that their attempts to reasonably approximate vehicle expenses constitutes conformance with written guidance. Plaintiffs argue that this is insufficient. Plaintiffs argue that if they prove that Defendants’ approximations were not in fact reasonable, Defendants’ alleged attempt to comply will not insulate them from liability-
Plaintiffs next move for summary judgment on Defendants’ 19th affirmative defense, which states that the Court lacks subject matter and supplemental jurisdiction over some or all of Plaintiffs’ claims, including Plaintiffs’ “attempt to assert putative class and collective actions, which are inherently incompatible, and therefore cannot be maintained in the game action.” (Doc. No. 137 at 38.) Plaintiffs argue that the Court has already denied Defendants’ motion to dismiss on the basis of this defense, and. as Defendants have not provided any additional evidence in support of their argument, Plaintiffs are entitled to summary judgment consistent with the Court’s earlier judgment.
Plaintiffs also move for summary judgment on Defendants’ 22nd affirmative defense, which states' that Plaintiffs who were not employed by Defendants lack standing to assert claims against Defendants. Plaintiffs argue that Defendants have failed to identify any class members who were not employed by one or both of Defendants, and they have not provided any other supporting documentation or factual basis for this defense. Thus, Plaintiffs contend that summary judgment is proper as to this defense.
Plaintiffs move for summary judgment on Defendants’ 23rd affirmative defense, which states, that the named Plaintiffs lack standing to serve as class representatives for any class members who did not live or work for Defendants in the same state as they did. Plaintiffs argue that summary judgment is warranted on this defense, as Defendants have failed to identify any such Plaintiff or class representative..
Plaintiffs further move for summary judgment on Defendants’ 24th affirmative defense, which simply states that one or both Defendants are not proper parties for claims asserted by Plaintiffs. . Plaintiffs argue, in a single sentence, that Defendants have failed to come forward with any evidence supporting this defense, so summary judgment in favor of Plaintiffs is appropriate.
Plaintiffs group Defendants’ 16th, 20th, 25th, 27th, 29th, 32nd, and 33rd affirmative defenses, and move for summary judgment as to all of them. Defendants’ 16th affirmative defense states that Plaintiffs’ state law claims are preempted by federal law. The 20th affirmative defense states that Plaintiffs have not adequately pleaded that the Court has diversity jurisdiction under 28 U.S.C. § 1332(d)(2). The 25th affirmative defense states that Plaintiffs are not entitled to compensation for “actual expenditures purportedly made on behalf of Defendants” that were incurred without Defendants’ knowledge. The 27th affirmative defense states that if Plaintiffs are entitled to damages, Defendants are entitled to a credit for, or a set-off against, amounts they overpaid such Plaintiffs. The 29th
Plaintiffs also group Defendants’ “equitable” 26th, 28th, 30th, and 31st affirmative defenses, and move for summary judgment as to all of them. The 26th affirmative defense states that* Plaintiffs are estopped from pursuing, or have waived, the claims in the complaint, due to their acts and omissions, including their failure-to record and report their actual expenditures. The 28th affirmative defense states that Plaintiffs have failed to.mitigate their damages. The 30th and 31st defenses allege that Plaintiffs’ claims are barred by the doctrines of laches and unclean hands, respectively. Plaintiffs argue that these defenses are inconsistent with minimum wage laws, and are therefore not cognizable. In support of their argument,.Plaintiffs cite to a number of cases which state that estoppel, waiver, and failure to mitigate are not defenses to minimum wage claims under the FLSA.
Finally, Plaintiffs argue that Defendants’ responses to discovery requests are insufficient to prohibit- summary judgment. Plaintiffs claim that Defendants have referred them to “nearly 110,000 documents” without identifying which allegedly support any particular affirmative defense. (Doc. No. 360 at 10.) Plaintiffs contend that Defendants’ lack of specificity violates Federal Rule of Civil Procedure 33(d), makes it impossible to determine which, if any, of the produced documents support Defendants’ arguments, and that Defendants cannot be allowed to make vague references to the documents they have produced throughout litigation as an evi-dentiary basis to deny summary judgment on their affirmative defenses.
In response, Defendants first argue that Plaintiffs’ motion for summary judgment is premature and inappropriate at this stage of the litigation. Defendants cite to the Court’s most recent Case. Management Order (Doc. Nos. 350, 353 & 354) to argue that, though the parties completed discovery. for dispositive motions by the time Plaintiffs filed their summary judgment motion, trial discovery was continuing.
Defendants next argue that Plaintiffs cannot show that there is an absence of evidence regarding Defendants’ defenses. Defendants contend that Plaintiff's have failed to satisfy their initial burden of production by submitting evidence which negates an element of Defendants’ defense, and have similarly failed to prove elements of their complaint necessary for judgment on those defenses which “express a negation of an element of’' Plaintiffs’ claims. (Doc. No. 386 at 9.) Specifically, Defendants argue that Plaintiffs have failed to show that they are “similarly-situated,” which Defendants 'claim is necessary before Plaintiffs’ can obtain summary judgment on Defendants’ 25th through 29th, and 31st, affirmative defenses. Likewise, Defendants claim that Plaintiffs have failed to show that they are entitled to damages, which is necessary-for summary judgment on Defendants’ 27th affirmative defense. Defendants also contend that Plaintiffs have not proven that they are entitled to recovery for their 'FLSA or state-law claims, by proving the elements of these claims, which they must do to obtain summary judgment on Defendants’ 25th, 29th, and 32nd affirmative defenses.
Defendants go on to argue that their non-waiver equitable defenses may apply to FLSA claims, even if waiver may generally not apply to FLSA claims. In support, Defendants cite cases for the proposition that estoppel may apply in some FLSA cases. Defendants also argue generally that equitable defenses apply to Plaintiffs’ state law claims. Defendants distinguish Plaintiffs’ cases as discussing estoppel based on bargaining and contract law, which Defendants claim is not the case here. Therefore, Defendants argue that summary judgment is not warranted on their equitable defenses.
In reply, Plaintiffs argue that Defendants’ procedural attempts to avoid summary judgment are spurious, and that the timing of their motion for summary judgment on Defendants’ affirmative defenses is not only appropriate, but required under the deadlines set forth in the most recent Case Management Order. Plaintiffs argue that, to the extent that Defendants required additional discovery to oppose summary judgment, they should have requested an exténsion under Federal Rule of Civil Procedure 56(d), and that Defendants have not followed the proper procedure to do so, nor have they shown specifically what additional facts discovery would uncover. Plaintiffs also contend that because Defendants have the burden of proof on their affirmative defenses, Plaintiffs need only show the absence of evidence supporting the affirmative defenses for summary judgment to be proper. Plaintiffs claim that they have adequately done so.
Application of Tip Credit
Both sides move for summary judgment regarding Defendants’ use of a “tip credit” to calculate Plaintiffs’ wages for purposes of determining minimum wage compliance. The parties do not dispute that' at least some group of Plaintiffs are “tipped employees” as that term is defined in the FLSA,
Plaintiffs argue that even if Defendants could have taken the maximum tip credit to offset any under-reimbursed expenses, they did not comply with the statutory and regulatory prerequisites for doing so. Plaintiffs contend that, as interpreted by the DOL, the FLSA requires employers to notify employees , in advance of the amount of the cash wage paid to tipped employees and the amount of tip credit taken by the
Instead', Plaintiffs argue that Defendants consistently notified them, through letters and pay stubs, that Defendants were only taking a tip credit equal to the difference between the $4.25 cash wage and the applicable minimum wage, such that Plaintiffs’ regular'* rate of pay was exactly minimum wage. Plaintiffs assert that Defendants’ own Vice President of Human Resources, Robert Smith, who managed the tip credit transition, confirmed this fact when he testified that Defendants only intended to take a tip credit equal to the difference between the $4.25 cash wage and the ¿pplicable minimum wage, and further testified that Defendants never' intended to use the tip credit to offset any under-reimbursed vehicle expenses. Plaintiffs argue that Defendants cannot' now retroactively take a higher tip credit, without having provided Plaintiffs notice thereof, in order to cure -their minimum wage violations. Finally, Plaintiffs assert that Defendants waived any reliance on the tip credit- by failing to plead the tip credit as an affirmative defense and failing to identify the tip credit in answers to interrogatories asking for the factual bases of all defenses. Therefore, Plaintiffs argue that partial summary judgment should be entered precluding Defendants from taking a tip credit in an amount greater than the difference between Plaintiffs’- cash wage and minimum wage.
Defendants argue that the FLSA, as interpreted by the DOL, permitted them to pay tipped employees a cash wage higher than $2.13 — in this case, $4.25 — and still .take the maximum, tip credit to offset any allegedly under-reimbursed expenses. Defendants admit that their letters notifying -their delivery drivers of the -tip credit, as well as their employee handbook, state only that Defendants will “take a tip credit in the amount of the difference between [the driver’s] hourly wage and the state minimum wage.” (Doc. No. 405 at 15.) Defendants also admit that they never specifically “identified] the amount of the tip credit as something greater than the difference between the direct cash wage and the general minimum wage” and that they “did not initially intend to take 'the maximum tip credit.” (Doc. No. 404 at 8, 2.) Defendants state that they “had no reason” to take the'maximum tip credit initially because they - “believed then and still believe now that Plaintiffs have been paid at least the minimum wage.” Id. at 2. However, Defendants argue that precluding them from taking the maximum tip credit because they did not specifically notify Plaintiffs in advance that they were doing so would “elevate form ■ over substance.” Id. at 3. Defendants contend that the FLSA only requires employers to notify employees of their intent to take a tip credit; it does not require employers to explain in detail how the tip credit works. Id. at 3. Therefore, Defendants argue that they complied with the letter and spirit of the FLSA by notifying drivers generally that they intended to meet their minimum wage obligations through the use of a tip credit.
Defendants also refute Plaintiffs’ contention that Defendants cannot take the maximum tip credit because they did not calculate Plaintiffs’ regular rate of pay for overtime purposes using the maximum tip credit. Defendants describe this argu
Exclusion of Fixed Vehicle Costs
Defendants also move for summary judgment ordering that fixed vehicle costs — those which Defendants claim a driver would'have incurred regardless of his or her employment — are not for the employer’s benefit and therefore cannot be counted as “kickbacks” against an employee’s wages. In support of their position, Defendants argue that they are aware of no drivers who purchased, registered, or insured a car specifically to work for them, and that these were costs that the drivers would have incurred regardless of their employment. Defendants stress that' though they did reimburse drivers for a portion of these costs during the relevant time period, they were under no legal obligation to do so, and are not under one now.
Defendants analogize their drivers’ fixed vehicle costs to the non-uniform clothing worn- by restaurant employees. Defendants argue that although. a restaurant may benefit from- its employees wearing socks, for example, if it does not foree its employees to buy any particular socks and if the employees would likely have purchased socks regardless of their jobs, the metaphorical restaurant would not be liable to its employees for the cost of socks. Likewise, Defendants, argue that they should not. be liable to their drivers for fixed vehicle costs because the drivers routinely use their vehicles for non-work-related activities, and because Defendants require nothing other than that the car be insured and be clean, in good repair, and safe; For these reasons, Defendants claim that they cannot be held accountable for drivers’ fixed vehicle costs as a matter of law, and that therefore, summary judgment on this issue is appropriate.
In response, Plaintiffs argue that Defendants have a duty to reimburse employees for their fixed costs, or at least for those which are incurred while they are making deliveries for Defendants, if those costs reduce employees’ wages below the minimum wage. Plaintiffs note that this is industry practice, and that most delivery-oriented businesses, including Defendants themselves, reimburse their drivers a portion of their fixed costs. Moreover, Plaintiffs note that the DOL includes fixed costs in its calculation of vehicle expenses reimbursements when ‘ it enforces minimum wage compliance. Plaintiffs argue that the regulations at issue require an employee be reimbursed for “facilities” which “primarily” benefit the employer, which include “tools of the trade and other materials and services incidental to carrying on the employer’s business,” if the' cost of those facilities cuts into the employee’s minimum wages. See Doc. No. 389 at 4 (citing 29 C.F.R. § 531.3(d)). Plaintiffs
Plaintiffs also argue that Defendants’ non-uniform clothing analogy is inapposite, as socks and other non-uniform -clothing are not incidental to the job 'of serving restaurant patrons, but a safe and licensed vehicle is incidental to pizza delivery service. Plaintiffs emphasize that their methodology, as did Defendants’, only seeks reimbursement for a portion of the fixed costs a driver accrued while in the -scope of his or her employment. Because the payment of these costs was a prerequisite for Plaintiffs’ employment, and was necessary for the operation of Defendants’ business, Plaintiffs argue, summary judgment is inappropriate.
Matthiesen Declaration
Finally, Plaintiffs move to strike the Declaration of Bradford K. Matthiesen submitted in support of Defendants’ motions for summary judgment.
DISCUSSION
Federal Rule of Civil Procedure 56(a) provides that summary judgment shall be entered “if 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). “The movant ‘bears the initial responsibility of informing the district court of the basis for its motion,’ and must identify-‘those portions of [the record] ... which it believes demonstrate the absence of a genuine issue of material fact.’ ” Torgerson v. City of Rochester,
Affirmative defenses are assertions by a defendant raising new facts and arguments that, if true, will defeat a plaintiffs claim, and a defendant therefore bears the burden of proof with respect to its affirmative defenses. PNC Bank, Nat. Ass’n v. El Tovar, Inc., No. 4:13-CV-1073 CAS,
Plaintiffs’ Summary Judgment Motion Regarding Defendants’ Reimbursement Rate
The Court finds there to be material questions of fact that preclude summary judgment on the issue of whether Defendants’ reimbursement rate was a reasonable approximation of Plaintiffs’ vehicle expenses. As noted above, the regulations applicable to the FLSA allow employers to reasonably approximate the amount of an employee’s expenses incurred on his employer’s behalf in lieu of tracking the employee’s actual expenses. See 29 C.F.R. § 778.217. However, neither the regulations nor the FLSA define what constitutes a “reasonable approximation” in this context. Plaintiffs contend that Defendants’ approximation was unreasonable as a matter of law because they failed to use the IRS standard'business mileage rate. In support of this contention, Plaintiffs cite to the DOL Handbook, which provides, in relevant part:
Car expenses — employee’s use personal car on employer’s business.
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 carry-out type restaurants. •
(a) As an enforcement policy, the Internal Revenue Service (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.
DOL Handbook § 30cl5(a) (issued June 30, 2000), available at http://www.dol.gov/ whd/FOH/FOH_Ch30.pdf; see also Fast v. Applebee’s Int’l, Inc.,
Plaintiffs also note that at least one court to consider the issue, Zellagui v. MCD Pizza, Inc.,
The Court has reviewed the non-binding authority cited by Plaintiffs and finds that, at most, they suggest that the IRS standard business mileage rate may be a reasonable approximation of employee vehicle expenses. These authorities do not suggest that the IRS rate is the only reasonable approximation of such expenses. Nor have Plaintiffs cited any authority holding
Plaintiffs’ Summary Judgment Motion Regarding Defendants’ Affirmative Defenses
As an initial matter, the Court rejects Defendants’ argument that Plaintiffs’ motion for partial summary judgment on certain affirmative defenses is premature. The most recent Case Management Order set the deadline for dispositive motions as January 30, 2015, which is the exact date on which Plaintiffs filed their motion. (Doc. No. 354.) Moreover, this deadline was established based on a joint motion filed by the parties. (Doc. No. 353.) In short, Plaintiffs filed their motion at the proper time, and Defendants had every reason to anticipate that Plaintiffs would do so. If Defendants needed additional discovery to respond to Plaintiffs’ motion, they could have filed a proper motion with the Court requesting an extension and identifying the responsive information they expected further discovery to reveal. Defendants chose not to do so, and the Court gives no weight to their post hoc protests about the schedule they helped to create.
The Court will addréss Defendants’ relevant affirmative defenses in turn.
1. Defendants’ 20th, 22nd, 23rd, 2kth, 29th, and 33rd Affirmative Defenses
As stated above, a proper affirmative defense asserts new facts and legal arguments that, if proven, defeat or limit an otherwise legitimate claim for relief. PNC Bank,
These defenses assert, respectively, that Plaintiffs have not adequately pleaded the existence of diversity jurisdiction, that Defendants’ have paid everything they were legally required to pay, that Defendants are not proper parties for the claims Plaintiffs assert, that certain Plaintiffs and class representatives lack standing, and that Defendants reserve the right to add additional affirmative, defenses. Because these “negative defenses” are merely rebuttals against the evidence and claims presented by Plaintiffs, Defendants do not generally bear the burden of proof on them. See Barnes v. AT & T Pension Ben. PlanNonbargained Program,
Therefore, although Defendants have • provided little or no evidence in support of these arguments, they are matters on which Plaintiffs bear the burden of proof at trial, and Plaintiffs cannot show that there is no material dispute with respect to these issues, which largely go to the merits of their claims.
2. Defendants’ 2nd Affirmative Defense
Defendants’ 2nd affirmative defense states that Plaintiffs’ complaint is barred, in whole or in part, by an applicable statute of limitations. As they do with respect to all of their proper affirmative defenses, Defendants bear the burden of proof to produce facts showing that some or all of Plaintiffs’ claims fall outside the applicable statute of limitations. See Residential Funding Co. v. Terrace Mortgage Co.,
3. Defendants’ 5th Affirmative Defense
Defendants assert that Plaintiffs’ claims are barred because Defendants relied in good faith upon, and acted in conformity with, interpretations of the FLSA promulgated by the DOL.' This is a proper
4.Defendants’ 16th Affirmative Defense
Defendants assert that Plaintiffs’ state law claims are preempted by federal law. However, they fail to offer evidence for this assertion, and moreover, fail to respond to Plaintiffs’ motion for summary judgment on this defense. The FLSA “does not generally preempt state law claims in a given case.” See Robertson v. LTS Mgmt. Sens. LLC,
5. Defendants’ 19th Affirmative Defense
Defendants’ 19th affirmative ' defense states that putative class actions and FLSA collective actions are incompatible and cannot be maintained in the same action. The Court has previously denied Defendants’ motion to dismiss based on this argument. (Doc. No. 127.) Defendants have not provided any additional factual or legal basis for the Court to reconsider its earlier decision, and in fact, Defendants do not respond at all to Plaintiffs’ motion on this defense. Therefore, the Court will grant Plaintiffs’ motion for summary judgment on Defendants’ 19th affirmative defense.
6. Defendants’ 25th Affirmative Defense
Defendants argue that Plaintiffs are not entitled to compensation for expenditures that Defendants were not actually or constructively aware of. While there is some case law suggesting that employers are not liable for overtime worked by employees without their knowledge, the parties have not cited, and the Court has hot found, any cases which expand this doctrine to employees’ out-of-pocket expenditures allegedly made for the employer’s benefit. Cf. Koral v. Inflated Dough, Inc., Civ. No. 13-CV-02216-WYD-KMT,
7. Defendants’ 26th, 28th, 30th, and 31 st Affirmative Defenses
The Court will next address Defendants’ equitable defenses of waiver, failure to. mitigate, laches, and unclean hands. Defendants have cited authority for the proposition that at least some courts have found that the affirmative defense of unclean hands may be applicable to FLSA cases in limited circumstances. However, even the ease cited by Defendants shows that this is the exception rather than the rule. In Wlodynski v. Ryland Homes of Florida Realty Corp., the court explained that an employer defendant would have to show that the plaintiff committed wrongdoing which was directly related to his claim, and that the defendant was personally injured' by the employer’s conduct. No. 8:08-CV-00361-JDW-MAP,
With respect to Defendants’ lach-es argument, the Court agrees with Plaintiffs that this defense is inapplicable to Plaintiffs’ FLSA and state minimum wage claims. Laches only serves to bar an equitable claim when the plaintiff is guilty of unreasonable and inexcusable delay that prejudiced the defendant. See Torres,
The Court also agrees with Plaintiffs that there is no duty to mitigate damages under the FLSA or state wage laws. While Defendants maintain that failure to mitigate is still a proper affirmative defense in this case, they fail to cite any law in support of this argument, and the Court has not found any law suggesting that Plaintiffs had a duty to mitigate damages. The Court agrees with Plaintiffs that failure to mitigate does not apply in this case, and will grant Plaintiffs’ motion for summary judgment on this defense. See Tran v. Thai, Civ. No. H-08-3650,
Finally, Defendants claim that Plaintiffs are estopped from, or have waived, their claims due to their failure to record and report their actual expenses. On review, the Court agrees with Plaintiffs that a defense of estoppel is generally, not applicable to FLSA claims, as it is inconsistent with both the language and policy of the FLSA. See Caserta v. Home Lines Agency, Inc.,
8. Defendants’ 27th Affirmative Defense
Defendants also allege that, “[t]o the extent Plaintiff, and others with whom he is ‘similarly situated,’ are entitled to damages, Defendants are entitled to a credit for, or set off against, amounts overpaid to them.” (Doc. No. 137 at 39.) Defendants have not explained what this defense means or offered authority in support of it. Instead, Defendants generally argue that summary disposition of this defense is improper as it relates to the measure of damages and cannot be decided until liability has been determined. In their reply brief, Plaintiffs construe Defendants’ defense as an attempt to use weeks, in which drivers’ average hourly pay exceeded minimum wage to offset those weeks in which the average wage fell below minimum wage. Plaintiffs cite several cases which appear to dispel the notion that Defendants’ set-off argument is a proper affirmative defense, to the extent that it seeks to average drivers’ wages across multiple workweeks. See, e.g., Reich v. Giaimo, Civ.A. No. 85-2184(C)(5),
9. Defendants’ 32nd Affirmative Defense
The final affirmative defense at issue in Plaintiffs’ motion alleges that Plaintiffs have not complied with all administrative requirements before filing this action. The parties have not cited, and the Court has not found, any analogous cases addressing this argument in the context of the. FLSA. Indeed, neither party has provided any factual or legal support whatsoever for their respective positions. Rather, Plaintiffs argue that Defendants have not produced any evidence supporting their defense, and Defendants argue that Plaintiffs have not met their burden of proof to support their prima facie case. However, to the extent that Defendants are alleging that Plaintiffs failed to exhaust a necessary administrative remedy, they must identify the remedy in question. Because Defendants have failed to make such a showing, the Court will grant summary judgment as to this affirmative defense.
Cross Motions for Summary Judgment Regarding Application of the Tip Credit
The Court finds, as a matter of law, that Defendants may not claim a tip credit in an amount greater than the difference between Plaintiffs’ cash wage and minimum wage because they failed to notify Plaintiffs in advance that they were doing so. Therefore, the Court will grant Plaintiffs’ motion for summary judgment on this issue and deny Defendants’ motion for summary judgment.
Under the FLSA, the wage paid to a tipped employee
However, the tip credit comes with conditions. The FLSA provides that the tip credit provision “shall not apply with respect to any tipped employee unless such employee has been informed by the employer of the provisions of this subsection, and all tips received by such employee have been retained by the employee.” 29 U.S.C. § 203(m). “This notice provision is strictly construed and normally requires that an employer take affirmative steps to inform affected employees of the employer’s intent to claim the tip credit.” Perez v. Lorraine Enterprises, Inc.,
It is undisputed thsit Defendants never-notified Plaintiffs they were taldng a. tip credit greater than the difference between Plaintiffs’ cash wage and the applicable minimum wage. Although Defendants attempt to downplay the notice requirement, the Court agrees with Plaintiffs that the notice provision is more than just a technical requirement. As discussed below, the tip credit notice informs employees of their regular rate of pay and of the higher rate to which they are entitled for overtime.
As an initial matter, the FLSÁ does not directly discuss whether an employer may pay a higher cash wage to tipped employees and still take the maximum tip credit to offset any unreimbursed' expenses. However, in support of their contention that the FLSÁ permits them tó do this, Defendants rely primarily on two guidance documents issued by the DOL. The first is a 2006 Opinion Letter, in which the DOL offered the following guidance regarding using a tip credit to offset an employee’s unreimbursed uniform laundering expenses:
[A]n employer may not pay tipped employees less than $2.13 an hour in direct wages. The employer may, however, pay tipped employees more than the minimum required cash wage— For example, if an ¿mployer chooses to pay $3.13 per hour in direct wages and claims the full tip credit, that server’s regular rate would be [$8.25]13 per hour, and this is the rate on which additional half-time pay would be computed if the server worked more than 40 hours in a workweek. In this example, the employer could deduct each week toward uniform maintenance up to $1.00 per hour for eaeh hour the server worked that week.
Opinion Letter FLSA2006-21, Dep’t of Labor, Wage & Hour Div., Op. Letter,
This opinion letter cites the DOL Handbook § ’30d08, which is the second guidance document on which Defendant’s rely. The DOL Handbook § 30d08 suggests that employers may pay more than the minimum cash wage for tipped employees and still take the maximum tip credit to offset deductions for expenses that would otherwise cut into minimum wage:
[W]here the employer pays [$4.13] per hour in cash wages and claims [the maximum] tip credit of [$5.12] per hour and the employees receive not less than [$5.12] per hour in tips, the émployees’ [regular rate] is [$9.25]. In such cases, deductions of up to [$2.00] per hour ( [$9.25-$7.25]) may be made for such things as uniform purchases and maintenance without cutting into the required [minimum wage], (The employees would still be due [$13.88] per horn’ foreach [overtime] hour worked ([$9.25] x m.
DOL Handbook § 30d08(b).
Although these guidance documents suggest that employers may pay a higher cash wage and still claim the maximum tip credit to offset expenses, they'recognize that to do so, employers must comply, with the DOL’s regulations regarding employees’ regular rate of pay for overtime purposes. The DOL’s' regulations provide that, for overtime purposes, “a tipped employee’s regular rate of pay includes .the amount of tip credit taken by the employer per hour.” 29 C.F.R. § 531.60. Indeed, in the section of the DOL Handbook directly pre-céding the section cited by Defendants, the DOL advises that “[a]n employer may not take a different tip credit during [overtime] hours than is taken during non-OT hours” because “[t]o so allow would conflict with the purposes of the OT provisions of the FLSA.” DOL Handbook § 30d07(a). Thus, “[w]here an employer pays a cash wage to a tipped employee in excess of the amount required by Sec 3(m) and also wishes to claim the full tip credit amount, the employee’s regular rate of pay for OT purposes is the sum of the cash wage paid and the tip credit amount claimed.” Id. § 30d07(c).
Although the Plaintiffs do not raise overtime claims in this litigation, the Court agrees with Plaintiffs that the relationship among the FLSA’s tip credit, minimum wage, and overtime provisions highlights the importance of the FLSA’s tip credit notice requirements. By limiting their tip credit to the difference between Plaintiffs’ cash wage and the applicable minimum wage, and so notifying Plaintiffs, Defendants were permitted ■ to similarly limit Plaintiffs’ regular rate of pay for overtime- purposes to minimum wage. Had Defendants taken a higher tip credit to offset against potential unreim-bursed expenses, as they claim the DOL guidance documents allow, this would have increased Plaintiffs’ regular rate of pay and, correspondingly, increased ■ the amount Defendants owed Plaintiffs for overtime. ■ Nothing in the DOL guidance documents,- regulations, or the FLSA permits Defendants' to claim á higher tip credit retroactively, in order to gain the benefit of an offset, without having notified Plaintiffs of the higher tip credit (and the correspondingly higher rate of pay for overtime purposes). Because it is undisputed that Defendants did not notify Plaintiffs in advance that they were taking the maximum tip credit, the Court' finds that Defendants are prohibited from taking the maximum tip credit as a matter of law. Therefore, the Court will deny Defendants’ motion for summary judgment o'n this issue and will grant Plaintiffs’ motion for partial summary judgment precluding Defendahts from relying, post hoc, on a tip credit greater than the difference between Plaintiffs’ cash wage and the applicable minimum wage.
Defendants’ Summary Judgment Motion Regarding Exclusion of Fixed Costs
. The Court.finds there to .be material questions of fact which, preclude summary judgment regarding the exclusion of fixed costs from the calculation of Defendants’ minimum wage liability. At its core, the parties’ argument regarding this issue is over whether drivers’ fixed vehicle costs qualify as facilities primarily benefiting — or incidental to — Defendants’ business, such that they must be included in determining Defendants’ minimum wage compliance. Construing the facts in -the manner most favorable to Plaintiffs, the Court declines .Defendants’ invitation to assume that each Plaintiff would have purchased, registered, and maintained their vehicles, on their own, in the same fashion that they were required to under the terms of their employment. As an exam-
Moreover, there is substantial overlap between the parties’ argument over fixed costs, and their argument over the reasonableness of Defendants’ overall reimbursement methodology, of which the “fixed cost” calculation is but a part. The question of fixed costs is thus subsumed by the parties’ debate over the reasonableness of Defendants’ reimbursement formula, as to which, as discussed above, there remain additional factual questions better left to a jury. In short, Defendants have not met their burden of showing that there is an absence of issues of material fact such that summary judgment would be warranted.
As this is primarily a factual question, the Court need not delve into a determination of whether, and to what extent, Defendants benefit from their drivers’ fixed vehicle expenditures. However, a brief survey of regulatory guidance and industry practice reveals a general acceptance that at least a portion of such fixed costs are for the benefit of the employer, and are thus properly reimbursable expenses under the FLSA. Plaintiffs assert that most companies with delivery-based business, including Defendants, reimburse their drivers for a portion of their fixed vehicle expenses. This makes logical sense, as courts have decided that, for the purposes of determining minimum wage compliance, expenses incurred for the benefit of the employer include costs that are “essential for the ... employment relationship to come to fruition.” See Rivera v. Pen & Sons Farms, Inc.,
Plaintiffs’ Motion to Strike the Matth-iesen Declaration
The Court did not rely on Matth-iesen’s declaration in denying Defendants’ motions for summary judgment. Therefore, Plaintiffs’ motion to strike this declaration is moot. ■
CONCLUSION
For the reasons set forth above,
IT IS HEREBY ORDERED that Plaintiffs’ motion for summary judgment regarding Defendants’ reliance on tips to achieve the minimum wage is GRANTED. (Doe. No. 367.)
IT IS FURTHER ORDERED that Plaintiffs’ motion for summary judgment on ■ Defendants’- affirmative defenses is GRANTED in part, with respect to defenses numbered 2, 16, 19, 26, 28, and 30-32, and DENIED in part, with respect to defenses numbered 5, 20, 22-25, 27, 29, and 33. (Doc. No. 360.) With respect to defenses numbered 25 and 27, the motion for summary judgment is DENIED without prejudice to reassertion at a later stage and upon an appropriate record.
IT IS FURTHER ORDERED that Plaintiffs’ motion to strike the declaration of Bradford K. Matthiesen is DENIED as moot. (Doc. No. 388.)
Notes
. Defendants have moved to decertify these actions, but the Court has stayed further proceedings, including the decertification motions, other than ruling on the summary judgment motions, pending a ruling by the U.S. Supreme Court in Tyson Foods, Inc. v. Bouaphakeo, — U.S. -,
. Defendants do not specifically deny Plain-tiffs’ assertion in their statement of facts that Defendants' per-delivery reimbursement rate-was at all relevant times less than the IRS. standard business mileage rate.. See Doc. No. 383 at 3 (stating only that, this fact is "immaterial" because Defendants are not required to reimburse at the IRS rate and that factors other than Defendants per-delivery rate may need to be considered in determining Defendants’ total reimbursement). Therefore, this fact is undisputed for purposes of this motion. See Local Rule 4.01(E) ("All matters set forth in the statement of the movant shall be deemed admitted for purposes of summary judgment unless specifically controverted by the opposing party. ”).
. Defendants admit that they used the IRS standard business mileage rate to establish their reimbursement rate for non-delivery-related employee travel expenses beginning in 2008, but deny that this reimbursement rate corresponded with the IRS rate at all times after 2008.
. The parties' summary judgment motions reference only the FLSA and corresponding DOL regulations. The parties argue that because the DOL's interpretations of the FLSA apply to the state law minimum wage statutes, their summary judgment motions apply equally to Plaintiffs’ state law claims. However, the parties do not cite or refer to any of the state statutes or regulations in their motions. Therefore, the Court will focus on the FLSA in resolving the parties' motions.
. The Court notes that Plaintiffs' motion does not initially request summary judgment on Defendants' affirmative defenses numbered 22-24, but later in the argument section discusses why summary judgment is proper as to each. See Doc, No. 360 at 1, 6-7; see also Doc. No. 386 at 2 n. 2. As Plaintiffs combined their motion for summary judgment and memorandum in support as a single filing, the Court infers that,Plaintiffs intended to request summary judgment on these defenses as well, and will therefore consider them under Plaintiffs'present'motion; ‘
. Under the Case Management Order, trial discovery ended on June 1, 2015. (Doc. No. 350.)
. Defendants claim that this argument applies “particularly, for [Defendants’] 5th, 25th, 26th, 27th, 28th, 29th, 31st and 33rd defenses, as these defenses necessarily contemplate factual and legal determinations yet to be decided." (Doc. No. 386 at 7.)
. The Court notes that Plaintiffs appended a paragraph to the end of their reply which asks the Court to strike several of Defendants’ affirmative defenses which Plaintiffs contend are not proper affirmative defenses- (Doc. No. 400 at 15.) While the Court agrees, as discussed further below, that certain of the defenses in’ question are improperly styled, ■ the Court' declines to consider a motion to strike which has been raised for the first time in Plaintiffs’ reply. Because Defendants have not had the opportunity to respond to a motion to strike, and because the parties have already briefed their arguments under the standard for summary judgment, out of fairness to the parties, the Court will consider Plaintiffs’ motion regarding Defendants’ affirmative defenses only as one for summary judgment. See Bullock v. Brandywine Sch. Dist.,
. Defendants have identified 18 Plaintiffs, including named Plaintiff Perrin, whom they assert earn at least $30 per month in tips, qualifying them as "tipped-employees” under the FLSA, and Plaintiffs do not dispute this fact. The parties do not address how much the other Plaintiffs earn in tips per month, but, for purposes of their cross motions for summary judgment on this issue, the parties appear to assume that all Plaintiffs are "tipped employees” with respect to their on-the-road work.
. Plaintiffs only move to strike Matthiesen’s declaration submitted in support of Defendants’ summary judgment motions. (Doc. No. 388.) The Court notes that Defendants also submitted an identical declaration by Matthiesen in support of their motion for leave to decertify the Rule 23 class action. See Doc. No. 366-16. However, Plaintiffs have not moved to strike this declaration.
. With respect to Defendants’ “defense” that the Court lacks subject-matter jurisdiction, summary judgment is not proper because the Court may determine whether it lacks subject-matter jurisdiction at “any time.” See Fed. R.Civ.P. 12(h)(3) (“If the court determines at any time that it lacks subject-matterjurisdiction, the court must dismiss the action.”). However, the Court notes that Plaintiffs have adequately pleaded that this Court has federal-question jurisdiction over their FLSA claims under 29 U.S.C. § 216(b) and 28 U.S.C. § 1331, and supplemental jurisdiction , over their state law claims under 28 U.S.C. § 1367(a), and Defendants have not raised any facts or arguments that would cause the Court to question its jurisdiction.
. A "tipped employee” is an employee "engaged in an occupation in which he customarily and regularly receives more than $30 a month in tips.” 29 U.S.C. § 203(t).
. As the parties have done in their briefs, the Court has adjusted the wage rates cited in the DOL’s guidance documents to reflect the current federal minimum wage of $7.25. See Doc. No. 372 at 8 n. 7.