Sullivan v. PJ United, Inc. (362 F. Supp. 3d 1139, 2018)

L. Scott Coogler, United States District Judge

I. INTRODUCTION

Before the Court is Defendants' Motion to Strike Sullivan's' Declarations filed in Opposition to Summary Judgment (doc. 210); Sullivan's Consolidated Motion for Summary Judgment (doc. 235) ; Defendants' Motion for Summary Judgment (doc. 269); and Sullivan's Motions to Strike (docs. 275 & 277). These Motions have been fully briefed and are ripe for decision. For the following reasons Defendants' Motion to Strike Sullivan's Declarations filed in Opposition to Summary Judgment is due to be GRANTED; Sullivan's Consolidated Motion for Summary Judgment is due to be GRANTED in PART and DENIED in PART; Defendants' Motion for Summary Judgment is due to be GRANTED in PART and DENIED in PART; and Sullivan's Motions to Strike are due to be DENIED as MOOT.

II. FACTUAL BACKGROUND

Defendants operate approximately 158 Papa John's stores in Alabama, Louisiana, Texas, Mississippi, Tennessee, Illinois, Missouri, Ohio, Virginia, and Utah. As part of their business, Defendants employ delivery drivers who use privately owned automobiles to deliver pizzas or other foods on behalf of the Defendants. This case involves a minimum wage claim by Sullivan, who is a delivery driver formerly employed by the Defendants. Sullivan brought this case as a collective action under the Fair Labor Standards Act, ("FLSA"), 29 U.S.C. § 201, et seq. , alleging that Defendants failed to pay him and others similarly situated a minimum wage.

Central to the parties' dispute is the method Defendants use to reimburse drivers for the cost drivers incurred making deliveries on behalf of Defendants. Defendants' reimbursement policy is not based on a per-mile rate, but is calculated by multiplying a predetermined amount per delivery (called the "Mileage Rate") by the number of discrete delivery addresses to which a driver delivers. The Mileage Rate fluctuates according to local gas prices and also seeks to reimburse drivers for certain maintenance costs incurred such as oil changes and tire replacements. At the end of each delivery driver's shift, a "Checkout Report" is created by Defendants that includes the total amount of reimbursement due to the driver for the deliveries they made on their shift. The Checkout Reports do not include the total number of miles driven by the drivers each shift, nor do Defendants track or maintain records of delivery drivers' actual expenses.

Sullivan's minimum wage claims are based on the Department of Labor ("DOL") regulations made according to the rulemaking authority delegated to the DOL under the FLSA. Those regulations 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. Sullivan argues that Defendants' reimbursement method undercompensates the amount of actual expenses that Sullivan incurred delivering for Defendants, such that the kick-back given to Defendants reduces Sullivan's hourly wage below the federal minimum wage.

Subsequent to the filing of the parties' motions for summary judgment, the Supreme Court held in Epic Systems Corp. v. Lewis that otherwise valid arbitration agreements providing for the waiver of collective action procedures during arbitration must be enforced. --- U.S. ----, 138 S.Ct. 1612, 200 L.Ed.2d 889 (2018). Concerned that Epic Systems was possibly at odds with early holdings in relation to the class-wide-nature of this action, the Court ordered the parties to indicate their support or opposition to dismissal of this action in favor of individual arbitration. (See Doc. 283.) The parties responded, with Defendants supporting such dismissal and Sullivan initially opposing it. (See Docs. 287 & 88.) The Court set a hearing for the parties to offer arguments both in regards to the arbitration agreements and any decertification arguments.

In a motion on June 15, 2018, Plaintiffs reversed their earlier decision and indicated that they did not oppose dismissal of the conditionally certified class members so that they could participate in individual arbitration. (See Doc. 294.) Defendants likewise filed a Motion for Decertification on June 20, 2018. In light of these additional motions, the Court on June 22, 2018, decertified the class of Opt-in Plaintiffs, dismissing them without prejudice. The sole remaining plaintiff in this action is Sullivan himself. The Court thus addresses in this Memorandum of Opinion only the issues that directly implicate Sullivan, because the Court is without power to make any holding regarding the former Opt-in Plaintiffs.

III. STANDARD OF REVIEW

Summary judgment is appropriate "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). A dispute is genuine if "the record taken as a whole could lead a rational trier of fact to find for the nonmoving party." Id. A fact is "material" if it is one that "might affect the outcome of the case." Urquilla-Diaz v. Kaplan Univ. , 780 F.3d 1039, 1050 (11th Cir. 2015) (quoting Harrison v. Culliver , 746 F.3d 1288, 1298 (11th Cir. 2014) ). The trial judge should not weigh the evidence, but determine whether there are any genuine issues of fact that should be resolved at trial. Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 249, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

In considering a motion for summary judgment, trial courts must give deference to the non-moving party by "considering all of the evidence and the inferences it may yield in the light most favorable to the nonmoving party." McGee v. Sentinel Offender Servs., LLC , 719 F.3d 1236, 1242 (11th Cir. 2013) (citing Ellis v. England , 432 F.3d 1321, 1325 (11th Cir. 2005) ). Further, "the moving party has the burden of either negating an essential element of the nonmoving party's case or showing that there is no evidence to prove a fact necessary to the nonmoving party's case." Id. (citing Clark v. Coats & Clark, Inc. , 929 F.2d 604, 608 (11th Cir. 1991) ). Although the trial courts must use caution when granting motions for summary judgment, "[s]ummary judgment procedure is properly regarded not as a disfavored procedural shortcut, but rather as an integral part of the Federal Rules as a whole." Celotex Corp. v. Catrett , 477 U.S. 317, 327, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The standard of review for cross-motions for summary judgment does not differ from the standard applied when only one party files a motion. See Am. Bankers Ins. Grp. v. United States , 408 F.3d 1328, 1331 (11th Cir. 2005) ; Griffis v. Delta Family-Care Disability , 723 F.2d 822, 824 (11th Cir. 1984) ; see also 10A Wright, Miller & Kane, Federal Practice and Procedure: Civil 3d § 2720 , at 335-36 (1998) (footnote omitted).

IV. DISCUSSION

The parties have moved for summary judgment on over ten discrete issues. While some arguments are made only by Sullivan or Defendants, the central issues of this case are addressed in both parties' summary judgment briefs. In an attempt to create a coherent treatment of the parties' dispute, the Court first addresses the "core issues" surrounding the parties' dispute, wherein a grant of summary judgment in favor of Defendants would require dismissal of this action. After finding that the core of this action is not due to be dismissed, the Court then addresses additional issues raised by both sides.

1. MT. CLEMENS BURDEN SHIFTING

Perhaps more important than any other dispute, the parties both raise in their motions for summary judgment the applicability of burden-shifting scheme created in Anderson v. Mt. Clemens Pottery Co. to the claims in this action. 328 U.S. 680, 66 S.Ct. 1187, 90 L.Ed. 1515 (1946). "In Mt. Clemens , the Supreme Court held that where the employer's records are inaccurate or inadequate, the employee has the burden to prove by way of just and reasonable inference that he in fact performed work for which he was improperly compensated. Once the employee has met his burden, the burden then shifts to the employer to come forward with evidence of the precise amount of work performed or with evidence to negate the reasonableness of the inference to be drawn from the employee's evidence." Jarmon v. Vinson Guard Servs., Inc. , 488 F. App'x 454, 457 (11th Cir. 2012) (citing Mt. Clemens , 328 U.S. at 687-88, 66 S.Ct. 1187.)

In order to trigger applicability of Mt. Clemens burden shifting, a Court must find that Defendants have not complied with the statutory recordkeeping requirements under the FLSA in regards to Sullivan's employment. This inquiry in turn requires the Court to determine what records must be retained and produced by the Defendants "in accordance with the requirements of § 11 (c) of the [FLSA]." Mt. Clemens , 328 U.S. at 688, 66 S.Ct. 1187. When making this determination, the Court disregards whether "the lack of accurate records grows out of a bona fide mistake as to whether certain activities or non-activities constitute work, [because] the employer, having received the benefits of such work, cannot object to the payment for the work on the most accurate basis possible under the circumstances." Mt. Clemens , 328 U.S. at 688, 66 S.Ct. 1187.

Section 11(c) of the FLSA, codified at 29 U.S.C. § 211(c), requires that:

Every employer subject to any provision of this chapter or of any order issued under this chapter shall make, keep, and preserve such records of the persons employed by him and of the wages, hours, and other conditions and practices of employment maintained by him , and shall preserve such records for such periods of time, ...

(emphasis added). The base requirements of § 211(c) are for the employer alone. Section 211(c)"places on the employer the obligation of keeping accurate records of the hours worked by his employees, and the employer cannot transfer his statutory duty to his employees." Goldberg v. Cockrell , 303 F.2d 811, 812 n.1 (5th Cir. 1962).

As a preliminary matter, the Court must address an argument that Defendants have repeatedly raised that it is Sullivan's failure to keep records of his actual expenses that is to blame for the void in the record, and not Defendants themselves. Defendants do not cite any authority for this argument, (see doc. 271 at 55-56), and appear to be making their argument on what they think the law should be. Sullivan's own recordkeeping is immaterial to the Mt. Clemens inquiry, which focuses on the employer. Goldberg , 303 F.2d at 812 n.1 ("[T]he employer cannot transfer his statutory duty to his employees.") The road Defendants wish to lead the Court down has long since been condemned, and the Court declines to examine "whose" documents are "whose":

Due regard must be given to the fact that it is the employer who has the duty under § 11(c) of the Act to keep proper records of wages, hours and other conditions and practices of employment and who is in position to know and to produce the most probative facts concerning the nature and amount of work performed. Employees seldom keep such records themselves; even if they do, the records may be and frequently are untrustworthy.

Mt. Clemens , 328 U.S. at 687, 66 S.Ct. 1187 (emphasis added).

That is not to say that Defendants must keep records of any and all expenses that Sullivan believes to be pertinent to his FLSA claims. Instead, the exact records to be retained by Defendants are provided by statute and DOL regulation. The parties appear to agree that the § 211(c) is ambiguous to the extent that it fails to specify the exact records that an employer must maintain. Both parties ask the Court to apply Chevron deference to the DOL's regulations interpreting § 211(c). See Josendis v. Wall to Wall Residence Repairs, Inc. , 662 F.3d 1292, 1299 (11th Cir. 2011) (citing Chevron, U.S.A., Inc. v. Natural Res. Def. Council, Inc. , 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984) ). The recordkeeping requirements at 29 C.F.R. §§ 516.2 & 516.6 appear to be the most relevant to the Court's inquiry.

Section 516.2 provides a list of various records that an employer, subject to the FLSA's minimum wage and overtime provisions, must retain. Those records include basic information such as the employee's name in full, home address, date of birth, sex, time of day, and day of week on which the employee's workweek begins. 29 C.F.R. § 516.2(a)(1)-(5).

Sullivan identifies § 516.2(a)(10) as the specific recordkeeping requirement that Defendants have failed to comply with. This section requires Defendants to keep a record of "[t]otal additions to or deductions from wages paid each pay period including employee purchase orders or wage assignments. Also, in individual employee records, the dates, amounts, and nature of the items which make up the total additions and deductions, ..." Likewise, § 516.6(c) requires that employers must retain "All records used by the employer in determining the original cost, operating and maintenance cost, and depreciation and interest charges, if such costs and charges are involved in the additions to or deductions from wages paid."

There does not appear to be any binding precedent to answer the direct question on hand, which is whether Mt. Clemens burden shifting applies to Defendants' failure to keep records of the actual expenses that Sullivan incurred using his own vehicle as a violation of the recordkeeping requirements of §§ 516.2 & 516.10 to record all "deductions" from wages paid. Sullivan points to Caro-Galvan v. Curtis Richardson, Inc. as a sufficiently similar case to this action to support the claim that Sullivan is entitled to Mt. Clemens burden shifting for Defendants' recordkeeping omission. 993 F.2d 1500 (11th Cir. 1993). In Caro-Galvan , the plaintiffs were farm workers who brought suit under the FLSA for violation of the minimum wage provisions of § 206(a). The district court dismissed the plaintiffs' case after finding that plaintiffs had failed to submit sufficient evidence to show that the deductions that the defendant-employer had taken from the plaintiffs' paycheck for "board, lodging, or other facilities" under § 203(m) were unreasonable. Caro-Galvan reversed the lower court's Rule 41(b) dismissal, finding that the district court had improperly shouldered the plaintiffs with the burden of proof instead of determining that Mt. Clemens applied. Importantly, although Caro-Galvan ultimately found that Mt. Clemens burden shifting applied to farm workers' case, it was not explicit in what recordkeeping requirement the defendants failed to comply with. See id. at 1513-14.

Caro-Galvan did note that the defendant-employer had an obligation under § 516.27 to keep records substantiating all deductions from a worker's paycheck for "board, lodging, or other facilities" under § 203(m). Thus, although Caro-Galvan did not explicitly state such, it appears that the defendant-employers had failed to keep such detailed records of all "deductions" under § 516.27, and thus the plaintiffs were unable to show the deductions were unreasonable. Id. at 1514.

Section 516.27 differs materially from the recordkeeping obligations incumbent upon Defendants in §§ 516.2 & 516.6. In addition to reiterating an employer's duty to keep records of "deductions" from wages of employees under the general requirements of the FLSA, § 516.27(a) additionally requires that the employer "maintain and preserve records substantiating the cost of furnishing each class of facility," i.e., maintain records to substantiate the costs incurred which are later applied to an employee's wage as a "facility" deduction under 29 U.S.C. § 203(m). Section § 516.27(b) further requires than an employer maintain records showing on a workweek basis the deductions from a wage, if those deductions reduce the employee's remuneration below the applicable minimum hourly wage. In this way, § 516.27 requires more than just an employer's accounting of the deduction itself, but also that the employer "go on the record" with the exact costs that he believe substantiates that deduction.

Caro-Galvan is ultimately unhelpful because it dealt with the recordkeeping requirements under § 516.27 for "board, lodging, or facilities" deductions from wages and further, these deductions were for items provided to the employees by the employer. Sullivan's theory of an FLSA violation does not turn on "board, lodging, or facilities" deductions as defined under 29 U.S.C. § 203(m) ; he instead argues that he has been forced to kick back part of his wages as defined in 29 C.F.R. § 531.35. Sullivan does not allege, nor could he reasonably, that Defendants have failed to comply with § 516.27's explicit recordkeeping requirements. Sullivan argues that Defendants have failed to comply with §§ 516.2 & 516.6 by not recording the expenses incurred by Sullivan delivering pizzas. Neither of those cited regulations requires Defendants to record Sullivan's actual expenses. On its face § 516.2(a)(10) requires Defendants to record "[t]otal additions to or deductions from wages paid" and does not even mention the employee's own expenses. Section 516.6(c) is a closer call, as it requires an employer to retain in regards to "[r]ecords of additions or deductions from wages paid: (1) [t]hose records relating to individual employees referred to in § 516.2(a)(10) and (2) All records used by the employer in determining the original cost, operating and maintenance cost, and depreciation and interest charges, if such costs and charges are involved in the additions to or deductions from wages paid." § 516.6(c)(2). Section 516.6(c)(2) does not purport to require that employers keep records of each employee's expenses, but rather the methodology used to arrive at the additions or deductions from wages paid.

Sullivan additionally cite two other cases that ostensibly held that Mt. Clemens burden shifting could apply from an employer's failure to keep employee expense records under §§ 516.2 & 516.6. See Villalpando v. Exel Direct Inc. , No. 12-CV-04137-JCS, 2016 WL 1598663, at *6 (N.D. Cal. Apr. 21, 2016) ; Melgar v. CSk Auto, Inc. , No. 13-CV-03769-EMC, 2015 WL 9303977, at *9 (N.D. Cal. Dec. 22, 2015), aff'd , 681 F. App'x 605 (9th Cir. 2017). Despite Sullivan's representations to the contrary, neither Villalpando nor Melgar made such a holding based on §§ 516.2 & 516.6 alone. As clearly stated in Villalpando and Melgar , the application of Mt. Clemens burden shifting turned on the employers' failure to comply with state recordkeeping law. See Villalpando , 2016 WL 1598663, at *9 ("The Court also rejects [Defendant's] assertion that Mt. Clemens does not apply to employee reimbursement under California Labor Code section 2802."); Melgar , 2015 WL 9303977, at *9 ("But even if there is no statute that explicitly requires recordkeeping for business expenses, [California Labor Code] § 2802 requires reimbursement of all expenses, and, as interpreted by this Court, imposes an affirmative duty on employers to reimburse such expenses when it has knowledge thereof."). While not preclusive, Villalpando and Melgar 's decision to rely on state recordkeeping law rather than §§ 516.2 & 516.6 tends to show that those DOL regulations do not require an employer to record their employees' business expenses-but rather the "additions or deductions" from wages paid.

For his Mt. Clemens argument, Sullivan also relies on Arriaga v. Florida Pacific Farms, L.L.C. 's statement that "there is simply no legal difference between an employer requiring a worker to have the tools before the first day of work, requiring the tools to be purchased during the first workweek, or deducting the cost of the tools from the first week's wages." 305 F.3d 1228, 1237 (11th Cir. 2002). Sullivan argues that this statement somehow makes incumbent on Defendants the duty to track Sullivan's' actual expenses incurred operating his own vehicle. The quoted portion of Arriaga has nothing to do with recordkeeping obligations, and dealt with the interpretation of the calculation of a minimum wage violation.

Sullivan has not shown convincing authority to the Court that Mt. Clemens burden shifting should apply by reason of Defendants' failure to record Sullivan's actual expenses. Additions and deductions that Defendants have made from Sullivan's paychecks are not the same as expenses that Sullivan incurred in operating his vehicles. The DOL surely could have specified such, especially considering the overwhelming burden this would impose on employers such as Defendants to gather and correlate the data for the different expenses that each employee would incur. Indeed, § 516.27's referral to "board, lodging, or other facilities" shows that in the event the DOL wishes for lawyers to record specific costs, it will say so:

[an] employer ... shall maintain and preserve records substantiating the cost of furnishing each class of facility.... Separate records of the cost of each item furnished to an employee need not be kept. The requirements may be met by keeping combined records of the costs incurred in furnishing each class of facility, such as housing, fuel, or merchandise furnished through a company store or commissary.

29 C.F.R. § 516.27.

Other persuasive authority buttresses the Court's conclusion that Defendants are not required to record Sullivan's actual expenses. Responding to a letter requesting an opinion regarding cost reimbursement for uniforms provided to a tipped employee without charge that were damaged in a non-work related context, the DOL stated that:

We note that the provisions of 29 C.F.R. § 516.2(a)(10) require an employer to maintain, for a period of two years, records showing the total additions to or deductions from wages paid each pay period. Thus, records documenting any deductions from wages of employees for purchasing employer-required uniforms must be maintained. Similarly, records documenting any deductions from wages of employees for voluntarily purchasing additional uniforms in excess of the number provided, as discussed above, must also be maintained. However, if employees purchase excess uniforms on their own, rather than through the employer, no record of such private transactions need be kept under the FLSA.

Opinion Letter Fair Labor Standards Act (FLSA), 2008 WL 5483046, at *1, *3 (emphasis added). While not binding on the Court, it appears that the DOL's interpretation of 29 C.F.R. § 516.2(a)(10) is that where the employee incurs a cost on behalf of the employer, the employer need not record such private transactions.

Simple reference to Sullivan's expert report shows the insurmountable burden Sullivan's proposed recordkeeping standard would impose on employers. In determining reasonable estimates for the former Opt-in Plaintiffs' vehicle costs, Sullivan's expert Paul Lauria only gathered average cost data from one type of car from each class of common vehicles, i.e., truck, SUV, sedan, or compact. Nor does Paul Lauria even attempt to use data from the former Opt-in Plaintiffs themselves, as "standard methodology used within [his] industry does not rely on reports of costs actually incurred or reported after-the-fact by drivers." (Doc. 256-1 at 18.) According to Sullivan's own expert, it is not feasible or helpful to rely on a driver's report of his own costs.

Without clearer indication from the DOL, it does not appear that Defendants have violated recordkeeping requirements by failing to track Sullivan's actual expenses. Sullivan appears to argue that the finding that Mt. Clemens burden-shifting applies is a per se finding that representative testimony can be used. This is an overstatement. Tyson Foods, Inc. v. Bouaphakeo , --- U.S. ----, 136 S.Ct. 1036, 1049, 194 L.Ed.2d 124 (2016) held that the use of representative testimony in FLSA class actions does not live and die by the application of Mt. Clemens burden shifting. Ultimately, for Sullivan to use representative testimony in the form of an expert report, the Court must ask whether the experiences of a subset of employees can be probative as to the experiences of all of them. Said another way, the Court must determine whether the representative samples used by Sullivan could be "used to establish liability in an individual action." Tyson , 136 S.Ct. at 1046.

The Court's holding that Mt. Clemens burden shifting does not apply in this case does not mean that representational evidence cannot necessarily be used in this action. Tyson Foods 's holding on the use of representational evidence was not based on Mt. Clemens burden shifting alone, but more broadly on whether such evidence is reliable:

petitioner and various of its amici maintain that the Court should announce a broad rule against the use in class actions of what the parties call representative evidence. A categorical exclusion of that sort, however, would make little sense. A representative or statistical sample, like all evidence, is a means to establish or defend against liability. Its permissibility turns not on the form a proceeding takes-be it a class or individual action-but on the degree to which the evidence is reliable in proving or disproving the elements of the relevant cause of action.

136 S.Ct. at 1046. Ultimately, Mt. Clemens burden shifting and the use of representational evidence are two different issues. Representational evidence is appropriate where FLSA class members are similar such that "each [former] class member could have relied on that sample to establish liability if he or she had brought an individual action. If the sample could have sustained a reasonable jury finding as to hours worked in each employee's individual action, that sample is a permissible means of establishing the employees' hours worked in a class action." Tyson Foods , 136 S.Ct. at 1046-47. While Sullivan may no longer take advantage of the "just and reasonable inference" standard, the finding that Mt. Clemens burden-shifting does not apply ultimately requires he proves his damages using the normal standard applied to FLSA minimum-wage violations.

2. SULLIVAN'S ARGUMENTS CONCERNING DEFENDANTS' REIMBURSEMENT RATE

Sullivan additionally argues that he is entitled to summary judgment on the issue of whether "Defendants used a vehicle-reimbursement methodology that is contrary to the law." (Doc. 235 at 60.) Sullivan primarily bases his argument on his interpretation of DOL Field Operations Handbook § 30c15, which according to him requires Defendants to either "track, record, and reimburse their employees' actual vehicle expenses incurred on the job, or (2) reimburse their employees at the IRS standard business mileage rate." (Doc. 235 at 62.)

DOL Handbook § 30c15 states in whole:

Car expenses: employee's use of 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 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. The IRS standard business mileage rate (currently 28 cents per mile) represents depreciation, maintenance and repairs, gasoline (including taxes), oil, insurance, and vehicle registration fees. In situations where the IRS rate changes during the investigation period, the applicable rates should be applied on a pro-rate basis.

(b) The IRS standard business mileage rate may be used in lieu of actual costs for FLSA purposes whether or not the employee will be able to take a deduction on his or her tax return for the business use of the employee's car.

(emphasis in original). There are primarily two issues the Court must address: (1) what level of deference § 30c15 is due to be given by this Court and whether Sullivan's interpretation of § 30c15 is supported by its text and the FLSA in general.

The first of these questions is relatively easy to answer. The Eleventh Circuit has held that the DOL Handbook as "[a]n agency's internal directive[ ] to its employees" is persuasive authority; it is not entitled to Chevron deference and is "without the force of law." Klinedinst v. Swift Investments, Inc. , 260 F.3d 1251, 1255 (11th Cir. 2001) ; see also Morgan v. Family Dollar Stores, Inc. , 551 F.3d 1233, 1275 (11th Cir. 2008) ; Kirkland Masonry, Inc. v. C.I.R. , 614 F.2d 532, 534 (5th Cir. 1980) ("Although federal agencies are bound by their own regulations, a simple administrative directive to agency employees does not suffice to create a duty to the public"). As an interpretation of its own regulations, the DOL Handbook is entitled to lesser Skidmore deference. See Skidmore v. Swift & Co. , 323 U.S. 134, 140, 65 S.Ct. 161, 89 L.Ed. 124 (1944). Under Skidmore , interpretations of "an agency charged with the mission of enforcing a particular statute, 'while not controlling upon the courts by reason of their authority, do constitute a body of experience and informed judgment to which courts and litigants may properly resort for guidance.' " Young v. United Parcel Serv., Inc. , --- U.S. ----, 135 S.Ct. 1338, 1351, 191 L.Ed.2d 279 (2015) (quoting Skidmore , 323 U.S. at 140, 65 S.Ct. 161 ). Nonetheless, "the weight of [the agency's] judgment in a particular case will depend upon the thoroughness evident in its consideration, the validity of its reasoning, its consistency with earlier and later pronouncements, and all those factors that give it power to persuade, if lacking power to control." Id. at 1352 (quoting Skidmore , 323 U.S. at 140, 65 S.Ct. 161 ).

Sullivan reads § 30c15 for the proposition that if Defendants did not record and pay Sullivan's actual costs incurred during delivery on behalf of Defendants, then Defendants must reimburse Sullivan at the IRS standard business mileage rate. The text of § 30c15, "the IRS standard business mileage rate ... may be used (in lieu of actual costs and associated recordkeeping) to determine or evaluate the employer's wage payment practices for FLSA purposes" does not support Sullivan's interpretation. Nowhere does § 30c15 require Defendants to record Sullivan's actual costs, the section instead makes a general reference to "associated recordkeeping." In this Opinion, the Court has already held the FLSA and DOL's regulations do not require employers to track employees' actual expenses incurred. To the extent § 30c15 purports to require employers to track their employees' actual expenses, it is not entitled to deference because it has no basis in the DOL's recordkeeping regulations. Nor does it make sense to require the Defendants to reimburse Sullivan at the IRS standard-as the Court has already held that an employer may either pay actual costs or use a reasonable approximation thereof. (See Doc. 197 at 14-21.) The IRS rate is arbitrary and has no logical tie to the ultimate question in a minimum wage case-whether Sullivan was paid the federal minimum wage taking into account reimbursements he received for vehicle expenses he incurred.

Even if Sullivan's interpretation was supported by the text of DOL Handbook § 30c15, which it is not, this interpretation is at odds with the DOL's regulations and the FLSA itself. No regulation or statute supports Sullivan's contention that if the Defendants do not keep records of Sullivan's actual costs or then Defendants' compliance with minimum-wage laws must be measured by the IRS standard business mileage rate. Defendants only have to pay Sullivan the minimum wage after deducting actual expenses and including reimbursements-not the IRS standard business mileage rate.

Sullivan cites a number of non-binding cases for his interpretation of DOL Handbook § 30c15, none of which are particularly persuasive. Zellagui v. MCD Pizza, Inc. relied on § 30c15 to hold that employers must either reimburse at the IRS rate or keep detailed records of employees' actual expenses. 59 F.Supp.3d 712, 716 (E.D. Pa. 2014). Zellagui did not examine the particular statutory or regulatory background relevant to § 30c15, but appeared to rely on § 30c15's interpretation of the FLSA without even recounting what the FLSA stated. Zellagui recognized that the IRS rate is per se unrepresentative of a local class's actual damages as "[t]he IRS figure is a national average of the cost of operating a motor vehicle." Id. at 716 (quoting Gattuso v. Harte-Hanks Shoppers, Inc. , 42 Cal. 4th 554, 565, 67 Cal.Rptr.3d 468, 169 P.3d 889 (2007) ). To that extent the IRS rate is unhelpful to showing Sullivan's actual damages or a reasonable approximation thereof.

Sullivan additionally cites Gattuso v. Harte-Hanks Shoppers, Inc. for his argument, but this case involved the interpretation of California minimum wage and recordkeeping requirements. Gattuso v. Harte-Hanks Shoppers, Inc. , 42 Cal. 4th 554, 561-70, 67 Cal.Rptr.3d 468, 169 P.3d 889 (2007). Gattuso 's parsing of California minimum wage law, which differs materially from the FLSA and the DOL's regulations, is hardly informative to the Court's task here. Additionally cited by Sullivan is Cornish v. Deli Mgmt., Inc. , but Cornish simply relied on Zellagui and Gattuso 's interpretation of § 30c15 without taking a fresh look at the regulations themselves. No. CV WMN-16-672, 2016 WL 5934077, at *3 (D. Md. Oct. 12, 2016).

Perrin v. Papa John's Int'l, Inc. , another case litigated by Sullivan's counsel but omitted from his argument in this section, correctly sums up this Court's parsing of the § 30c15 in light of DOL regulations and the FLSA:

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 that an employer's failure to use the IRS rate in approximating expenses is per se unreasonable. Indeed, Plaintiffs' own expert offers an alternative rate that Plaintiffs contend is a reasonable, albeit conservative, approximation of their expenses for minimum wage purposes.

114 F.Supp.3d 707, 721-22 (E.D. Mo. 2015). To the extent Sullivan's motion for summary judgment asks the Court to hold that Defendants' reimbursement methodology is unlawful, that request is due to be DENIED.

3. DEFENDANTS' ARGUMENT THAT THE COURT SHOULD APPLY SKIDMORE DEFERENCE IN REGARDS TO 29 C.F.R. § 778

In their Motion for Summary Judgment, Defendants challenge the Court's earlier interpretation of 29 C.F.R. § 778 in it October 16, 2017 Memorandum of Opinion and Order where the Court ultimately determined that Sullivan could reasonably approximate expenses incurred on behalf of an employer. (See Doc. 197 at 14-21.) Defendants state that the Court erroneously applied Chevron deference in its interpretation of 29 C.F.R. § 778.217, where the proper standard to be applied was the more limited Skidmore deference. (Doc. 269-1 at 42.) The Court is puzzled by Defendants' argument as nowhere in its Memorandum of Opinion and Order did it state it applied Chevron deference to 29 C.F.R. § 778.217. (See Doc. 197 at 18 ("Although not binding upon this Court because it is an interpretation, not a regulation, the Court finds § 778.217 to be highly persuasive, because the DOL's role in enforcing FLSA provisions and because § 778.217 was specifically referenced by § 531.32. See Young v. United Parcel Serv., Inc. , --- U.S. ----, 135 S.Ct. 1338, 1351, 191 L.Ed.2d 279 (2015).").) The Court cited Young v. United Parcel Service, Inc. , which dealt with the application of Skidmore deference to an EEOC interpretative regulation. The Court applied Skidmore deference.

4. DEFENDANTS' ARGUMENT CONCERNING THE BURDEN OF PROVING WHAT EXPENSES AN EMPLOYER MUST REIMBURSE

Defendants' next section, titled " 29 C.F.R. Section 778.217 Compared to Section 531.35" appears to address multiple issues surrounding the expenses Sullivan can include in his calculations to determine whether Defendants have violated the minimum wage provision of the FLSA. Defendants first argue that because Sullivan did not incur certain vehicle expenses "solely by reason of action taken for the convenience of his employer," under 29 C.F.R. § 778.217, that those expenses are not to be deducted from Sullivan's wages for the purposes of determining whether Defendants complied with the minimum wage provision of the FLSA. (Doc. 269-1 at 43.) Defendants state they are entitled to judgment as a matter of law to the extent Sullivan's Complaint can be construed as claiming a minimum wage violation in any FLSA workweek by virtue of expenses incurred "solely by reason of action taken for the convenience of his employer."

Defendants then inexplicably change their argument to 29 C.F.R. § 531.35, to discuss the "kickback" standard in that section. They argue under § 531.35 that "each cost allegedly incurred by ... Plaintiff must be analyzed to determine whether the cost was incurred for an employer's primary benefit. " (Doc. 269-1 at 44.) Defendants appear to be arguing two different standards should apply to determine whether certain vehicle expenses should be used to calculate minimum wage violations the "solely by reason of action taken for the convenience of his employer" under § 778.217 and the "primary benefit" analysis under § 531.35. At varying points in the section Defendants make generalized statements referring to "evidence" on the record that they believe supports their argument, but do not include any citations to the record or undisputed facts to support these statements.

The FLSA requires employers to pay their employees a minimum wage. 29 U.S.C. § 206. Under 29 C.F.R. § 531.35 :

"wages" [under 29 U.S.C. § 206 ] 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.

(emphasis added). The Eleventh Circuit has held § 531.35"prohibits any arrangement that 'tend[s] to shift part of the employer's business expense to the employees ... to the extent that it reduce [s] an employee's wage below the statutory minimum.' " Ramos-Barrientos v. Bland , 661 F.3d 587, 594-95 (11th Cir. 2011) (quoting Mayhue's Super Liquor Stores, Inc. v. Hodgson , 464 F.2d 1196, 1199 (5th Cir. 1972) ).

It is notable that neither § 531.35 nor Ramos-Barrientos make use of the "primary benefits" test that Defendants ask the Court to adopt. It is only §§ 531.3 & 531.32, which further define the term "facilities" from 29 U.S.C. § 203(m), which make use of the term "primarily benefits." Specifically, section 531.3(d) states in pertinent part:

The cost of furnishing "facilities" found by the Administrator to be primarily for the benefit or convenience of the employer will not be recognized as reasonable and may not therefore be included in computing wages.

29 C.F.R. § 531.3(d)(1) (emphasis added). Section 531.32 likewise uses the "primary benefits" language in relation to the definition of "facilities":

It should also be noted that under § 531.3(d)(1), the cost of furnishing "facilities" which are primarily for the benefit or convenience of the employer will not be recognized as reasonable and may not therefore be included in computing wages.

29 C.F.R. § 531.32(c). Section 531.35 references the term "facilities" and directs the reader to refer to § 531.32(c) -but does not define a "kick-back" as "primarily for the employer's benefit."

Arriaga v. Florida Pacific Farms, L.L.C. bridges the connection between the "primarily benefits" requirement of §§ 531.3 & 531.32 with the generalized statement in § 531.35 that an employer cannot count as "wages" the amount 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." 305 F.3d 1228, 1237 (11th Cir. 2002). Arriaga addressed whether employers of migrant workers violated minimum wage requirements under the FLSA by failing to reimburse workers for expenses relating to traveling to employers' farm and certain visa and recruitment costs. Id. at 1231-32. It began by noting that an employer is allowed to count as "wages" the reasonable cost of furnishing an employee with "other facilities" under 29 U.S.C. § 203(m). Id. at 1236. Because "other facilities" is not defined under the FLSA, Arriaga relied on the further definitions provided under 29 C.F.R. §§ 531.3 & 531.32. Id. Importantly in Arriaga , the expenses in dispute fell into the definition of "other facilities" under § 531.32(a) :

"Other facilities," as used in this section, must be something like board or lodging. The following items have been deemed to be within the meaning of the term: ...; transportation furnished employees between their homes and work where the travel time does not constitute hours worked compensable under the Act and the transportation is not an incident of and necessary to the employment.

29 C.F.R. 531.32(a) ; see also Arriaga , 305 F.3d at 1241 (analyzing expenses as "other facilities" under § 531.32 ). As stated above, both §§ 531.3 & 531.32 define "facilities" as expenses primarily for the benefit or convenience of the employer.

At the same time, Arriaga briefly mentions § 531.35-the dispositive section in the present case-for the proposition that "[i]f an expense is determined to be primarily for the benefit of the employer, the employer must reimburse the employee during the workweek in which the expense arose." Section 531.35 thus appears in Arriaga for the proposition that the violation occurs: "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." Arriaga , 305 F.3d at 1237. This is in fact the extent of Arriaga 's discussion of § 531.35, and the opinion quickly returns to the framework under § 203(m) and 531.32's definition of "other facilities." Arriaga appears to require that for an expense incurred by an employee to constitute a "kick-back" under § 531.35, it must be incurred for the primary benefit of the employer.

The issue the dicta in Arriaga creates in relation to § 531.35, and this Court faces now, is that the "primarily benefits" for provision of "other facilities" facially differs from the test stated in Ramos-Barrientos and Mayhue's Super Liquor Stores, Inc. for kickbacks under § 531.35, which does not look to whether an employer receives a primary benefit, but to whether payment by the employee " 'tend[s] to shift part of the employer's business expense to the employees.' " Ramos-Barrientos v. Bland , 661 F.3d 587, 594-95 (11th Cir. 2011) (quoting Mayhue's Super Liquor Stores, Inc. v. Hodgson , 464 F.2d 1196, 1199 (5th Cir. 1972) ). In fact, Ramos-Barrientos applies the "primarily benefits" test in part, but only when determining whether certain benefits liking housing and meals received by employees constituted "other facilities" under 203(m). 661 F.3d at 595.

The "expense-shifting" test first articulated in Mayhue's Super Liquor Stores, Inc. is better suited to the dispute here than the "primary benefits" test in Arriaga for a number of reasons. More importantly, because Mayhue's Super Liquor Stores, Inc. was decided earlier, its holding is binding upon Arriaga to the extent that the two standards conflict. Fanin v. U.S. Dep't of Veterans Affairs , 572 F.3d 868, 874 (11th Cir. 2009) ("[W]e are bound by the holdings of earlier panels unless and until they are clearly overruled en banc or by the Supreme Court." (quoting Swann v. S. Health Partners, Inc. , 388 F.3d 834, 837 (11th Cir. 2004) ) ). Mayhue more clearly addressed kick-backs under § 531.35 and did not include a discussion of "facilities." Section 531.35 itself provides that while a "wage" can be paid in cash or facilities, it constitutes a "kick-back" if the employee gives 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. While Arriaga dealt with "other facilities," specifically the "transportation furnished employees between their homes and work," this action does not involve the provision of "other facilities" as defined under § 531.32(a). Instead, this action deals with the provision by Defendants to Sullivan of wages, which Sullivan alleges are being kicked back to Defendants through Sullivan's payments for insurance, registration costs, vehicle depreciation, and repair costs.

Defendants argue the evidence establishes that "(1) some Plaintiffs did not own the vehicles used to deliver for a Defendant, (2) state laws required drivers to be insured and vehicles to be registered, (3) Plaintiffs paid for insurance and registration as part of their ordinary life, and (4) Plaintiffs paid insurance, registration, maintenance and repair costs for their primary benefit." (Doc. 269-1 at 44 (emphasis omitted).) Viewed in the light most favorable to Sullivan, there are numerous issues of fact concerning the statements that Defendants argue they have established, and for that reason Defendants' Motion for Summary Judgment will be denied as to this issue.

Defendants have shown that some former Opt-in Plaintiffs did not in fact own the vehicles that they used to deliver pizzas. (See Id. ¶ 15 (purporting to list the former Opt-in Plaintiffs and other documents in the record which establish that the former Opt-in Plaintiffs do not own the vehicles used for pizza deliveries).) Defendants have likewise referenced statements by some former Opt-in Plaintiffs that finance companies required vehicle insurance, state law requires insurance and vehicles to be registered. (Id. ¶¶ 19-21, 25-27.) None of these facts are helpful in answering the dispositive question of whether Defendants have shifted part of their business expenses to Sullivan. Thus questions of fact remain as to whether these costs or some portion of these costs have been shifted from the employer to employees.

5. LACK OF RECORD EVIDENCE SHOWING MINIMUM WAGE VIOLATION

Defendants argue that summary judgement should be granted because Sullivan has failed to present any evidence that establishes violations of the FLSA's minimum wage provision. Defendants state:

No Plaintiff has disclosed, and there is no record evidence that would establish with regards to each Plaintiff for each workweek in which each Plaintiff alleges a minimum wage violation: (1) the number of hours worked by each Plaintiff, (2) the wages paid to each Plaintiff, (3) the reimbursement provided to each Plaintiff, and (4) the expenses allegedly incurred by each Plaintiff for a Defendant's primary benefit. On this basis alone, each Plaintiff's FLSA minimum wage claim(s) must be dismissed.

(Id. at 41.) Defendants do not develop this argument, nor do they include citation to any controlling or precedential authority on their failure-of-proof argument.

Sullivan relies on the report of his vehicle-costing expert, Paul Lauria, which used a representative model of the former class members and approximation to establish that Defendants failed to pay a minimum wage. In light of Tyson Foods , the proper inquiry before the Court is whether the report is representative enough to be used by Sullivan individually:

One way for respondents to show, then, that the sample relied upon here is a permissible method of proving classwide liability is by showing that each class member could have relied on that sample to establish liability if he or she had brought an individual action. If the sample could have sustained a reasonable jury finding as to hours worked in each employee's individual action, that sample is a permissible means of establishing the employees' hours worked in a class action.

136 S.Ct. at 1046. The issue of whether this report is so representative as to be usable in proving Sullivan's individual claim is not before the Court. Defendants take too-narrow of a view of the use of class-wide testimony to establish liability, apparently arguing that it may never be used to show liability. Defendants' argument has no basis in the Federal Rules of Evidence or in Tyson Foods.

Sullivan's report creates a dispute of material fact as to whether Defendants violated the FLSA by failing to pay Sullivan the minimum wage. Defendants' reimbursement to delivery drivers is done on a per-delivery basis. Sullivan nonetheless calculates that, for example, in 2016, Defendants' average annual per-mile reimbursement rate for its drivers was $ 0.27. Sullivan's expert Paul Lauria estimates that the average costs incurred by former class members delivering pizzas for Defendants in 2016 was $ 0.40 per mile. The per-mile difference in the Defendants' reimbursement, with what Sullivan's expert estimates was the actual cost incurred was $ 0.13. Sullivan, based on the data contained in Defendants' Checkout Reports, has calculated an average of sixteen (16) miles driven per hour worked. Multiplying the per-mile cost the former Opt-in Plaintiffs incurred, on average, with the amount of miles driven in an hour yields an average unreimbursed cost incurred by the former Opt-in Plaintiffs of $ 2.08 per hour-which in terms of the FLSA is the kickback allegedly given to Defendants.

To determine whether this arrangement violates the FLSA minimum wage provision, the Court must then subtract the kickback amount from the per-hour wage given to drivers. According to Sullivan, the highest-paid delivery driver received $ 8.20 per hour, although most delivery drivers received much less. Subtracting the average kickback amount, $ 2.08, from the highest pre-kickback hourly wage reveals an actual hourly wage of $ 7.12 per hour. This amount is lower than the current federal minimum wage of $ 7.25 per hour. This calculation does not take in to account that the vast majority of the former Opt-in Plaintiffs made only the federal minimum wage. The Court notes that while the parties offered argument on the sufficiency of evidence to show a class-wide violation, neither party offered calculations or argument to Sullivan specifically. The Court cannot assess whether Defendants' payments to Sullivan violated the FLSA, because the arguments and evidence are not properly before it.

Defendants do not interact with Sullivan's damages calculations, but generally object to his use of expert testimony. They state that "[Sullivan] point[s] to no underlying admitted or admissible evidence that supports the purported conclusions" contained in Sullivan's report. (Doc. 258 at ¶¶ 5, 7, 8, 9, 10.) Defendants do not specify which conclusions in the report are not supported by admissible evidence. Nor does it matter that Paul Lauria's report is unsworn, as the Eleventh Circuit has held that parties' exhibits may be considered for purposes of pretrial rulings so long as they can be reduced to admissible form at trial. McMillian v. Johnson , 88 F.3d 1573, 1584 (11th Cir. 1996). Summary judgment is not due to be granted to Defendants at this time.

6. LACK OF RECORD EVIDENCE TO ESTABLISH DAMAGES

Along with Defendants' argument above that Sullivan has failed to establish liability, Defendants also argue that summary judgment is due to be granted because Sullivan has "not disclosed damages under [ Federal Rules of Civil Procedure 26 ], and the record does not contain evidence of damages as to each workweek in which each [former Opt-in Plaintiff] claims damages." (Doc. 269-1 at 48.) Defendants' argument that Sullivan must prove damages "by the workweek," which they have repeated throughout this litigation, is troubling, because the data Defendants kept in their Checkout Reports is not by the workweek but biweekly. (See Doc. 279-1 (data in Defendants' Checkout Reports is stored biweekly).) Defendants' storage of this data, or Defendants' parent-company PJI International, Inc.'s storage, facially fails to comply with the recordkeeping requirements of 29 C.F.R. § 516.2(a)(7), which requires:

(7) Hours worked each workday and total hours worked each workweek (for purposes of this section, a "workday" is any fixed period of 24 consecutive hours and a "workweek" is any fixed and regularly recurring period of 7 consecutive workdays)....

Although Sullivan does not specifically raise this argument in regards to Mt. Clemens burden shifting, Defendants' failure to keep weekly records of its drivers' hours is likely in violation of their recordkeeping obligations. The Court cannot now fault Sullivan for not being able to prove weekly violations when Sullivan does not have the needed information that Defendants were obliged to retain under law. To the extent that Sullivan must rely on the burden-shifting regime of Mt. Clemens , including the showing of hours worked by a "just and reasonable inference" because of Defendants' failure to keep weekly timesheets, he is so entitled.

Defendants also make an argument relating to "interrogatory responses," that are blank or incomplete. The Court has already dismissed a number of former Opt-in Plaintiffs for failure to respond to Defendants' interrogatories. (See Doc. 232, 262.) Obviously, to the extent that Sullivan himself "does not know" a specific claimed expense, no jury could base an award of damages on that interrogatory response.

Defendants then make the converse argument, "[t]o the extent [the former Opt-in] Plaintiffs' interrogatory answers reflect a "weekly" cost incurred, there is no evidence (and no allegation) that the amount reported is an actual amount expended or an estimation of each week's expenses incurred." The former Opt-in Plaintiffs' interrogatory answers constitute evidence, and Defendants do not explain why such answers are insufficient. Defendants wrote the interrogatory request for costs incurred, so they can hardly fault the former Opt-in Plaintiffs for responding to Defendants' subpoena and attempting to use that information. The Court does not understand Defendants' argument that the former Opt-in Plaintiffs' attested to response to the interrogatory is not itself evidence.

7. DEFENDANTS' SECOND, THIRD, AND FOURTH DEFENSES

Sullivan asserts that Defendants have failed to show entitlement to specific affirmative defenses raised in Defendants' Answer. Sullivan moves for dismissal of Defendants' second, third, and fourth affirmative defenses.

A. SECOND DEFENSE: SECTION 10 OF THE PORTAL TO PORTAL ACT

Defendants' Second Affirmative Defense is under Section 10 of the Portal to Portal Act, 29 U.S.C. § 259. (Doc. 121 at 17.) Section 259 provides a good-faith defense that bars actions for violations of the minimum wage provisions of the FLSA if the employer "pleads and proves the act or omission complained of was (1) taken in good faith and was (2) in conformity with and (3) in reliance on a written administrative interpretation by a designated agency [under § 259(b) ]." Cole v. Farm Fresh Poultry, Inc. , 824 F.2d 923, 926 (11th Cir. 1987). The agency designated to provide interpretations of the FLSA is the Administrator of the Wage and Hour Division of the Department of Labor. Id. ; see also 29 U.S.C. § 259(b). An employer's good faith is not enough for the defense provided in § 259(a) to apply, nor is "an employer's actual reliance upon his own incorrect interpretation of a vague and general administrative guideline." Cole , 824 F.2d at 927. Thus, an employer cannot find relief under § 259 simply by showing that it relied on "general administrative guidelines" that provide "no opinion regarding the employer's particular situation." Id. at 928.

It is clear that Defendants do not qualify for this exemption, because in determining their compliance with the FLSA minimum wage requirements they did not rely on any specific interpretive guidance from the DOL Wage and Hour Division. Steven Saunders ("Saunders"), Defendants' 30(b)(6) representative, admitted that Defendants "did not rely on anything specific [in the DOL regulations] because it's all up to interpretation." (Doc. 235-4 at 13-15.) He likewise admitted that "[t]here's no specific guidance on reimbursements other than for anything the employees come out of pocket for primary benefit of the employer that should be reimbursed." (Doc. 235-4 at 15-16.)

Rather than argue reliance on a specific DOL interpretation, Defendants argue in their Response in Opposition that they relied on general DOL regulations including 29 C.F.R. §§ 531.32, 531.35, and 778.217. Defendants do not cite to any specific interpretation that purports to address their situation, and repeat the same argument expressly rejected in Cole . See 824 F.2d at 927 ("[A]n employer's actual reliance upon his own incorrect interpretation of a vague and general administrative guideline" is not sufficient for the affirmative defense under § 259 to apply.); id. at 929 (A Section 259 defense is insufficient where administrative guidance "left individual employers to their own devices in determining compensable time under all the particular circumstances not specifically mentioned as examples in the guidelines."). Cole 's dispositive language requires that an administrative interpretation must provide "a clear answer to the particular situation"-Defendants' citation to the general agency regulations is inadequate. Defendants' argument that it relied on these specific regulations is further contradicted by Saunders' testimony where he admitted during his deposition that he did not rely on any specific regulation because it "is all up to interpretation."

Even if Saunders attempted to rely "in good faith" upon the cited regulations, as Defendants argue he did, good faith reliance on general regulations is not enough for a § 259 defense. Id. at 927. While Defendants argue that there continues to be genuine issues of fact, they only cite parts of Saunders' deposition testimony showing that he attempted to create a reimbursement policy "in good faith." (Doc. 235-4 at 12, 22, 29.) Saunders' good faith reliance is insufficient to establish a § 259 defense. Therefore, Sullivan's motion for summary judgment on Defendants' second affirmative defense is due to be GRANTED.

B. THIRD DEFENSE: SECTION 11

Sullivan also moves for summary judgment on Defendants' third affirmative defense under Section 11 of the Portal to Portal Act, 29 U.S.C. § 260. Section 260 provides a partial defense to the penalty provided under 29 U.S.C. § 216(b), which states that an employer must pay an employee's unpaid minimum wage and an additional equal amount as liquidated damages. "[I]f the employer shows to the satisfaction of the court that the act or omission giving rise to [the violation] was in good faith and that [it] had reasonable grounds for believing that [the] act or omission was not a violation[,] ... th