Judge: William D. Claster, Case: JCCP4725, Date: 2022-10-21 Tentative Ruling
Defendant Southern California Pizza Company, LLC's Notice of Motion and Motion for Summary Adjudication Regarding Plaintiffs' Claim for Expense Reimbursements Under the Private Attorneys General Act ROA 1413
Defendant Southern California Pizza Company’s motion for summary adjudication is GRANTED.
PRELIMINARY MATTERS
Defendant seeks judicial notice of two unpublished decisions of the Court of Appeal. Under the Rules of Court, they are uncitable except in circumstances not present here. (CRC 8.1115.) The Court has neither read nor considered the two decisions.
As Plaintiffs point out in their objection to the RJN, the Court previously rejected a request from Defendant to take judicial notice of an unpublished Court of Appeal decision, so Defendant can hardly plead ignorance of the rule. (See ROA 1278.) Defendant didn’t simply fail to heed that prior ruling: one of the decisions in its current RJN, Vazquez v. Warrant Distributing, Inc., is the same decision the Court previously rejected. (See ROA 1226.) “[P]ersistent use of unpublished authority may be cause for sanctions.” (People v. Williams (2009) 176 Cal.App.4th 1521, 1529.)
In support of their opposition, Plaintiffs filed a declaration with nearly 200 pages of exhibits attached. The Court agrees with Defendants that this contradicts the parties’ CCP § 437c(t) stipulation for this motion. (ROA 1401.) There, the parties stipulated that Defendant could move for summary adjudication “based on this Joint Stipulation and accompanying declarations attached hereto as Exhibits 1 and 2.” (Id., ¶ 1.) The stipulation says nothing about any other declarations or evidence. The stipulation also lists 12 stipulated facts and provides, “there are no triable issues as to any of the facts necessary for the Court to decide” the motion. (Id., ¶ 3.) Finally, the stipulation provides, “the opposition papers shall be limited [to] a memorandum of points and authorities not to exceed 20 pages.” (Id., ¶ 5.)
It has no provision for supporting declarations and evidence. Because the declaration and attached evidence are outside the scope of the parties’ stipulation, the Court has not considered them for purposes of this ruling.
GROUNDS FOR RULING
I. Background
Per the parties’ stipulation, the Court is to decide the following issue: “whether Plaintiffs can use a Mileage Reimbursement Rate, instead of drivers’ actual expenses, to prove Defendant’s liability under Labor Code section 2802 for all delivery drivers collectively from October 17, 2012 through May 31, 2022.” (ROA 1401, ¶ 1 [emphasis added].)
For purposes of this motion, the following facts are undisputed (see id. ¶ 3):
Under Gattuso v. Harte-Hanks Shoppers, Inc. (2007) 42 Cal. 4th 554, there are three methods Defendant may use to reimburse employees for vehicle use associated with pizza deliveries: the “actual expense method,” the “mileage reimbursement method,” and the “lump sum payment method.” Defendant uses the lump sum payment method. It does not use the mileage reimbursement method or actual expense method.
Defendant regularly adjusts its lump sum rate to reflect gas price fluctuations. Drivers are allowed to seek additional reimbursement beyond the lump sum payment. Lump sums are paid on a per-order basis, so a driver who makes multiple deliveries on a single trip receives a payment for each order. Defendant has a computerized record of the customer’s address for each delivery. Some employees may have made deliveries on foot or by bicycle, without using their personal vehicles.
It is possible that Defendant’s lump sum payments may have over-reimbursed, under-reimbursed, or adequately reimbursed some deliveries. It is possible that the mileage reimbursement method may over-reimburse, under-reimburse, or adequately reimburse some deliveries.
II. Discussion
Per the recitals to the parties’ stipulation, Plaintiffs intend to use the mileage reimbursement method to determine liability in one fell swoop for all aggrieved employees: “Plaintiffs contend that they can calculate the total number of miles each delivery driver drove, and the total amount each driver was reimbursed, and that it is a matter of simple math to calculate damages and liability by comparing the amount each delivery driver was actually reimbursed with the amount that they would have been reimbursed had Defendant adopted a Mileage Reimbursement Rate.” (ROA 1401, at p. 2.)
As the Court understands it, and as the parties appear to have stipulated, Defendants maintain a record of every single delivery made by every single aggrieved employee, including address information. They also maintain a record of all reimbursement payments made to every single aggrieved employee, which are made on a lump sum basis. For each employee, Plaintiffs plan to add all the miles he or she traveled on delivery trips in a pay period, calculate the amount that would be owed under the mileage reimbursement method (Plaintiffs prefer using the IRS mileage rate), and compare that to the amount actually paid the employee under the lump sum method. If the amount paid is less than the amount owed, this is a Labor Code § 2802 violation giving rise to PAGA penalties. Plaintiffs presumably intend to have their experts run this calculation on a vast data set (around 15,000 employees, going back years, on a pay period-by-pay period basis) to determine liability.
The parties’ stipulated facts foreclose this possibility. For purposes of this motion, it is undisputed that “the Mileage Reimbursement Rate may over-reimburse some deliveries.” (ROA 1401, ¶ 3(l).) Labor Code section 2802 requires Defendant “to fully reimburse its [delivery employees] for the automobile expenses they actually and necessarily incur in performing their employment tasks.” (Gattuso, supra, 42 Cal.4th at 568.) Because it is undisputed for purposes of this motion that the mileage reimbursement rate may over-reimburse for some deliveries, a simple comparison of the amount actually paid under the lump sum method to the amount that would have been paid under the mileage reimbursement method cannot, by itself, establish a section 2802 violation.
Plaintiffs characterize potential over-reimbursement as a mere “theoretical possibility” and contend it has never had evidentiary support in the record. (Opp. at p. 14.) Given that Plaintiffs stipulated to this possibility, they now can’t argue it is a figment of the imagination. In any event, record evidence in support of over-reimbursement was part of the reason the Court denied certification of a reimbursement class in 2021. (See ROA 1278, at p. 6 [“Significantly, this argument ignores evidence in the record that deliveries were made by foot and bicycle . . . .”].)
Plaintiffs also contend any potential over-reimbursement goes to damages, not liability. This appears to misunderstand the procedural posture of the case. All that remains is a PAGA claim where the sole question is liability, not a class claim where individualized damages questions don’t prevent certification. (On page 14 of the opposition, Plaintiffs suggest employees could opt out of the case to pursue their individual claims, which the Court understands to be impossible for PAGA claims.) Liability for a given employee in a given pay period depends on a finding that the lump sum actually paid is less than the delivery-related expenses actually incurred. Because it is undisputed for purposes of this motion that the mileage reimbursement method might over-reimburse expenses for a delivery, the amount owed under the mileage reimbursement method is not proof of the delivery-related expenses actually incurred.
Finally, Plaintiffs seize on the following language in Gattuso: “An employee may [challenge the adequacy of a lump sum reimbursement] by comparing the payment with the amount that would be payable under either the actual expense method or the mileage reimbursement method. If the comparison reveals that the lump sum is inadequate, the employer must make up the difference.” (Gattuso, supra, 42 Cal.4th at p. 571.) They argue this means their preferred method for proving liability is automatically sufficient to make out a prima facie case of a section 2802 violation.
The Court disagrees. Before discussing lump sum reimbursement, Gattuso discusses mileage rate reimbursement. It states, “[I]f an employer uses the mileage reimbursement method, the employee must be permitted to challenge the resulting reimbursement payment. If the employee can show that the reimbursement amount that the employer has paid is less than the actual expenses that the employee has necessarily incurred for work-required automobile use (as calculated using the actual expense method), the employer must make up the difference.” (Id., at p. 569.) That is, the discussion of challenging lump sum reimbursements arises in a context where the mileage rate reimbursement is assumed to be less than the actual expense incurred. If the lump sum is less than the mileage rate reimbursement, and the mileage rate reimbursement is less than the actual expense, then it follows that the lump sum is less than the actual expense.
Here, on the other hand, it is stipulated and undisputed that the mileage rate method may over-reimburse. This undercuts the assumption in Gattuso. To take an extreme example, if the lump sum was $1, the actual expenses incurred $2, and the mileage rate reimbursement $10, surely Gattuso doesn’t require the employer to pay the employee $9. More to the point for this motion, the $9 difference, standing alone, says nothing about whether there is in fact a section 2802 violation.
As stipulated to by the parties, the mileage reimbursement method may over-reimburse for deliveries. As a result, in the context of a motion for summary adjudication based on those stipulated facts, comparison of the amount paid under the lump sum method to the amount that would be owed under the mileage reimbursement method cannot establish a section 2802 violation on a universal basis. Accordingly, the Court rules in Defendant’s favor on the motion for summary adjudication brought pursuant to CCP § 437c(t).