Between navigating rush-hour traffic to dealing with entitled customers, delivering pizzas can be a thankless job. But one thing you probably don’t expect is having to dish out so much of your own gas, maintenance, and car costs that the job cuts into your minimum wage.
That is the heart of one former Papa John’s driver’s wage lawsuit. He alleges that the company’s mileage reimbursement did not cover the cost of using his personal vehicle for deliveries, effectively pushing his pay below the minimum wage.
Delivery Costs Take a Bite Out of Pay
Steve Mighell worked as a delivery driver at a Colorado Papa John’s store for roughly a month in summer 2023. He alleges that he earned about $10.60 an hour, plus tips, for both delivery work and non-tipped work inside the store.
Like other delivery drivers, Mighell said he had to use his own car for the job and cover its gasoline, maintenance, insurance, depreciation, and other operating costs. He alleged that the company reimbursed him about 35 cents per mile, an amount that did not cover those expenses.
Mighell used the 2023 IRS business mileage rate of 65.5 cents per mile as an estimate of the cost of operating his vehicle. Based on his estimates of five miles per delivery and 2.5 deliveries per hour, he argued that the unreimbursed portion of those expenses reduced his effective pay below the minimum wage required by the Fair Labor Standards Act (FLSA). He also alleged that the companies operating the Colorado Papa John’s locations (and a company exec) used substantially similar pay and reimbursement practices for delivery drivers at more than 30 stores across the state.
Mighell sued the companies in federal court, HPG Pizza I and HPG Pizza II, as well as operations executive Rob Prange, on behalf of himself and other similarly situated drivers.
District Court Takes the Case Off the Menu
In 2024, the district court dismissed Mighell’s claims, finding that he had not adequately alleged an injury in fact for Article III standing.
The court’s reasoning came down to the numbers. Colorado’s 2023 minimum wage was $13.65 an hour, with a tipped cash wage of $10.63. Mighell alleged that unreimbursed vehicle expenses amounted to a $4.58 per hour kickback. But using the full $13.65 minimum wage as its starting point, the court subtracted that alleged kickback and arrived at $9.07 an hour. This, of course, was still comfortably above the FLSA’s $7.25 wage floor.
The overtime claim did not fare any better. Mighell’s pay stubs showed an overtime rate of $20.82 an hour, which the court found exceeded the required time-and-a-half rate.
In short, the court found no cognizable injury and never reached the merits of whether the reimbursement policy itself was lawful. With the FLSA claims out of the case, the court declined supplemental jurisdiction over the Colorado-law claims, dismissed them without prejudice, and denied Mighell’s request for conditional collective-action certification as moot.
Appeals Court Fires It Back Up
The Tenth Circuit saw a problem with that reasoning.
Article III standing requires a plaintiff to show three things: an injury in fact, a connection between that injury and the defendant’s conduct, and a likelihood that a favorable court decision would remedy the injury. But the appellate court emphasized that, at the standing stage, courts must assume the legal validity of the plaintiff’s claim rather than decide whether that claim will win on the merits.
Mighell’s theory was that HPG could not use the Colorado tip credit to offset the allegedly unreimbursed delivery expenses when calculating compliance with the federal minimum wage. The district court rejected that theory by using the full Colorado minimum wage as the starting point for its calculation.
That was the key issue, according to the appellate panel. If Mighell’s legal theory is valid, the court explained, then his allegations describe an actual economic injury: compensation below what federal law requires. The district court could later decide whether the theory succeeds under the applicable wage statutes and regulations. But it could not reject the theory at the standing stage and then rely on that rejection to find no injury.
Put another way, the appeals court concluded that the district court put “the merits cart before the standing horse.”
Case Remains Half-Baked
The Tenth Circuit vacated the jurisdictional dismissal and sent the case back to the Colorado federal court. On remand, the district court can consider the defendants’ other arguments: whether the complaint states a viable FLSA claim under Rule 12(b)(6), whether Mighell adequately alleged damages, and which defendants qualify as his employer under the FLSA.
The appellate court did not decide those questions. It also noted a potential arithmetic issue in Mighell’s complaint: his asserted $1.525 under-reimbursement per delivery, multiplied by 2.5 deliveries per hour, equals $3.8125 per hour rather than the alleged $4.575. Still, the panel said that the adequacy of his damages allegations is distinct from whether he has standing to bring the suit.
For now, Mighell’s managed to get his case cooking again, but whether it delivers remains to be seen.
