West v. Bam! Pizza Management, Inc.
Case Information
IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW MEXICO DEBORAH WEST, on behalf of herself
and others similarly situated,
Plaintiff, v. No. 1:22-cv-209-SMD-JMR BAM! PIZZA MANAGEMENT, INC., et al.
Defendants.
ORDER DENYING DEFENDANT’S MOTION TO DISMISS THIS MATTER
is before the Court on Defendant Bam! Pizza’s motion for summary judgment. [1] Doc. 238 (“Def.’s Mot. for SJ”). Plaintiff Deborah West (“Plaintiff”) [2] filed her response, Doc. 248 (“Pl.’s Resp.”) and Defendant replied, Doc. 256 (“Def.’s Reply”). On review of the record and the relevant law, the Court hereby DENIES Defendant’s motion.
BACKGROUND
I. Undisputed Material Facts
The following recitation of facts is based on Defendant’s statement of undisputed material facts (“UMF”), Def.’s Mot. for SJ at 3 (“Def.’s UMF”), Plaintiff’s response to Defendant’s UMF, Pl.’s Resp. at 4–6 (“Pl.’s Resp. to Def.’s UMF”), and Defendant’s reply, Def.’s Reply at 2–3.
Plaintiff worked as a delivery driver for Defendant BAM! Pizza from December 19, 2018, to January 30, 2020. Def.’s UMF ¶ 1; Pl.’s Resp. to Def.’s UMF ¶ 1–3. Plaintiff was compensated on an hourly basis, at New Mexico’s minimum wage rate, during this period. Def.’s UMF ¶¶ 2, 4; Pl.’s Resp. to Def.’s UMF ¶ 1. Defendant reimbursed Plaintiff some amount per delivery, though the Parties dispute whether such reimbursement was sufficient to cover Plaintiff’s expenses. Def.’s UMF ¶ 3; Pl.’s UMF ¶ 2.
II. Procedural Background
Plaintiff alleges that Defendant’s delivery-reimbursement rate was insufficient to cover the
attendant costs of her job, such as gas, insurance, and car maintenance. Pls.’ Am. Compl. ¶¶ 113–
129. Plaintiff asserts that the cost of these expenses caused her wages to fall below the legal
minimum.
Id. ¶
129. Plaintiff now seeks to recover, on behalf of herself and others similarly
situated, the difference between her actual wage (with the cost of her vehicle-related expenses
deducted) and the legally required minimum wage under the Fair Labor Standards Act (“FLSA”)
and the New Mexico Minimum Wage Act (“NMMWA”).
See
Pls.’ Am. Compl. ¶¶ 194–95 (first
citing
LEGAL STANDARD
Summary judgment is warranted “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.”
DISCUSSION
The central raised question by Defendant’s motion is whether the New Mexico Minimum Wage Act provides a cause of action for employees who allege that their employer’s insufficient reimbursement of expenses drove their wages below the state-minimum. Def.’s Mot. for SJ at 2. Before discussing the propriety of Plaintiff’s NMMWA claim, the Court takes a moment to discuss how these types of claims typically proceed under federal law as an analog for Plaintiff’s state law theory.
The FLSA and NMMWA each set a minimum wage for hourly workers. The FLSA states
that “[e]very employer shall pay to each of his employees… wages at the following rates.”
Because of the regulations’ prohibition on kickbacks, it is well-established that the FLSA
provides Plaintiff with the right to sue for insufficient reimbursement of vehicle-related expenses.
As the Eleventh Circuit explained, “there is no legal difference between deducting a cost directly
from the worker’s wages and shifting a cost, which they could not deduct, for the employee to
bear. . . . This rule cannot be avoided by simply requiring employees to make such purchases on
their own, either in advance or during the employment.”
Arriaga v. Fla. Pac. Farms, LLC
, 305
F.3d 1228, 1236 (11th Cir. 2002);
see also Ayres v. 127 Rest. Corp.
, 12 F. Supp. 2d 305, 310
(S.D.N.Y. 1998) (“Both New York law and federal law require employers to compensate
employees for the purchase and maintenance of required uniforms if the employees’ expenditures
for these purposes would reduce their wages to below minimum wage”);
Parker v. Battle Creek
Pizza, Inc.
,
The New Mexico legislature has not promulgated a regulation comparable to
Plaintiff counters that the NMMWA’s text “necessarily prohibits an employer from
circumventing the wage requirement by demanding employees pay something back to the
employer or, as here, purchase tools on behalf of the employer.” Pl.’s Resp. at 7. Plaintiff reasons
that even if the NMMWA’s text is ambiguous as to whether employers must reimburse employees,
up to the minimum wage, for business expenses, the New Mexico Department of Workforce
Solutions’ Instruction Manual (the “Manual”) affirms her interpretation.
Id.
at 11. Lastly, Plaintiff
argues that the FLSA and its accompanying regulations,
As explained below, the Court finds that Plaintiff’s theory of recovery is cognizable under the NMMWA and denies Defendant’s motion for summary judgment, as well as its request that this question be certified to the New Mexico Supreme Court.
I. Plaintiff Alleges a Right to be Paid the New Mexico Minimum Wage and Does Not Seek Reimbursement for All Delivery-Related Expenses.
To determine whether Plaintiff’s claim is actionable under the NMMWA, the Court must first clarify what it is exactly that Plaintiff is alleging. Throughout their motion, Defendant imprecisely refers to Plaintiff’s theory of liability in three different ways. At times, Defendant characterizes it as a claim for sub-minimum wages. Def.’s Mot. for SJ at 2 (“Plaintiff Deborah West alleged that Defendant failed to adequately reimburse her for delivery-related expenses and consequently failed to pay her minimum wage.”). At other points, Defendant refers to Plaintiff’s claim as one for unlawful deductions, id. at 4 (arguing that Plaintiff’s claim fails because “Plaintiff cannot identify any ‘unauthorized deductions’ from her pay … that caused her wages to fall below the minimum wage”), and, more than once, Defendant insinuates that Plaintiff’s claim is for all unreimbursed business expenses, see, e.g. , id. at 4, 5 (arguing that Plaintiff’s claim fails because “the NMMWA does not mandate reimbursement of business expenses” nor “explicitly require employers to reimburse employees for job-related expenses”). Though these three theories of liability—sub-minimum wages, unlawful deductions, and unreimbursed business expenses—can overlap, they are district from one another and cannot be used interchangeably. The Court digresses briefly to elucidate which category Plaintiff’s claim falls into. Because not every state, nor federal law, recognizes all three causes of action, cases from a variety of jurisdictions are used as illustration.
First, and most well-recognized, are claims alleging sub-minimum wages from work-
related costs. Under the FLSA, and many state laws, an employer violates the law if they force an
employee to bear business expenses that drive their pay below the minimum wage.
See
The second category of claims are those alleging unlawful deductions, which assert that
the withholding of certain types of costs from an employee’s pay is illegal, regardless of whether
it drives the employee’s wages below the legal minimum. For instance, in some states, it is illegal
for an employer to deduct a cash shortage from a cashier’s paycheck where there is no evidence
that the cashier is responsible for the stolen funds.
See, e.g.
,
Lastly, claims for unreimbursed business expenses encompass a slightly broader class of
costs, depending on the exact statute, and have different evidentiary requirements than do suits for
unlawful deductions. By way of example, California requires employers to reimburse employees
for “all necessary expenses incurred in performing their duties.”
Alvarado v. Wal-Mart Assocs.,
Inc.
, Case No. 2:20-CV-10926-AB,
Recognizing that an employee’s right to recover businesses expenses is typically tied to their right to be paid a minimum wage, courts have dismissed claims for “unreimbursed expenses” brought under unlawful deduction statutes rather than minimum wage laws. For example, in Tegtmeier , the court dismissed a plaintiff’s claim for “unreimbursed expenses” because it was not a minimum wage claim, but a claim for “improper deductions from wages.” Tegtmeier v. PJ Iowa, LLC , 189 F. Supp. 3d 811, 824 (S.D. Iowa 2016) (noting the distinction between a claim for unreimbursed expenses and the “general principle that improperly reimbursed business expenses may, under certain circumstances, result in a violation of minimum wage laws”). Similarly, in Smith , the District of Colorado dismissed a claim for unlawful deductions where plaintiffs did not allege a failure to pay the minimum wage. Smith v. Mini Mart, Inc. , Civil Action No. 17-cv-00671- PAB-MEH, 2018 WL 10932965, at *4 (D. Colo. Mar. 26, 2018). As the court explained “[P]laintiffs claim that the expenses they incurred checking gasoline prices and making bank deposits ‘effectively’ reduced plaintiffs’ wages. Such an argument can have relevance to a claim that expenses caused an employee’s hourly wages to fall below the minimum wage, but plaintiffs cite no authority holding that an employer violates the [Colorado Wage Claim Act] [3] that form the basis for their claim without actually deducting money from the amounts paid to employees.” Id. at *4.
a. Plaintiff’s claim is for sub-minimum wages.
Plaintiff’s complaint states that Defendant’s expense reimbursement policy caused her wages to “drop below legally allowable minimum wage.” Pls.’ Am. Compl. ¶ 212. Specifically, “Defendants did not reimburse West based on her actual delivery-related expenses” and, as a result, “Defendants failed to pay West minimum wage as required by law.” Id. ¶¶ 123, 129. Properly read, Plaintiff’s claim seeks to recover full minimum wages. Defendant’s repeated portrayal of Plaintiff’s claim as “deficient” because “the NMMWA does not mandate reimbursement of business expenses” ignores this distinction and misconstrues the complaint. Def.’s Mot. for SJ at 4. Plaintiff does not assert that the NMMWA entitles her to reimbursement for all business expenses; she asserts that the NMMWA entitles her to the minimum wage and that an employer does not pay such a wage when it shifts costs onto the employee. Cf. Pl.’s Resp. at 7 (“Under Defendants’ argument, expenses that a worker bears for the employer have no effect on the employees’ wage.”).
Defendant’s suggestion that Plaintiff must show that her employer deducted these expenses
from her paystub is likewise mistaken. Def.’s Reply at 5 nn.2 & 7. Defendant analogizes to
Smith
to argue that an employer only violates the wage law if they “actually deduct[] money from the
amounts paid to employees,” Def.’s Reply at 5 n.2. As discussed above,
Smith
dismissed a
reimbursement claim brought under the state’s unlawful deduction statute instead of its minimum
wage law.
Smith
did not conclude that under-reimbursement suits are inactionable under
Colorado’s minimum wage law.
Smith
,
II. The NMMWA Provides a Cause of Action for Plaintiff’s Claim.
The Court now considers whether the NMMWA enables an employee to sue their employer
if the insufficient reimbursement of delivery-related expenses leads to sub-minimum wages.
Because the Plaintiff’s NMMWA claim is before the Court on supplemental jurisdiction, the Court
applies the “substantive laws of the forum state” and is bound by on-point decisions of the state
Supreme Court.
N.Y. Life Ins. Co. v. K N Energy, Inc.
,
Defendant argues that “no New Mexico statute, rule, regulation, or caselaw requires an employer to reimburse an employee for vehicle-related expenses incurred in the performance of their job[.]” Def.’s Mot. for SJ at 5. As established above, Defendant’s contention that Plaintiff cannot sue under the NMMWA because the claim seeks “reimbursement of business expenses,” rather than recovery of unpaid wages, is unavailing. Id. at 8-9. The Court will now address Defendant’s assertion that unreimbursed expenses do not violate New Mexico’s minimum wage law and that the NMMWA’s silence on kickbacks dooms Plaintiff’s claim. Id. at 5.
a. The NMMWA’s plain text prohibits kickbacks resulting in sub-minimum wages.
In interpreting a statute, a court’s “principal goal” is to “give effect to the Legislature’s
intent.”
In re Grace H.
,
On its face, the NMMWA does not address whether business expenses that result in sub-
minimum wages are actionable, but the statute’s plain text indicates they are. The NNMWA states
that “[e]xcept as provided in Subsection C of this section, an employer shall pay to an employee a
minimum wage rate.”
Similarly, in
Rivera
, employees brought under-reimbursement minimum wage claims
under the FLSA and Nevada’s minimum wage law.
Rivera v. Peri & Sons Farms, Inc.
, 805 F.
Supp. 2d 1042, 1050 (D. Nev. 2011). Though the Nevada Supreme Court had not decided whether
the state minimum wage law supported this theory of liability, the district court “believe[d] it would
adopt it.”
Id.
at 1050. The court noted that “federal and state minimum wage laws exist for the
same purpose: to ensure minimum compensation for each hour worked.”
Id.
“When an employee
is required to provide a benefit to an employer as a condition of employment, the hourly
compensation is effectively reduced.”
Id.
The Ninth Circuit affirmed that “the Nevada Supreme
Court would probably interpret Nevada law to follow federal law on this issue.”
Rivera v. Peri &
Sons Farms, Inc.
,
b. New Mexico’s Department of Workforce Solutions’ Manual supports Plaintiff’s reading of the NMMWA.
Still, if there were any doubt as to whether New Mexico’s mandatory minimum wage
prevents an employer from under-reimbursing business expenses, the New Mexico Department of
Workforce Solutions (“DWS”)’s Investigations Manual resolves it. DWS employees rely on the
Manual in investigating and enforcing New Mexico labor law. N.M. Dep’t of Workforce Sols.,
Investigations Manual
, ii (2019). Although the Manual is not binding on New Mexico courts, it is
viewed as a source of persuasive authority.
See, e.g.
,
Wagner v. Air Methods Corp.
, 539 F. Supp.
3d 1157, 1170 (D. Colo. 2021) (finding that Manual’s “incorporation of the sleep time rule is
persuasive”);
Davis v. Steward Energy II, LLC
, No. 20-966 KG/JHR,
In pertinent part, the Manual states that “[k]ick-backs are deductions” and “cannot bring take-home pay below the minimum wage.” Manual at 13, 16. A “kick-back” is defined as “a situation in which an employer pays wages to the employee but then requires the employee to pay back money to the employer or a third party for the benefit of the employer.” Id. at 13. Examples of such “deductions” or “kickbacks” include the cost of uniforms, tools, or work-related equipment provided by the employer, breakage or loss of equipment or tools, and insurance premiums for vehicle damage. Id. at 17.
Defendant objects to the use of the Manual as persuasive guidance in the first instance
because it does not “create new law or precedent.” Def.’s Mot. for SJ at 7 n.3 (arguing that reliance
on the Manual is “misplaced”). It is this Court’s responsibility to “predict how the Supreme Court
of New Mexico would rule.”
Reno v. Bd. of Cnty. Comm’rs
, 577 F. Supp. 3d 1204, 1219 n.5
(D.N.M. 2022) (explaining standard for interpreting state law when exercising supplemental
jurisdiction). Given that the Manual offers the sole insight into how New Mexico courts would
address this issue, it would be imprudent for the Court to disregard it simply because it is not
binding. The Court is also unpersuaded by Defendant’s suggestion that because the Manual was
published “nearly six years ago,” its authority is diminished. Def.’s Reply at 5. Indeed, it would
be impractical to require agencies to constantly reaffirm their guidance rather than assume that the
rule of law remains stable unless otherwise stated.
Cf. Seggerman Farms, Inc. v. C.I.R.
, 308 F.3d
803, 807 (7th Cir. 2002) (“There is simply no merit to the proposition that precedent somehow
becomes less binding solely with the passage of time.”). The Court therefore finds that the Manual
affirms the NMMWA’s clear, remedial purpose in ensuring that all employees receive the minimum
wage and unequivocally states that the NMMWA authorizes claims for sub-minimum wages
resulting from “kickbacks.”
Cf. Rivera
,
III. Plaintiff’s Alleged Under-Reimbursed Delivery-Related Expenses Were Kickbacks. What remains is whether Plaintiff’s alleged delivery-related expenses constituted “kickbacks.” Per the Manual, the delivery expenses are kickbacks if they (1) primarily benefit the employer and (2) are paid to the employer or a third party. Manual at 13.
a. FLSA precedent offers appropriate guidance for evaluating Plaintiff’s claim . New Mexico courts have not defined “business expenses” nor issued any cases interpreting the term “kickbacks.” The Court will thus look to federal case law in analyzing Plaintiff’s claim. This approach accords with the New Mexico Supreme Court’s instruction that when the FLSA and NMMWA “cover the same subject matter, we attempt to harmonize and construe them together in a way that facilitates their operation and the achievement of their goals.” A.C. Elec., Inc. , 965 P.2d at 368. Further, the Manual states that its standard for unlawful deductions “ adopts the rationale from the FLSA for allowing such deductions to bring wages below the minimum wage.” Manual at 16 (emphasis added). The Manual elaborates that:
For a variety of reasons, there are many sources of law interpreting the FLSA than the MWA. The federal agency that enforces the FLSA, the Wage and Hour Division of the U.S. Department of Labor, has promulgated regulations explaining how the FLSA applies to nearly every factual scenario that may arise in a wage payment dispute. District court and appellate decisions in FLSA lawsuits are also a robust source of information about how to interpret and apply the FLSA. By contrast, there is only a small body of case law interpreting the MWA, and New Mexico regulations interpreting the MWA are silent on many issues … Consistent with the authorities outlined in this section, LRD uses FLSA regulations and other FLSA precedents to interpret several provisions of the MWA or Wage Payment Act (“WPA”) in this manual.
Manual at ii-iii.
New Mexico state courts and federal courts in the Tenth Circuit have affirmed the FLSA’s
relevance in interpreting the NMMWA. “When interpreting the NMMWA, the Supreme Court of
New Mexico has considered law interpreting FLSA to be persuasive.”
Payne v. Tri-State
CareFlight, LLC
,
With such extensive approval of the FLSA as guidance, Defendant’s protestation that FLSA
cases are “unhelpful” precedent, and their corresponding reliance on
Segura
, is unconvincing.
Def.’s Mot. for SJ at 6; Def.’s Reply at 7–8 (citing
Segura v. J.W. Drilling, Inc.
,
The Portal-to-Portal Act simply has no analog in New Mexico law, whereas the FLSA and
NMMWA have significant overlap; both are remedial,
[4]
use mandatory language for the payment
of wages,
[5]
and have accompanying guidance that prohibits unlawful deductions.
[6]
Most
importantly, and in stark contrast to
Segura
, the Manual incorporates the FLSA’s reasoning and
regulations throughout the unlawful deduction section. Manual at 16. Though the Court reaches
no conclusion as to whether the Manual’s omission of
b. Requiring employees to bear the cost of delivery-related expenses for the benefit of the employer result in a kickback.
The Court now considers the merits of Plaintiff’s claim under the NMWA. To review,
payments an employee makes either to the employer or to a third party are kickbacks if those
payments primarily benefit the employer and are illegal if they “bring take-home pay below the
minimum wage.” Manual at 13, 16. Expenses that are primarily for the benefit of the employer
includes “tools of the trade.”
Id.
at 15 (citing
The FLSA prohibits an employer from crediting the cost of “tools of the trade” toward the
payment of wages, and courts consistently designate delivery vehicles as “tools of the trade.”
See,
e.g.
,
Yu G. Ke v. Saigon Grill, Inc.
, 595 F. Supp. 2d 240, 258 (S.D.N.Y. 2008) (“[T]here is
substantial legal authority for the proposition that mechanisms for transportation—typically motor
vehicles—can be tools of the trade.”);
Benton v. Deli Mgmt., Inc.
, 396 F. Supp. 3d 1261, 1273
(N.D. Ga. 2019) (“Plaintiffs’ vehicles are a ‘tool of the trade’ when they are used for Jason’s Deli
business.”);
Hussein
, 502 F. Supp. 3d at 1372 (“In this context, vehicle expenses incurred by
delivery drivers are ‘tools of the trade’ for the benefit of their employers[.]”);
Graham
, 2018 WL
3036313, at *4 (“An example of such an expense are tools of the trade that the employee must
provide which is required to perform the job, such as a personal car that an employee operates to
make pizza deliveries.”);
Bradford v. Team Pizza, Inc.
, No. 1:20-cv-60, 2021 U.S. Dist. LEXIS
99413, at *19 (S.D. Ohio May 26, 2021) (“Included in the list of facilities which are considered
to be primarily for the benefit or convenience of the employer are "[t]ools of the trade and other
materials and services incidental to carrying on the employer's business,”
Here, Plaintiff’s vehicle was a tool of the trade because it was incidental to her work for
Defendant and, without it, she would have been unable to complete the necessary functions of her
work. The Court is unconvinced by Defendant’s recasting of Plaintiff’s alleged costs as “indirect
kickbacks,” Def.’s Mot. for SJ at 1, that fall outside of the Manual’s definition of “deduction.” To
support this reading, Defendant insists that a kickback must be “direct,” meaning that it “involves
the subtraction of a monetary amount from the employee’s paycheck.” Def.’s Reply at 5. This
rationale is irreconcilable with the Manual’s explicit recognition of kickbacks made to a “third
party.” Manual at 13. Plaintiff’s alleged expenses were a kickback to Defendant because she paid
third parties for gas, insurance, and auto care, for the primary benefit of Defendant. Summary
judgment is therefore inappropriate because whether Defendant’s reimbursement rate was
sufficient to ensure compliance with minimum wage laws requires further factual investigation.
Garcia v. Koning Rests. Int’l, L.C.
, No. 12-CV-23629-HUCK,
The Court therefore concludes that (1) the NMMWA provides a cause of action for kickbacks that drive an employee’s pay below the legal minimum and (2) under-reimbursed delivery expenses provide a kickback to an employer. Defendant’s motion for summary judgment is DENIED.
IV. The Court Will Not Certify This Question to the New Mexico Supreme Court.
Defendant asked the Court, as an alternative to ruling on their summary judgment motion,
to certify this issue for consideration before the New Mexico Supreme Court. Def.’s Mot. for SJ
at 11. The New Mexico Supreme Court will answer questions of law certified by a federal court
if “(1) the answer may be determinative of an issue in pending litigation in the certifying court and
(2) the question is one of which answer is not provided by a controlling (a) appellate opinion of
the New Mexico Supreme Court or the New Mexico Court of Appeals; or (b) constitutional
provision or statute of this state.” N.M. R. App. P. 12-607(A)(1). The Tenth Circuit has instructed
courts to not “trouble our sister state courts every time an arguably unsettled question of state law
comes across our desks. When we see a reasonably clear and principled course, we will seek to
follow it ourselves.”
Pino v. United States
,
In light of the federal cases approving class actions under state minimum wage laws, the consistent use of FLSA precedent in New Mexico state courts, and the Investigation Manual’s guidance on kickbacks, Defendant’s concern that Plaintiff’s claim will force the Court to “resolve a number of policy questions as to the scope of reimbursement requirements” and “fashion[] new legislation” is uncompelling. Def.’s Mot. for SJ at 11–12. The authorities cited in this order chart a “reasonably clear and principled course” for resolving Plaintiff’s NMMWA claims without state court intervention. Pino , 507 F.3d at 1236. The Court DENIES Defendant’s request for certification to the New Mexico Supreme Court.
CONCLUSION
IT IS THEREFORE ORDERED that Defendant’s Motion for Summary Judgment as to Plaintiff’s wage claim under the New Mexico Minimum Wage Act is DENIED .
SARAH M. DAVENPORT UNITD STATES DISTRICT JUDGE
Notes
[1] Although this lawsuit includes multiple defendants, Defendant Bam! Pizza filed the motion for summary judgment and is accordingly referred to in the singular throughout this order. See Def.’s Mot. for SJ at 1.
[2] As noted in this Court’s previous order, Doc. 295, this suit has multiple named plaintiffs, but there is only one representative for each state-based subclass. Doc. 208 (“Pls.’ Am. Compl.”) ¶¶ 6–9. Plaintiff Deborah West represents the subclass of New Mexico workers and brings Counts 2–3 on their behalf. See Pls.’ Am. Compl. ¶¶ 194– 95. Thus, except for the amended complaint filed on behalf of all plaintiffs, the Court will refer to “Plaintiff” in the singular.
[3] The Colorado Wage Claim Act (“CWCA”),
[4]
Compare Echostar Commc’ns Corp.
,
[5]
Compare
29 U.S.C. 206(e) (“Every employer shall pay to each of his employees… wages at the following
rates.”),
with
[6]
Compare