Martinez v. FedEx Ground Package Sys.

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FERNANDEZ MARTINEZ, Plaintiff, v. FEDEX GROUND PACKAGE SYSTEM, INC., Defendant.

Civ. No. 20-1052 SCY/LF

United States District Court, D. New Mexico

August 22, 2023

AMENDED MEMORANDUM OPINION AND ORDER DENYING MOTION TO DISMISS ^[1]

STEVEN C. YARBROUGH, UNITED STATES MAGISTRATE JUDGE.

Plaintiff Fernandez Martinez brings a putative class action suit against Defendant FedEx Ground Package System, Inc., alleging violations of the New Mexico Minimum Wage Act. In pertinent part, the complaint alleges that Plaintiff and a class of similarly situated employees worked for independent service providers to deliver packages on behalf of Defendant. Plaintiff and the putative class members were paid by the day, rather than by the hour or by package delivered, and regularly worked in excess of 40 hours per week with no premium payments for overtime hours. Defendant moves to dismiss the complaint, arguing that payment of a “day rate” falls within an exception to the Minimum Wage Act for “fixed rate schedules.” Defendant also argues that it cannot be held jointly and severally liable with the independent service provider companies for any alleged violations of the Act, because New Mexico has abolished joint and several liability in most situations.

The Court finds that “fixed rate schedules,” as that term is used in the Act, does not encompass the concept of a day rate. The Court also finds that the complaint does not bring a theory of liability based on joint and several liability. Therefore, the Court DENIES the motion to dismiss.

BACKGROUND

Plaintiff Fernandez Martinez filed this putative Class Action Complaint for Unpaid Wages in federal court on October 12, 2020. Doc. 1 (“Compl.”).^[2] The complaint alleges that Defendant violated the New Mexico Minimum Wage Act by failing to pay premium wages for overtime hours. Specifically, Plaintiff alleges that FedEx drivers and runners are paid a “day rate” whereby they earn the same amount of money regardless of how many hours they work in a day. Id. ¶ 8. This results in employees working more than forty hours per week with no premium payment for their overtime hours. Id.

The complaint does not allege that Defendant directly pays the drivers and runners. Instead, Defendant uses intermediaries called “independent service providers” (“ISPs”) that employ people as drivers and runners who work uncompensated overtime hours. Compl. ¶¶ 7-8. But, Plaintiff asserts, Defendant is “a controlling employer” and therefore responsible for ensuring its drivers and runners are paid in accordance with New Mexico law. Id. The drivers and runners such as Plaintiff typically work full-time and exclusively as FedEx drivers and runners, delivering Defendant's packages to Defendant's customers while wearing FedEx uniforms and driving vehicles bearing FedEx's logos and color scheme. Id. ¶ 11. The drivers and runners work out of Defendant-owned and operated terminals located in New Mexico, where Defendant's managers oversee and manage the package delivery operations. Id. ¶ 12. The services rendered by Plaintiff and other drivers and runners are integral to Defendant's business because Defendant's business is to pick up and deliver packages. Id. ¶ 13. Plaintiff and other drivers and runners are required to perform their delivery and pickup duties pursuant to Defendant's policies and procedures dictated to them both directly by Defendant's managers and indirectly through ISPs. Id. ¶ 14. The schedules of the drivers and runners are based on the needs of Defendant's customers. Id.

Defendant controls many aspects of the work of the drivers and runners. Id. ¶ 15. Defendant requires that the delivery drivers and runners have specific equipment on their vehicles when they perform deliveries for Defendant. Id. ¶ 15(a). Defendant requires the delivery drivers and runners to wear a uniform bearing Defendant's logos and color scheme and to maintain personal standards established by Defendant. Id. ¶ 15(b). Defendant requires the delivery drivers and runners to place specific signage on their vehicles bearing Defendant's name and logo. Id. ¶ 15(c). Defendant assigns the specific packages that the delivery drivers and runners must deliver and dictates when the packages must be delivered. Id. ¶ 15(d). Defendant requires the drivers and runners to scan all assigned packages with a specific scanner designated by Defendant upon loading each morning and upon delivery. Id. ¶ 15(e). Defendant requires the drivers and runners to begin and end each day at a designated terminal operated by Defendant. Id. ¶ 15(f). Customer comments and complaints regarding the drivers' and runners' job performance are made directly to Defendant, who uses its own discretion on what action to take. Id. ¶ 15(g). Defendant closely monitors the job performance of the drivers and runners, tracking whether each delivery is “successful” based on Defendant's own standards. Id. ¶ 15(h). Defendant has the authority to require its ISPs to terminate the drivers and runners working under them if Defendant believes they should be terminated. Id. ¶ 15(i). When drivers and runners work for different ISPs, or even directly for Defendant, their job duties and the procedures they are required to follow do not differ in any material way. Id. ¶ 16.

Drivers and runners are paid fixed “day rates” with no overtime compensation. Id. ¶ 17. For example during the last three years of his employment, Plaintiff worked, on average, approximately 12-18 hours per day, six days per week and was not paid overtime wages for those hours over 40 that he worked each workweek. Id. ¶ 18. During the first year of his tenure, Plaintiff worked, on average, approximately 10-12 hours per day, six days per week, with no overtime pay. Id.

The Complaint preliminarily defines the class as “all current or former New Mexico FedEx drivers and runners who were paid day rates without overtime compensation.” Id. ¶ 21. The Complaint brings a single claim for relief under the Minimum Wage Act, NMSA § 50-4-19 Doc. 1 at 7-8. Plaintiff invokes jurisdiction under the federal Class Action Fairness Act, 28 U.S.C. § 1332(d), because the putative class contains at least 100 members, the parties are minimally diverse, and the amount in controversy exceeds $5,000,000 in the aggregate for the class, exclusive of interest and costs. Id. ¶ 4.

Defendant filed the present Motion to Dismiss on December 29, 2020. Doc. 12. Defendant moves to dismiss the class action complaint on two grounds: First, that its actions as described in the complaint do not violate New Mexico's minimum wage law; and second, if any violations exist, Defendant is not jointly and severally liable with the independent contractor who actually employs Plaintiff. Plaintiff responded in opposition on January 26, 2021. Doc. 21. Defendant filed its reply on February 15, 2021. Doc. 23. Pursuant to 28 U.S.C. § 636(c), the parties consented to the undersigned to conduct any or all proceedings and to enter an order of judgment. Docs. 16, 17, 19. Briefing is complete and the motion is ready for decision.

LEGAL STANDARD

Federal Rule of Civil Procedure 12(b)(6) allows a court to dismiss a complaint for failure to state a claim upon which the court can grant relief. “[T]o withstand a Rule 12(b)(6) motion to dismiss, a complaint must contain enough allegations of fact, taken as true, to state a claim to relief that is plausible on its face.” Khalik v. United Air Lines, 671 F.3d 1188, 1190 (10th Cir. 2012) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). While a complaint does not require detailed factual allegations to survive a Rule 12(b)(6) motion to dismiss, it “requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Twombly, 550 U.S. at 555.

“A claim is facially plausible when the allegations give rise to a reasonable inference that the defendant is liable.” Mayfield v. Bethards, 826 F.3d 1252, 1255 (10th Cir. 2016). The court's consideration, therefore, is limited to determining whether the complaint states a legally sufficient claim upon which the court can grant relief. See Sutton v. Utah State Sch. for the Deaf & Blind, 173 F.3d 1226, 1236 (10th Cir. 1999). The court is not required to accept conclusions of law or the asserted application of law to the alleged facts. See Hackford v. Babbitt, 14 F.3d 1457, 1465 (10th Cir. 1994). Nor is the court required to accept as true legal conclusions that are masquerading as factual allegations. Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009). The court must, however, view a plaintiff's allegations in the light most favorable to him. Schrock v. Wyeth, Inc., 727 F.3d 1273, 1280 (10th Cir. 2013).

DISCUSSION

Defendant argues that it cannot be held liable for its pay practices because those practices comply with the law and it cannot be held liable for the pay practices of another business because New Mexico has abolished joint and several liability in most situations. The Court rejects both contentions.

I. “Flat Rate Schedules” Do Not Encompass the Concept of a Day Rate.

The New Mexico Minimum Wage Act requires employers to pay premium rates for overtime hours worked by employees (i.e., those hours in excess of 40 hours per week). NMSA § 50-4-22(E). The Act, however, does not apply to “salespersons or employees compensated upon piecework, flat rate schedules or commission basis.” NMSA § 50-4-21(C)(4). Exemptions from the New Mexico Minimum Wage Act are strictly and narrowly construed. State ex rel. State Labor Comm'r v. Goodwill Indus., 1970-NMSC-163, ¶ 6, 478 P.2d 543, 545. Accordingly, courts consider whether an exception “unmistakably” applies. See id. ¶ 5.

Defendant moves to dismiss the single claim in the complaint, arguing...