NEW MEXICANS FOR FREE ENTERPRISE V. CITY
OF SANTA FE, 2006-NMCA-007, 138 N.M. 785, 126 P.3d 1149
NEW MEXICANS FOR FREE ENTERPRISE,
THE SANTA FE CHAMBER OF COMMERCE,
PRANZO, ZUMA CORPORATION, ROBBIE DAY,
and SANTA FE HOTEL JOINT VENTURES,
Plaintiffs-Appellants,
v.
THE CITY OF SANTA FE,
Defendant-Appellee.
COURT OF APPEALS OF NEW MEXICO
2006-NMCA-007, 138 N.M. 785, 126 P.3d 1149
APPEAL FROM THE DISTRICT COURT OF SANTA FE COUNTY, Daniel
A. Sanchez, District Judge
Released for publication January 24,
2006
Ellington & Ellington, L.L.C.,
Kathrin Kinzer-Ellington, T. Glenn Ellington, Santa Fe, NM, for Appellants
City of Santa Fe, Bruce Thompson, Santa
Fe, NM, Jones, Snead, Wertheim & Wentworth, P.A., Jerry Todd Wertheim,
Santa Fe, NM, Paul, Weiss, Rifkind, Wharton & Garrison LLP, Sidney S.
Rosdeitcher, New York, NY, The Brennan Center for Justice at NYU Law School,
Paul K. Sonn, New York, NY, for Appellees
Rodey, Dickson, Sloan, Akin, & Robb,
P.A., Edward Ricco, Jocelyn Drennan, Albuquerque, NM, for Amici Curiae
Association of Commerce and Industry et al.
Sanders & Westbrook, P.C., Duff
Westbrook, Maureen A. Sanders, Albuquerque, NM, Columbia Law School, Richard
Briffault, New York, NY, for Amici Curiae New Mexico Municipal League et al.
Philip B. Davis, Albuquerque, NM, for
Amici Curiae Santa Fe Partnership for Social Justice et al.
CYNTHIA A. FRY, Judge. WE CONCUR: MICHAEL
D. BUSTAMANTE, Chief Judge, LYNN PICKARD, Judge
{1} Plaintiffs New
Mexicans for Free Enterprise, the Santa Fe Chamber of Commerce, and several
local business owners challenge an ordinance enacted by the City of Santa Fe
mandating certain city-based businesses to pay a minimum wage higher than the
current state and federal minimum hourly wage. Plaintiffs contend that the
ordinance is beyond the power of a home rule municipality to enact and that the
state minimum wage law preempts local policymaking in this area. Further,
Plaintiffs argue that the ordinance is a taking of private property and that
the ordinance's exemption for small businesses violates equal protection
guarantees. Finally, Plaintiffs seek to have the ordinance struck down because
the City failed to follow its own rules in passing the ordinance and the trial
court abused its discretion in regulating discovery for expert testimony at
trial. We conclude that a home rule municipality may set a minimum wage higher
than that required by the state Minimum Wage Act, NMSA 1978, §§
50-4-19 to -30
(1955, as amended through 2003), because of the independent powers possessed by
municipalities in New Mexico and the absence of any conflict with state law.
Unpersuaded by Plaintiffs' other arguments, we therefore affirm the district
court's ruling that the minimum wage ordinance is within the power of the City
to enact and is otherwise constitutional.
{2} The significant
facts in this case are those surrounding the processes by which the City passed
the ordinance as well as the particular provisions of the ordinance. In 2002,
the City passed the first version of the ordinance setting a minimum wage above
that of the federal and state minimum wages for its own workers, contractors
doing substantial business with the City, and other businesses directly
receiving city benefits. Santa Fe, N.M., Wage Requirements: Minimum Wage
Payment Requirements, ch. XXVIII, § 1.5 (2003). The City also established a
Living Wage Roundtable that was directed to "explore and develop" an
amendment to the 2002 ordinance that would mandate a living wage for the entire
city. The Roundtable reviewed a substantial amount of information regarding
local wages, cost of living, the daily challenges faced by both workers and
employers in Santa Fe, and the costs and benefits of minimum wage requirements.
The Roundtable consisted of nine members representing both labor and business
management.
{3} The Roundtable
presented majority and minority recommendations to the city council, with
management members writing the minority report. The majority recommended, among
other things, amending the ordinance to impose minimum wage requirements on all
employers citywide, except those with fewer than ten employees. The majority
also recommended that there be no credits for employer-provided benefits and
that tips be excluded from the wage calculation. The minority, on the other
hand, recommended further study to determine the potential impact to the Santa
Fe economy and unemployment prior to any further action.
{4} The city council
then held public hearings on the amended ordinance proposed by the Roundtable
majority, and received input from over 150 speakers on both sides of the issue.
Several economists provided input on the impact minimum wage increases would
have upon the local economy, businesses, and workers. One economist represented
to the city council that the federal and state minimum wage has declined
significantly in real dollars.
{5} The council and the
Roundtable both had information detailing the Santa Fe employment scene,
including figures of how many low-wage workers worked in particular businesses.
Early versions of the amended ordinance excluded small businesses, which they
defined as those employing fewer than ten workers. On the night that the
council was to vote on the amendments to the ordinance, the council expanded
the small business exemption by requiring compliance by only those businesses
with twenty-five or more workers. The councilor making the proposal noted that
expanding the exemption for small businesses would approximately cut in half
the number of private businesses impacted while reducing the percentage of
Santa Fe low-wage workers benefitting from the higher wage from around 75
percent to around 58 percent.
{6} The amendments to
the ordinance passed by a vote of seven to one. The ordinance as amended
requires for-profit businesses or non-profit entities that are registered or
licensed in Santa Fe and that employ twenty-five or more workers (either
full-time or part-time) to pay a minimum hourly wage of $8.50.
Id. §
1.5(A)(4), (C). This wage increases to $9.50 in 2006 and to $10.50 in 2008;
thereafter, the hourly wage is to be increased in tandem with increases in the
Consumer Price Index.
Id. § 1.5(B). Employers receive an hourly wage
credit for employer-provided health care and childcare.
Id. § 1.5(B).
Tips are included in the wage calculation if the employee customarily receives
at least $100 per month in tips.
Id. The ordinance made a violation of
its terms a misdemeanor and included provisions for enforcement by the city
manager as well as by private, civil actions against an employer. Santa Fe,
N.M., Wage Requirements: Enforcement; Remedies ch. XXVIII, § 1.8 (2003).
{7} In passing the
amendments to the ordinance, the council issued legislative findings, including
a finding that many workers in Santa Fe earn wages insufficient to support
themselves and their families and that the community bore the burden when
workers could not meet basic needs such as housing, food, shelter, and health
care. Santa Fe, N.M., Wage Requirements: Legislative Findings ch. XXVIII, §
1.2(B), (H) (2003). The council also found that the cost of living in Santa Fe
is 18 percent higher than the national average, while average earnings in Santa
Fe are 23 percent below the national average.
Id. § 1.2(E). In finding
that Santa Fe housing is substantially more expensive than in most of New
Mexico and that low-wage workers must spend a disproportionate portion of their
income for housing in Santa Fe, the city council concluded:
A. The public
welfare, health, safety and prosperity of Santa Fe require wages and benefits
sufficient to ensure a decent and healthy life for workers and their families.
D. Minimum wage
laws promote the general welfare, health, safety and prosperity of Santa Fe by
ensuring that workers can better support and care for their families through
their own efforts and without financial governmental assistance.
I. It is in the
public interest to require certain employers benefiting [sic] from city actions
and funding, and from the opportunity to do business in the city, to pay
employees a minimum wage, a "living wage[,]" adequate to meet the
basic needs of living in Santa Fe.
{8} The City, which is
a home rule municipality, recited two bases for the authority to pass the
ordinance: (1) the powers given to home rule municipalities by the section of
our constitution which we will refer to as the "home rule amendment,"
N.M. Const. art. X, § 6, and the Municipal Charter Act, NMSA 1978, §§
3-15-1 to
-16 (1965, as amended through 1990); and (2) the police and general welfare
powers delegated by the legislature to all municipalities by NMSA 1978, §§
3-17-1 to -7 (1965, as amended through 2003) and §§ 3-18-1 to -31 (1965, as
amended through 2003). Santa Fe, N.M., Wage Requirements: Authority of the City
of Santa Fe ch. XXVIII, § 1.3.
{9} Opponents of the
ordinance filed suit in district court. The district court granted summary
judgment for the City on several of Plaintiffs' claims, including a claim that
the Minimum Wage Act preempts the ordinance. The issues remaining for trial
were that the ordinance violates (1) the home rule amendment, (2) equal
protection guarantees of the New Mexico Constitution, (3) procedural due
process, (4) eminent domain principles, and (5) the City's own procedural
requirement to conduct a fiscal impact study. After a week-long trial devoted
primarily to the eminent domain issue, the district court rejected each of
Plaintiffs' claims and held the ordinance to be effective on the date of its
decision. Plaintiffs timely appealed. Both the district court and this Court
denied Plaintiffs' motions to stay the ordinance during the pendency of this
appeal; therefore, Santa Fe employers with more than twenty-five workers are
currently required to comply with the ordinance.
{10} Plaintiffs make
several arguments, which we categorize into four areas: (1) violation of
municipal powers, (2) violation of equal protection and eminent domain
principles, (3) illegal rate-making, and (4) procedural errors by the City in
enacting the ordinance and by the district court at trial.
I. MUNICIPAL POWER AND THE PRIVATE LAW EXCEPTION
{11} Our task is to
effectuate the allocation of power between state and local government as
articulated in the home rule amendment. The question presented by Plaintiffs as
to the power possessed by home rule municipalities involves interpretation of both
a constitutional amendment and statutes. Interpretation of statutes and
constitutional amendments involves questions of law that an appellate court
reviews de novo.
See City of Albuquerque v. Sachs,
2004-NMCA-065,
¶ 9,
135 N.M. 578,
92 P.3d 24 (describing de novo review for interpretation of
constitutional amendment). "Interpretation of constitutional clauses
begins with the language of the text."
State v. Lynch,
2003-NMSC-020, ¶ 15,
134 N.M. 139,
74 P.3d 73. "Where the constitutional
clause is clear and unambiguous on its face, courts will not construe the
clause."
Id.;
State v. Cleve,
1999-NMSC-017, ¶ 7,
127 N.M.
240,
980 P.2d 23 (stating standard of review for statutes),
modified on
other grounds as recognized by State v. Perea,
2001-NMCA-002, ¶ 10,
130
N.M. 46,
16 P.3d 1105 . If the meaning of a clause is not clear, by virtue of
having more than one fair and reasonable interpretation, then we may consider
history and context to shed light on the terms used and to ascertain the will
of the people.
Flaska v. State,
51 N.M. 13, 18,
177 P.2d 174, 177
(1946). We construe statutes similarly, beginning with the language, resorting
to other sources when necessary, and ultimately seeking to determine and give
effect to the intent of the legislature.
State v. Smith,
2004-NMSC-032,
¶¶ 8-10,
136 N.M. 372,
98 P.3d 1022.
{12} We begin by briefly
summarizing the nature of municipalities in New Mexico. We then consider
whether the City was authorized to pass the ordinance.
See City of
Hobbs v. Biswell,
81 N.M. 778, 781,
473 P.2d 917, 920 (Ct. App. 1970)
(noting that the question of municipal authority to act is a separate inquiry
from the determination of conflict with state law). Finally, we determine
whether the ordinance impermissibly conflicts with state law. § 3-17-1 (stating
that municipalities may adopt ordinances as long as they are "not
inconsistent with the laws of New Mexico").
A. THE NATURE OF MUNICIPALITIES
{13} Municipalities, as
units of local government, come into existence by the process of incorporation
under the Municipal Act.
See NMSA 1978, §§
3-2-1 to -9 (1965, as amended
through 1999). They are subordinate to the state government.
City of
Albuquerque v. N.M. Pub. Regulatory Comm'n,
2003-NMSC-028, ¶ 3,
134 N.M.
472,
79 P.3d 297 (stating that "[a] municipality is an auxiliary of the
state government" (internal quotation marks and citation omitted)). All
municipalities have been granted certain powers by the legislature, including
the so-called general welfare and police powers, as set out in Sections
3-17-1(B) and 3-18-1(F), (G) respectively. Municipalities may adopt ordinances
as long as they are "not inconsistent with the laws of New Mexico." §
3-17-1.
{14} A municipality may
become a home rule municipality by adopting a charter under the Municipal
Charter Act, NMSA 1978, §§
3-16-1 to -18 (1965) and
N.M. Const. art. X, § 6(C).
There are two benefits of becoming a home rule municipality. The first benefit
is a generous grant of authority by the home rule amendment, which gives the
municipality blanket authority to act as long as the legislature has not
expressly denied that authority.
State ex rel. Haynes v. Bonem,
114 N.M.
627, 631,
845 P.2d 150, 154 (1992). Second, home rule municipalities have a
limited form of autonomy from state interference in matters of local concern.
Id.
at 634, 845 P.2d at 157 (explaining that "the purpose of our home rule
amendment is to delegate to municipalities autonomy in matters concerning their
local community"). Because Santa Fe is a home rule municipality, we turn
next to a more detailed examination of the authority granted by the home rule
amendment and the limitations on that authority.
B. THE CITY'S POWER TO ADOPT THE ORDINANCE
{15} New Mexico adopted
its current version of home rule in 1970 by constitutional amendment.
Id.
at 630, 845 P.2d at 153;
see also N.M. Mun. League, Home Rule Manual
for N.M. Municipalities, ch. II, § 7-12 (1976) (tracing the history of home
rule in New Mexico). Home rule "was to enable municipalities to conduct
their own business and control their own affairs, to the fullest possible
extent, in their own way . . . upon the principle that the municipality itself
knew better what it wanted and needed than did the state at large."
Apodaca
v. Wilson,
86 N.M. 516, 520,
525 P.2d 876, 880 (1974) (internal quotation
marks and citation omitted),
modified on other grounds as recognized in Bonem,
114 N.M. 627,
845 P.2d 150. "[I]n New Mexico, . . . a home rule
municipality no longer has to look to the legislature for a grant of power to
act, but only looks to legislative enactments to see if any express limitations
have been placed on their power to act."
Apodaca, 86 N.M. at 521,
525 P.2d at 881. The home rule amendment, in pertinent part, states:
D. A municipality
which adopts a charter may exercise all legislative powers and perform all
functions not expressly denied by general law or charter. This grant of powers
shall not include the power to enact private or civil laws governing civil
relationships except as incident to the exercise of an independent municipal
power.
E. The purpose of
this section is to provide for maximum local self-government. A liberal
construction shall be given to the powers of municipalities.
{16} By its phrase
"may exercise all legislative powers and perform all functions not
expressly denied," the home rule amendment was clearly intended to devolve
onto home rule municipalities remarkably broad powers. In addition, the express
purpose and liberal construction clauses make clear that the home rule
amendment is intended to provide chartered municipalities with the utmost
ability to take policymaking initiative.
See Home Rule Manual for
N.M. Municipalities, ch. III, § 17 (noting that New Mexico's home rule
provision is "probably among the more liberal in the nation" in terms
of granting power to municipalities).
{17} But there are limits
to this power. The exercise of municipal power cannot be "expressly denied
by general law," and the so-called private law exception bars a home rule
municipality from "enact[ing] private or civil laws governing civil
relationships except as incident to the exercise of an independent municipal
power."
N.M. Const. art. X, § 6(D). We consider each limitation in turn.
1. THE MINIMUM WAGE ACT IS A "GENERAL LAW"
{18} The Minimum Wage Act
is a law that might conceivably deny the City's power to enact the ordinance
because both the Minimum Wage Act and the ordinance have the same subject
matter. Therefore, in order to determine whether the City's power is
"expressly denied by general law," the first step is to determine
whether the Minimum Wage Act is a general law. A general law "applies
generally throughout the state, or is of statewide concern as contrasted to
`local' or `municipal' law."
Haynes, 114 N.M. at 631, 845 P.2d at
154 (internal quotation marks and citation omitted). A general law impacts all
inhabitants of the state rather than just the inhabitants of a municipality.
Id.
at 633, 845 P.2d at 156. Specifically, in determining whether the Minimum Wage
Act is a general law, we consider whether there is statewide concern that the
law set a minimum wage. We think an hourly minimum wage is of obvious concern
to workers across the state and it applies to all workers in the state. Thus,
we conclude, as the district court did, that the Minimum Wage Act is a general
law because it applies generally throughout the state, relates to a matter of
statewide concern, and impacts workers across the entire state.
2.THE MINIMUM WAGE ACT DOES NOT EXPRESSLY DENY THE CITY'S
POWER TO ENACT THE ORDINANCE
{19} We next consider
whether the general law "expressly denies" the City's power to enact
a higher minimum wage applicable municipally. This involves an inquiry into
whether the Minimum Wage Act evinces any intent to negate such municipal power,
whether there is a clear intent to preempt that governmental area from
municipal policymaking, or whether municipal authority to act would be so
inconsistent with the Minimum Wage Act that the Minimum Wage Act is the
equivalent of an express denial.
Id at 634, 845 P.2d at 157 (summarizing
the manner in which express denial may occur);
see also ACLU v. City
of Albuquerque,
1999-NMSC-044, ¶¶ 10, 13, 128 N.M 315,
992 P.2d 866
(holding that the comprehensive Children's Code contained an "express
statement of the authority or power denied that is necessary to preempt a
home-rule ordinance" because a city criminal curfew ordinance would
frustrate and circumvent the intent of the general law (interal quotation marks
and citation omitted))
; Casuse v. City of Gallup,
106 N.M. 571, 573,
746
P.2d 1103, 1105 (1987) (stating that "any New Mexico law that clearly
intends to preempt a governmental area should be sufficient" to do so).
{20} Plaintiffs contend
that the Minimum Wage Act expresses a policy "tantamount to [a]
denial" based primarily on one word in the declaration of public policy in
the Minimum Wage Act. That portion of the Minimum Wage Act states that the act
is "to establish minimum wage and overtime compensation standards for
all
workers." § 50-4-19 (emphasis added). We disagree. The Minimum Wage Act's
application to "all" workers simply means that the minimum wage is
intended to set an hourly wage floor for all workers—it does not express that
the
only permissible minimum wage is that set by the Minimum Wage Act,
it does not imply any preemption of this area, and it does not grant
comprehensive authority to set minimum wages to the state such that municipal
action would be inconsistent with state policy.
See Haynes, 114
N.M. at 634, 845 P.2d at 157 (exploring preemption of municipal lawmaking by
asking whether state law embodies any intent to preempt, any single statewide
scheme, or any grant of authority to another governmental body). We note that,
unlike the situation in
ACLU, state law does not establish any type of
comprehensive wage-setting program or scheme and the Minimum Wage Act does not
exhaustively address the subject of minimum wages.
ACLU,
1999-NMSC-044,
¶¶ 13, 15 (describing how the Children's Code, by "comprehensively"
and "exhaustively" addressing behavior by children that would be
criminal but for the offender's age, preempted a municipal ordinance attempting
to criminalize children's behavior). In addition, unlike the situation in
In
re Generic Investigation into Cable Television Services,
103 N.M. 345, 351,
707 P.2d 1155, 1161 (1985), there is neither a constitutional nor statutory
grant of authority to another governmental body over the regulation of wages
that would make a municipal action so inconsistent with the Minimum Wage Act
that it would be equivalent to an express denial.
{21} Moreover, in passing
the Minimum Wage Act, the legislature allowed any existing local minimum wage
ordinances that were more favorable to employees to stay in effect. § 50-4-29.
Plaintiffs contend that by reading this section together with the policy that
the Minimum Wage Act applies to "all workers," then "it is clear
that the legislature intended that no other governmental entities adopt their
own wage laws." Plaintiffs contend these sections are tantamount to an
express denial of municipal authority. We do not agree that any preemption is
suggested by these two sections. To the contrary, we view this recognition of
existing ordinances setting higher local wages as expressly contemplating a
lack of uniformity, which cuts against any intent to preempt or deny municipal
power in setting minimum wages.
{22} We conclude that
municipal power to set a minimum wage higher than that of the Minimum Wage Act
is not "expressly denied by general law" within the meaning of the
home rule amendment. We next consider the exception within the home rule
amendment that the broad grant of powers to home rule municipalities
"shall not include the power to enact private or civil laws governing
civil relationships" and then the exemption that allows such a private or
civil law when it is "incident to the exercise of an independent municipal
power." We refer to these as the private law exception and the independent
power exemption, respectively.
3.THE ORDINANCE IS A PRIVATE OR CIVIL LAW
{23} Plaintiffs contend
that the ordinance is a private or civil law governing the civil relationship
of employer and employee because it "seeks to establish legal duties
between private businesses and their private employees, and it establishes a
new cause of action against private businesses that do not pay the wage."
We agree. While there are no bright-line divisions between public law and
private law, Terrrance Sandalow,
The Limits of Municipal Power Under Home
Rule: A Role for the Courts, 48 Minn. L. Rev. 643, 674 [hereinafter
Sandalow], private law has been defined as consisting "of the substantive
law which establishes legal rights and duties between and among private
entities, law that takes effect in lawsuits brought by one private entity
against another." Gary T. Schwartz,
The Logic of Home Rule and the
Private Law Exception, 20 UCLA L. Rev. 671, 688 [hereinafter Schwartz]
(internal footnotes omitted). That definition certainly applies to the
ordinance, which sets a mandatory minimum wage term for labor contracts between
private parties that the employee may enforce by bringing a civil action
against the employer. The fact that the city administrator may punish violation
of the ordinance as a misdemeanor does not convert the ordinance into
"public law" nor does it alter the basic nature of the ordinance,
which is to set and enforce a key contract term between private parties.
See
Marshal House, Inc. v. Rent Review & Grievance Bd. of Brookline, 260
N.E.2d 200, 206 (Mass. 1970) (noting that public enforcement is not dispositive
of the private law nature of an ordinance). The relationship between private
employer and employee has been described as a civil relationship because it is
governed by the civil law of contracts.
See New Orleans Campaign for
a Living Wage, 02-0991 at p. 11, 825 So. 2d at 1117 (Weimer, J.,
concurring) (concluding that a private employee-employer relationship is both a
private and civil relationship and that a minimum wage ordinance is attempting
to regulate that relationship). We conclude that the ordinance is a private or
civil law governing civil relationships within the meaning of the home rule
amendment.
4.THE ORDINANCE IS WITHIN THE INDEPENDENT POWERS EXEMPTION
{24} Although the
ordinance is a private law, nonetheless the home rule amendment permits a
municipality to enact such a law if it is "incident to the exercise of an
independent municipal power."
N.M. Const. art. X, § 6(D). Both
commentators and courts have noted the ambiguity of this independent power exemption.
For example, Professor Schwartz observed that while its "precise legal
meaning can be questioned . . . [it] clearly attempts to express the idea that
cities have a substantial stake in private law insofar as that law may advance
or support the cities' `independent' (i.e. public law) programs or
enactments." Schwartz,
supra, at 718 (internal footnote omitted).
{25} Also noting the
vagueness of the private law exception overall, the Massachusetts Supreme
Judicial Court held in
Marshal House, Inc. that for an ordinance to fall
within the independent power exemption, a municipality must point to an
"individual component of the municipal police power" that provides it
authority to act; otherwise, the private law exception might have "a very
narrow range of application." 260 N.E.2d at 206-07. The court held that
the municipality failed to do this in connection with a provision establishing
a rent-control and review board. The court rejected the municipality's claims
that its objective in controlling rents was to provide for the public welfare.
Id.
While the court recognized the link between affordable housing and the public
welfare, it stated that "[r]ent control, however, is also an objective in
itself designed to keep rents at reasonable levels."
Id. at 206 The
court held that "it would be, in effect, a contradiction (or circuitous)
to say that a by-law the
principal objective . . . of which is
to
control rent payments, is also merely incidental to the exercise of an
independent municipal power to control rents."
Id. at 207 (emphasis
added).
{26} Plaintiffs urge us
to follow
Marshal House, Inc. by requiring that the City point to an
"individual component" of its police power providing the power to
pass the ordinance. We decline to adopt the reasoning in
Marshal House, Inc.
for two reasons. First, the court in that case provided a specious answer to
the question "What is the object of the regulation?" by concluding
the object was "to control rent payments." There, the stated
"principal objective" of the municipality was not to control rent
payments as an end itself, but to provide for the general health and welfare of
residents by providing sufficient affordable housing. Second, because New
Mexico municipalities have been delegated a generic police and general welfare
power, we think that forcing a municipality to point to an "individual
component" of its police power puts an unduly restrictive gloss on the
exemption and reads words into the home rule amendment that are not there.
{27} The exemption refers
to an "independent municipal power," which we conclude means any
power other than home rule. There is no indication in the phrase
"independent municipal power" that such a power must be in some way
particularized or tailored; as long as there is a power granted by the
legislature that is independent from home rule power, that is enough. We take
the view that as long as a municipality can point to a power that the
legislature has delegated to it, and the regulation of the civil relationship
is reasonably incident to, and clearly authorized by that power, the exemption
can apply.
{28} The only additional
limitation on a municipality's power, which we have gleaned from the
commentators, is the need for uniformity that informs any consideration of the
private law exception and independent powers exemption.
See Howard
McBain,
The Law and the Practice of Municipal Home Rule (1916) 673
(noting that, "[b]y common understanding such general subjects as crime,
domestic relations, wills and administration, mortgages, trusts, contracts,
real and personal property, insurance, banking, corporations and many others
have never been regarded by any one, least of all by the cites themselves, as
appropriate subjects of local control"); Schwartz,
supra, at 720-47
(proposing three underlying rationales for the private law exception, including
"the need to retain uniformity in private law"); Sandalow,
supra,
at 678-79 (stating that "chaos would ensue" if all home rule
municipalities could "adjust contract, property and the host of other
legal relationships between private individuals"). Given this concern for
uniformity, we conclude there are two prerequisites to a municipality's
regulation of a civil relationship. Where a municipality has been given powers
by the legislature to deal with the challenges it faces, those may be
sufficiently independent municipal powers to allow regulation of a civil
relationship as long as (1) the regulation of the civil relationship is
reasonably "incident to" a public purpose that is clearly within the
delegated power, and (2) the law in question does not implicate serious
concerns about non-uniformity in the law. This rule allows a home rule
municipality to regulate a civil relationship as far as necessary within its
delegated powers to address local public concerns, while preventing the harm at
which the private law exception is primarily aimed.
See Schwartz,
supra,
at 752 (stating "[h]avoc would be occasioned if city corporation codes and
blue sky ordinances were enforced against corporations which engage in
operations or sell securities throughout the state or nation").
See
also City of Baltimore v. Sitnick, 255 A.2d 376, 384 (Md. 1969)
(concluding that unique local conditions, such as higher cost of living and
housing problems, justified additional city regulation of the minimum wage).
This rule is also sufficiently flexible to allow a fact-intensive evaluation of
any given municipal action by balancing the municipality's pursuit of the
public interest to address local issues against the need for stability and
uniformity in the law across the state.
See Schwartz,
supra, at
747 (describing some non-uniformity as "a price we willingly pay in order
to achieve the benefits of local democracy"). This rule is consistent with
the home rule amendment and Municipal Code, both of which provide for liberal
construction in favor of granting power to cities for a "maximum local
self-government."
N.M. Const. art. X, § 6(E); § 3-15-13(B) (repeating this
rule of construction).
{29} In light of this
holding, we apply the rule and evaluate (1) whether the ordinance's regulation
of the civil relationship is reasonably "incident to" a public
purpose that is clearly within the legislature's delegation of specific,
independent powers, and (2) whether the ordinance implicates serious concerns
about non-uniformity in the law. With respect to public purpose within a
municipality's delegated powers, the legislature has given all municipalities
the power to provide for the general welfare of their residents by the general
welfare clause in Section 3-17-1(B). In addition, the legislature has given all
municipalities the police power to "protect generally the property of its
municipality and its inhabitants" and to "preserve peace and order
within the municipality" by Section 3-18-1(F) and (G). While these are
separate powers, they may be treated as one.
Biswell, 81 N.M. at 780,
473 P.2d at 919 (stating that these two powers "if independent of one
another, tend to merge"). We consider these powers to be independent
municipal powers within the meaning of the home rule amendment because they are
powers delegated to municipalities completely independent from the home rule
amendment.
{30} The connection
between wages and the general welfare of workers is well established in
American jurisprudence and is clearly within the police power of a state to
regulate.
Rui One Corp. v. City of Berkeley, 371 F.3d 1137, 1150 (9th
Cir. 2004) (stating that "[t]he power to regulate wages and employment
conditions lies clearly within a state's or a municipality's police
power");
New Orleans Campaign for a Living Wage, 02-0991, at p. 13,
825 So. 2d at 1098 (affirming that the power to set a minimum wage is an
exercise of the police power);
City of Baltimore, 255 A.2d at 378
(holding that a municipality has authority to establish a minimum wage under
its police powers). In
West Coast Hotel Co. v. Parrish, 300 U.S. 379
(1937), the United States Supreme Court upheld against a freedom of contract
challenge a state court decision that the police power of the state permitted
setting a minimum wage.
Id. at 413-14. The Court concluded that wages
insufficient to support basic needs are a public problem due to the impact on
the entire community.
Id. at 399. This conclusion was presaged by
Justice Stone's dissent in
Morehead v. New York ex rel. Tipaldo, 298
U.S. 587 (1936),
overruled on other grounds by Olsen v. Nebraska ex
rel. W. Reference & Bond Ass'n, Inc., 313 U.S. 236, (1941) when he
noted:
We have had opportunity to perceive
more clearly that a wage insufficient to support the worker does not visit its
consequences upon him alone; that it may affect profoundly the entire economic
structure of society and, in any case, that it casts on every taxpayer, and on
government itself, the burden of solving the problems of poverty, subsistence,
health and morals of large numbers in the community. Because of their nature
and extent these are public problems.
Morehead, 298 U.S. at 635 (Stone, J., dissenting).
Given this authority, we conclude that setting a minimum wage is unquestionably
a public purpose and that such legislation is within the police and general
welfare power of a New Mexico municipality.
{31} As to whether the
City is acting incident to the exercise of an independent municipal power,
there is little conclusive authority on the subject. In
Marshal House, Inc.,
the court held that regulating the landlord-tenant relationship by setting the
rental price term was a direct, rather than incidental, regulation of the
relationship, yet it would have allowed regulation of the relationship for
safety or health codes, such as fire prevention or hallway lighting, which it
viewed as incidental to the police power. 260 N.E.2d at 206.
{32} The rationale of
Marshal
House, Inc., appears to allow comparatively minor intrusions by an
ordinance into a civil relationship, but bars greater intrusions. Yet we fail
to see how regulating a private relationship in terms of health and building
safety codes is "indirect" while regulating a more central or
important aspect, such as the rental term in
Marshal House, Inc., is
"direct." Such a principle would lead to arcane inquiries into the
relative importance of different aspects of an agreement. Is building safety or
rent more important to the landlord-tenant relationship? Is worker health and
safety less critical than wages or hours? We read "incident to an exercise
of an independent municipal power" as simply limiting the circumstances in
which a municipality may pass a private or civil law, not as barring certain
types of private or civil law or limiting the degree of their intrusion into
the relationship.
Id. We conclude that as long as the intrusion into the
private relationship is in pursuit of the public interest and clearly within
the independent municipal power, that is sufficient to permit the municipality
to pass a private or civil law regulating that relationship as long as the law
does not generate non-uniformity issues. We focus on whether there is a public
purpose or objective for the exercise of the independent municipal power. Here,
there clearly is a public purpose as described by the myriad authorities
holding that a minimum wage protects the general welfare of the community.
{33} Amicus Association
of Commerce and Industry of New Mexico, echoing the reasoning in
Marshal House,
Inc., argues that the City's regulation of wages is "both the specific
purpose and the direct result" of the power to enact private law. We
disagree. The object of this legislation is not to regulate private wages as an
end in itself or to set comprehensive "reasonable wages" in the City,
but rather to provide for the general welfare of workers and taxpayers in the
City. The City has thus pursued a public program to ensure that workers can
meet their basic needs and avoid becoming a burden on the community. The City
is in no way singling out private employers or burdening them as an end in
itself. The ordinance is analogous to many types of other health and safety
ordinances that may impact private and civil relationships, but which are aimed
at the health, welfare, or safety of renters, workers, or consumers.
See,
e.g., Santa Fe, N.M., Environmental Regulations: Prohibition of Smoking ID
Places of Employment ch. X, § 6.6 (1999) (mandating that private employers in
the city provide a smoke-free workplace); Santa Fe, N.M., Fair Housing:
Discrimination in Sales or Rental of Housing ch. VII, § 14.8 (1999)
(prohibiting discrimination in the sale or rental of private housing within the
city); Santa Fe, N.M., Environmental Regulations: Premises to be Free from
Litter and Refuse ch. X, § 1.14 (requiring private property owners to keep
their premises free of litter and refuse).
{34} We now turn to the
second prong of the rule permitting regulation of a civil relationship and
consider whether the ordinance seriously implicates concerns about
non-uniformity. Commentators and courts have expressed concern about home rule
municipalities creating a patchwork quilt of law that would hamper business
transactions and unfairly upset parties' expectations, and we have concluded
that this is the primary evil at which the private law exception is aimed. We
view the inquiry, then, as whether the ordinance disrupts or confuses New
Mexico law to an unacceptable degree.
{35} The nature of the
ordinance is central in determining whether it implicates serious concerns
about non-uniformity. For example, substantial disorder and confusion would
result if the City rejected the Uniform Commercial Code, adopted a contributory
negligence regime, or if it imposed heightened burdens on corporate boards of
directors for companies doing business in the City. Leaving aside potential
conflicts with state law (which will often bar such local laws), these types of
private or civil law changes would frustrate and confuse even the most diligent
consumer, businessperson, or lawyer. Those contracting with city parties,
corporations doing business there, or those injured by tortfeasors in the City
would have little reason to know of these special rules and each would cause
notice, compliance, and choice of law issues. Our task is to determine whether
such issues are so pervasive that the ordinance disrupts or confuses New Mexico
law.
{36} Here, the ordinance
does not raise serious concerns about non-uniformity in the way that any of the
prior examples would. Any concerns about inefficiency in terms of high notice
and compliance costs are allayed by the limited application of the ordinance—it
applies only to employers who are registered or licensed in the City. We
presume that those entities with more than twenty-five employees seeking city
business licenses are doing so purposefully (and with at least some
deliberation), and we doubt that they are unaware of such a high-profile
ordinance. In addition, the burden on a regional or national business of discovering
and applying a higher wage for city workers is modest at most. Presumably,
extra-local businesses can identify their own locations and workers licensed in
the City and set their hourly wage.
{37} Given modern
technology and administration, the cost of discovering and complying with the
City's law is minimal. We would be much more concerned if the City were
attempting to set a minimum wage term for any contracts for labor "entered
into" within the City or for any "labor provided" in the City.
Such provisions would raise more serious questions regarding the cost of
discovering and complying with the ordinance and the overall disruption of
employment contract terms.
See Madison, Wisc., Officials, Boards,
Employees, & Public Records ch. 3, § 3.45(2)(k),
abrogated by, Wis.
Stat. Ann. §104.001(2) (2005) (setting a living wage above the state minimum
wage, and defining the term "employee" to mean anyone who
"performs at least two hours of compensable work" per calendar week
to any employer in Madison). In light of the ordinance's requirements, we doubt
that the ordinance will generate confusion in the law of contracts in New
Mexico, produce great inefficiency among the businesses that are required to
comply with the ordinance, or cause choice of law problems. Thus, the ordinance
does not implicate any serious concerns about generating non-uniformity in New
Mexico law.
{38} We emphasize that
our conclusion is informed by the circumstances of this case, in which the City
has made a showing that it was addressing a serious local problem and where the
particular regulation of the employer/employee relationship has long been
considered a reasonable exercise of the police power. Were a home rule
municipality to enact a private or civil law regulating a civil relationship at
the borders of its delegated powers, clearly engaging in overreaching, or
implicating substantial non-uniformity issues, we think a different result
could obtain. We disagree with Plaintiffs' contention that allowing a home rule
municipality to rely on its police power to enact private or civil law
governing civil relationships would render the private law exception in the
home rule amendment "meaningless." We conclude that our construction
is a straightforward application of the language in the home rule amendment as
well as consistent with the model version of the private law exception.
American
Municipal Association: Model Constitutional Provisions for Municipal Home Rule,
21, at cmt. 5 (1953) (stating that "[i]t is the theory of the draft that a
proper balance can be achieved by enabling cities to enact private law only as
an incident to the exercise of some independent municipal power").
C. NO INCONSISTENCY WITH STATE LAWS
{39} Deciding that the
City has the authority to enact a minimum wage regulation under the home rule
amendment is not the end of the inquiry; we must finally determine whether the
ordinance is inconsistent with state law.
See Biswell, 81 N.M. at
782, 473 P.2d at 921 (noting that the question of municipal authority to act is
a separate inquiry from the determination of conflict with state law); § 3-17-1
(stating that "[t]he governing body of a municipality may adopt ordinances
or resolutions not inconsistent with the laws of New Mexico"). While this
inquiry is similar to the discussions above regarding whether the Minimum Wage
Act expressly denies legislative power to the City and whether the ordinance
implicates non-uniformity concerns, we believe separate treatment of
inconsistency is justified. In
State ex rel. Coffin v. McCall,
58 N.M.
534, 537,
273 P.2d 642, 644 (1954), our Supreme Court articulated the test for
determining whether an inconsistency exists as "whether the ordinance
permits an act the general law prohibits, or vice versa."
See Bd.
of Comm'rs of Rio Arriba County v. Greacen,
2000-NMSC-016, ¶ 16,
129 N.M.
177,
3 P.3d 672 (explaining that
McCall was evaluating inconsistency and
applying this test to determine whether an ordinance conflicted with state
law);
Biswell, 81 N.M. at 783, 473 P.2d at 922 (applying the test from
McCall
to determine inconsistency under the identical predecessor statute to Section
3-17-1). If an ordinance merely complements a statute, instead of being
"antagonistic" to it, it is not in conflict with state law.
McCall,
58 N.M. at 538, 273 P.2d at 644. Where an ordinance is more strict than a state
law, it is effective unless it conflicts with state law.
Gould v. Santa Fe
County,
2001-NMCA-107, ¶ 18,
131 N.M. 405,
37 P.3d 122,
overruled on
other grounds by Rio Grande Chapter of Sierra Club v. N.M. Mining Comm'n,
2003-NMSC-005,
133 N.M. 97,
61 P.3d 806. "The analysis to apply is whether
the stricter requirements of the ordinance conflict with state law, and whether
the ordinance permits an act the general law prohibits, or prohibits an act the
general law permits."
Gould,
2001-NMCA-107, ¶ 18 (internal
quotation marks omitted).
{40} Amicus Association
of Commerce and Industry argues that the ordinance prohibits an act which the
state law permits, because state law purportedly "permits" certain
city employers to pay their workers a wage of $5.15 per hour, while the
ordinance does not. We are not persuaded. We note that our courts have not
mechanically applied this test for the existence of a conflict where state and
local law both touch upon the same subject matter.
McCall, 58 N.M. at
538, 273 P.2d at 644 (holding that a local DWI ordinance was simply
complementary to, and not in conflict with state DWI law, because it was not
antagonistic to the state law). For example, in
Biswell, we considered
an ordinance that imposed a higher burden than state law on local pawnbrokers
because it required pawnbrokers to permit inspection of records by not only
police officers, but by others, such as city commissioners. 81 N.M. at 779, 473
P.2d at 918. We held that the ordinance was not in conflict with state law
because the state law did not prohibit "inspection by other than police
officers." 81 N.M. at 783, 473 P.2d at 922. The state law did not "permit"
pawnbrokers to keep their records secret from all but police officers, and
therefore the more stringent local ordinance did not "prohibit" an
activity permitted by state law.
See also Gould,
2001-NMCA-107, ¶ 18 (holding that a local ordinance that was more strict than
state law was not in conflict with state law).
{41} Courts do not apply
this test for conflict in a wooden manner because doing so would lead to absurd
results. For example, where state law is silent on smoking in public places,
that silence likely would not be deemed permission by state law such that a
municipality could never restrict smoking in public places. Were that the test,
municipalities would effectively lose much of their ability to regulate.
People
v. Cook, 312 N.E.2d 452, 457 (N.Y. 1974) (stating that where state law is
silent, it is not permitting activity and "[t]his statement of the law is
much too broad. If this were the rule, the power of local governments to
regulate would be illusory").
{42} We agree with those
authorities concluding that conflict with state law may be found when state law
affirmatively or specifically permits an activity rather than when it is
silent.
Jancyn Mfg. Corp. v. County of Suffolk, 518 N.E.2d 903, 907-08
(N.Y. 1987);
see also N.Y. State Club Assoc, Inc. v. City of N.Y.,
505 N.E.2d 915, 920 (N.Y. 1987) (noting that a state law "permits"
activity so as to bar local regulation, only when it evidences an intent to
preempt varying local regulations or "when the state
specifically
permits the conduct" that the locality bans (emphasis added));
Wholesale Laundry Bd. of Trade, Inc. v. City of N.Y., 189 N.E.2d 623, 624
(N.Y. 1963) (Fuld, J., dissenting) (stating that a local law requiring a
minimum wage higher than state law "neither prohibits what the [s]tate
statute
affirmatively permits nor permits what it prohibits" and
that minimum wage acts are prohibitory, not permissive, such that a local law
imposing higher standards is not inconsistent with state law (emphasis added)).
{43} Like these
authorities, we hold that an ordinance will conflict with state law when state
law specifically allows certain activities or is of such a character that local
prohibitions on those activities would be inconsistent with or antagonistic to
that state law or policy. This is not the case here. The Minimum Wage Act sets
a minimum hourly wage, prohibiting the payment of wages below $5.15 per hour.
The Minimum Wage Act does not "permit" only its rate, and it does not
establish any type of comprehensive wage scheme or express any need for
uniformity. The City's ordinance does not allow an employer to pay less than
this minimum but requires wages to be higher than this minimum. We view the
Minimum Wage Act as setting only a wage floor that does not bar higher local
minimum wage rates.
See Wilson Oil Co. v. Hardy,
49 N.M. 337,
344,
164 P.2d 209, 213 (1945) (concluding that the purpose of the federal
minimum wage is "to put a floor on wages,")
superseded by statute
on other grounds as stated in,
Witt v. Skelly Oil Co.,
71 N.M. 411,
379 P.2d 61 (1963);
Gould,
2001-NMCA-107, ¶ 18 (holding that ordinances
more restrictive than state law are allowed as long as the two do not
conflict);
see also City of Baltimore, 255 A.2d at 385-86
(holding that city minimum wage requirement higher than state requirement only
supplemented state law and that an exemption from a state requirement
"amounts to no regulation at all" leaving the field open to local
regulation). Thus, the ordinance is merely complementary to the Minimum Wage
Act and is not antagonistic toward the Minimum Wage Act's policy of ensuring
that all workers are paid a minimum of $5.15 per hour. Because we find that the
ordinance is not in conflict with the Minimum Wage Act, under Section 3-17-1,
the ordinance is not inconsistent with state law and is permitted.
{44} The legislature
remains the ultimate check on home rule municipal policymaking when a subject
is one of statewide concern. The legislature clearly knows how to preempt local
lawmaking when it wants to do so.
See, e.g., NMSA 1978, §
29-11A-7
(2000, as amended by 2005 N.M. Laws ch. 279, p. 2735) (preempting the field of
sex offender registration and barring any municipalities from legislating in
this area, but allowing pre-existing ordinances to stand to the extent they
impose greater registration requirements). Minimum wage policymaking is within
the scope of municipal power unless the legislature clearly intends to remove
it or when there is a conflict between an ordinance and general state law.
II.CONSTITUTIONAL CHALLENGES: EQUAL PROTECTION AND
EMINENT DOMAIN
{45} Plaintiffs contend
the ordinance violates the constitutional provisions ensuring equal protection
and regarding eminent domain. We review constitutional challenges to a statute
de novo.
State v. Laguna,
1999-NMCA-152, ¶ 24,
128 N.M. 345,
992 P.2d
896. City ordinances are treated no differently than statutes for purposes of
judicial review.
See City of Albuquerque, ex rel. Albuqerque Police
Dep't v. One (1) 1984 White Chevy UT.,
2002-NMSC-014, ¶ 5,
132 N.M. 187,
46
P.3d 94 (reviewing constitutionality of city ordinance using rules regarding
statutes).
A reviewing court begins its inquiry
with a presumption that a statute is valid. A court must uphold a statute
unless satisfied beyond a reasonable doubt that the legislature exceeded the
bounds of the constitution in enacting it. All doubts as to its
constitutionality must be resolved in favor of the validity of the law. A party
challenging the constitutionality of a statute has the burden of establishing
its invalidity.
{46} Plaintiffs argue
that the small-business exemption in the ordinance violates the equal
protection guarantee contained in Article II, § 18 of the New Mexico
Constitution. "Like its federal equivalent, this is essentially a mandate
that similarly situated individuals be treated alike, absent a sufficient
reason to justify the disparate treatment."
Wagner v. AGW Consultants,
2005-NMSC-016, ¶ 21,
137 N.M. 734,
114 P.3d 1050. We assume without deciding
that the small business exemption results in similarly situated individuals
being treated in a dissimilar fashion, particularly for those businesses that
employ only slightly more or fewer than twenty-five employees.
See Breen
v. Carlsbad Mun. Schs.,
2005-NMSC-028, ¶ 10,
138 N.M. 331,
120 P.3d 413
(describing the "threshold question" in equal protection analyses
"whether the legislation creates a class of similarly situated individuals
who are treated dissimilarly"). Therefore, we turn to an identification of
the level of scrutiny to be applied to the challenged law, which turns upon the
"nature and importance of the individual interests asserted and the
classifications created."
Wagner,
2005-NMSC-016, ¶ 12. Here,
Plaintiffs concede that rational basis scrutiny applies because the ordinance
does not impact or involve fundamental rights or suspect classifications, nor
does it involve important rights or protected classes.
Trujillo v. City of
Albuquerque,
1998-NMSC-031, ¶ ¶ 26, 28,
125 N.M. 721,
965 P.2d 305
(applying rational basis scrutiny to economic or financial legislation and
emphasizing that linedrawing in classification is a legislative function). This
Court must make its own determination, de novo, which level of scrutiny is
appropriate to apply in light of the "right or the nature of the group
affected by the legislation."
Breen,
2005-NMSC-028, ¶ 16. Because
the ordinance does not restrict Plaintiffs' ability to exercise an important
right and because Plaintiffs are not part of a sensitive class, we agree with
Plaintiffs that rational basis scrutiny applies.
Id. ¶¶ 18, 19, 20
(describing sensitive classes as those groups subjected to societal prejudice
or systematic denial from the political process).
{47} Minimum wage
regulation is considered social and economic legislation.
See Rui One
Corp., 371 F.3d at 1154. Ordinarily, we defer to the legislature's
"judgment in enacting social and economic legislation."
Wagner,
2005-NMSC-016, ¶ 12. "To successfully challenge [a] statute under this
[rational basis] standard of review, [the challenger] must demonstrate that the
classification created by the legislation is not supported by a firm legal
rationale or evidence in the record."
Id. ¶ 24 (internal quotation
marks and citation omitted).
{48} The ordinance's
small-business exception excludes those employers who employ fewer than
twenty-five workers, either full-time or part-time. Minimum Wage Payment Requirements
ch. XXVIII, § 1.5(A)(4). Plaintiffs contend that the selection of the
twenty-five employee cut-off is arbitrary and lacked sufficient foundation
demonstrating any differences between large and small employers. Plaintiffs
make much of the fact that the small-business exemption was increased from ten
workers to twenty-five on the night the ordinance passed and contend that the
City "literally plucked the numbers out of the air," thereby engaging
in arbitrary selection rather than rational classification. We disagree. The
councilor proposing the amendment stated that it was "designed to reduce
the potential impact of this ordinance on 50 [percent] of the small businesses,
i.e., from 19.7 percent to 9 percent," and she described the commensurate
reduction in impact from 74.8 percent of employees down to 57.9 percent. She
described this change as a "tradeoff" until an evaluation of the
ordinance's impact on local employers was completed. We view this tradeoff as
classic line-drawing in legislative policymaking.
See Trujillo,
1998-NMSC-031,
¶ 28 (stating that linedrawing is a legislative function).
See also Williamson
v. Lee Optical of Okla., Inc., 348 U.S. 483, 489 (1955) (explaining that
legislators may address only one area or aspect of a problem and neglect others
without causing invidious discrimination).
classification, in order to be
legal, must be rational; it must be founded upon real differences of
situation or condition, which bear a just and proper relation to the
attempted classification, and reasonably justify a different rule.
If persons under the same
circumstances and conditions are treated differently, there is arbitrary
discrimination, and not classification.
(Emphasis added.) Plaintiffs contend that because the City
conducted no studies or fact-finding into whether businesses employing more
than twenty-five workers had "real differences" from smaller
businesses, such a choice is invidious or arbitrary discrimination. We disagree
for two reasons. First, this argument erroneously attempts to shift the burden
onto the City to justify its policy choice. It is Plaintiffs' burden to
demonstrate the flaws in the classification; no such justification is required
for social and economic legislation as long as the classification is rationally
related to a legitimate government purpose. Wagner, 2005-NMSC-016, ¶ 12.
{50} Second, size-based
exemptions for small businesses, either based on gross receipts or the number
of employees, were proposed by the management members of the Roundtable. In its
recommendations, the management minority of the Roundtable suggested that if
the city council did expand the wage requirement to private employers, the
ordinance should differentiate among businesses by limiting the ordinance to
"employers with gross receipts of $5 million or more per year,"
stating that "[s]maller businesses simply have a limited capacity to
leverage large expense increases." Prior to issuing its report, the
minority also issued a list of "Vital Areas of Concern" to the
Roundtable stating, in part, that "[e]mployers who employ fewer than 10
full-time employees should be exempted from the mandated minimum wage." We
cannot see how an exemption based on business size, which was proposed by both
advocates and opponents of the ordinance, is irrational beyond a reasonable
doubt. The fact that the exemption was expanded from the initial ten employee
cut-off to twenty-five does not make it irrational; the decision to temper the
impact on Santa Fe businesses until more study on the ordinance's impact could
be completed appears to us to be reasonable. From our prior summary of cases
holding minimum wage legislation to be a valid exercise of the police power, it
is also readily apparent that minimum wage legislation serves a legitimate
government purpose.
{51} Plaintiffs next
argue that the holding in
Burch, where our Supreme Court struck down a
state minimum wage statute, requires the same result here.
Burch teaches
that when the law creates a classification, "there must always be
uniformity within the class."
Burch, 62 N.M. at 224-25, 308 P.2d at
203 (striking down a wage classification as "arbitrary and oppressive and
without any valid reason" when the class included food or drink servers as
well all types of drug store employees, not just those drug store employees
serving food or drink). Here, Plaintiffs have failed to show how, as in
Burch,
there is such a blatant and oppressive heterogeneity within a classification
that there can be no valid reason for it. Even opponents of the ordinance
recognized a reason for a size-based classification. The city council's
ultimate selection of the twenty-five employee cutoff is rationally related to
a legitimate government purpose and Plaintiffs have not shown how it is
invidious, arbitrary, or irrational. We therefore conclude the ordinance does
not offend equal protection guarantees provided by the New Mexico Constitution.
{52} Plaintiffs argue
that the ordinance constitutes a taking of private property in violation of the
takings clause in the New Mexico Constitution based on testimony at trial that
each of Plaintiffs' ventures would be economically destroyed within a matter of
a few years due to the ordinance. The New Mexico takings clause states that
"[p]rivate property shall not be taken or damaged for public use without
just compensation."
N.M. Const. art. II, § 20. The only difference between
our takings clause and the federal takings clause is the inclusion of the words
"or damaged" in the New Mexico Constitution. Although our cases have
pointed out that the "or damaged" provision allows compensation when
an actual taking has not occurred,
see Sunland Park v. Santa Teresa Svcs.
Co.,
2003-NMCA-106, ¶ 44,
134 N.M. 243,
75 P.3d 843, our jurisprudence in
this area does not materially vary from federal jurisprudence.
See Estate
& Heirs of Sanchez v. County of Bernalillo,
120 N.M. 395, 396-99,
902
P.2d 550, 551-54 (1995). Because the New Mexico takings clause parallels the
federal clause,
E.Spire Communications, Inc. v. Baca, 269 F. Supp. 2d
1310, 1325 (D. N.M. 2003),
aff'd by E.Spire Communications, Inc. v.
N.M. Public Regulation Commission, 392 F.3d 1204 (10th Cir. 2004), we find
federal case law instructive. There is federal authority rejecting Plaintiffs'
argument outright.
See Connolly v. Pension Benefit Guar. Corp.,
475 U.S. 211, 222-23 (1986) (providing minimum wage laws as an example of
regulations that do not constitute a taking);
see also McGrew
v. Indus. Comm'n, 85 P.2d 608, 611 (Utah 1938) (holding that a minimum wage
law is not a taking because an employer is neither required nor forbidden to
employ anyone and no property right is being taken from the employer). In
Commonwealth
Edison Co. v. United States, 271 F.3d 1327, 1339 (Fed. Cir. 2001) (in
banc), the Court of Appeals for the Federal Circuit extracted from the
plurality opinion in
Eastern Enterprises v. Apfel, 524 U.S. 498 (1998),
the conclusion that a majority of the United States Supreme Court has
"rejected the theory that an obligation to pay money constitutes a
taking."
Commonwealth Edison Co., 271 F.3d at 1339.
{53} New Mexico law
compels the same conclusion. Our Supreme Court, in
Temple Baptist Church,
Inc. v. City of Albuquerque,
98 N.M. 138, 144-45,
646 P.2d 565, 571-72
(1982), stated:
The general rule is that
a regulation which imposes a reasonable restriction on the use of private
property will not constitute a "taking" of that property if the
regulation is (1) reasonably related to a proper purpose and (2) does not
unreasonably deprive the property owner of all, or substantially all, of the
beneficial use of his property.
The wage regulation here does not appear to be a
"restriction on the use of private property" because Plaintiffs can
continue to use their businesses as they wish. In addition, the wage rate in
contracts for labor is generally not considered a vested property right of the
employer. See E.Spire Commc'ns, Inc., 269 F. Supp. 2d at 1325-26
(holding that a utility had no vested property right to a particular regulatory
rate and even if it did, its contracts were clearly subject to additional
regulation); see also McGrew, 85 P.2d at 610 (holding that an
employer has no vested right in the labor of his workers). However, even if the
ordinance did restrict the use of private property, it is reasonably related to
a proper purpose and does not deprive the business owner of substantially all
of the beneficial use of his property, given the absence of any severe,
retroactive liability. E. Enters., 524 U.S. at 500 (stating that
economic legislation "might be unconstitutional if it imposes severe
retroactive liability on a limited class of parties that could not have
anticipated the liability, and if the extent of that liability is substantially
disproportionate to the parties' experience").
{54} Plaintiffs have not
directed us to any authority, and we have found none, in which a minimum wage
law has been viewed as a violation of either the federal or a state takings
clause. We decline to be the first, particularly where we cannot identify any
limiting principle that would prevent such a holding from potentially
converting the vast majority of public health, safety, and welfare regulations,
which typically burden businesses with some additional costs, into takings of
private property by the state.
{55} Plaintiffs also
argue that by setting a minimum wage, the City was engaged in rate-making
within the meaning of New Mexico law and therefore had to comply with
rate-making requirements that ensure a reasonable rate of return to the
impacted businesses. In making this argument, Plaintiffs direct us to
traditional rate-making cases involving utilities.
See In re Petition
of PNM Gas Servs.,
2000-NMSC-012, ¶ 105,
129 N.M. 1,
1 P.3d 383 (vacating
and annulling the public utility commission's order denying a gas utility's
rate case);
In re Gen. Tel. Co. of S.W.,
98 N.M. 749, 751,
652 P.2d
1200, 1202 (1982) (reviewing telephone rate making proceedings);
Mountain
States Tel.& Tel. Co. v. N.M. State Corp. Comm'n,
90 N.M. 325, 329,
563
P.2d 588, 592 (1977) (same). We are unpersuaded. These cases do not address
municipal regulation of private businesses in any respect and do not support
Plaintiffs' implicit argument that the definition of rate-making should be
expanded to cover regulation of private wages by ordinance.
Ramirez v.
Dawson Prod. Partners, Inc.,
2000-NMCA-011, ¶ 10,
128 N.M. 601,
995 P.2d
1043 (stating that "cases are not authority for propositions they do not
consider").
{56} Plaintiffs claim
various procedural errors in either the enactment of the ordinance or the
management of the trial. We discuss and reject each in turn.
A.ABSENCE OF FISCAL IMPACT REPORT
{57} Plaintiffs claim
that the City violated a city ordinance mandating the preparation of a fiscal
impact report for all proposed ordinances and resolutions. Thus, because the
City did not prepare a fiscal impact report before it expanded the living wage
ordinance, Plaintiffs contend the ordinance is invalid.
{58} The applicable
Fiscal Impact Report Ordinance, Santa Fe, N.M., Administration: Fiscal Impact Reports;
Ordinances and Resolutions ch. II, § 2.10 (1997), provides:
A. For the purpose of
regulating the immediate and apparent long-range fiscal implications of
proposed ordinances and resolutions, the City of Santa Fe Rules and
Instructions for Fiscal Impact Reports is adopted by reference and incorporated
as fully as if set out herein.
B. Fiscal impact reports
shall be completed for all proposed ordinances and resolutions to be considered
for adoption of the governing body.
C. A copy of the City of
Santa Fe Rules and Instructions for Fiscal Impact Reports shall be kept for
distribution at the city of Santa Fe finance office.
D. Completed fiscal
impact reports shall be filed in the office of the city clerk.
{59} To the extent we
must interpret the fiscal impact report ordinance, we do so de novo.
Acosta
v. City of Santa Fe,
2000-NMCA-092, ¶ 16,
129 N.M. 632,
11 P.3d 596. We
construe an ordinance as we would a statute, giving effect to the intent and
purpose of those who enacted it, reading all parts together as a harmonious
whole, and refraining from adding in language not present.
Id. ¶ 17.
{60} The City completed a
fiscal impact report prior to the original living wage ordinance, passed in
2002, which applied only to city workers, grantees, and major contractors. The
City argues that a fiscal impact report was not required for the 2003
amendments to the ordinance, which expanded the requirements to certain private
employers, because the Fiscal Impact Report Ordinance is intended to
"assess the impact of proposed ordinances or resolutions on the City's
expenditures and revenues, and are not designed to assess fiscal impacts on
private business." At trial, the City presented testimony from city
employees that the fiscal impact report requirement had traditionally been
aimed at assessing impacts to city departments, budgets, and staffing. Thus,
because the 2003 amendments involved no additional direct city expenditures,
the City contends that a second fiscal impact report was not necessary.
{61} We agree. The fiscal
impact report form and instructions, which are incorporated by reference into
Fiscal Impact Reports; Ordinances and Resolutions ch. II, § 2.10, confirm that
the fiscal impact report requirement is intended to provide city policymakers with
information on the impact to city department budgets, staffing, and capital
expenditures caused by proposed ordinances or resolutions. For example, Section
C of the fiscal impact report form states that financial information on the
fiscal impact report "does not directly translate into a budget
increase" and goes on to explain the processes, "similar to annual
requests for budget," by which a city department requests a budget
increase from the finance committee. The form also contains lines for personnel
expenses, capital outlay expenses, and operating costs, as well as spaces to
identify which public funding source would pay for such expenses. The fiscal
impact report form states that the city manager must approve any increases in
staffing in advance, and requires that staffing increases be approved by the
human resources department.
{62} It would be
inappropriate and contrary to the fiscal impact report instructions to complete
a fiscal impact report form for fiscal impacts to private businesses. While an
ordinance or resolution impacting private entities may have indirect fiscal
impact on city coffers by stimulating or depressing tax payments or the need
for city services, assessing such incidental impacts to the City is clearly not
the objective of the fiscal impact report requirement. Construing the ordinance
as a whole, the plain meaning of the fiscal impact report requirement contained
in Fiscal Impact Reports; Ordinances and Resolutions ch. II, § 2.10, is that it
ensures city policymakers are provided with estimates of the impact of an
ordinance or resolution on the City's own budget. Because the City completed a
fiscal impact report for the initial living wage ordinance in 2002, which did
directly impact city expenditures, there was no requirement to complete a
fiscal impact report for the 2003 amendments to the ordinance which had no such
direct impact.
B.MISCELLANEOUS PROCEDURAL ERRORS BY THE DISTRICT COURT
{63} Plaintiffs contend
that the district court (1) abused its discretion in its management of
discovery regarding the City's expert economist, Dr. Robert Pollin, and (2)
erred in failing to adopt "uncontroverted and unimpeached testimony"
in connection with Plaintiffs' takings claim.
{64} Plaintiffs argue
that they were severely prejudiced by the short amount of time they had to
review the raw information providing the basis for a report from Dr. Pollin.
They contend that the City unjustifiably withheld this underlying information
for one month, and that the appropriate sanction was to bar Dr. Pollin's
testimony or continue the trial. As background, we recount selected events
leading up to trial.
{65} The district court
rescheduled the trial from February 2004 to April 12, 2004. On February 20,
2004, the court orally ordered that the City disclose any expert witnesses it
intended to call by February 25, 2004, and provide any expert reports in
existence.
In its filed order, the district court directed that both
parties "shall disclose all expert witnesses and their addresses and the
general nature of their testimony." On February 25, 2004, the City wrote
to Plaintiffs identifying Dr. Pollin as its expert witness and provided a list
of the subjects upon which he was expected to testify and other background
materials, such as his prior research. On March 4, 2004, Plaintiffs moved under
Rule
1-037 NMRA, to exclude Dr. Pollin because the City had neither provided
Dr. Pollin's report nor stated Dr. Pollin's opinion or the bases therefor,
thereby depriving Plaintiffs of an "opportunity to prepare an effective
cross-examination" or obtain a rebuttal expert. On March 9, 2004, the City
provided Plaintiffs with Dr. Pollin's final report, which had been completed
that same day. On March 15, 2004, the district court held a hearing on Plaintiffs'
expedited motion to exclude the testimony of Dr. Pollin and denied the motion.
On April 2, 2004, Plaintiffs made an emergency application for an order to
either exclude his testimony or bifurcate the trial. The district court denied
this motion. Six days before trial, the City provided to Plaintiffs a compact
disk and binders with selected printouts containing the data supporting Dr.
Pollin's analysis.
{66} Ultimately,
Plaintiffs did call their own rebuttal expert economist, Dr. Aaron Yelowitz, after
Dr. Pollin had testified. Yelowitz testified that he was able to form an
opinion about the conclusions and methods in Dr. Pollin's report, but he was
not able to confirm Dr. Pollin's calculations due to the limited time he had
prior to trial to review the materials. However, on cross, Yelowitz conceded
that he had not seen the binder of selected documents that the City had
identified as being the most important.
{67} Whether we frame the
issue as a denial of a motion for continuance or as a denial of sanctions on
discovery, we apply an abuse of discretion standard.
State v. Torres,
1999-NMSC-010, ¶ 10,
127 N.M. 20,
976 P.2d 20 (stating abuse of discretion is
the standard for denial of continuance);
Enriquez v. Cochran,
1998-NMCA-157, ¶ 20,
126 N.M. 196,
967 P.2d 1136 (stating that abuse of
discretion applies for a court's choice of sanctions). "An abuse of
discretion will be found when the trial court's decision is clearly untenable
or contrary to logic and reason."
Newsome v. Farer,
103 N.M. 415,
420,
708 P.2d 327, 332 (1985). "When there exist reasons both supporting
and detracting from a trial court decision, there is no abuse of
discretion."
Talley v. Talley,
115 N.M. 89, 92,
847 P.2d 323, 326
(Ct. App. 1993).
{68} Our review of the
February 25, 2004 letter from the City to Plaintiffs indicates compliance with
the district court's written order to identify the expert and describe
generally the nature of his expected testimony. Dr. Pollin's report, which
reportedly was completed on March 9, 2004, was provided to Plaintiffs on the
same day. The combination of the letter and the report certainly met the
requirements of Rule 1-026, which requires only a "summary of the grounds
for each opinion." We note that Dr. Pollin's report has a methodology
section and appendices and identifies the public data sets used for the
analysis. This is clearly enough to suffice as a "summary" of the
grounds for his opinion and was in the hands of Plaintiffs over one month prior
to trial for review by their experts.
{69} We do not see the
court's ruling as clearly untenable or beyond logic or reason. We see reasons
supporting the district court's decision to proceed with trial, such as the
need to avoid a second continuance and the notion that under Rule 1-026 all of
the data underlying Dr. Pollin's report need not have been provided to
Plaintiffs. One reason detracting from the district court's ruling could be a
desire to ensure that Plaintiffs' experts had ample time to review all of the
data and methods underlying Dr. Pollin's report prior to trial, even if it was
not strictly required. The district court would have been well within its
discretion to either grant or deny a continuance or bifurcation.
See Talley,
115 N.M. at 92, 847 P.2d at 326. We doubt whether sanctions, up to and
including exclusion of Dr. Pollin's testimony, would have been appropriate, and
so it was proper for the district court to deny the extreme sanction of
exclusion.
2.REJECTION OF PURPORTEDLY UNCONTROVERTED TESTIMONY
{70} Plaintiffs next
argue that in considering their takings claim, the district court improperly
rejected "uncontroverted and unimpeached" testimony as to the costs
of the ordinance and its impact on Plaintiffs' profitability. Plaintiffs' claim
has no merit. Whether the district court did or did not believe Plaintiffs'
assertions as to their expectations or costs is irrelevant because it decided
as a matter of law that the ordinance did not constitute a taking. As we
discussed above, this ruling was correct and we can affirm on that basis.
{71} Moreover, we find no
merit to Plaintiffs' contention. This was a case that had contradictory
testimony from the City's witnesses as well as self-contradictory testimony
from Plaintiffs' own witnesses. It is well established that "[w]here there
is conflicting evidence, the trial court, as fact finder, resolves all
disparities in the testimony and determines the weight and credibility to be
accorded to the witnesses."
See Tres Ladrones, Inc. v. Fitch,
1999-NMCA-076, ¶ 16,
127 N.M. 437,
982 P.2d 488.
{72} The City has the
power to set a minimum wage for private employers that is higher than that
mandated by the state. The ordinance does not conflict with state law and is
not otherwise unconstitutional. The decision of the district court is therefore
affirmed.
MICHAEL D. BUSTAMANTE, Chief Judge