Opinion ID: 2638592
Heading Depth: 2
Heading Rank: 5

Heading: The Waiver of Sovereign Immunity in Section 37-1-23

Text: {16} Cockrell contends that Section 37-1-23, which waives immunity from actions based on a valid written contract, waives the State's immunity from FLSA claims. To support his claim, Cockrell relies on this Court's opinion in Bernalillo County, which the Court of Appeals interpreted as holding that an FLSA claim sounds only in contract. Bernalillo County, 114 N.M. at 699, 845 P.2d at 793. Based on this interpretation of Bernalillo County, Cockrell contends that an FLSA claim falls within the parameters of Section 37-1-23 and that sovereign immunity is waived as long as there is a valid written contract of employment. See Archer v. Rockingham County, 144 N.C.App. 550, 548 S.E.2d 788, 792-93 (2001), review denied, 355 N.C. 210, 559 S.E.2d 796 (2002); see also West v. State ex rel. State Superintendent of Pub. Educ., 324 So.2d 579, 581 (La.Ct.App.1975); Allen v. Fauver, 167 N.J. 69, 768 A.2d 1055, 1061-62 (2001) (Long, J., concurring in part, dissenting in part); cf. King v. State, 260 Neb. 14, 614 N.W.2d 341, 348 (2000) (per curiam) (concluding that the statutory waiver of immunity for claims based on contract does not waive the State's sovereign immunity from a suit brought against it for alleged FLSA violations when the FLSA claims are not founded upon or growing out of the contracts themselves). The Court of Appeals held that Cockrell could assert his FLSA claim based on a waiver of immunity under Section 37-1-23 if he established a valid written contract incorporating the FLSA. We disagree. {17} Initially, we believe that the Court of Appeals misconstrued our opinion in Bernalillo County. In that case, we addressed an issue of insurance coverage and an insurance company's duty to defend and indemnify. Bernalillo County, 114 N.M. at 697, 845 P.2d at 791. In order to resolve this issue, we analyzed whether the injured party's complaint states facts that bring the case within the coverage of the policy. Id. The injured party's complaint contained three counts, the first of which alleged a violation of the FLSA and the second two of which alleged breach of contract. Id. at 698-99, 845 P.2d at 792-93. We addressed each count separately. Id. The discussion referenced by the Court of Appeals concerned one of the breach of contract counts, not the count directly alleging a violation of the FLSA. Id. In the context of the contract claim, we determined that the breach of the contractual duty to pay overtime wages did not give rise to an independent action in tort. Id. at 699, 845 P.2d at 793. Although we stated that [e]ven the violation of the FLSA evolves from the contract of employment, this observation was made in the specific context of a breach of contract claim, not a claim for damages directly under the FLSA. Id. As a result, we do not believe that our conclusion in Bernalillo County that this specific count of the complaint was properly viewed as existing only in contract, id., provides guidance on the question presented in this case. {18} We determine that Cockrell's direct FLSA claim is not one based on contract. Cockrell's direct FLSA claim is statutory, not contractual. The FLSA claim is based on NMSU's alleged failure to comply with the substantive requirements of the FLSA as mandated by Congress, and Cockrell seeks the damages provided in 29 U.S.C. § 216(b), including liquidated damages and attorney's fees. Addressing a nearly identical argument, the Supreme Court of New Jersey recognized that recharacterization of the claim cannot change the essential nature of the claim. Plaintiffs' complaint alleges a violation of the federal FLSA and seeks damages pursuant to rights created by that federal statute. We can see no reasonable conclusion other than that plaintiffs' claim is a statutory claim. Allen, 768 A.2d at 1059 (citations omitted). In fact, Cockrell amended his complaint to allege a separate breach of contract claim based on NMSU's failure to pay overtime wages. Because the FLSA claim is purely statutory, we reject the characterization of it as one based on a valid written contract within the meaning of Section 37-1-23. Thus, Section 37-1-23 does not provide an express waiver of immunity for the FLSA claim. {19} Cockrell appears to contend in the alternative that Section 37-1-23 implicitly evidences a legislative intent to waive immunity from FLSA claims. See Anthony v. State, 632 N.W.2d 897, 902 (Iowa 2001) (We are convinced that the statutory scheme for deriving pay plans has been implemented in a manner that includes FLSA overtime remuneration as compensation owed by an employer.). We are not persuaded. {20} We have been reluctant to infer a waiver of sovereign immunity, even outside the context of constitutional sovereign immunity. In Torrance County, for example, we concluded that our legislature's silence on punitive damages in Section 37-1-23 cannot be read as expressing an intention to waive immunity for punitive damages in contract actions. 113 N.M. at 598, 830 P.2d at 150. Similarly, the Supreme Court has indicated that in order to find a waiver of a state's constitutional sovereign immunity the State's consent [must] be unequivocally expressed. Pennhurst State Sch. & Hosp. v. Halderman, 465 U.S. 89, 99, 104 S.Ct. 900, 79 L.Ed.2d 67 (1984). Our reluctance to infer that a State's immunity from suit . . . has been negated stems from recognition of the vital role of the doctrine of sovereign immunity in our federal system. Id. Constructive consent is not a doctrine commonly associated with the surrender of constitutional rights, and we see no place for it here. In deciding whether a State has waived its constitutional protection under the Eleventh Amendment, we will find waiver only where stated by the most express language or by such overwhelming implications from the text as [will] leave no room for any other reasonable construction. Murray v. Wilson Distilling Co., 213 U.S. 151, 171, [29 S.Ct. 458, 53 L.Ed. 742] (1909). Edelman v. Jordan, 415 U.S. 651, 673, 94 S.Ct. 1347, 39 L.Ed.2d 662 (1974) (alteration in original). Because the waiver in this case involves the State's constitutional right to sovereign immunity, a right that goes to the essence of federalism, Allen, 768 A.2d at 1060, we require a clear and unambiguous expression of legislative intent to consent to suit for FLSA claims. {21} In response to a similar argument that the legislative waiver of immunity for contract claims evidences an intent to waive immunity for FLSA claims, the Supreme Court of Virginia stated, This proposition ignores the basis underpinning the Commonwealth's assertion of sovereign immunity in this case. As the Commonwealth notes, the plea in bar was advanced in order to exercise the Commonwealth's prerogative not to be subject to suit in her own courts pursuant to an act of Congress. The issue is not one of the avoidance of a just contract debt, but of the preservation of a right reserved to the states by the United States Constitution. We see no reason to vitiate that right by a broad and unwarranted interpretation of the legislative intent behind the limited waiver of sovereign immunity [for contract debts], and nothing in our cases interpreting that statute suggests that it should be applied in circumstances other than in claims properly instituted under that statute and the scheme provided for pursuing such claims. . . . Commonwealth v. Luzik, 259 Va. 198, 524 S.E.2d 871, 877 (2000) (emphasis added). We agree. We believe that the purposes behind the creation of immunity and the limited waiver of immunity in Section 37-1-23 do not support an inference of an intent to waive this State's constitutional sovereign immunity. {22} We have recognized that the purpose of the legislative enactment containing Section 37-1-23 was to reinstate the sovereign immunity which had been abolished by Hicks v. State , subject to certain exceptions. Hydro Conduit, 110 N.M. at 177, 793 P.2d at 859. The limited waiver of immunity for valid written contracts encourag[es] parties who contract with governmental entities to do so in writing in order to facilitate clarity in contractual terms and obligations and to ensure that the governmental entity is authorized to enter into [the] contract. Garcia v. Middle Rio Grande Conservancy Dist., 1996-NMSC-029, ¶¶ 16-17, 121 N.M. 728, 918 P.2d 7. The State's constitutional sovereign immunity involves entirely different considerations than contract enforcement and proof of contractual terms. It involves the proper balance between the supremacy of federal law and the separate sovereignty of the States. Alden, 527 U.S. at 757, 119 S.Ct. 2240. We believe it would be contrary to the purposes of Section 37-1-23 to infer a waiver of an immunity that not only survived our opinion in Hicks but goes to the very heart of federalism. Thus, we conclude that Section 37-1-23 does not waive the State's constitutional sovereign immunity. {23} Because the Legislature has not waived the State's constitutional sovereign immunity, NMSU could not do so on its own in a contract of employment. See Connelly v. State, 26 P.3d 1246, 1259 (Kan.2001) (The consent to suit or waiver of sovereign immunity must be based on State action which we deem to be legislative enactments expressing the will of elected officials and cannot be based on acts of agents.), cert. denied, ___ U.S. ___, 122 S.Ct. 813, 151 L.Ed.2d 698 (2002). Thus, although Cockrell contends that NMSU agreed to be bound by the provisions of the FLSA by incorporating the federal act into a personnel manual, NMSU did not have the authority to waive the State's constitutional sovereign immunity. As indicated above, that power is reserved to the Legislature. Moreover, we disagree with the Court of Appeals' determination that the incorporation of the provisions of the FLSA into an employment contract by operation of law would entitle Cockrell to invoke the remedial provisions of the FLSA in state court. It is true that [t]he FLSA provisions are read into and become a part of every employment contract that is subject to the terms of the Act. Bernalillo County, 114 N.M. at 699, 845 P.2d at 793 (internal quotation marks and quoted authority omitted). A contract incorporates the relevant law, whether or not it is referred to in the agreement. State ex rel. Udall v. Colonial Penn Ins. Co., 112 N.M. 123, 130, 812 P.2d 777, 784 (1991). However, as we have described above, the Supreme Court has held that Congress is without authority under Article I of the federal Constitution to subject a nonconsenting state to private remedies in the state's own court for the violation of a federal statute. Because we conclude that the State of New Mexico has not consented to FLSA claims by state employees, 29 U.S.C. § 216(b) does not have the force of law as applied against the State and therefore cannot be incorporated into a state employment contract by operation of law. It would indeed be circular logic to allow a contract, by legal implication, to accomplish what the law otherwise prohibits. Thus, to the extent that NMSU might have had a contract with Cockrell incorporating the FLSA by operation of law, it would incorporate only those constitutionally valid substantive provisions of the federal act by which the State is bound under Garcia; it would not incorporate the remedial provisions that are beyond the scope of Congress's constitutional powers to enforce against the State under Alden. {24} We conclude that any waiver of the State's constitutional sovereign immunity must be clear and unambiguous. See generally Dick v. Merillat, 139 Ohio App.3d 716, 745 N.E.2d 507, 510 (2000) (discussing a statute that expressly exempts from immunity civil claims based upon alleged violations of the constitution or statutes of the United States). We also conclude that the Legislature has not enacted a clear waiver of immunity from FLSA claims. In fact, we believe it is noteworthy that the Legislature has expressly provided that the provisions of the Minimum Wage Act, NMSA 1978, §§ 50-4-19 to -30 (1955, as amended through 1999), New Mexico's analog to the FLSA, shall not apply to the state or any political subdivision thereof. NMSA 1978, § 50-4-21(B) (1983). For these reasons, we hold that Cockrell's FLSA claims must be dismissed on the basis of NMSU's constitutional immunity from suit.