MICHAEL H. DOLINGER UNITED STATES MAGISTRATE JUDGE

MEMORANDUM & ORDER

:

Plaintiff Horace Slay, a former employee of defendant Target Corporation, commenced this lawsuit in New York State Supreme Court, asserting a single claim under N.Y. Labor Law § 740, the state whistleblower statute. In substance, Slay alleged that he had been terminated from his job because he had reported to Target the improper conduct of a supervisor, who, he contended, was animated by racial animus toward plaintiff and other African-American employees.

On April 20, 2011, defendant removed the lawsuit to this court. The stated basis for the removal was that plaintiff was a New York domiciliary and defendant was not.

Plaintiff has since moved to amend the complaint. In substance his amendment would drop the whistleblower claim and in its place would assert one federal statutory claim and three state-law claims. The first claim invokes 42 U.S.C. § 1981 and alleges that defendant exposed minority workers, including plaintiff, to hostility based on their race and terminated plaintiff's employment for racially discriminatory reasons. (Decl. of Fred Lichtmacher, Esq. in Support of Pl.'s Mot. To Amend, Ex. 1 ("Am. Compl.") ¶¶ 22-24, June 7, 2011; see also id. at ¶¶ 10-17). The next two claims are asserted under the parallel anti-discrimination provisions of the New York State Human Rights Law, N.Y. Exec. Law § 296, and the comparable New York City statute, embodied at N.Y.C. Admin. Code § 8-107. (Id. at ¶¶ 28-42). Finally, Slay asserts a breach-of-contract claim. (See id. ¶¶ 43-49).

Defendant has opposed the motion. Its sole argument against the amendment is that all of the claims asserted in the proposed amended complaint are barred by the so-called election-of-remedies provision of N.Y. Labor Law § 740(7). (Br. in Opp'n to Pl.'s Mot. to Amend, 2-4, June 21, 2011). For the reasons that follow, we disagree and hence grant the motion to amend.

ANALYSIS

Rule 15(a)(2) of the Federal Rules of Civil Procedure specifies that federal courts should "freely give" leave to amend "when justice so requires," As explained by the Supreme Court, such leave is to be liberally granted:

If the underlying facts or circumstances relied upon by a plaintiff may be a proper subject of relief, he ought to be afforded an opportunity to test his claim on the merits. In the absence of any apparent or declared reason -- such as undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendment previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, futility of amendment, etc. -- the leave sought should, as the rules require, "be freely given."

Target invokes futility as the one ground for denying Slay's application. Futility generally turns on whether the proposed amended pleading states a viable claim. Thus, if the proposed new pleading could survive a Rule 12 dismissal motion, it will generally not be deemed futile. Penn Group, LLC v. Slater, 2007 WL 2020099, *4 (S.D.N.Y. June 13, 2007) (citing Lucente v. IBM Corp., 310 F.3d 243, 258 (2d Cir. 2002); Ricciuti v. N.Y.C Transit Auth., 941 F.2d 119, 123 (2d Cir. 1991)).

In this case defendant's argument has a somewhat different focus and turns on the proper interpretation of the so-called election-of-remedies provision found in section 740(7) of the New York Labor Law. Before addressing that issue, we briefly summarize the salient features of the statute.

Section 740(2) of the Labor Law prohibits employer retaliation against employees in certain specified circumstances. Thus it states in pertinent part:

Prohibitions. An employer shall not take any retaliatory action against an employee because such employee does any of the following:

(a) discloses or threatens to disclose to a supervisor or to a public body an activity, policy or practice of the employer that is in violation of law, rule or regulation, which violation creates and presents a substantial and

specific danger to the public health or safety, or which constitutes health care fraud.

As for the targeted election-of-remedies provision, it states the following:

Existing Rights. Nothing in this section shall be deemed to diminish the rights, privileges or remedies of any employee under any other law or regulation or under any collective bargaining agreement or employment contract; except, that the institution of an action in accordance with this section shall be deemed a waiver of the rights and remedies available under any other contract, collective bargaining agreement, law, rule or regulation or under the common law.

The reach of this provision has caused considerable interpretive difficulty, particularly since, if literally read, it would seem to bar any plaintiff who has filed a section 740 claim from asserting claims against anyone on any other claim, whether or not related to the section 740 claim. Even if more narrowly construed to require some factual relationship between the section 740 claim and other, possibly future claims, the statute raises serious problems in two respects. First, it would seem then to preclude claims that, even if related to the transactions at issue on the section 740 claim, are based on wholly separate statutory policies, such as statutes barring discriminatory treatment, as distinct from prohibitions against retaliation for notification about threats to public health and safety. Second, insofar as the term "laws" is defined to encompass federal legislation, the statute, if so interpreted, would appear very possibly to run afoul of the Supremacy Clause of the United States Constitution since it would purport to define the terms for waiver of federal rights (whether constitutional or statutory). Indeed, the practice commentaries to this section make this very point in arguing for a narrow interpretation of the waiver clause. See Givens, Practice Commentaries, McKinney's Consol. Laws of N.Y. Anno., Book 30, N.Y. Labor Law § 740, pt. III(M)(3) (noting that a broad interpretation of section 740(7) as barring recovery under federal retaliation statutes "may violate the obligations of the states to enforce federal law") (McKinney's 1988); see also id. at pt. III(M)(2) (the compulsory waiver provision "is not a proviso which . . . takes precedence over the original rule of preservation of other rights in Clause 1, but is written as an exception, as such capable of narrow construction . . . [it] might appropriately be read to mean that the rights and remedies which are deemed waived are those for retaliation as such rather than all rights arising out of the incident involved") (internal citations and emphasis omitted).

These concerns have led to the recognition in the better reasoned cases that section 740(7) must be more narrowly construed. For reasons discussed at length by Judge Lynch in Collette v. St. Luke's Roosevelt Hosp. 132 F. Supp.2d 256 (S.D.N.Y. 2001), we conclude that the waiver clause "applies only to rights and remedies concerning whistleblowing as defined in the Act." Id. at 274. See id. at 262-74. Accord, e.g., Kramsky v. Chetrit Group, LLC, 2010 WL 4628299, *3-6 (S.D.N.Y. Nov. 16, 2010); Reddington v. Staten Island Univ. Hosp., 373 F. Supp.2d 177, 185-86 (E.D.N.Y. 2005), aff'd, 543 F.3d 91 (2d Cir. 2008). See also Frank v. State, 924 N.Y.S.2d 634, 636-37, 2011 Slip Op. 04588 (3d Dep't 2011).

As for application of this formulation to our case, we start by noting that the New York Court of Appeals has clarified that -- given the statutory wording -- the mere filing of a section 740 claim triggers the waiver analysis even if the claim is time-barred or the plaintiff thereafter seeks to withdraw that claim. See Reddington v. Staten Island Univ. Hosp., 11 N.Y.3d 80, 87-88, 862 N.Y.S.2d 842, 847 (2008). Hence plaintiff cannot avoid the issue by virtue of the fact that his proposed amended complaint omits the section 740 claim. We must, then, assess whether the particular claims that he does assert in that pleading invoke the same "rights and remedies concerning whistleblowing as [are] defined in the Act." We conclude that they do not.

We start with the basic factual allegations of the amended complaint. Plaintiff reports that he was employed at a Target retail store at 135-05 20^th Avenue, in College Point, Queens for thirteen years, culminating in his appointment as a "Department Manager," which he refers to as a supervisory position. (Am. Compl. ¶¶ 7-8). He alleges that he was terminated "on or about" April 16, 2010. (Id. ¶¶ 7, 17). He then proceeds to describe the events leading to that termination.

According to plaintiff, he had never been subjected to any disciplinary action by the company. (Id. ¶ 9), He recounts that in early 2010 a new store manager began to work at his premises, as did several other managerial personnel. The manager's first name was Ely and one of the other supervisors was named Jordan. (Id. ¶ 10).

Plaintiff alleges that as soon as Ely became the manager, he fired numerous store personnel, most of whom were minorities. He also alleges that both Ely and Jordan made "numerous . . . racist statements to plaintiff, who is African American, and to other African Americans at Target such as 'I can't stand F-ing N-ers.'" (Id. ¶¶ 11, 14).

In plaintiff's account, he was on duty on the overnight shift on or about April 10-11, 2010, and Jordan was present "as an executive trainee," a position superior to that of plaintiff at the time. He asserts that sometime during that shift, Jordan "deliberately locked two employees, both minorities, in the freezer at Target." He reports that the employees were "eventually" liberated and that he thereafter made a report of the incident to the company. (Id. ¶¶ 12-13, 15-16).

According to plaintiff, on April 16, 2010 he was "summoned" by a supervisor named Faye, who advised him that he was suspended and indicated that this was probably connected in some way to the freezer incident. Plaintiff alleges that he was escorted out of the store by Target security personnel and a "police escort" and thereafter "terminated without explanation." (Id. ¶¶ 17-19).

Based in part on this account, plaintiff asserts his first claim under 42 U.S.C. § 1981. He alleges that he entered into an employment contract with defendant in 1996 or 1997, and he asserts upon "information and belief" that Target terminated that contract "due to plaintiff's race and his standing against the hostile treatment of other minority employees." In an alternative phrasing, he alleges that he was fired because of his "reporting the infringement of the civil rights of other minority employees." (Id. ¶¶ 21-27).

Plaintiff's second claim, under section 296 of the New York Executive Law, and his third, asserted under section 8-107 of the New York City Administrative Code, contain a somewhat broader set of factual allegations. Thus he complains that for a period of time -- presumably starting in early 2010 -- he was subjected to a hostile work environment "premised on racial discrimination" and "harassment by his supervisors," including the freezer incident. He then alleges, in a fashion that parallels his federal claim, that he was fired "as a direct result of [his] complaint of racial discrimination and due also to his being a minority." (Id. ¶¶ 29-38, 41).

Plaintiff's last claim, for breach of contract, is premised on the existence of an employment contract. He says that the defendant breached the agreement when it fired him "as a result of his complaints of racial discrimination." (Id. ¶ 47; see also id. ¶¶ 44-48).

A review of these claims readily demonstrates that section 740(7) does not bar them. The section 1981 claim is not susceptible to dismissal for two reasons. First, because it is based on federal law, we infer that the state statute does not purport to reach it, an interpretation that is appropriate as a means of avoiding a serious potential constitutional defect in the state enactment. See, e.g., Collette, 132 F. Supp.2d at 265-66 & n.7. Second, the allegations underlying the claim distinguish it from the rights and remedies that concern whistleblowing "as defined in" section 740.

The distinction between what plaintiff is alleging and what the state statute addresses becomes apparent when we recognize that the state law is explicitly limited to reports of violations that "create[] and present[] a substantial and specific danger to the public health and safety." N.Y. Labor Law § 740(2)(a). We infer that defendant is implicitly suggesting that the incident in which Jordan allegedly locked two store employees in the freezer constituted a violation that created the requisite danger, an assumption that appears unwarranted in view of the language of the statute, which refers to creation of "a specific and substantial danger to public health and safety" -- language that suggests that the danger must extend beyond a potential for harm to the two store employees. Indeed, the New York courts have consistently read this language as requiring more than an "isolated" incident that may have threatened the well-being of one or two individuals or that posed, at most, a speculative danger to the public. See, e.g., Cotrone v. Consol. Edison Co. of N.Y., Inc., 50 A.D.3d 354, 355, 856 N.Y.S.2d 48, 48-49 (1st Dep't 2008); Peace v. KRNH, Inc., 12 A.D.3d 914, 915, 792 N.Y.S.2d 547, 549 (3d Dep't 2004).

In any event, plaintiff's pleading of the claim makes clear that the focus of his report to the company was not on any danger to public health and safety, but rather on the fact that the store supervisors were engaging in a pattern of racially motivated misconduct directed at African-American employees. This alone appears to take the incident that allegedly triggered plaintiff's termination out of the reach of section 740 concerns.

Finally, in any event, whatever the tenor of plaintiff's alleged report to company officials, he is not alleging that he was terminated for reporting a health-and-safety violation, but rather because of both his race and his complaint about racial discrimination on the part of the senior store managers. These concerns do not mirror the focus of section 740 and hence take this claim outside the realm of the waiver provision. See, e.g., Collette, 132 F. Supp.2d at 271 & n.12.

The next two proposed claims of the plaintiff are subject to the same analysis, that is, they involve allegations of racial animus and retaliatory animus triggered by an African-American employee complaining of racially motivated harassment. Indeed, plaintiff's allegations supporting his claims under the State and City anti-discrimination laws target the behavior of the supervisors well before the freezer incident -- alleging a pattern of harm that amounted to a hostile work environment -- and are plainly focused on the notion that this conduct was racially motivated. Since plaintiff is invoking protections against such discrimination, the concerns of section 740 about public health and safety are not implicated, and the independent policies underlying the anti-discrimination statutes preclude dismissal on the basis cited by defendant.

Finally, plaintiff's contract-breach claim is also not vulnerable to an election-of-remedies argument. That claim is also premised on the notion that the plaintiff had a contract that gave him "absolute" protection against its termination on racial grounds (Am. Compl. § 47), and he asserts that it was this improper motivation that gives rise to his claim. Once again, the claim is not predicated on an assertion that plaintiff was terminated because he reported a threat to public health and safety, and hence the waiver analysis is inapplicable.

CONCLUSION

For the reasons stated, plaintiff's motion to amend the complaint is granted. The complaint is deemed served on defendant, which is to respond to that pleading within twenty days. Dated: New York, New York

July 20, 2011

/s/_________

MICHAEL H. DOLINGER

UNITED STATES MAGISTRATE JUDGE Copies of the foregoing Memorandum and Order have been mailed today to: Fred Lichtmacher, Esq.
The Empire State Building
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Cheryl M. Stanton, Esq.
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New York, New York 10175