Restaurant Law Center v. City of New York
| Citation | 585 F.Supp.3d 366 |
| Decision Date | 10 February 2022 |
| Docket Number | 21cv4801 (DLC) |
| Parties | RESTAURANT LAW CENTER, et al., Plaintiffs, v. CITY OF NEW YORK, et al., Defendants. |
| Court | U.S. District Court — Southern District of New York |
For plaintiffs Restaurant Law Center and New York State Restaurant Association: Angelo Amador, Restaurant Law Center, 2055 L Street, NW, Suite 700, Washington, DC 20036, Leni D. Battaglia, James D. Nelson, Morgan, Lewis & Bockius LLP, 1111 Pennsylvania Ave., NW, Washington, DC 20004, William R. Peterson, Morgan, Lewis & Bockius LLP, 1000 Louisiana Street, Ste. 4000, Houston, TX 77002.
For defendants: Georgia M. Pestana, New York City Law Department, Office of The Corporation Counsel, 100 Church Street, New York, NY 10007.
For Amicus Curiae Professors of Labor Law: Hanan B. Kolko, Cohen Weiss and Simon LLP, 900 Third Avenue, Ste. 2100, New York, NY 10022.
For Amicus Curiae National Employment Law Project, Make the Road New York, the Center for Popular Democracy, A Better Balance, the CUNY Urban Food Policy Institute, the New York Taxi Workers Alliance, Community Voices Heard, and the Workers Justice Project: Wayne N. Outten, Outten & Golden, LLP, 685 Third Avenue, 25th Floor, New York, NY 10017, (212) 245-1000.
In 2021, the City of New York ("City") enacted a law prohibiting the wrongful discharge of fast food restaurant employees and expanding private enforcement avenues available to them (the "Wrongful Discharge Law" or the "Law"). The Restaurant Law Center ("RLC") and the New York State Restaurant Association ("NYSRA"; together, "Plaintiffs") seek a declaration of the Law's invalidity under the U.S. Constitution and State law. They have moved for summary judgment on all claims. The City has cross-moved for summary judgment, and urges the Court to refrain from exercising supplemental jurisdiction over the Plaintiffs’ State law claims. For the reasons set forth below, the City's motion for summary judgment on the federal claims is granted. The Court declines to exercise supplemental jurisdiction over the State law claims.
This litigation addresses a 2021 amendment to the City's Fair Workweek Law. The City enacted the Fair Workweek Law in 2017 to expand wage and hour protections for employees working at fast food businesses. N.Y.C. Admin. Code §§ 20-1201 to 20-1263.
N.Y.C. Admin. Code § 20-1201 (emphasis added). A "fast food employee ... does not include any employee who is salaried." Id.
On December 17, 2020, the City Council amended the Fair Workweek Law by enacting the Wrongful Discharge Law at issue in this case. The Wrongful Discharge Law was signed by the Mayor and the provisions at issue here went into effect on July 4, 2021. N.Y.C. Admin. Code §§ 20-1271 to 20-1275.
The Wrongful Discharge Law prohibits the employers governed by the Fair Workweek Law from firing hourly wage employees without notice or reason in the absence of egregious misconduct, and provides those employees with the option to arbitrate claims of alleged violations of the Law. Provisions of the Wrongful Discharge Law that are significant to the discussion that follows include the following.
The Just Cause Provision states that a "fast food employer shall not discharge a fast food employee who has completed such employer's probation period2 except for just cause or for a bona fide economic reason."3 Id. § 20-1272(a). Section 20-1271 provides definitions of the operative terms in the Provision.
A discharge is defined as "any cessation of employment, including layoff, termination, constructive discharge, reduction in hours and indefinite suspension." Id. § 20-1271. A reduction in hours "means a reduction in a fast food employee's hours of work totaling at least 15 percent of the employee's regular schedule or 15 percent of any weekly work schedule." Id.
"Just cause" is defined as "the fast food employee's failure to satisfactorily perform job duties or misconduct that is demonstrably and materially harmful to the fast food employer's legitimate business interests." Id. There are five nonexclusive factors that a fact-finder must consider when determining whether a just cause discharge occurred. Id. §§ 20-1271, 20-1272(b).
Id. § 20-1201. Except for an employee's egregious misconduct, a termination is not for just cause unless the employer utilized progressive discipline. Id. § 20-1272(c).
Finally, an employer must supply the former employee with a written explanation containing "the precise reasons for their discharge" within five days of discharge. Id. § 20-1272(d). In any subsequent action alleging a violation of the Just Cause Provision, the employer bears the burden of establishing that the discharge was valid, and a fact-finder is limited to consideration of the employer's written reasons it provided to the employee. Id. § 20-1272(d)-(e).
The Wrongful Discharge Law also amended the Fair Workweek Law by giving employees a right to arbitrate a claim of wrongful discharge (the "Arbitration Provision"). Id. § 20-1273. Previously, the Fair Workweek Law provided two avenues for enforcement: administrative enforcement by the New York City Department of Consumer and Worker Protection ("DCWP") upon an employee's complaint, id. § 20-1207, or direct private action in court by an employee, id. § 20-1211.
The Arbitration Provision adds that "any person or organization representing persons alleging a violation" of the Wrongful Discharge Law may bring an arbitration proceeding. Id. § 20-1273(a). An employee who prevails in arbitration is entitled to attorneys’ fees and costs, reinstatement or restoration of hours, and "all other appropriate equitable relief," including "such other compensatory damages or injunctive relief as may be appropriate." Id. The DCWP may "provide by rule for persons bringing such a proceeding to serve as a representative party on behalf of all members of a class." Id.
Once an employee selects arbitration to pursue a claim, it "shall be the exclusive remedy for the wrongful discharge dispute." Id. § 20-1273(i). The parties may petition for judicial review of the outcome of any arbitration proceeding. Id. § 20-1273(j).
Plaintiff RLC is a public policy organization based in Washington, D.C. that is affiliated with the National Restaurant Association, a food service trade association. Plaintiff NYSRA is a not-for-profit hospitality association with over 10,000 food service members in the State, including approximately 1,000 members in New York City. Some of those member food service establishments are fast food restaurants.
The RLC and NYSRA initiated this action on May 28, 2021. They challenge the City's authority to enact the Wrongful Discharge Law and seek declaratory and injunctive relief. They bring this action under 42 U.S.C. § 1983 and assert that the Wrongful Discharge Law violates the dormant Commerce Clause and Supremacy Clause of the U.S. Constitution, in addition to raising claims under New York State law.4 The parties have agreed to litigate these claims through cross-motions for summary judgment.
An Order of February 1, 2022 granted two motions by amicus curiae for leave to file briefs in support of the City. The amici are Professor Kate Andrias and other Professors of Labor Law, and a group of organizations including the National Employment Law Project, Make the Road New York, the Center for Popular Democracy, A Better Balance, the CUNY Urban Food Policy Institute, the New York Taxi Workers Alliance, Community Voices Heard, and the Workers Justice Project.
The City challenges the Plaintiffs’ standing to bring these claims. Finding that at least the NYSRA has standing, this Opinion will address the Plaintiffs’ challenges to the Wrongful Discharge Law as preempted by the National Labor Relations Act ("NLRA"), 29 U.S.C. § 151 et seq., and then as a violation of the dormant Commerce Clause. Next, the Opinion addresses the Plaintiffs’ claim that the Arbitration Provision is preempted by the Federal Arbitration Act ("FAA"), 9 U.S.C. § 1 et seq. Having concluded that the City Law survives these challenges, the Opinion will address whether to exercise supplemental jurisdiction.
As a threshold matter, the City challenges the Plaintiffs’ standing to bring this action. The case-or-controversy requirement of Article III encompasses "the requirement that the plaintiff establish standing to sue." Stagg, P.C. v. U.S. Dep't of State, 983 F.3d 589, 601 (2d Cir. 2020). "A plaintiff must demonstrate standing for each claim and form of relief sought." Carver v. City of New York, 621 F.3d 221, 225 (2d Cir. 2010) (citation omitted).
An organization does not have standing "to assert the rights of its members in a case brought under 42 U.S.C....
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