Sherwood v. Olin Corp.

• Decision Date: 04 September 1991
• Docket Number: No. 90 Civ. 1294 (MBM).,90 Civ. 1294 (MBM).
• Parties: Ruby Birt SHERWOOD, Plaintiff, v. OLIN CORPORATION, Defendant.
• Court: U.S. District Court — Southern District of New York

772 F. Supp. 1418

Ruby Birt SHERWOOD, Plaintiff, v. OLIN CORPORATION, Defendant.

No. 90 Civ. 1294 (MBM).

United States District Court, S.D. New York.

September 4, 1991.

Robert D. Goodstein, Goodstein & West, New Rochelle, N.Y., for plaintiff.

Michael R. Zeller, Epstein Becker & Green, Stamford, Conn., Judith A. Gordon, Asst. Atty. Gen., State of N.Y., Dept. of Law, New York City, for defendant.

OPINION AND ORDER

MUKASEY, District Judge.

Plaintiff Ruby Birt Sherwood, a New York resident, sues her former employer, defendant Olin Corporation, a Virginia Corporation for allegedly violating the New York State Human Rights Law ("HRL"), N.Y.Exec.L. §§ 290-301 (McKinney's 1982 & Supp.) by discriminating against her on account of race and sex. Sherwood seeks damages pursuant to HRL § 297(9) which provides victims of discrimination with a private civil remedy. While employed by Olin, Sherwood was assigned to the company's corporate headquarters in Connecticut. Defendant moves for summary judgment on the ground that § 298-a, which applies the HRL to acts committed outside New York, is unconstitutional to the extent it regulates out-of-state conduct by foreign corporations such as Olin. Defendant's motion is denied. As set forth more fully below, it is unnecessary to address the constitutionality of § 298-a because that section does not authorize private civil actions against foreign corporations. However, because Sherwood fails to state a claim with respect to Olin's out-of-state conduct, the complaint must be dismissed unless she can amend it to allege discriminatory acts within New York.

I.

Sherwood, a black female, was hired by Olin Corporation on January 23, 1984 as an attorney in the legal department of Olin's Chemical Group. Sherwood is licensed to practice law in New York only and at all relevant times has been a resident of New York State. (Sherwood Aff. ¶¶ 2, 3; Compl. ¶ 4). Throughout her employment, Sherwood was stationed at Olin's corporate headquarters in Stamford, Connecticut, but performed certain work within New York State, including the negotiation of Olin's acquisition of Hi-Pure Chemicals Inc., and also served as counsel to Olin's factory in Rochester, New York. (Sherwood Aff. ¶¶ 7-13). Olin is a Virginia Corporation having its principal place of business in Connecticut. (Petition for Removal ¶ 4). Subject-matter jurisdiction is based on diversity of citizenship.

Sherwood alleges that she was denied promotions or bonuses and received smaller salary increases than similarly situated white male employees because of her race and/or sex. (Compl. ¶¶ 6-12). She alleges also that Olin retaliated against her with respect to the terms and conditions of employment after she complained to Olin management about discrimination. (Id. ¶ 14-15). Sherwood resigned her position on September 2, 1988. (Id. ¶ 17).

Sherwood initially filed an administrative complaint with the Connecticut Commission on Human Rights and Opportunities (CCHRO) on February 22, 1989. (Sherwood Aff. ¶ 15). On February 7, 1990, she sued Olin in New York State Supreme Court for alleged violating HRL § 296.¹ (Petition for Removal ¶ 1). Her suit, which seeks $5 million in damages, is based on HRL § 297(9), which provides a private right of action to persons claiming to be aggrieved by an unlawful discriminatory practice.² Olin removed the action to this Court on February 27. On November 11, 1990, Sherwood voluntarily withdrew her complaint filed with CCHRO. (See Exhibit to Plaintiff's May 30, 1991 Letter to Court).

II.

Olin's summary judgment motion assumes that Sherwood complains of alleged discrimination that occurred totally within the borders of Connecticut. That assumption is reasonable because although Sherwood performed some work "physically within the State of New York" (Sherwood Aff. ¶ 9), she was stationed at Olin's Stamford headquarters throughout her career with the company, and that appears to be the location where all decisions bearing on her employment were made. Although New York's Human Rights Law originally regulated conduct occurring within the state only, the Law was amended in 1975 to apply to acts committed outside New York. See Iwankow v. Mobil Corp., 150 A.D.2d 272, 541 N.Y.S.2d 428, 429 (1st Dep't 1989). The amendment extending the HRL to out-of-state acts is set forth in § 298-a. In full, that section states:

Application of article to certain acts committed outside the state of New York

1. The provisions of this article shall apply as hereinafter provided to an act committed outside this state against a resident of this state or against a corporation organized under the laws of this state or authorized to do business in this state, if such act would constitute an unlawful discriminatory practice if committed within this state.

2. If a resident person or domestic corporation violates any provision of this article by virtue of the provisions of this section this article shall apply to such person or corporation in the same manner and to the same extent as such provision would have applied had such act been committed within this state except that the penal provisions of such article shall not be applicable.

3. If a non-resident person or foreign corporation violates any provision of this article by virtue of the provisions of this section, such person or corporation shall be prohibited from transacting any business within this state. Except as otherwise provided in this subdivision, the provisions of § 297 of this chapter governing the procedures for determining and processing unlawful discriminatory practices shall apply to violations defined by this subdivision insofar as such provisions are or can be made applicable. If the division of human rights has reason to believe that a non-resident person or foreign corporation has committed or is about to commit outside of this state an act which if committed within this state would constitute an unlawful discriminatory practice and that such act is in violation of any provision of this article by virtue of the provisions of this section, it shall serve a copy of the complaint upon such person or corporation by personal service either within or without the state or by registered mail, return receipt requested, directed to such person or corporation at his or its last known place of residence or business, together with a notice requiring such person or corporation to appear at a hearing, specifying the time and place thereof, and to show cause why a cease and desist order should not be issued against such person or corporation. If such person or corporation shall fail to appear at such hearing or does not show sufficient cause why such order should not be issued, the division shall cause to be issued and served upon such person or corporation an order to cease or desist from the act or acts complained of. Failure to comply with any such order shall be followed by the issuance by the division of an order prohibiting such person or corporation from transacting any business within this state. A person or corporation who or which transacts business in this state in violation of any such order is guilty of a class A misdemeanor. Any order issued pursuant to this subdivision may be vacated by the division upon satisfactory proof of compliance with such order. All orders issued pursuant to this subdivision shall be subject to judicial review in the manner prescribed by CPLR Article 78.

When plaintiff brought suit, defendant apparently believed that § 298-a allowed New York residents to bring private civil actions under § 297(9) with respect to discriminatory acts committed outside New York state by foreign corporations. Accordingly, defendant moved for summary judgment on the ground that § 298-a is unconstitutional under the Commerce and Full Faith and Credit Clauses to the extent it provides such a private civil action.

Pursuant to 28 U.S.C. § 2403(b), which provides for the intervention of the state attorney general in any action challenging the constitutionality of a state statute, the Court asked the New York Attorney General to address the constitutional issues presented by defendant. The Attorney General argues that § 298-a does not provide claimants with a private civil remedy for out-of-state discrimination by foreign corporations. Rather, the only remedy for victims of such discrimination is to file an administrative complaint with the New York State Division of Human Rights ("NYSDHR"). The NYSDHR then issues an order for the non-resident person or foreign corporation to cease and desist from the discriminatory conduct. If the defendant fails to cease and desist, the NYSDHR can then issue an order prohibiting the defendant from transacting business within the state.

For the reasons set forth below, the Attorney General's construction is correct: § 298-a does not provide claimants with a private civil remedy for out-of-state discrimination by foreign corporations such as Olin. Because defendant's constitutional challenge is premised on the existence of such a remedy, its motion for summary judgment must be denied.

III.

No court has discussed whether § 298-a allows residents to bring private civil actions for out-of-state acts committed by foreign persons or corporations. In Iwankow, 150 A.D.2d at 274, 541 N.Y.S.2d at 429, the First Department held that § 298-a did not provide a non-resident with a private civil action for out-of-state acts of discrimination by a domestic corporation, and observed that "absent an allegation that a discriminatory act was committed in New York or that a New York State resident was discriminated against, New York's courts have no subject matter jurisdiction over the alleged wrong." See also Matter of Walston & Co., Inc. v. New York City Commission on Human Rights, 41 A.D.2d 238, 241, 342 N.Y.S.2d 459 (1st Dep't 1973) (HRL applies to all discrimination occurring within New York — even discrimination against non-residents). However, ...