`
`
`
`
`UNITED STATES DISTRICT COURT
`
`
`SOUTHERN DISTRICT OF NEW YORK
`
`
`
`PEOPLE OF
`
`21_cv_1417 (JSR)
`
`
`OPINION & ORDER
`
`
`STATE OF NEW
`THE
`
`
`
`
`iRT T A
`
`
`
`YORK,
`
`BY
`
`JAMES,
`
`
`ATTORNEY GENERAL OF THE STATE
`
`OF NEw YORK,
`
` Defendants.
`
`Plaintiff,
`
`—against—
`
`AMAZON.COM,
`
`INC., et al.,
`
`
`
`
`
`
`JED S. RAKOFF, U.S.D.J.
`
`The State of New York by and through Letitia James, Attorney
`
`"II
`
`General of the State of New York (the “Attorney General
`
`or “New
`
`:nc.,
`
`and
`
`York”),
`
`sued Amazon.com Inc., Amazon.com Sales,
`
`
`
`Amazon.com Services LLC (collectively,
`
`“Amazon”)
`
`in the New York
`
`
`
`Supreme Court, New York County for violations of New York Executive
`
`Law § 63(12) and New York Labor Law §§ 200, 215, and 740. New York
`
`alleges
`
`that Amazon
`
`inadequately
`
`implemented worker
`
`safety
`
`
`
`
`
`
`
`protocols in response to the COV'T—l9 pandemic and retaliated
`
`against workers who protested unhygienic work conditions. The next
`
`
`day, Amazon removed the action to federal court, asserting that
`
`
`this Court has subject matter jurisdiction on diversity and federal
`
`question grounds.
`
`New York then moved to remand the case to state court pursuant
`
`to 28 U.S C.
`
`§ 1447 and Amazon moved to transfer the case to the
`
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`
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`
`
`
`Case 1:21-cv-01417-JSR Document 36 Filed 07/26/21 Page 2 of 25
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`
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`U.S. District Court for the Eastern District of New York pursuant
`
`to 28 U.S.C.
`
`§ 1404(a). By bottom—line order dated April 9, 2021,
`
`the Court granted New York's motion and denied Amazon’s motion.
`
`ECF No. 35. This Opinion states the reasons for that decision and
`
`directs the Clerk to enter judgment and close the case.
`
`
`FACTUAL AND PROCEDURAL BACKGROUND
`
`
`
`
`Factual Background
`
`
`
`The Complaint alleges the following facts. COVID—l9
`
`is a
`
`deadly respiratory disease caused by a novel and highly contagious
`
`coronavirus. Compl.
`
`T 17. The novel coronavirus spreads through
`
`person—to—person
`
`contact
`
`and.
`
`is more
`
`transmissible
`
`when
`
`
`
`
`
`individuals gather within six feet of one another for longer than
`
`
`
`“5 minutes over a 24—hour period.
`
`pre—symptomatic, and even asymptomatic individuals can spread the
`
`Id. at T 18. Mildly symptomatic,
`
`
`
`
`
`virus.
`
`Id. at
`
`T 19. The resulting disease can ravage the lungs,
`
`shut down the organs, and cause severe neurological malfunctions.
`
`
`Id. The first confirmed case of COVID—l9 in New York was reported
`
`on March I, 2020.
`
`
`Id. at T 22.
`
`In March 2020,
`
`the New York state legislature amended the
`
`Executive Law to authorize Governor‘ Cuomo
`
`to issue directives
`
`necessary to address epidemics and disease outbreaks. Id; at T 25.
`
`A
`
`series
`
`of
`
`executive orders affecting New York businesses
`
`followed.
`
`Id. Governor
`
`Cuomo declared a
`
`statewide disaster
`
`emergency,
`
`curtailed
`
`nonessential
`
`business
`
`operations,
`
`and
`
`
`
`Case 1:21-cv-01417-JSR Document 36 Filed 07/26/21 Page 3 of 25
`
`directed the Empire State Development Corporation (ESD)
`
`to issue
`
`
`
`guidance
`
`and directives
`
`on
`
`required closures
`
`ard the
`
`steps
`
`necessary to maintain a safe work environment during the pandemic.
`
`Id.
`
`at
`
`IT
`
`25»29.
`
`
`38D
`
`issued
`
`guidance
`
`that
`
`categorized
`
`“warehouse/distribution
`
`and
`
`fulfillment”
`
`as
`
`essential
`
`and,
`
`accordingly, Amazon’s
`
`fulfillment and distribution centers were
`
`not ordered closed.
`
`Id. at
`
`T 28.
`
`Instead, essential businesses
`
`like Amazon were directed.
`
`to “comply with the guidance
`
`and
`
`
`directives for maintaining a clean and safe work environment issued
`
`
`
`by the Department of Health.” Id. at T 30.
`
`
`In May, Governor Cuomo
`
`issued another executive order “authorizing a phased re—opening of
`
`non—essential businesses,” similarly “subject
`
`to the guidelines
`
`promulgated by the Department of Health.” Id. at T 31.
`
`The Department of Health issued industry—specific minimum
`
`safety standards in June 2020. See id. at
`
`T 32. These minimum
`
`
`
`standards incorporated by reference Centers :or Disease Control
`
`(“CDC”) cleaning guidance issued in February 2020.
`
`This guidance recommended.
`
`that
`
`facilities:
`
`(1)
`
`en
`
`T 34.
`
`Id. at
`.C
`_orce social
`
`
`
`distancing where possible;
`
`(2) encourage regular handwashing;
`
`(3)
`
`
`close areas used by infected employees, ventilate affected areas,
`
`and wait at least 24 hours before beginning to clean those areas;
`
`and.
`
`(4)
`
`cooperate with. state and local health departments
`
`to
`
`implement a contact—tracing program that includes investigation of
`
`
`
`Case 1:21-cv-01417-JSR Document 36 Filed 07/26/21 Page 4 of 25
`
`
`COVZD—l9 cases and prompt notification to employees who may have
`
`been exposed to the virus.
`
`:d. at ll 35—38.
`
`Amazon
`
`is
`
`a Wastington—based
`
`e—commerce
`
`retailer,
`
`
`
`
`incorporated in Delaware,
`
`that distributes goods nationwide.
`
`
`Id.
`
`at II 14—16. Amazon operates two facilities in New York:
`
`JFK8,
`
`a
`
`
`
`
`
`Staten Island fulfillment center, and DBKl,
`
`a Queens distribution
`
`center.
`
`
`Id. at I? 3, 45. At Amazon fulfillment and distribution
`
`centers, continued employment depends on productivity as measured
`
`by digital devices that
`
`scan bins and packages
`
`to be shipped,
`
`record how many units are processed per hour,
`
`and calculate the
`
`
`
`
`amount of time employees spend “off task.” Id. at II 56—59. If an
`
`employee’s
`
`time
`
`
`off
`
`task drops
`
`below certain
`
`established
`
`
`
`thresholds
`
` termination.
`
`known only to managers,
`
`the
`
`employee
`
`could face
`
`Id. at II 59—61.
`
`
`
`Most workers at JFK8 and DBKL continued to work on~site after
`
`New York became the epicenter of
`
`the COVID—l9 pandemic.
`
`Id. at
`
`
`
`ll 4,
`
`45~46. At various times
`
`since the coronavirus outbreak,
`
`Amazon
`
`has
`
`allegedly:
`
`(1) failed to implement
`
`site closure,
`
`
`disinfection,
`
`and cleaning protocols when workers infected with
`
`COVIDel9 had been present at
`
`
`JFK8 and D3Kl within the previous
`
`seven days,
`
`(2) neglected to create a
`
`robust
`
`contact—tracing
`
`program,
`
`and
`
`(3)
`
`
`refused to soften its produc:ivity—related
`
`discipline policies to allow its workers sufficient
`
`time
`
`for
`
`
`handwashing and hygiene practices. Id. at I 4. Trough Amazon claims
`
`
`
`
`
`
`
`Case 1:21-cv-01417-JSR Document 36 Filed 07/26/21 Page 5 of 25
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`that
`
`it paused. productivity—related. discipline in March 2020,
`
`
`Amazon did not notify workers of this change until July 10, 2020.
`
`Id; at I 63. The practice resumed in October 2020. Id; at I 64.
`
`In late March,
`
`two employees at
`
`JFK8, Christian Smalls,
`
`a
`
`“process assistant” who had been promoted_to a management position,
`II
`
`and Derrick Palmer,
`
`a “process guide warehouse associate,
`
`raised
`
`concerns with their managers and with the media about Amazon's
`
`pandemic response.
`
`Id. at
`
`fl 78. Both had worked at Amazon since
`
`2015, had a history of good work performance,
`
`and had received
`
`positive feedback from supervisors.
`
`Id. at ii 79—80. During the
`
`week of Narch 22, Smalls and Palmer, along with a dozen other
`
`
`
`employees, approached JFK8 managers to ask that Amazon close the
`
`facility for proper cleaning. Id; at I? 80—83.
`
`On March 30, Smalls and Palmer protested Amazon’s pandemic
`
`response in front of
`
`JFK8.
`
`IdL at
`
`I 88. Amazon fired Christian
`
`Smalls
`
`in late March 2020 for violating quarantine and social—
`
`distancing protocols by attending the protest after being exposed
`
`
`
`to COVID~l9,
`
`though Smalls did not enter the facility during his
`
`
`
`quarantine period and instead remained on an adjacent
`
`sidewalk
`
`during the protest. Id. at Ii 5, 88—89.
`
`sent Derrick Pa'mer a disciplinary letter termed a
`
`
`In early April 2020, Amazon
`\\
`
`
`final written
`
`warning,”
`
`reprimanding Palmer
`
`for attending the protest
`
`and
`
`violating social distancing policies.
`
`Id. at ii 5, 95.
`
`
`
`
`
`Case 1:21-cv-01417-JSR Document 36 Filed 07/26/21 Page 6 of 25
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`
`
`
`"t
`is further alleged that Smalls and Palmer are two of many
`
`
`Amazon employees who “reasonably fear that if they make legitimate
`
`
`health and safety complaints about Amazon’s COVZD—19
`
`response,
`
`Amazon will retaliate against
`
`
`them as well.” :d. at l 99. Since
`
`April 2020, Amazon has allegedly continued to prioritize increased
`
`worker productivity and profit margins over compliance with state
`
`health and safety guidance.
`
`
`:d. at 11 100—06,
`
`108. During the
`
`pandemic alone, Amazon has earned over $160 billion in profits,
`
`a
`
`
`$30 billion increase from its pre—pandemic performance.
`
`Id. at
`
`
`l 109. About $28.5 million in profits can be traced to Amazon’s
`
`facilities in New York.
`
`
`Id.
`
`II.
`
`
`
`Procedural Background
`
`On February 16,
`
`2021,
`
`the New York Attorney General
`
`sued
`
`Amazon in the New York Supreme Court, New York County, alleging
`
`that Amazon’s
`
`inadequate
`
`disinfection
`
`and
`
`contract—tracing
`
`protocols,
`
`its prioritization of productivity policies
`
`‘over
`
`sanitation and social—distancing practices, and its termination of
`
`workers who protested Amazon’s COVZD—19 response vio
`
`
`
`
`
`rated New York
`
`
`Labor Law §§ 200, 215, and 740. See Compl., ECF No.
`
`Section 200
`
`requires
`
`New York businesses
`
`to be
`
`“constructed,
`
`equipped,
`
`arranged, operated and conducted as
`
`to provide reasonable and
`
`
`adequate protection to the lives, health and safety of all persons
`
`employed therein.” N.Y. Labor L.
`
`§ 200. Section 215 prohibits
`
`employers from discriminating or retaliating against employees who
`
`
`
`Case 1:21-cv-01417-JSR Document 36 Filed 07/26/21 Page 7 of 25
`
`
`bring potential state labor law violations to the attention of the
`
`employer,
`
`a labor commissioner, an authorized representative, or
`
`the Attorney General. N.Y. Labor L.
`
`§ 215(l)(a). Finally, section
`
`740 prohibits employers
`
`from taking retaliatory action against
`
`employees who disclose or threaten to disclose to a supervisor or
`
`to a governmental authority that an employer has violated a law,
`
`rule, or regulation and has thereby “present[ed] a substantial and
`
`
`specific danger
`
`§ 740(2)(a).
`
`
`
`to the public health or safety.” N.Y. Labor L.
`
`The state court complaint premised the Attorney General’s
`
`right
`
`to sue on New York Executive Law § 63(12), which empowers
`
`the Attorney General
`
`to seek injunctive and other relief against
`
`
`entities that “engage in repeated fraudulent or illegal acts or
`
`otherwise demonstrate persistent
`
`fraud or
`
`illegality in the
`
`carrying on, conducting or transaction of business” in New York.
`
`§E§.N-Y- Exec. Law § 63(12). The Attorney General sought injunctive
`.C
`relie_ against Amazon’s allegedly unlawful practices;
`
`an order
`
`direc:ing Amazon to notify employees of their Labor Law rights and
`
`to
`
`provide
`
`related training to
`
`supervisors;
`
`backpay,
`
`lost
`
`
`compensation and benefits,
`
`liquidated damages,
`
`and
`
`emotional
`
`distress damages on behalf of Christian Smalls; emotional distress
`
`damages and liquidated damages on behalf of Derrick Palmer; and
`
`
`disgorgement of ill—gotten profits under Executive Law § 63(12).
`
`
`
`
`
`Case 1:21-cv-01417-JSR Document 36 Filed 07/26/21 Page 8 of 25
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`
`On February 17, 2021, Amazon filed a notice of removal in the
`
`
`Southern District of New York pursuant to 28 U.S.C. §§ 1331, 1332,
`
`1367,
`
`and 1441. Five days before the instant action commenced,
`
`Amazon filed a complaint against the New York Attorney General
`
`in
`
`the Eastern District of New York, seeking a declaration that state
`
`regulation of Amazon’s COVID—19 response is preempted by federal
`
`law. See Schwartz Decl., ECF No. 24, at Ex. A.
`
`On March 3, 2021, New York moved to remand this case to state
`
`court. ECF No. 19. That
`
`
`same day, Amazon moved to transfer this
`
`
`
`case to the Eastern District of New York. ECF No. 17.
`
`D:SCUSS:ON
`
`
`
`A defendant may remove to federal court “any civil action
`
`of which the district courts of
`
`the United States have
`
`original jurisdiction.” 28 U.S.C.
`
`§ 1441(a). The federal district
`
`courts are courts of limited subject—matter jurisdiction. Purdue
`
`
`Pharma L.P. v. Kentucky,
`
`
`704 F.3d 208, 213
`(2d Cir. 7013). This
`
`Court has diversity jurisdiction over certain disputes between
`
`
`citizens of different states pursuant
`
`to 28 U.S.C.
`
`§ 1332 and
`
`federal question jurisdiction over “civil actions arising under
`
`:he Constitution,
`
`laws, or treaties of the United States” pursuant
`
`
`
`to 28 U.S.C.
`
`§ 1331.
`
`
`Id. Neither ground supports the exercise of
`
`jurisdiction over this action.
`
`
`
`Case 1:21-cv-01417-JSR Document 36 Filed 07/26/21 Page 9 of 25
`
`
`
`
`Diversity Jurisdiction
`
` Federal courts have diversity jurisdiction. over suits in
`
`
`
`which no plaintiff is a citizen of the same state as any defendant
`
`and the amount~in—controversy exceeds $75,000.
`
`See
`
`28 U.S.C.
`
`§ 1332. There
`
`is no diversity jurisdiction over
`
`this action,
`
`
`because the State 0: New York is the real party in interest and
`
`its presence destroys diversity.
`
`“[A] state is not a
`
`‘citizen’
`
`
`for purposes of the diversity
`
`
`jurisdiction.” Moor V. County of Alameda, 411 U.S. 693, 717 (1973).
`
`Thus,
`
`a suit between a state and a citizen of a different state
`
`
`does not create diversity jurisdiction. See, e.g., State Highway
`
`
`Comm’n 0: Wyoming v. Utah Const. Co.,
`
`278 U.S. 194,
`
`199
`
`(1929)
`
`
`
`(explaining the “well—settled” principle that
`
`a suit between a
`
`state and a citizen of another state is not a suit between citizens
`
`
`of different states). However, “because a State’s presence as a
`
`party will destroy complete diversity,” when a state or state
`
` official brings suit, courts consider whether
`
`the state is the
`
`real
`
`party
`
`in
`
`interest
`
`before
`
`concluding
`
`that
`
`diversity
`
`
`jurisdiction does not lie. Mississippi ex rel. Hood v. AU Optronics
`
`
`Corp., 571 U.S. 161, 17~ (2014).
`
`
`
`
`
`The real~party—in—interest analysis requires “consideration
`
`
`0: the nature of the case as presented by the whole record,” rather
`
`
`than a claim-by—claim analysis. See Purdue Pharma, 704 F.3d at 218
`
`
`
`(quoting Ferguson v. Ross, 38 F. 161, 162—63 (C.C.E.D.N.Y. 1889)).
`
`
`
`
`
`Case 1:21-cv-01417-JSR Document 36 Filed 07/26/21 Page 10 of 25
`
`When.
`
`a holistic review of
`
`the complaint
`
`reveals that
`
`a state
`
`“merely asserts the personal claims of its citizens,
`
`[the state]
`
`
`
`is not the real party in interest.” See In re Baldwin—United Corp.,
`
`770 F.2d 328, 341 (2d Cir. 1985); see also id. at 219.
`
`Here,
`
`the State is the real party in interest. While the State
`
`seeks backpay and emotional distress damages on behalf of Smalls
`
`and Palmer,
`
`the Attorney General also asserts a right
`
`that only
`
`
`
`
`the Attorney General can enforce. See, e.g.,
`In re Standard &
`
`
`Poor’s Rating Agency Litig.,
`
`23 F. Supp.
`
`3d 378,
`
`404
`
`(S.D.N.Y.
`
`2014)
`
`
`(finding that the state’s status as real party in interest
`
`is “manifest” when “the case is brought by the state attorney
`
`general under his exclusive authority”).
`
`In particular, while
`
`
`Executive Law § 63(12) authorizes the Attorney General
`
`to seek
`
`
`
`injunctive and other relief “in the name of the people of the State
`
`
`of New York,” the Attorney General cad seek disgorgement of pro:i:s
`
`on
`
`
`the State’s beha1:.
`
`
`Scc People
`ex
`rel.
`
`Schneiderman v.
`
`
`
`
`
`Greenberg, 54 N.E.3d 74, 77 (N.Y. 2016); People ex rel. Spitzer v.
`
`
`Applied Card Sys., Inc., 894 N.E. 2d 1,
`
`14—15
`
`(N.Y. 2008)
`
`(noting
`
`that the Attorney General may “obtain disgorgement -— an equitable
`
`remedy distinct
`
`
`from restitution [to aggrieved consumers] —- of
`
`
`
`profits that respondents derived”); People v. Ernst
`& Young, LLP,
`
`980 N.Y.S.2d 456, 457
`
`
`(lst Dep’t 2014)
`
`(finding the disgorgement
`
`remedy available to the Attorney General under section 63(12) even
`
`without direct losses to New York consumers or the public). When
`
`10
`
`
`
`Case 1:21-cv-01417-JSR Document 36 Filed 07/26/21 Page 11 of 25
`
`the Attorney General
`
`seeks
`
`disgorgement
`
`of profits,
`
`the
`
`
`beneficiary is the State treasury. See, e.g., United States V.
`
`
`Twin America, LLC, 2015 WL 9997203, at *2
`(S.J.NY. NOV. 17, 2015)
`
`
`(ordering that profits disgorged under section 63(12) be paid to
`
`
`
`the State of New York through its Budget
`
`& Eascal Management
`
` Bureau). Thus,
`
`the State has an interest
`
`
`in the outcome of this
`
`litigation separate from the personal interests of its citizens.
`
`In addition to the State's financial interest, “[t]he State’s
`
`
`goal 0:
`
`securing‘
`
`an honest marketplace in which to transact
`
`business
`
`is
`
`a quasi—sovereign interest” independent
`
`from.
`
`the
`
`
`interests of individual citizens. See New York ex rel. Abrams v.
`
`
`Gen. Motors Corp., 547 F. Supp. 703, 705»706 & n.5 (S.D.N.Y. 1982)
`
`
`(finding New York the real party in interest
`
`in a suit brought
`
`under‘ New York Executive Law § 63(12)
`
`and remanding'
`
`to state
`
`
`court); see also in re Standard & Poor’s, 23 F. Supp. 3d at 404—
`
`405. Amazon guibbles with the applicability of
`
`the
`
`“honest
`
`marketplace” rationale here,
`
`arguing that
`
`the phrase
`
`implies
`
`
`fraud, which the Attorney General has not alleged. But the State’s
`1)
`
`statutory interest under § 63(12)
`
`encompasses the prevention 0;
`
`either “fraudulent or
`
`illegal” business activities. Misconduc:
`
`that is illegal for reasons other than fraud still implicates the
`
`government’s interest in guaranteeing a marketplace that adheres
`
`to
`
`standards
`
`of
`
` transactions in the state do not
`
`fairness,
`
`as well
`
`ensuring
`
`that
`
`business
`
`injure public health. Thus,
`
`the
`
`11
`
`
`
`Case 1:21-cv-01417-JSR Document 36 Filed 07/26/21 Page 12 of 25
`
`State does not sue “only as an agent, but also as
`
`[a party] who
`
`has
`
`[its]
`
`own stake in the litigation.
`
`II
`
`
`See Oscar Gruss
`& Son,
`
`
`Inc. v. Hollander, 337 F.3d 186, 194 (2d Cir. 2003)
`
`(holding that
`
`the real party in interest
`
`for diversity jurisdiction purposes
`
`depends
`
`on whether
`
`
`a plaintiff
`
`brings
`
`suit
`
`in
`
`a
`
`solely
`
`representative capacity).
`
`
`Amazon argues that the fired workers, Smalls and Palmer, are
`
`the real parties in interest —— and that as New Jersey citizens,
`
`Smalls
`
`and Palmer are diverse fronl Amazon, which :maintains
`
`a
`
`
`principal place of business in Washington. But the State’s decision
`
`to seek damages on behalf of Smalls and Palmer
`
`is incidental
`
`to
`
` the State’s other
`
`interests. Courts
`
`in this district
`
`have
`
`previously recognized that where
`
`\\
`
`a State seeks both injunctive
`
`
`
`relief against
`
`illegal business prac:ices and restitution for
`
`victims,” these purposes cannot “be separated from each other” and
`
`neither should be characterized as the “primary” interest in the
`
`
`
`case. People of New York ex rel. Cuomo v. Charles Schwab & Co.,
`
`2010 WL 286629, at
`
`*6
`
`(S.D.N.Y.
`
`Jan.
`
`19, 2010). As
`
`the Second
`
`Circuit has
`
`indicated,
`
`for diversity jurisdiction purposes,
`
`the
`
`
`presence of interested individual citizens “does not necessarily
`
`
`
`negate” a plaintif: state’s interest. Purdue Pharma, 704 F.3d at
`
`220.
`
`Amazon insists that the Supreme Court’s ruling in M0,, Kan.,
`
`
`& Tex. Ry. Co. v. Hickman,
`
`
`
`183 U.S.
`
`53
`
`(1901), counsels against
`
`12
`
`
`
`
`
`
`
`
`
`
`
`E
`
`Case 1:21-cv-01417-JSR Document 36 Filed 07/26/21 Page 13 of 25
`
`finding that New York is the real party in interest in this case.
`
`In Hickman, which involved a state—created rail commission,
`
`the
`
`Supreme Court noted that the state’s “governmental interest in the
`
`
`
`
`welfare 0“ all
`its citi ens
`
`.
`
`.
`
`.
`
`is not
`
`that which makes
`
`the
`
`state, as an organized political community, a party in intereSt in
`
`the litigation.” Id. at 60. The state's interest here is more
`
`
`
`
`
`
`
`specific than that —— it is the interest in securing safe and fair
`
`
`
`conditions for the transaction of business Within its borders.
`
` Hickman also holds that “the state is such a real party when
`
`
`the relie: sought
`
`is that which inures to it alone.” Id. at 59.
`
`
`
`
`
`The State herc socks r lief —— disgorgement 0“ profits ~e
`
`that
`
`only the State can seek. This distinguishes this case from Hickman,
`
`where the lawsuit was “not an action to recover any money for the
`
`state” and “[ilts results will not
`
`
`inure to the benefit of
`
`the
`
`
`state as a state in any degree.” Id. Whether the money the state
`
`obtains will ultimately benefit certain Amazon workers
`
`is not
`
`relevant where, as here, “the moneys recovered were payable into
`
`
`the treasury of
`
`the state.” See id. Because New York is a real
`
`party in interest in this case,
`
`its presence destroys diversity,
`
`and there is no federal jurisdiction under 28 U.S.C.
`
`§ 1331.
`
`II. Arise—Under Jurisdiction
`
`A complaint
`
`
`that does not allege a federal cause or action
`
`“arises under”
`
`
`federal
`
`law only when
`
`(1) Congress
`
`expressly
`
`provides for removal of such state law claims,
`
`(2)
`
`the state law
`
`l3
`
`
`
`Case 1:21-cv-01417-JSR Document 36 Filed 07/26/21 Page 14 of 25
`
`claims are completely preempted, or
`
`
`
`on a question of federal law. See Fracasse v. People's United Bank,
`
`the state law right turns
`
`(3)
`
`747 F.3d 14;, 142—44
`
`(2d Cir. 2014)
`
`(per curiam); see also Grable
`
`
`
`& Sons Metal Prods.,
`
`Inc. v. Dare Eng’g & Mfg., 545 U.S. 308, 312
`
`(2005); Gunn v. Minton, 568 U.S. 251, 258 (2013). Amazon does not
`
`(and cannot) argue that Congress has expressly provided for the
`
`
`removal 0: state law labor claims. Thus,
`
`the Court addresses only
`
`whether complete preemption or the test articulated in Grable and
`
`
`
`Gunn permit the exercise of federal jurisdiction.
`
`
`A. Complete Preemption
`
`
`Ordinary (also known as defensive) preemption is insufficient
`
`to create arise—under jurisdiction.
`
`“[A] case may not be removed
`
`
`to federal court on the basis of a federal defense,
`
`including the
`
`.5
`
`
`defense o_ pre—emption, even if the defense is anticipated in the
`
`
`
`plaintiff’s complaint, and even if both parties concede that the
`
`federal defense is the only question truly at issue.” Caterpillar
`
`
` Inc. v. Williams, 482 U.S. 386, 393 (1987)
`
`(emphasis in original).
`
`mmuflwfiarvgxmmw
`
`Rather,
`
`for removal
`
`to federal court
`
`grounds,
`
`a
`
`
`federal statute must completely preempt state law
`
`to be proper on preemption
`
`claims. See
`
`
`id. at 393; Franchise Tax Bd. v. Constr. Laborers
`
`
`Vacation Trust et al., 463 U.S. 1, 14
`
`(1983). Complete preemption
`
`exists when Congress has developed an all—encompassing regulatory
`
`scheme that
`
`
`leaves no room for the state action at
`
`
`issue. See,
`
`
`e.g., Avco Corp. v. Machinists, 390 U.S. 557, 560~61 (1968)
`
`(LMRA);
`
`14
`
`
`
`
`
`Case 1:21-cv-01417-JSR Document 36 Filed 07/26/21 Page 15 of 25
`
`
`Metro Life Ins. Co. v. Taylor, 481 U.S. 58,
`
`66—67
`
`(1987)
`
`(ERISA).
`
`The Supreme Court has
`
`
`identified only three statutes with such
`
`extraordinary preemptive
`
`_orce:
`
`Section
`
`301
`
`of
`
`the
`
`Labor—
`
`Management Relations Act
`
`(LMRA), Section 502(a) of
`
`
`the Employee
`
`Retirement
`
`
`Income Security Act
`
`
`
`(ERISA), and Sections 85 and 86 of
`
`
`
`the National Bank Act. See Sullivan v. Am. Airlines,
`Inc.,
`
`424
`
` .C
`
`F.3d 267, 272 (2d Cir. 2005).
`
`The Occupational Safety and Health_Act
`
`here relies, has not
`
`joined the ranks of the LMRA,
`
`(OSHA), on which Amazon
`
`
`
`
`fiR SA, and the
`
`National Bank Act
`
`for
`
`these purposes. The Supreme Court has
`
`
`
`
`considered the preemptive effect of OSHA and concluded that
`
`“Congress expressly saved.
`
`two areas
`
`
`
`
`from.
`federal
`pre—emption”
`
`under‘
`
`the Act:
`
`(1) workers’
`
`compensatior
`
`and
`
`(2) occupational
`
`
` effect.” Gade v. Nat’l Solid Wastes Mgmt. Ass'n, 505 U.S. 88,
`
`
`
`
`safety and health issues for which
`
`\\
`
`no federal standard is in
`
`97
`
`(1992). Moreover, OSHA.gives states the options of avoiding federal
`
`regulation entirely by submitting to the Secretary of Labor a state
`
`plan for
`
`the
`
`development of occupational
`
`safety and health
`
`
`
`standards in a particular area.
`
`
`:d.; see also 29 U.S C.
`
`§ 667(b).
`
`Thus, OSHA does not completely preempt state law claims such that
`
`
`
`
`it displaces all state causes of action. Ci. Franchise Tax 3d.,
`
`
`463 U.S. at 23 (explaining that the preemptive effect of LMRA § 301
`.C
`
`\\
`
`is
`
`so powerful
`
`as
`
`to displace entirely any state cause
`
`action”).
`
`15
`
`
`
`o_
`
`
`
`
`
`Case 1:21-cv901417-JSR Document 36 Filed 07/26/21 Page 16 of 25
`
`Further,
`
`the Palmer case on which Amazon repeatedly relies is
`
`clear that OSEA does not preempt claims under New York Labor Law
`
`§ 200 even defensively. See Palmer V. Amazon.com,
`
`
`:nc., 2020 WL
`
`
`
`6388599, at *'
`(?.D.N.Y. Nov. 2, 2020).
`
`In Palmer,
`
`the district
`
`
`
`court
`
`reasoned.
`
`that Congress “reserv[ed]
`
`
`for state regulation
`
`those issues not governed by a federal standard” and found that
`
`Amazon’s alleged failure to implement adequate COVID—l9 protocols
`
`
`in violation of New York Labor Law § 200 “does not conflict with
`
`an existing‘
`
`federal
`
`standard.” 1d. at *8. The district court
`
`
`therefore held that it “[Could ]rot find that plaintiffs'
`
`§ 200
`
`
`
`claim is preempted by the OSH Act.” Id.
`
`Similarly,
`
`
`the Supreme Court has declined to identify the
`
`NLRA (on which Amazon also relies) as one of the vanishingly few
`
`
`
`statutes
`
`that
`
`completely
`
`preempt
`
`state
`
`law
`
`claims.
`
`See
`
`Caterpillar,
`
`482 0.8. at 398
`
`(observing that “[t]he fact
`
`that a
`
`defendant might ultimately prove that
`
`
`a plaintiff's claims are
`
`pre—empted under
`
`the NLRA does not establish that
`
`they are
`
`
`removable to federal court”). While Congress indeed delegated to
`
`
`the National Labor Relations Board (NLRB)
`
`the authority to regulate
`
`labor policy and administration, Congress “has never exercised
`
`
`
`authority to occupy the entire field in the area of
`
`labor
`
`
`legislation.” Allis—Chalmers Corp. v. Lueck,
`
`471 0.8. 202,
`
`208
`
`(1985). Accordingly,
`
`the NLRA does not completely preempt state
`
`16
`
`
`
`Case 1:21-cv-01417-JSR Document 36 Filed 07/26/21 Page 17 of 25
`
`law claims such that
`
`these claims arise under
`
`
`the laws of
`
`the
`
`United States.1
`
`
`3.
`The Gunn—Grable Test
`
`
`
`“[F]ederal jurisdiction over a state law claim will
`lie i" a
`
`federal
`
`issue is:
`
`(3) substantial,
`
`
`
`(1) necessarily raised,
`
`(2) actually disputed,
`
`
`and (4) capable of resolution in federal court
`
`without
`
`disrupting
`
`the
`
`
`federal—state
`
`balance
`
`approved,
`
`by
`
`
`
`
`
`
`Congress.” Gunn, 568 3.8. at 258; accord Grable, 545 U.S. at 308;
`
`NASDAQ OMX Grp. V. UBS SeC., LLC,
`
`770 F.3d 1010,
`
`1020
`
`(2d Cir.
`
`(Mr,infirmu
`
`2014)
`
`
`(applying the “Gunn—Grable
`
`test”). There
`
`is no
`
`federal
`
`
`jurisdiction under the test articulated in Grable and Gunn.
`
`
`
`1” A federal issue is not necessarily raised.
`
`A federal issue is not “necessarily raised” when it “becomes
`
`relevant only by way of a defense to an obligation created entirely
`
`
`by state law.” Franchise Tax 3d., 463 U.S. at 13; see also Tantaros
`
`
`v. Fox News Channel, LLC, 427 F. Supp. 3d 488, 494 (S.D.N.Y. 2019).
`
`
`
`the NLRB
`in certain cases,
`that,
`1 Amazon correctly points out
`should determine whether
`a company has
`instituted unfair labor
`
`practices in the first instance. See San Diego Bldg. Trades Council
`v. Garmon,
`359 U.S. 236,
`245
`(1959)
`(holding that
`the NLRB has
`exclusive original
`jurisdiction over
`claims
`of unfair
`labor
`practices under sections '7
`and 8 of
`the NLRA,
`the collective
`
`
`bargaining and employee coercion provisions). But “defendants may
`to federal court by alleging Garmon
`not
`remove state claims
`preemption.” Sullivan,
`424 F.3d at 277. Even if Garmon were to
`apply here,
`this case would belong neither in federal court nor in
`
`state court, but before the NLRB. See, e g., TKO Fleet Enterprises,
`
`
`
`
`Inc. v. Dist.
`'5, "nt’l Ass’n of Machinists & Aerospace Workers,
`
`AFL——CIO, 72 F. Supp. 2d 83,
`87
`(E.D.N.Y. 1999).
`
`
`
`17
`
`
`
`Case 1:21-cv-01417-JSR Document 36 Filed 07/26/21 Page 18 of 25
`
`The federal issue must be “an essential element” of the state law
`
`claim such that “the claim’s very success depends on giving effect
`
`
`
`
`
`to a federal requirement.” Merrill Lynch, Pierce, Fenner & Palmer
`
`Inc. v. Manning, 136 S. Ct. 1562, 1570 (2016).
`
`Amazon
`
`has
`
`invoked
`
`defensive
`
`rather
`
`than
`
`“complete”
`
`preemption. Accordingly,
`
`the NRLA and OSHA preemption issues that
`
`
`Amazon discusses in its notice of
`
`removal are not necessarily
`
`
`raised but are rather “relevant only by way 0;
`
`
`a defense.”
`
`
`Franchise Tax 3d., 463 U.S. at 13.
`
`
`Ama on also identifies as a potential federal
`
`issue whether
`
` CDC guidance is binding under
`
`the Administrative Procedure Act
`
`(APA). However,
`
`
`the meaning and effect of CDC guidance are not
`
`part and parcel of the relevant New York Labor Law claim, The State
`
`sues under New York Labor Law § 200, which requires employers “to
`
`provide reasonable and adequate protection to the lives, health
`
`and safety of all persons employed therein.” N.Y. Labor L.
`
`§ 200.
`
`
`The State argues that CDC guidance can inform what constitutes
`
`“reasonable and adequate protection” and alleges that New York
`
`state guidance echoes the CDC’s warnings and suggested protocols.
`
`
`But
`
`the state law claini does not
`
`rise and. fall with the CDC
`
`guidance’s binding effect. The CDC guidance may be purely advisory
`
`but nevertheless describe a minimum standard for protecting the
`
`
`health and safety 0: workers.
`
`18
`
`
`
`Case 1:21-cv-01417-JSR Document 36 Filed 07/26/21 Page 19 of 25
`
`2.The federal issues are not substantial.
`
`For a federal
`
`issue to be substantial, it must be important
`
`“to the federal
`
`systeni as
`
`a whole,”
`
`implicating the federal
`
`
`interest in claiming the advantages of a federal forum. See Gunn,
`
`
`568 U.S. at 260. A purely legal question “is more likely to be a
`
`
`
`
`substantial federal question.” Fracasse, 747 F.3d at 145.
`
`
`Healthchoice Assurance,
`Inc. v. McVeigh, 547 U.S. 677 (2006),
`
`for
`
`in impire
`
`
`
`instance,
`
`the Supreme Court distinguished Grable as presenting a
`
`“nearly pure issue 0:
`
`law,” whereas the claim over which the Court
`
`
`
`found
`
`no
`
`subject matter
`
`jurisdiction was
`
`“fact—bound
`
`and
`
`situation—specific,” and thus a state court would be “competent to
`
`apply federal law,
`
`to the extent it is relevant.” Id. at 681.
`
`
`
`An issue is not important to the federal system when a federal
`
`
`
`law is raised only as an indicator of reasonable conduct or public
`
`policy. For example,
`
`
`in Fracasse v. People’s United Bank,
`
`two
`
`mortgage underwriters sued their former bank employer
`
`in state
`
`
`
`court for wrongful termination and breach of the covenant of good
`
`faith and fair dealing.
`
`747 F.3d 141,
`
`142
`
`(2d Cir.
`
`2014)
`
`(per
`
`curiam). Under Connecticut
`
`law,
`
`a wrongful
`
`requires the claimant
`
`to show that he or
`
`she was
`
`termination claim
`\\
`
`
`fired for
`
`a
`
`reason whose impropriety is derived from some important violation
`
`
`of public policy.” Id. at
`143 n.l
`(quoting Sheets v. Teddy’s
`
`
`Frosted Foods,
`:nc.,
`
`179 Conn.
`
`471,
`
`475
`
`(1980)).
`
`In their
`
`complaint,
`
`the underwriters referred to the Fair Labor Standards
`
`19
`
`
`
`Case 1:21-cv-01417-JSR Document 36 Filed 07/26/21 Page 20 of 25
`
`Act
`
`
`(FLSA) as reflecting the important public policy that employees
`
`should not work more than 40 hours
`
`a week without being paid
`
`overtime.
`
`
`id. at 143—44.
`
`
`In support of
`
`
`the cause of action for
`
`breach of
`
`
`the covenant of good faith and fair dealing,
`
`the
`
`underwriters also pleaded that
`
`the FLSA “provide[d]
`
`a basis for
`
`their
`
`reasonable
`
`expectations
`
`
`0:
`
`defendant’s
`
`contractuai
`
`obligations." Id. at 144. The bank removed the action to federal
`
`court,
`
`arguing that
`
`the references
`
`to ELSA in the complaint
`
`warranted the exercise of federal
`
`jurisdiction.
`
`
`Id. at 143. The
`
`
`
`Second Circuit found no federal question jurisdiction, because the
`
`
`
`.E
`iederal question was
`
`
`
`insubstantial. The case did not
`
`require
`
`
`interpretation of the FLSA, and the federal system’s interest in
`
`the case was minimal, because employees continued to have “direct
`
`access to a federal forum to assert their rights under the FLSA.”
`
`
`
`Id. at 145. Notably,
`
`the Second Circuit emphasized that “[n]either
`
`the federal government nor
`
`the federal system as a whole has a
`
`
`pressing interest in ensuring that a federal forum is available to
`
`
`defendants in state tort suits that include passing references to
`
` a federal statute cited only as an articulation of public policy.”
`
`Fracasse, 747 F.3d at 145. Such suits do not present a substantial
`
`
`
`federal
`question. of
`‘aw, because the employees WhOHl
`
`FLSA. was
`
`
`
`
`designed to protect have direct access to federal forums to assert
`
`their rights under the statute. 1d.
`
`nVAX/lath
`
`20
`
`
`
`Case 1:21-cv-01417-JSR Document 36 Filed 07/26/21 Page 21 of 25
`
`This case is akin to Fracasse. The Complaint refers to federal
`
`
`standards as part of
`
`
`a passing articulation or what
`
`reasonable
`
`safety measures entail. This Court
`
`is not required to interpret
`
`OSHA,
`
`the NLRA, or the interaction between the CDC guidance and
`
`the APA in order to resolve the state labor law claims. Rather,
`
`th