Opinion
100574-2009.
Decided July 6, 2009.
In this action alleging the retaliatory discharge in violation of Labor Law § 740, defendant Quality Building Services ("defendant") moves pursuant to CPLR § 3211, Labor Law § 740(6), and 22 NYCRR 130-1.1 to dismiss the complaint of the plaintiffs Jeffrey Katz ("Katz") and Fabiola Colas ("Colas") (collectively, "plaintiffs") for failure to state a cause of action and for attorneys' fees, costs and disbursements.
Complaint
Plaintiffs allege that they were employed by defendant and terminated shortly thereafter for objecting to, and refusing to participate in, defendant's violation of Labor Law § 740, which prohibits an employer from taking retaliatory actions against employees who object or refuse to participate in an employer's violation of a law, rule or regulation. The U.S. Immigration and Reform Control Act of 1986 as amended in 2006 ("IRCA") requires that employers verify that each new worker hired after 1986 is authorized to work in the United States. Defendant was thus required to verify that each employee is authorized to work in the United States. IRCA also requires employers to fill out the Employment Eligibility Verification Form (the "I-9 Form"). Defendant continuously failed to check the legal employment status of applicants as required by IRCA. According to plaintiffs, defendant failed to properly document prospective and new employees pursuant to the I-9 Form. When plaintiffs objected to defendant's violation of IRCA, they were terminated in violation of Labor Law § 740. Defendant's Motion
The complaint alleges two causes of action under Labor Law 740, the first cause of action on behalf of Jeffrey Katz and the second cause of action is on behalf of Fabiola Colas.
Defendant contends that while Labor Law 740 provides a narrow exception to New York's employment at will policy, plaintiffs' claim fails to allege two conditions precedent to suit: that the alleged violation of a law, rule or regulation was an actual violation, and that the alleged violation created and presented a substantial and specific danger to the public health or safety. Defendant argues that plaintiffs' alleged complaints, objections and refusals to participate in defendant's violation of IRCA do not implicate a substantial and specific danger to the public health or safety, so as to state a claim under Labor Law § 740.
Defendant asserts that the purpose of the I-9 Form is to verify employment eligibility and to identify documents presented by the employee. IRCA and the I-9 Form are not the type of laws, rules and regulations that implicate the substantial and specific danger to the public safety. IRCA is not a safety statute, but rather, a statute aimed at controlling and deterring illegal immigration in the United States. Courts have rejected claims based on complaints about more dangerous situations, such as parking a tanker full of hazardous chemicals on a public street and falsely documenting respiratory treatment and blood-oxygen level checks. Since the conduct was not serious enough to state a claim under Labor Law § 740, the alleged conduct here of not properly documenting new employees, is plainly insufficient.
Defendant further contends that attorneys' fees and sanctions are warranted. Labor Law § 740 permits a court, in its discretion, to award an employer reasonable attorneys' fees and costs and disbursements in the event the court determines than an action under this section was without basis in law or fact. Also, 22 NYCRR 130-1 permits the imposition of costs, including attorneys' fees and sanctions for engaging in frivolous conduct. Defendant argues that this action is without basis in law or fact, and cursory research prior to commencing this action would have shown that Labor Law § 740 does not and was not intended to provide a remedy for the type of wrong alleged in the complaint.
Opposition
Plaintiffs argue that illegal immigration poses a substantial and specific danger to the public safety. Plaintiffs submit data compiled by the U.S. Government, i.e., (1) the United States Government General Accounting Office's report dated May 9, 2005 to the Chairman, Subcommittee on Immigration, Border Security and Claims Committee on the Judiciary House of Representatives (the "GOA Report on Immigration"), and (2) the United States General Accounting Office Report on Identity Fraud Before the Subcommittee on Crime, Terrorism and Homeland Security and the Subcommittee on Immigration, Border Security and Claims, Committee on the Judiciary, House of Representative dated June 25, 2002 (the "GOA Report on Fraud") (collectively, the "GOA Reports"). Plaintiffs argue that the GOA Reports demonstrate that illegal immigration results in an increase in crime and poses grave threats to the public. Thus, defendant's failure to prevent illegal immigration into this county is a substantial and specific danger to public safety. Pointing to one of the goals of the Department of Homeland Security, which is "reduce the likelihood that terrorists can enter the United States" by strengthening border security and administering immigration laws, plaintiffs contend that illegal immigration is an issue relating to serious criminal activity and national security. The GAO Report on Immigration indicates that there is an average of eight arrests per illegal alien, of which 45% were drug related, 15% were property related offenses, and 12% were violent offenses. The GAO Report on Fraud cites IRCA and indicates that illegal aliens use fraudulent documents in connection with more serious illegal activities, such as narcotics trafficking and terrorism. The I-9 Form is an important tool in combating crime terrorism. The 9/11 Report establishes that the people responsible for the nearly 3,000 deaths that day were in the United States illegally.
Plaintiffs contend that there was an actual violation a law, i.e., the violation of IRCA.The cases cited by defendant are distinguishable or not controlling, and the process of completing the I-9 Form is a small but important tool in the overall strategic objective to prevent another terrorist strike, and other crimes involving drugs, murder, rape and gun-running. As in other cases involving violations of Labor Law § 740, statutes herein were violated that could have prevented the disaster of September 11, 2001.
.Plaintiffs also argue that attorneys' fees are unwarranted, as it would be ironic to award attorneys' fees and sanctions to defendant in a situation where plaintiffs were terminated from employment for attempting to prevent a continuing violation of Federal law designed to prevent crime.
Reply
Defendant argues that plaintiffs point to no authority within IRCA, its rules, regulations, or its legislative history which suggests that IRCA was meant to prevent crime. Deterring illegal immigration and preventing crime are not one in the same. Under IRCA, employers are responsible for checking documents of new employees, not for policing their employees' activities, preventing criminal activity or even verifying that the documents are authentic. Plaintiffs improperly seek to stereotype all illegal aliens as criminals and potential terrorists. Plaintiffs fail to offer any evidence that the claimed violation at issue here in any manner creates any dangerous condition. Nor do plaintiffs provide any evidence that it was a violation of IRCA or a failure to properly check the documents of a new employee led to the events of September 11, 2001. Plaintiffs also failed to show that one hijacker on the planes on September 11 was even employed in the United States without the I-9 process having been followed. The alleged failure to properly check the documents of new employees in violation of IRCA did not directly endanger the public health or safety of employees; the individuals were already here. Nor do the alleged violations by defendant injure or harm the public, so as to rise to the level of dangerous activity to implicate the protections of Labor Law § 740.
Further, plaintiffs cannot create an exception to the employment-at-will doctrine. The legislative history of Labor Law § 740 makes clear that it was meant to protect only the reporting of a specific kind of illegal activity, one that creates and presents a substantial specific danger to the public health or safety. It does not extend such protections to all reports of misconduct.
In light of the frivolous nature of plaintiffs' complaint, reasonable attorneys' fees, court costs, and disbursements should be awarded to defendant.
Analysis
As relevant to the motion, New York Labor Law § 740(2) the "whistle-blowers' statute," provides, in relevant part, that an employer shall not take any retaliatory personnel action against an employee because such employee:
(a) discloses, threatens to disclose to a supervisor or to a public body an activity, policy or practice of the employer that is in violation of a law, rule or regulation which violation creates and presents a substantial and specific danger to the public health or safety . . .
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(c) objects to, or refuses to participate in any such activity, policy or practice in violation of a law, rule or regulation.
"This section creates a cause of action in favor of an employee against whom an employer has retaliated for disclosing to a supervisor, or to a public body, a violation of law on the part of the employer, which creates and presents a substantial and specific danger to the public health or safety'" ( Feinman v Morgan Stanley Dean Witter, 193 Misc 2d 496, 752 NYS2d 229 [Sup Ct New York County 2002]; see also Lore v New York Racing Assn., Inc., 12 Misc 3d 1159 [Sup Ct Nassau County 2006] [the New York Whistleblower Statute only provides protection when a violation of a law, rule, or regulation creates and presents a substantial and specific danger to the public health or safety]). In order to maintain a Labor Law § 740 claim, plaintiff must establish a violation of a law, rule or regulation, which violation must be actual and not merely possible, and that the lack of compliance presents a substantial and specific danger to the public health or safety ( Remba v Federation Employment and Guidance Serv., 149 AD2d 131, 133 [1st Dept 1989], affd, 76 NY2d 801). It does not apply to objections to or disclosures of fraudulent, or otherwise improper, economic activity alone (supra, citing Remba v Federation Empl. and Guidance Serv., 76 NY2d 801, 559 NYS2d 961).
According to U.S. Citizenship and Immigration Services, the essential purpose of the U.S. immigration laws is to preserve "the tradition of legal immigration" while closing "the door to illegal entry." It has also been noted that the public policies behind IRCA are (1) to protect documented workers from employment discrimination based on national origin and citizenship status, and (2) to protect all documented workers, whether citizens or not, from competition by undocumented workers who, by accepting substandard terms as to wages and working conditions, can seriously depress wage scales and working conditions of citizens and legally admitted aliens, thus diminishing the effectiveness of labor unions ( see Pineda v Kel-Tech Const., Inc ., 15 Misc 3d 176 , 832 NYS2d 386 [Sup Ct New York County 2007]).
Before hiring an alien, an employer is required to verify the prospective worker's identity and work eligibility by examining the government-issued documentation. If the required documentation is not presented, the alien cannot be hired ( see 8 USC § 1324a [a][1]). An employer who knowingly violates the employment verification requirements, or who unknowingly hires an illegal alien but subsequently learns that an alien is not authorized to work and does not immediately terminate the employment relationship, is subject to civil or criminal prosecution and penalties (see 8 USC § 1324a[a][1], [2]; [f][1]). Every employer, before hiring any person, must verify that the potential employee is not an unauthorized alien by examining specified documents that establish the person's identity and eligibility for employment in the United States and completing Form I-9, which evidences that examination ( see 8 USC § 1324a [b]; Coque v Wildflower Estates Developers, Inc ., 58 AD3d 44 , 867 NYS2d 158 [2d Dept 2008]). Thus, the purpose of the I-9 Form, on the other hand, is to verify a new employee's employment eligibility so as to discourage employers from hiring individuals who are legally permitted to work in the United States.
The GOA Report on Immigration studied a population of 55,322 illegal aliens who were incarcerated, and indicated an approximate 8 arrests per illegal alien, although an arrest did not necessarily result in a prosecution or a conviction (Plaintiffs' Opposition, Exhibit A, page 8).
The arrests consisted of drug offenses, burglaries, larceny-thefts, motor-vehicle thefts, and property damage. The GOA Report on Fraud indicates that "a significant number of aliens unauthorized to work in the United State have used fraudulent documents to circumvent the employment verification process" and that the use of fraudulent documents in connection with identity theft is "an essential component of many criminal activities, ranging from bank and credit card fraud to international terrorism" (Plaintiffs' Opposition, Exhibit B, pages 8-9).
However, the employment of a person not legally permitted to work in the United States, or more specifically as pertaining to the facts herein, the failure to verify a person's employment status, bears no relation to such person's disposition to commit terrorists acts or any other crimes. Unquestionably, terrorism anywhere is a substantial danger to the public health and safety. However, there is simply no indication in any of the submissions that the failure to properly complete the I-9 Form or verify the employment of a new employee creates or presents terrorism or any of the criminal activities performed by undocumented aliens as reported in the GAO or 9/11 Reports ( see Cotrone v Consolidated Edison Co., 50 AD2d 35 [1st Dept 2008] [stating that although leaving tanker trucks with hazardous materials unattended on a public street violated 49 CFR 397.5, this violation did not create a substantial and specific danger to the public health or safety; the claim that the violation would present such a risk was improperly based on mere speculation]). The employment of an undocumented alien, in and of itself, does not create or present a risk to the public's health or safety. Instead, the failure to verify the employment eligibility of new employees in violation of IRCA in the apparent fraudulent hiring of undocumented aliens, has at its root, the desire to hire employees at compensation rates much lower than the federally imposed minium wage, and is thus, akin to the type of claims alleging fraudulent economic practices, which do not constitute a danger to public health or safety ( see Gomez v F T Int'l (Flushing, NY) LLC , 16 Misc 3d 867, 842 NYS2d 298 [ Sup Ct New York County 2007] ["employers often hire undocumented workers to keep cost down"]; see Schultz v North American Ins. Group, 34 F Supp2d 866 [WDNY 1999] citing McGrane v Reader's Digest Ass'n, Inc., 822 F Supp 1044, 1051 [SDNY1993] ["Financial improprieties within a corporation do not constitute threats to public health or safety"]; Remba v Federation Employment and Guidance Serv., 76 NY2d 801 , supra [employee who was allegedly discharged because she objected to, and refused to participate in, her employer's purported fraudulent billing practice had no claim under Labor Law § 740]).
Interestingly, the statute violated does not even pertain to the public health and safety ( Cf. Grasner v Box Tree South Ltd., 164 Misc 2d 191 [discharge based on threat of disclosure of undisputed absence of fire exit signs at a restaurant as required by the Administrative Code, alone, is sufficient to support Labor Law § 740 claim]).
Therefore, having failed to allege that defendant violated a law, rule or regulation which violation creates and presents a substantial and specific danger to the public health or safety, the plaintiffs failed to state a cause of action under Labor Law 740. Thus, the branch of defendant's motion to dismiss the complaint is granted in its entirety.
Sanctions Pursuant to Labor Law § 740(6) and 22 NYCRR 130-1
Section 130-1.1 of the Rules of the Chief Administrator says in the pertinent part:
(a) The court, in its discretion, may award to any party or attorney in any civil action . . . costs in the form of reimbursement for actual expenses reasonably incurred and reasonable attorney's fees, resulting from frivolous conduct as defined in this Part. In addition to or in lieu of awarding costs, the court in its discretion may impose financial sanctions upon any party or attorney in a civil action or proceeding who engages in frivolous conduct as defined in this Part . . .
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(c) For purposes of this Part, conduct is frivolous if:
(i) it is completely without merit in law . . .
(ii) it is undertaken primarily to delay or prolong the resolution of the litigation, or to harass or maliciously injure another; or
(iii) it asserts material factual statements that are false.
Here, the complaint essentially alleges that defendant violated IRCA by failing to verify the employment of new employees and terminated plaintiffs for failing to cooperate with defendant's practices. Defendant has not established that any of these allegations are completely without merit or false. Both plaintiffs and defendant failed to cite any caselaw where the employee was terminated for disclosing or objecting to a violation of completing the I-9 Form. Therefore, it cannot be said that plaintiffs' filing of this action, in light of the above allegations, was frivolous so as to warrant sanctions under 22 NYCRR 130-1.
Further, Labor Law § 740(6) provides that
A court, in its discretion, may also order that reasonable attorneys' fees and court costs and disbursements be awarded to an employer if the court determines that an action brought by an employee under this section was without basis in law or in fact.
As stated above, the factual allegations have been established as frivolous or without basis and the law pertaining to an employees right to sue under Labor Law § 740 based on an employer's violation of IRCA was not expressly prohibited by New York caselaw or statute. Therefore, in this court's discretion, defendant's request for attorneys' fees and court costs and disbursements is denied.
Conclusion
Based on the foregoing, it is hereby
ORDERED that the branch of the motion by defendant Quality Building Services pursuant to CPLR § 3211 to dismiss the complaint of the plaintiffs Jeffrey Katz ("Katz") and Fabiola Colas ("Colas") (collectively, "plaintiffs") for failure to state a cause of action is granted; and it is further
ORDERED that the branch of the motion by defendant Quality Building Services pursuant to Labor Law § 740(6) and 22 NYCRR 130-1.1 for attorneys' fees, costs and disbursements is denied; and it is further
ORDERED that the Clerk may enter judgement accordingly; and it is further
ORDERED that defendant shall serve a copy of this order with notice of entry upon all parties within 20 days of entry.
This constitutes the decision and order of the Court.