Gardner-Alfred v. Federal Reserve Bank of New YorkGardner-Alfred v. Federal Reserve Bank of New York
Case Information
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
---------------------------------------------------------------------- X 1/18/2023
:
LORI GARDNER-ALFRED AND JEANETTE DIAZ, :
:
Plaintiffs, :
: 22-cv-1585 (LJL) -v- : : OPINION AND ORDER
FEDERAL RESERVE BANK OF NEW YORK, :
:
Defendant. :
:
---------------------------------------------------------------------- X
LEWIS J. LIMAN, United States District Judge:
Plaintiffs Lori Gardner-Alfred and Jeanette Diaz (“Plaintiffs”) bring claims against their former employer, Federal Reserve Bank of New York (“FRBNY” or “Defendant”), related to the termination of their employment for failing to comply with the requirement that employees be vaccinated against the COVID-19 virus. Dkt. No. 24. Defendant moves to dismiss the operative complaint. Dkt. No. 31.
For the following reasons, the motion to dismiss is granted with respect to Plaintiffs’ claims under New York State Human Rights Law (“NYSHRL”), N.Y. Exec. Law § 290 et seq. , and New York City Human Rights Law (“NYCHRL”), N.Y.C. Admin. Code § 8–101 et seq. The motion to dismiss is denied with respect to Plaintiffs’ claims under the Religious Freedom Restoration Act (“RFRA”), 42 U.S.C. § 2000bb et seq. , the Free Exercise Clause of the First Amendment, and Title VII of the Civil Rights Act of 1964 (“Title VII”), 42 U.S.C. § 2000e et seq.
BACKGROUND
The Court accepts the well-pleaded facts of the amended complaint (“Amended Complaint”), as supplemented by the documents incorporated by reference therein, as true for purposes of the motion to dismiss.
Defendant is one of twelve Federal Reserve Banks that make up the Federal Reserve System and that were established by the Federal Reserve Act, 12 U.S.C. § 341 (the “FRA”). Dkt. No . 24 ¶ 4. Plaintiff Lori Gardner-Alfred (“Gardner-Alfred”) began her employment with the FRBNY approximately thirty-five years ago, has held several titles over that time period, and most recently served as the Executive Assistant to the Executive Vice President (“EVP”) of the FRBNY. Id. ¶ 10. In that position, she facilitated and coordinated communications between the EVP and other areas of the FRBNY, maintained the EVP’s calendar, organized and scheduled meetings and events for the EVP, electronically reserved conference rooms and video conference meetings for the EVP, and coordinated travel and reimbursements for the EVP. Id. Plaintiff Jeanette Diaz (“Diaz”) began her employment with the FRBNY approximately twenty-seven years ago, has held several titles over that time period, and most recently served as Senior Executive Specialist, providing direct administrative support to the EVP of Information Technology. Id. ¶ 11. Diaz’s job responsibilities were substantively the same as Gardner- Alfred’s. Id.
At the onset of the COVID-19 pandemic in March 2020, Defendant implemented a mandatory remote work policy for its employees until employees were otherwise notified. Id. ¶ 12. Plaintiffs began working remotely almost immediately and their job performance was unaffected by remote work. ¶¶ 13–14. Both employees received strong performance evaluations for the years 2020 and 2021. ¶ 38.
In March 2021, the COVID-19 vaccine became widely available to adults in the United States. Id. ¶ 15. Plaintiffs, however, have both declined to receive any vaccination against COVID-19 for religious reasons. Id. ¶ 64. Gardner-Alfred is a member of the Temple of Healing Spirit, which is a belief system that emphasizes “holistic approaches to health focused on diet and spiritual self-awareness, and opposes the invasive techniques of traditional Western medicine.” Id. ¶ 18. For Gardner-Alfred, the COVID-19 vaccines, by reasons of their “provenance, chemical composition, and origin,” represent “unacceptable intrusions on her personal form.” Id. Diaz is a baptized Catholic and, because of her religious convictions, is morally against receiving certain vaccines. Id. ¶ 19. In particular, Plaintiffs claim that “[t]he COVID-19 injections available in the US all involve use of aborted fetal cells in their manufacturing and/or testing,” id. ¶ 16, and Diaz believes, among other things, that any individual Catholic may “refuse a vaccine that used abortion-derived cell lines at any stage of the creation of the vaccine,” id. ¶ 21.
On or about June 4, 2021, Defendant notified its employees that it would soon require employees to return to office on a part-time basis. Id. ¶ 26. Shortly thereafter, Defendant asked its employees to provide their COVID-19 vaccination status. Id. Plaintiffs responded that they were not vaccinated. Id. On or about August 2, 2021, Defendant implemented a COVID-19 vaccination policy (“Vaccination Policy”), requiring that every FRBNY employee be fully vaccinated against COVID-19. Id. ¶ 28.
The Vaccination Policy allows for certain religious and medical exemptions. ¶ 30. Specifically, the Vaccination Policy provides an exemption “as required by law, for employees unable to obtain a vaccine due to a medical condition or sincerely held religious belief that precludes receiving the COVID-19 vaccine.” (citation omitted). Further “[a]n employee requesting an accommodation based on religious belief must complete a religious accommodation request form and submit it to the People Relations team. The employee must clearly explain why receiving the COVID-19 vaccination would be contrary to their religious beliefs and may be required to provide supporting information.” Id. (citation omitted) (emphasis omitted). The Vaccination Policy also notes that persons who do not comply may be terminated. Id. ¶ 31.
Because neither of Plaintiffs is vaccinated, each submitted a Notification of Vaccination Exemption (“Notification”) by Affidavit to the People Relations team at the FRBNY; Gardner- Alfred submitted her Notification on or about August 9, 2021, and Diaz submitted her Notification on or about September 1, 2021. Id. ¶¶ 33–34. Each participated in a religious exemption interview conducted by the People Relations Team and answered questions about her religious views as well as her responsibilities and interactions with other individuals during a typical workday. Id. ¶ 35. On or about October 1, 2021, Plaintiffs were individually notified that Defendant had temporarily granted their request. Id. ¶ 36.
Defendant subsequently announced an official return to work date of January 10, 2022. Id. ¶ 37. On or about November 29, 2021, Defendant informed each Plaintiff by email that “as of January 7, 2022, your accommodation exempting you from the [FRBNY]’s mandatory COVID-19 Vaccination Policy will end.” ¶ 41 (citation omitted). The email further warned that “if you decide not to become vaccinated, by on or about January 7, 2022, you will receive additional information on your departure from the Bank . . . .” As for their religious accommodation requests, the Defendant stated it had reassessed “your temporary accommodation based on an evaluation of health, safety and population conditions related to the pandemic that impact the mission of the [FRBNY]. Those conditions include the increasing number of employees returning to the [FRBNY] in January, the return of external visitors, and your essential job functions (including the frequency of your interaction with external visitors and others at the [FRBNY]) and your proximity to others while conducting your job responsibilities.” Id. ¶ 42 (citation omitted). Plaintiffs were surprised by this reasoning as they had been able to satisfactorily perform their job functions remotely and, even prior to the remote work policy, had not regularly interacted with visitors to the building. Id. ¶ 45.
Despite denying Plaintiffs’ religious accommodation, the FRBNY approved exemptions for other employees for medical and religious reasons. Id. ¶ 46. For example, Defendant approved a religious accommodation for at least one executive assistant. That individual supports one senior vice president and a team comprised of multiple individuals, whereas Plaintiffs each support only one EVP. Id. Defendant has articulated no reason for granting the request for religious accommodation for certain individuals and not others. Id. Defendant has also implemented a procedure to accommodate those individuals; that procedure involves requiring the employees to submit weekly negative COVID-19 tests. Id. ¶ 49. Plaintiffs claim that Defendant could have accommodated their requests for accommodations, including by requiring testing to determine infection status or temperature checks. Id. ¶ 52.
Plaintiffs attempted to obtain additional information from Defendant about why their religious accommodation requests had been denied. Id. ¶ 53. Defendant noted that it could not reasonably accommodate Plaintiffs due to some of their essential job functions which required them to be physically at the FRNBY’s premises. ¶¶ 54–55. Defendant also noted that it could not reasonably accommodate Plaintiffs onsite because doing so would create increased safety risks for the FRNBY and its employees. ¶ 56.
Because Plaintiffs continued to refuse to be vaccinated against COVID-19, their employment at the FRBNY was terminated on March 14, 2022. Id. ¶ 68.
PROCEDURAL HISTORY
On February 23, 2022, Plaintiffs (who at that time were still employed by the FRBNY) commenced actions in New York State Supreme Court against the Defendant. Dkt. No. 1-1. Plaintiffs sought an immediate injunction barring Defendant from firing them (the “TRO”). Id. at 13, 39. That same day, Justice Frank of the New York State Supreme Court granted Plaintiffs an ex parte restraining order directing the FRBNY to show cause on March 7, 2022, why Plaintiffs should not be granted a permanent injunction restraining the FRBNY from firing Plaintiffs. Id. at 4–5.
The action was removed to this Court on February 25, 2022. Dkt. No. 1. On March 2, 2022, the FRBNY moved to dissolve the TRO. Dkt. No. 7. The Court granted that request. Dkt. No. 15. The Court held that the state court’s entry of the TRO did not satisfy the requirements of Federal Rule of Civil Procedure 65. Id. at 6. The Court also found that Plaintiffs had not shown irreparable harm justifying the issuance of a preliminary injunction. Id. at 7–8. In particular, the Court noted that while Plaintiffs’ argument that they would suffer irreparable harm hinged on the loss of their First Amendment freedoms,
Plaintiffs’ petitions here, however, do not allege any violation of their First Amendment freedoms; their operative pleadings assert no Free Exercise claims. Rather, they challenge the vaccination policy not as impinging on their free exercise of religion but because it is “clearly discriminatory, arbitrary, and capricious,” and “is not supported by scientific knowledge and fact but fear and intimidation. at 8 (citation omitted). The Court also noted that the economic harm of losing a job is not of
the type of harm that usually warrants injunctive relief as it can be compensable with money damages. After the Court granted the request, both Plaintiff were terminated from their employment by Defendant. Dkt. No. 24.
On April 5, 2022, Plaintiffs filed the Amended Complaint against the Defendant. In that Amended Complaint, Plaintiff alleged their terminations violated RFRA; the Free Exercise Clause of the First Amendment; Title VII, 42 U.S.C. §§ 2000e et al. ; the NYSHRL, N.Y. Executive Law § 290 et seq. ; and the NYCHRL, N.Y.C. Administrative Code, § 8–101 et seq.
On April 19, 2022, Plaintiffs moved the Court for a preliminary injunction reinstating their employment. Dkt. Nos. 27–30. Defendant moved to dismiss the Amended Complaint and opposed Plaintiff’s request for a preliminary injunction on May 3, 2022. Dkt. Nos. 31–33. On May 10, 2022, Plaintiffs filed a reply memorandum of law in further support of their motion for a preliminary injunction and a memorandum of law in opposition to the motion to dismiss the Amended Complaint (plus a supporting declaration). Dkt. Nos. 34–36. On June 10, 2022, Defendant filed a reply memorandum of law in support of the motion to dismiss the Amended Complaint. Dkt. No. 37.
On June 28, 2022, the parties submitted a joint letter to the Court agreeing to consolidate the hearing on Plaintiffs’ motion for a preliminary injunction with a trial on the merits pursuant to Federal Rule of Civil Procedure 65(a)(2). Dkt. No. 41. On July 20, 2022, the Court granted that request. Dkt. No. 43.
LEGAL STANDARD
I. Motion to Dismiss
To survive a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) for
failure to state a claim upon which relief can be granted, a complaint must include “sufficient
factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’”
Ashcroft v. Iqbal
,
DISCUSSION
Defendant seeks to dismiss each claim in the Amended Complaint. First, Defendant argues that the RFRA and Free Exercise Clause claims should be dismissed as Title VII is the exclusive remedy for the redress of federal employment discrimination and precludes the application of RFRA and the First Amendment. Dkt. No. 32 at 2. Second, Defendant argues that Plaintiffs’ New York City and New York State claims conflict with federal law and thus are preempted. Finally, Defendant argues that Plaintiffs’ Title VII claims should be dismissed as insufficiently pled. [1]
I. RFRA and Free Exercise Clause Claims
Defendant seeks to dismiss Plaintiffs’ RFRA and Free Exercise Clause claims as preempted by Title VII. Id. at 7–10. Defendant argues that Title VII sweeps within its reach all employment discrimination claims whether they are based on religion or any other form of discrimination that impacts a constitutionally protected right, and RFRA was not intended to broaden the employment discrimination remedies against federal employers, such as the FRBNY, that were in existence under Title VII. Id. at 8–10.
“Title VII of the Civil Rights Act of 1964 forbids employment discrimination based on
race, color, religion, sex, or national origin.”
Brown v. Gen. Servs. Admin.
,
The exclusivity of Title VII as to claims of federal employment discrimination was addressed by the Supreme Court in 1976 in Brown v. General Services Administration , 425 U.S. 820 (1976). In that case, a man who was employed by the General Services Administration of the federal government sued for race discrimination, including under Title VII. Id. at 822–24. The district court and Second Circuit dismissed the complaint holding that Section “717 provides the exclusive judicial remedy for federal employment discrimination, and that the complaint had not been timely filed under that statute.” at 824. The Supreme Court affirmed, holding that the 1972 amendment was intended to be exclusive and preemptive of all other judicial remedies for employment discrimination claims by federal employees. at 828–29. The Supreme Court discussed the various administrative and enforcement mechanisms that Section 717 included and found that the “[t]he balance, completeness, and structural integrity of § 717 are inconsistent with the petitioner’s contention that the judicial remedy afforded by § 717(c) was designed merely to supplement other putative judicial relief.” at 831–32.
In 1993, nearly two decades after the Court’s decision in
Brown
, Congress enacted RFRA
to provide broad protection for religious liberty. 42 U.S.C. § 2000bb–3(a);
see Burwell v. Hobby
Lobby Stores, Inc.
,
RFRA and Title VII have some overlap. Both, on their face, cover claims of religious discrimination (including failure to accommodate an employee’s religious practice) by governmental employers. See id. § 2000bb–1; id. § 2000e et seq. Thus, it is possible for a plaintiff, as Plaintiffs do here, to bring claims based on the same operative facts under both statutes. In such a case, the question arises whether Brown ’s holding that Title VII provides the exclusive remedy for claims of discrimination in federal employment persists even after the passage of RFRA.
Although the Second Circuit has not addressed this issue, several other circuit and district
courts have. In each case, the court held that RFRA was not intended to broaden the remedies
available for federal discrimination actions beyond that those existed under Title VII and thus
that Title VII still provides the exclusive remedy for claims of religious discrimination stemming
from federal employment.
See, e.g.
,
Harrell v. Donahue
,
These courts have reached this conclusion based on the Supreme Court’s holding in
Brown
that Title VII was the exclusive, pre-emptive scheme for the redress of claims of federal
employment discrimination,
see Harrell
,
Defendant asks this Court to extend the reasoning of these courts and to hold that Plaintiffs’ RFRA claims are preempted by Title VII. Dkt. No. 32 at 7–9. At first, this line of reasoning seems appealing. If, as the Supreme Court has stated, Title VII is the exclusive remedy for claims of federal employment discrimination and RFRA was not intended affect Title VII, then it seems straightforward that Plaintiffs should not be able to pursue their RFRA claims in this action against the FRBNY.
Plaintiffs, however, identify an important wrinkle in this mode of analysis. In each of the cases in which courts have held that the party’s RFRA claims were preempted by Title VII, the claims were against a federal entity that was made subject to Title VII by the addition of Section 717 in 1972. Dkt. No. 25 at 6–8 & n.4; see 42 U.S.C. § 2000e-16(a). In other words, these cases all involve entities of the federal government that were originally excluded from the scope of Title VII but were then later made liable under Section 717. Dkt. No. 25 at 7 7 n.4. The FRBNY, on the other hand, Plaintiffs argue, was made liable along with private employers under the 1964 Act and is not liable under Section 717. at 7–8.
Plaintiffs are correct that the FRBNY is not subject to Section 717 of Title VII. Section 717 applies only to:
employees or applicants for employment . . . in military departments . . . , in executive agencies . . . , in the United States Postal Service and the Postal Regulatory Commission, in those units of the Government of the District of Columbia having positions in the competitive service, and in those units of the judicial branch of the Federal Government having positions in the competitive service, in the Smithsonian Institution, and in the Government Publishing Office, the Government Accountability Office, and the Library of Congress.
42 U.S.C. § 2000e–16(a). The FRBNY does not fall into any of these categories and Defendant
does not claim that it does. Dkt. No. 37 at 3–4. The FRBNY has also historically been subject to
Title VII under the 1964 Act, not under Section 717 of Title VII.
See
Enforcement Guidance on
Coverage of Federal Reserve Banks, EEOC Compl. Man. ¶ 6530 (1993) (“[T]he Federal Reserve
Banks have long interacted with EEOC under those provisions of Title VII of the Civil Rights
Act of 1964, as amended, that apply to nongovernment employers.” (citation omitted));
see also
Cooper v. Fed. Reserve Bank of Richmond
,
That the FRBNY is not subject to Title VII under Section 717 is significant. First, it
distinguishes this case from prior cases
[3]
in which the court held that the plaintiff could not bring
both Title VII and RFRA claims. In those cases, the federal employers fell within the scope of
Section 717.
See
42 U.S.C. § 2000e–16(a);
see, e.g.
,
Harrell
,
The Supreme Court both in
Brown
and in its other decisions has made clear that outside
of those entities covered under Section 717, Title VII is not the exclusive remedy for claims of
employment discrimination. In
Johnson v. Railway. Express Agency, Inc.
,
In light of this case law, it is clear that
Brown
’s holding—as well as the holding of those
courts that have applied
Brown
to claims under RFRA—does not apply to Plaintiffs’ claims. As
outlined
Brown
’s holding was based on the legislative history of Section 717 and was specific to
entities covered under Section 717, and the FRBNY is not one of those entities. Instead,
Plaintiffs’ Title VII claims are governed by the 1964 Act, which the Supreme Court has held was
intended to “allow an individual to pursue independently his rights under both Title VII and
other applicable state and federal statutes.”
Johnson
,
The legislative history of RFRA is also supportive of the conclusion that Plaintiffs may
pursue claims under both Title VII and RFRA. As noted above, the Senate and House Reports
on RFRA substantively state that “[n]othing in this act shall be construed as affecting religious
accommodation under title VII of the Civil Rights Act of 1964.” S. Rep. No. 103–111, at 12;
see
also
H. R. Rep. No. 103–88, at 9 (1993). This language is revealing. The statement that RFRA
shall not “affect[]” Title VII indicates, most straightforwardly, that RFRA was not intended to
disallow parties from pursuing their remedies for religious accommodation under Title VII. In
other words, to the extent a person could bring a Title VII claim for religious accommodation
prior to RFRA’s enactment, the person could still bring such a claim even after RFRA’s
enactment. However, the language plainly does not indicate that Congress intended for Title VII
to be preemptive of RFRA claims of religious accommodation. Had that been Congress’s intent,
Congress would have used language such as “a party may only bring claims for religious
accommodation under Title VII” or “a party may not bring a religious accommodation claim
against an employer under RFRA.” Moreover, even if it were possible to read the language in
such a way, it still would not constitute the “definite expression in legislation” from which this
Court could infer that Congress intended one remedy to be preemptive of another.
Robbins &
Myers, Inc.
,
Furthermore, as mentioned, RFRA was passed to restore the pre-
Smith
approach to Free
Exercise Clauses cases. H.R. Rep. No. 103-88, at 6 (1993) (“The bill restores the compelling
governmental interest test previously applicable to First Amendment Free Exercise cases by
requiring proof of a compelling justification in order to burden religious exercise.”);
see also
S.
Rep. No. 103-111, at 9 (1993). In other words, RFRA was intended to give Plaintiffs a statutory
cause of action to bring claims that they could have brought pre-
Smith
under the Free Exercise
Clause.
See
42 U.S.C. § 2000bb–1(c). Importantly, pre-
Smith
, employees could and often did
bring Free Exercise claims for religious discrimination against their employers (not subject to
Section 717) alongside Title VII claims.
See Ansonia Bd. of Educ. v. Philbrook
,
Finding that Plaintiffs can pursue both RFRA and their Title VII claims is also consistent
with RFRA’s expansive purpose. “RFRA was designed to provide very broad protection for
religious liberty.”
Burwell
,
For these reasons, this Court holds that Plaintiffs’ Title VII claim does not preempt Plaintiffs’ RFRA or Free Exercise Clause claims. The Court accordingly declines to dismiss these claims on this basis.
Defendant also appears to argue that Plaintiffs’ RFRA and Free Exercise Clause claims
should be dismissed for a separate reason. Dkt. No. 32 at 8; Dkt. No. 37 at 2. Defendant states
that “[t]he Free Exercise Clause and RFRA apply to the United States government, which RFRA
defines as ‘a branch, department, agency, instrumentality, and official . . . of the United States.’”
Dkt. No. 32 at 8 (quoting 42 U.S.C. § 2000bb-2(1)). Defendant then states that the fact that the
FRBNY is a federal instrumentality is not dispositive as “[n]ot all federal instrumentalities fall
within RFRA’s scope.” ; Dkt. No. 37 at 2. Defendant, however, never follows this argument
through or explains exactly why the FRBNY is one of the federal instrumentalities that does not
fall within RFRA’s scope. Instead, Defendant appears to back away from this argument, noting
“[w]hether RFRA and the Free Exercise Clause apply to the New York Fed is a question of first
impression,” which the Court need not reach if it decides that Plaintiff may only pursue its
claims under Title VII. Dkt. No. 37 at 3. In response, Plaintiffs note that the FRBNY is an
instrumentality (a point that Defendant itself concedes) and thus falls under the plain meaning of
RFRA. Dkt. No. 35 at 5. Plaintiffs also state that the key case that Defendant cites in favor of its
argument,
Hall
,
This Court is unpersuaded by Defendant’s arguments that the RFRA and the Free
Exercise Clause do not apply to the FRBNY. First, the RFRA applies to any “branch,
department, agency, instrumentality, and official . . . of the United States.” 42 U.S.C. § 2000bb-
2(1). The term “instrumentality” is not defined in the Act and thus the Court must look to its
ordinary meaning.
See Schindler Elevator Corp. v. U.S. ex rel. Kirk
,
“Congress has expressly designated some entities as federal instrumentalities,
see, e.g.
,
12 U.S.C. § 2121 (banks for farm cooperatives), but it has not done so with respect to Federal
Reserve Banks.”
Starr Int’l Co. v. Fed. Rsrv. Bank of New York
,
Looking to and applying versions of these various tests, courts in this District as well as
outside of this District have repeatedly held that the Federal Reserve Banks are federal
instrumentalities.
See, e.g.
,
Starr Int’l Co.
,
The Court sees no basis to reach a contrary conclusion with respect to whether the
FRBNY is an “instrumentality” under RFRA, nor does Defendant provide any. As noted,
Defendant itself repeatedly states that the FRBNY is an instrumentality, Dkt. No. 32 at 8, 10,
and, other than noting some doubt,
[5]
does not explain why it is thus not covered under RFRA’s
plain language. Moreover, the Ninth Circuit decision on which Defendant appears solely to rely
in support of its argument,
see Hall
,
[6] There is some question about the continuing viability of this holding in light of the Supreme
Court’s rejection in
Burwell
of the argument that “RFRA did no more than codify this Court’s
pre-
Smith
Free Exercise Clause precedents.”
of Governors comprised of seven presidential appointees confirmed by the Senate who have
“enumerated powers to control their operations,”
Starr Int’l Co.
,
For similar reasons, the Court holds that Defendant is subject to the Free Exercise Clause.
As noted,
Lebron
held that a corporation created by special law is part of the government for the
purposes of the First Amendment when (1) the entity was created by a special statute explicitly
for the furtherance of federal governmental goals and (2) a majority of the board of directors of
the entity are appointed by the government itself.
Finally, in their reply brief, Defendant make an entirely new argument as to why Plaintiffs’ Free Exercise Clause claims should be dismissed. Dkt. No. 37 at 5. Defendant argues that the Free Exercise Clause, as interpreted by Smith , does not independently require an employer to provide religious accommodations from neutral and generally applicable policies. The Court declines to address this argument without prejudice to renewal at some other point. “[T]he law in the Second Circuit is clear that arguments or requests for relief raised for the first time in reply briefs need not be considered.” In re Various Grand Jury Subpoenas , 235 F. Supp. 3d 472, 485 (S.D.N.Y. 2017); Haywin Textile Prod., Inc. v. Int’l Fin. Inv. , 137 F. Supp. 2d 431, 434 (S.D.N.Y. 2001) (“It is well settled that courts should not consider arguments first raised in a party’s reply brief which afford no opportunity for response from the opposing party.”).
Defendant’s motion to dismiss is accordingly denied with respect to Plaintiffs’ claims under RFRA and the Free Exercise Clause.
II. State and Local Claims
Next, Defendant argues that Plaintiffs’ NYSHRL and NYCHRL claims conflict with and thus are preempted by federal law. Dkt. No. 32 at 10. First, Defendant argues that states and localities may not regulate federal activities, including the activities of federal instrumentalities, absent express and unambiguous Congressional authorization and that no such authorization exists here. Id. at 11. In the alternative, Defendant argues that NYSHRL and NYCHRL conflict with express provisions of federal law. Id. at 11–12. According to Defendant, the FRA expressly grants the Federal Reserve Banks the discretion to dismiss their employees at pleasure. Id. at 12. While this provision was impliedly amended by Title VII, to which the FRBNY is subject, Defendant argues it “cannot be curtailed beyond what federal law provides.” Id. Thus, Defendant argues that the FRA preempts state or local employment rights and Plaintiffs’ state and local claims must be dismissed. Id.
In opposition, Plaintiffs note that Defendant’s status as an instrumentality alone does not render it immune from state and local regulation. Dkt. No. 35 at 13–14. Instead, the relevant inquiry is whether the state laws will interfere with the FRBNY’s performance of its federal function. Id. Plaintiffs also argue that there is no conflict between state and local employment anti-discrimination statutes and the “at pleasure” language in the FRA. Id. at 15. Plaintiffs state: “It is well settled that the employment at will doctrine does not bar employment discrimination claims.” Finally, Plaintiffs argue that to the extent the Court does find such a conflict, it should “nevertheless find that the NYSHRL and NYCHRL are preempted only to the extent they exceed the requirements of Title VII.” at 17.
This Court first addresses the claim that Defendant’s status as an instrumentality renders it immune from state and local regulation regarding employment discrimination absent express and unambiguous Congressional authorization. It then turns to the question whether application of New York State and New York City law is preempted.
The Court concludes that Defendant’s status as a federal instrumentality does not
ipso
facto
render it immune from all state and local regulation absent express and unambiguous
Congressional authorization. It is true that the broad language in certain earlier Supreme Court
cases seems to support the view that the FRBNY should be free of regulation absent express
congressional authorization. In
Hancock v. Train
, the Supreme Court stated: “where Congress
does not affirmatively declare its instrumentalities or property subject to regulation, the federal
function must be left free of regulation.”
The Court turns next to the question whether state and local discrimination laws conflict
with the powers granted the FRBNY by the FRA. Dkt. No. 32 at 12; Dkt. No. 35 at 1. It is
undisputed that the broad powers granted the FRBNY by the FRA do not relieve it of the
obligation to comply with federal law anti-discrimination laws, including Title VII. The Court
when “faced with two possibly conflicting federal statutes, a court must, if at all possible,
construe them ‘to give effect to each if we can do so while preserving their sense and purpose.’”
Cortese v. Skanska Koch, Inc.
,
It is an entirely different question, however, whether states or localities, who are not co-
equals with the federal government with respect to federal legislation, have the power to restrict
the FRBNY’s powers under federal law. That “state laws of general application” apply to the
FRBNY, in the absence of a conflict, raises but does not answer the question how to determine
whether in the case of a federal instrumentality such a conflict exists and whether it exists here.
“That the conduct at issue was that of a federal instrumentality significantly ‘colors the
typical preemption analysis.’”
Starr Int’l Co.
,
As noted, Defendant argues that the NYSHRL and the NYCHRL conflict with
Section 341(Fifth) of the FRA. Section 341(Fifth) provides that “a Federal reserve bank . . .
shall have power . . . [t]o appoint by its board of directors a president, vice presidents, and such
officers and employees as are not otherwise provided for in this chapter, to define their duties,
require bonds for them and fix the penalty thereof, and
to dismiss at pleasure such officers or
employees
.” 12 U.S.C. § 341(Fifth) (emphasis added). While the Second Circuit has never ruled
on this precise issue, “[o]ther circuit and district courts have addressed whether the FRA or
analogous federal statutes containing similar ‘dismiss at pleasure’ language preempt state anti-
discrimination laws and have reached varying conclusions.”
Dobbins v. Fed. Rsrv. Bank of
Dallas
,
A second approach is the “more limited approach of partial conflict preemption of state
employment laws.”
Fasano
,
Finally, one court in this District has found that there is no conflict between the NYSHRL
and the NYCHRL and the FRA’s “dismiss at pleasure” provision. In
Goonan v. Fed. Reserve
Bank of New York
,
The Court draws guidance from the Second Circuit’s recent answer to a question similar
to that presented here in
Cantero
,
Drawing on the line of cases dating back to
McCulloch v. Maryland
, 17 U.S. (4 Wheat.)
316 (1819), the Second Circuit disagreed with the plaintiffs and held that the state statute was
preempted.
See id.
at 125. The Court held that “ordinary legal principles of pre-emption” were
to be applied to the question whether the state statute was preempted, but that under those
ordinary principles when the federal statute granted powers to a national bank “‘both enumerated
and incidental,’ those powers are ‘not normally limited by, but rather ordinarily pre-empt[],
contrary state law.’”
Id.
at 130 (quoting
Barnett Bank
,
Applying those principles in Cantero , the Second Circuit held that the state law was preempted because it purported to “exert control” over “a banking power granted by the federal government.” Id. at 134. The Court concluded: “The issue is not whether this particular rate of 2% is so high that it undermines the use of such accounts, or even if it substantially impacts national banks’ competitiveness. The power to set minimum rates is the ‘power to control,’ and the power to control is the ‘power to destroy.’” at 134–35 (quoting McCulloch , 17 U.S. at 431).
The identical principles compel the conclusion that New York State and New York City
anti-discrimination law are preempted by the grant of power to dismiss employees at pleasure to
the FRBNY in the FRA. The FRA, which is considered with the NBA and the Federal Home
Loan Bank Act as the “federal banking laws,” was enacted approximately fifty years after the
NBA and was modeled, in part, on that earlier act.
See
H.R. Rep. No. 63-69, at 36 (1913)
(stating that the “purpose of [Section 4 of the FRA] is to authorize the incorporation of such a
reserve bank in each district with powers precisely analogous to those of the national banks
except in so far as altered by the [FRA]” and “[t]here is no reason why any important distinction
as to type of organization should be drawn or exist between the typical reserve bank and the
typical national bank”). Like the NBA at issue in
Cantero
, the FRA grants powers to the Federal
Reserve Banks “both enumerated and incidental.’” at 130 (quoting
Barnett Bank
, 517 U.S. at
32);
see
12 U.S.C. § 341 (titled “General enumeration of powers”). Among those “powers” is
Section 341(Fifth) of the FRA that states that the Federal Reserve Banks “shall have power”
“[t]o appoint by its board of directors a president, vice presidents, and such officers and
employees as are not otherwise provided for in this chapter, to define their duties, require bonds
for them and fix the penalty thereof, and
to dismiss at pleasure such officers or employees
.” 12
U.S.C. § 341(Fifth) (emphasis added). The NBA contains a nearly identical provision, 12 U.S.C.
§ 24(Fifth) (“dismiss such officers or any of them at pleasure”), which courts look to in
construing Section 341(Fifth) of the FRA.
See, e.g.
,
Fasano
,
Giving the statute’s language “its ordinary meaning, considering the ‘commonly
understood meaning of the statute’s words at the time Congress enacted the statute, and with a
view to their place in the overall statutory scheme,’”
Springfield Hosp., Inc. v. Guzman
, 28 F.4th
403, 418 (2d Cir. 2022) (quoting
In re Bernard L. Madoff Inv. Secs. LLC
,
As much as the power to establish escrow accounts and to set the terms for those
accounts at issue in
Cantero
, the power to hire and fire employees is central to the banking
powers of a Federal Reserve Bank.
Cf. Myers v. United States
,
Observation and experience alike teach that it is essential to the safety and prosperity of banking institutions that the active officers, to whose integrity and discretion the moneys and property of the bank and its customers are intrusted, should be subject to immediate removal whenever the suspicion of faithlessness or negligence attaches to them. High credit is indispensable to the success and prosperity of a bank. Without it, customers cannot be induced to deposit their moneys. When it has once been secured, and then declines, those who have deposited demand their cash, the income of the bank dwindles, and often bankruptcy follows. It sometimes happens that, without any justification, a suspicion of dishonesty or carelessness attaches to a cashier or a president of a bank, spreads through the community in which he lives, scares the depositors, and threatens immediate financial ruin to the institution. In such a case it is necessary to the prosperity and success—to the very existence—of a banking institution that the board of directors should have power to remove such an officer, and to put in his place another, in whom the community has confidence. In our opinion, the provision of the act of congress to which we have referred was inserted, ex industria, to provide for this very contingency.
Westervelt v. Mohrenstecher
,
It follows then that the New York State and New York City laws are preempted if their
“enforcement . . . would exert control over” this power and “if taken to [their] extreme, threaten
to ‘destroy’ the grant made by the federal government.”
Cantero
,
Moreover, the application of New York State and City anti-discrimination laws
generally—if “aggregated with similar laws”—would threaten to undermine the FRBNY’s
exercise of its power to dismiss employee at-pleasure.
Cantero
,
Such laws might have salutary effects. The states can serve as “laborator[ies]” for
democracy, developing regulations that might serve as blueprints for subsequent federal
legislation.
New State Ice Co. v. Liebmann
,
In reaching the conclusion that Plaintiffs’ local and state claims are preempted, the Court
declines to follow the reasoning or conclusion of
Goonan
,
III. Title VII Claims
Finally, Defendant argues that Plaintiffs’ Title VII claims are deficient because Gardner- Alfred has not adequately pleaded facts to show that her stated beliefs are “religious” and neither Plaintiff has adequately pleaded that the FRBNY’s policy conflicts with their beliefs. Dkt. No. 32 at 16–17. Defendant also argues that the Amended Complaint does not offer facts to explain how the vaccines conflict with Plaintiffs’ own alleged religious beliefs. at 19. In response, Plaintiffs note that nondenominational beliefs steeped in matters of the spirit, like Gardner-Alfred’s beliefs here, qualify as religion under Title VII. Dkt. No. 35 at 20. Plaintiffs also respond that “[t]he Amended Complaint sufficiently pleads that both Plaintiffs’ religious beliefs prevent them from obtaining the vaccine, and they were forced to choose between their religious beliefs or termination.” at 22 (internal citations omitted).
To make out a prima facie case of religious discrimination, a plaintiff must allege that
“(1) they held a bona fide religious belief conflicting with an employment requirement; (2) they
informed their employers of this belief; and (3) they were disciplined for failure to comply with
the conflicting employment requirement.”
Baker v. The Home Depot
,
Title VII defines religion capaciously to include “all aspects of religious observance and
practice,
as well as belief
.” 42 U.S.C. § 2000e(j) (emphasis added). The inquiry as to whether a
person’s belief is religious is twofold: “whether the beliefs professed by a [claimant] are
sincerely held and whether they are, in his own scheme of things, religious.”
Patrick v. LeFevre
,
Both the Supreme Court and Second Circuit have warned that courts have a limited
function in determining whether religious beliefs are protected.
See, e.g.
,
Thomas v. Rev. Bd. of
Indiana Emp. Sec. Div.
,
The first requirement (
i.e.
, sincerity of a person’s religious belief) is a question of fact—
unsuitable to resolution at the motion to dismiss stage.
See Davis v. Fort Bend Cnty.
, 765 F.3d
480, 485 (5th Cir. 2014);
E.E.O.C. v. Union Independiente de la Autoridad de Acueductos y
Alcantarillados de Puerto Rico
,
Gardner-Alfred has made sufficient allegations that that she was forced to act in violation
of her alleged bona fide religious beliefs. The Amended Complaint alleges that Gardner-Alfred
is a member of the Temple of Healing Spirit, which believes in “holistic approaches to health
focused on diet and spiritual self-awareness, and opposes the invasive techniques of traditional
medicine” and that she also believes in the dictates of the “Book of Leviticus.” Dkt. No. 24
¶¶ 17–18. These allegations are, at this stage, sufficient under Title VII’s definition of religion.
They raise a plausible inference that Gardner-Alfred follows the mandates of the Temple of
Healing Spirit as, in her own scheme of things, religious mandates and not purely as intellectual
beliefs or views about her own self-interest. Moreover, that the Temple of Healing Spirit may
not be a well-recognized belief system does not impact this conclusion as “a person need not be a
member of a formal religious sect or church to have ‘religious’ beliefs.”
Caviezel v. Great Neck
Pub. Sch.
,
The Amended Complaint also sufficiently alleges a nexus between the objection to immunization and their own religious beliefs. Dkt. No. 32 at 18–19. As to Gardner-Alfred, the Amended Complaint alleges that the Temple of Healing Spirit, of which she is a member, “opposes the invasive techniques of Western medicine” and thus the “COVID-19 vaccines represent unacceptable intrusions on her personal form” due to their “provenance, chemical composition, and origin.” Dkt. No. 24 ¶¶ 17–18. As to Diaz, the Amended Complaint states that Diaz is a baptized Catholic and believes that it is “morally unacceptable for her to receive certain vaccines consistent with the teachings of the Catholic church,” including that there is a “moral duty to refuse the use of medical products, including certain vaccines, that are created using human cell lines derived from abortion” unless there are no alternatives available. [11] Dkt. No. 24 ¶¶ 19–22. The Amended Complaint also alleges that “[t]he COVID-19 injections available in the US all involve use of aborted fetal cells in their manufacturing and/or testing,” id. ¶ 16, and that there are alternatives to being vaccinated including Diaz’s natural immunity to the virus, which she acquired from contracting COVID-19 twice, id. Thus, the Amended Complaint alleges a nexus between Diaz’s religious beliefs as a Catholic and her refusal to receive the vaccine.
CONCLUSION
The motion to dismiss is GRANTED IN PART and DENIED IN PART. The Clerk of Court is respectfully directed to close Dkt. Nos. 27, 31. [12]
SO ORDERED. Dated: January 18, 2023 __________________________________
New York, New York LEWIS J. LIMAN United States District Judge
Notes
[1] In its opening brief, Defendant also argued that Plaintiffs’ Title VII claims should be dismissed
for failure to exhaust administrative remedies through the Equal Employment Opportunity
Commission (“EEOC”). Dkt. No. 32 at 2. However, Defendant dropped this argument in its
reply brief after Plaintiffs presented evidence that they have since exhausted their administrative
remedies.
See
Dkt. No. 35 at 10; Dkt. No. 37 (“As Plaintiffs have obtained right-to-sue letters,
ECF Nos. 36-1, 36-2, the New York Fed does not address exhaustion further.”);
see also
Brunson-Bedi v. New York
,
[2] RFRA, as enacted, applied to the federal government as well as state and local governments.
See Burwell
,
[3] Defendant states that it has found only one case in which the Court considered a RFRA claim asserted by a former employee of the Virgin Islands government, which is a “covered entity”
[4] “The Court in
Brown
. . . expressly reaffirmed the holding in
Johnson
.”
Keller v. Prince
George’s Cnty.
,
[5] It is possible to interpret Defendant as arguing that because the FRBNY is “formally
separate . . . from the government,” Dkt. No. 32 at 8 (citation omitted), it is not an
instrumentality within the RFRA’s scope. However, formal separateness is a key identifying
feature of an instrumentality and what distinguishes it from a governmental department or
agency.
See, e.g.
,
Lebron v. Nat’l R.R. Passenger Corp.
,
[7] The Eleventh Circuit similarly adopted this approach regarding nearly identical “at pleasure”
language in the National Bank Act, holding that “the at pleasure provision of the NBA preempts
Wiersum’s claim under the FWA for wrongful discharge under Florida law, because the FWA is
in direct conflict with the NBA.”
Wiersum v. U.S. Bank, N.A.
,
[8] As discussed infra pp. 31, 37, no such presumption against preemption applies in the context of federal instrumentalities and so the court’s references to it in Goonan are apparently in error.
[9] Thus Court therefore declines Plaintiffs’ request that the Court apply these laws to the extent they do not exceed the requirements of Title VII.
[10] They also are not coextensive with federal anti-discrimination law: for example, they restrict
the lawful reasons for which an employee may be terminated beyond those outlawed by federal
law and are to be construed liberally (untethered to federal law).
See
N.Y. Exec. Law § 296;
N.Y.C. Admin. Code § 8-107;
see Teachey v. Equinox Holdings Inc.
,
[11] While the Amended Complaint states “[t]here is no moral duty to refuse the use of medical products . . . that are created using human cell lines derived from abortion,” Dkt. No. 24 ¶ 20 (emphasis added), the insertion of the word “no” appears to be an error in light of the surrounding context. Accordingly, this Court understands the Amended Complaint to read “there is [a] moral duty . . . .”
[12] Plaintiffs’ motion for a preliminary injunction should be closed as this Court on July 20, 2022, upon consent of the parties, consolidated the motion for an injunction with the trial on the merits pursuant to Federal Rule of Civil Procedure 65(a)(2).