Opinion ID: 1194597
Heading Depth: 3
Heading Rank: 1

Heading: Did Reddington Waive Her Claim?

Text: The Hospital's principal argument is that Reddington waived her claim under section 741 by including an action under section 740, New York's general whistleblower provision, in her initial complaint. The statute of limitations applicable to a claim brought under section 740 is one year from the time of the alleged unlawful employment action, N.Y. Lab. Law § 740(4)(a), but the limitations period applicable to a claim brought under section 741 is two years, id. § 740(4)(d). Reddington filed her complaint almost eighteen months after the Hospital terminated her. She originally charged unlawful termination under both sections 740 and 741, but she omitted the section 740 charge from her amended complaint after the defendants moved to dismiss it as time-barred. Section 740 contains an election-of-remedies provision that states as follows: Nothing in this section shall be deemed to diminish the rights, privileges, or remedies of any employee under any other law or regulation or under any collective bargaining agreement or employment contract; except that the institution of an action in accordance with this section shall be deemed a waiver of the rights and remedies available under any other contract, collective bargaining agreement, law, rule or regulation or under the common law. Id. § 740(7). Two relevant questions arise from this provision. First, did Reddington trigger this waiver provision by including a section 740 claim in her initial pleading? Second, if so, what causes of action did the waiver affect? When we consider issues of New York law, our task is to determine how the New York Court of Appeals would decide them. Michalski v. Home Depot, Inc., 225 F.3d 113, 116 (2d Cir.2000). We owe no deference to the district court's interpretation of New York law. Elliott Assocs., L.P. v. Banco de la Naciòn, 194 F.3d 363, 370 (2d Cir.1999). Decisions of New York's intermediate appellate courts are helpful indicators of how the Court of Appeals would decide, but we are not strictly bound by decisions of the Appellate Division, particularly when we have `persuasive data' that the Court of Appeals would `decide otherwise.' DiBella v. Hopkins, 403 F.3d 102, 112 (2d Cir. 2005) (quoting West v. Am. Tel. & Tel. Co., 311 U.S. 223, 237, 61 S.Ct. 179, 85 L.Ed. 139 (1940)). For the reasons we describe below, we believe that it is appropriate for the New York Court of Appeals, if it so chooses, to address the state law issues regarding the scope of section 740 waivers that are raised by this case.
The second clause of N.Y. Lab. Law § 740(7) provides, in relevant part, that the institution  not the maintenance, pendency, or favorable resolution  of an action in accordance with section 740 shall be deemed a waiver of the rights and remedies available under any other . . . law. Several courts have suggested that the inclusion of a section 740 claim in a complaint triggers the waiver even if the section 740 claim is facially defective and even if the claim is promptly withdrawn. For example, in Pipia v. Nassau County, 34 A.D.3d 664, 826 N.Y.S.2d 318 (App. Div.2006), the plaintiff alleged a violation of section 740, as well as eight other causes of action, seven of which arose from an allegedly unlawful termination. He moved for leave to amend the complaint to withdraw the section 740 claim and replace it with a section 741 claim. The Appellate Division held that the amended complaint did not state a claim under section 741, and the court also dismissed the seven claims related to the termination because [t]he mere commencement of an action under Labor Law § 740(4) . . . acts as an election of remedies, waiving other causes of action relating to the alleged retaliatory discharge, irrespective of the disposition of such claims. Id. at 320. Similarly, in Hayes v. Staten Island University Hospital, 39 A.D.3d 593, 834 N.Y.S.2d 274 (App.Div.2007), the plaintiff alleged a violation of section 740 and breach of contract. The Appellate Division held that the plaintiff could not proceed on her contract claim even after she withdrew her section 740 claim. See id. at 275 ([T]he plaintiff's attempt to amend the complaint to exclude the Labor Law § 740 cause of action did not nullify the waiver. (citations omitted)). Other courts have adopted a somewhat more flexible reading, allowing plaintiffs a grace period within which they can withdraw section 740 and nullify the effect of the waiver. See, e.g., Nicholls v. Brookdale Univ. Hosp. Med. Ctr., No. 03-CV-6233 (JBW), 2004 WL 1533831, at  (E.D.N.Y. July 9, 2004) (The court will permit withdrawal of the whistleblower claims . . . by amendment within thirty days. Withdrawal will be deemed the equivalent [of] failing to file the claim.). The court in Nicholls interpreted the waiver provision to mitigate what it saw as a harsh result. Id.
The two clauses of section 740(7) would seem potentially to contradict each other  the first assuring that [n]othing in this section shall be deemed to diminish the rights . . . or remedies of any employee under any other law and the second excepting that the institution of an action in accordance with this section shall be deemed a waiver of the rights and remedies available under any other . . . law. N.Y. Lab. Law § 740(7). As one federal district court has put it, [o]n a plain reading of Clause Two, New York's whistleblower regime not only `diminish[es]' other rights, but for employees who seek its shelter, it eviscerates them. Collette v. St. Luke's Roosevelt Hosp., 132 F.Supp.2d 256, 262-63 (S.D.N.Y.2001) (second alteration in original). Responding to this apparent incongruity, courts have adopted differing and sometimes contradictory limiting constructions of this waiver. New York state courts have generally held that the waiver applies to all causes of action that relate to the retaliatory discharge, which may include contract claims, see Hayes, 834 N.Y.S.2d at 275; Bordan v. N. Shore Univ. Hosp., 275 A.D.2d 335, 712 N.Y.S.2d 155, 157 (App.Div.2000), tort claims, see Pipas v. Syracuse Home Ass'n, 226 A.D.2d 1097, 641 N.Y.S.2d 768, 768 (App.Div. 1996), and claims arising under state antidiscrimination laws, see Owitz v. Beth Isr. Med. Ctr., No. 600331/03, 2004 WL 258087, at  (N.Y.Sup.Ct. Jan.29, 2004). Federal district courts, in contrast, generally interpret the waiver as applying only to rights and remedies concerning whistleblowing, Collette, 132 F.Supp.2d at 274; see also Reddington, 373 F.Supp.2d at 185-86; Nicholls, 2004 WL 1533831, at , and therefore deem it not to apply, for example, to claims of employment discrimination. Collette, 132 F.Supp.2d at 274. Additionally, federal courts have interpreted the provision not to waive or otherwise affect rights arising under federal law. Id. at 266; Nicholls, 2004 WL 1533831, at ; United States ex rel. Mikes v. Straus, 853 F.Supp. 115, 121 (S.D.N.Y.1994). Whatever the proper scope of the section 740 waiver, there is an additional consideration here related to the district court's conclusion that a claim under section 741 falls within it. The waiver, by its terms, relates to rights and remedies available under any other . . . law. N.Y. Lab. Law § 740(7) (emphasis added). Although section 741, the health care whistleblower provision, provides a set of rights distinct from the rights created by section 740, the general whistleblower law, an employee aggrieved by a violation of section 741 can enforce his or her rights only in accordance with the remedial provisions of section 740. See id. §§ 740(4)(d), 741(4). It therefore seems arguable that section 740's waiver cannot affect rights created by section 741 because the associated remedies are available under the same law, not any other law. The logic of Pipia supports this reading. As discussed earlier, the court in Pipia dismissed claims related to an alleged retaliatory termination because they were waived by the institution of a section 740 action, even though the plaintiff withdrew the section 740 claim and replaced it with a section 741 claim. As an alternative ground for this disposition, the court stated that dismissal of the [related] causes of action would have been required even if the plaintiff's [section 741 claim] had been pleaded initially. Pipia, 826 N.Y.S.2d at 320. According to the court, [b]ecause a claim alleging a violation of Labor Law § 741(2) is enforced pursuant to Labor Law § 740(4)(d), the same waiver is effected by the institution of a cause of action alleging a violation of Labor Law § 741(2). Id. (citation omitted). Pursuant to this logic, because the waiver is triggered by the institution of an action in accordance with this section  namely, section 740  a claim under section 741 is, by necessary implication, an action in accordance with section 740 as well.