Supplemental Brief — Apartment Association of Los Angeles County, Inc., dba Apartment Association of Greater Los Angeles, Petitioner v. City of Los Angeles, California, et al.

No. 21-788

In the Supreme Court of the United States

__________________

APARTMENT ASSOCIATION OF LOS ANGELES COUNTY, INC.,

DBA APARTMENT ASSOCIATION OF

GREATER LOS ANGELES,

Petitioner,

v.

CITY OF LOS ANGELES & ALLIANCE OF CALIFORNIANS

FOR COMMUNITY EMPOWERMENT AND STRATEGIC

ACTIONS FOR A JUST ECONOMY,

Respondents.

__________________

On Petition for Writ of Certiorari to the

United States Court of Appeals

for the Ninth Circuit

__________________

SUPPLEMENTAL BRIEF FOR PETITIONER

__________________

DOUGLAS J. DENNINGTON

Counsel of Record

JAYSON A. PARSONS

RUTAN & TUCKER, LLP

18575 Jamboree Road, 9th Floor

Irvine, CA 92612

(714) 641-5100

ddennington@rutan.com

Counsel for Petitioner

Becker Gallagher · Cincinnati, OH · Washington, D.C. · 800.890.5001

i

TABLE OF CONTENTS

TABLE OF AUTHORITIES . . . . . . . . . . . . . . . . . . . ii

SUPPLEMENTAL BRIEF FOR PETITIONER . . . . 1

ARGUMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

SUPPLEMENTAL APPENDIX

Appendix A RHC Operating LLC, v. City of New

York, et al., 21-CV-9322 (JPO),

Opinion and Order in the United

States District Court Southern

District of New York

(March 30, 2022) . . . . . . . . Supp. App. 1

ii

TABLE OF AUTHORITIES

CASES

Allied Structural Steel Company v. Spannaus,

438 U.S. 234 (1978). . . . . . . . . . . . . . . . . . . . . . . . 1

DoorDash, Inc. v. City & County of San Francisco,

No. 21-cv-05502-EMC, 2022 WL 867254

(N.D. Cal. Mar. 23, 2022) . . . . . . . . . . . . . . . . . 1, 2

Melendez v. City of New York,

16 F.4th 992 (2d Cir. 2021). . . . . . . . . . . . . . . . 1, 2

RHC Operating LLC v. City of New York,

No. 21-CV-9322 (JPO), 2022 WL 951168

(S.D.N.Y. Mar. 30, 2022) . . . . . . . . . . . . . . . . . . . 2

1

SUPPLEMENTAL BRIEF FOR PETITIONER

ARGUMENT

As predicted in Petitioner’s reply brief, the split

between the Second Circuit and Ninth Circuit is

quickly widening. See Reply Br. 6–9. As district courts

are faced with new Contracts Clause challenges, courts

are looking to their respective circuit precedent for

guidance. In doing so, they are beginning to apply

wildly different standards.

In its reply brief, Petitioner called this Court’s

attention to a March 23, 2022 opinion and order from

the Northern District of California in DoorDash, Inc. v.

City & County of San Francisco, No. 21-cv-05502-EMC,

2022 WL 867254 (N.D. Cal. 2022). In DoorDash, the

district court relied on the opinion challenged here to

grant the defendant city’s motion to dismiss without

leave to amend because “the Ordinance has a

legitimate public purpose and the Court cannot ‘secondguess’ the City’s determination” of reasonableness.1 Id.

at *16 (quoting the opinion challenged here).

Seven days after the opinion in DoorDash, and after

the filing of Petitioner’s reply brief, the Southern

District of New York, following Melendez v. City of New

York, 16 F.4th 992 (2d Cir. 2021), recognized that in

challenges to laws impairing private contracts, “the

1

If a court cannot “second-guess” a defendant’s own determination

of reasonableness, per the opinion challenged by this petition, then

the Contracts Clause is indeed dead letter so far as impairments

to private contracts are concerned. But see Allied Structural Steel

Co. v. Spannaus, 438 U.S. 234, 241 (1978) (“[T]he Contract Clause

remains part of the Constitution. It is not a dead letter.”).

2

assessment of ‘purpose and means’ varies with ‘the

degree of contractual impairment.’” RHC Operating

LLC v. City of New York, No. 21-CV-9322 (JPO), 2022

WL 951168 (S.D.N.Y. Mar. 30, 2022) (quoting

Melendez, 16 F.4th at 1035); see also Supp. App. 26.

In RHC Operating, the court assumed arguendo

that the law substantially impaired contracts and

engaged in “the more searching review that follows a

severe impairment — ‘a careful examination of the

nature and purpose’ of the legislation.” Supp. App. 26

(quoting Melendez, 16 F.4th at 1035). “In conducting a

‘careful examination’ of reasonableness,” the court

understood from Melendez that it “considers factors

like the ‘extent of impairment,’ the ‘record basis’ that

‘link[s] purpose and means,’ and ‘tailoring.’” Pet. Supp.

App. 28 (quoting Melendez, 16 F.4th at 1029, 1038–47).

The RHC Operating court then spends nearly six

pages discussing these factors and addressing each of

plaintiff’s arguments. See Supp. App. 28–34. While the

plaintiff there may not have ultimately prevailed, it

cannot be said that the Southern District of New York

simply refused to “second-guess” the city’s own

determination of reasonableness. This is a far cry from

what is now occurring in district courts within the

Ninth Circuit, as evidenced by DoorDash, as a direct

consequence of the opinion challenged here.

DoorDash and RHC Operating are but the first in a

line of cases sure to come in which the divergence

between the circuits only widens. The Court should

grant this petition and nip this circuit split in the bud

before it grows into a jurisprudential bramble.

3

CONCLUSION

For the foregoing reasons and those set forth in the

petition and reply, the Court should grant the petition

for certiorari.

Respectfully submitted,

DOUGLAS J. DENNINGTON

Counsel of Record

JAYSON A. PARSONS

RUTAN & TUCKER, LLP

18575 Jamboree Road, 9th Floor

Irvine, CA 92612

(714) 641-5100

ddennington@rutan.com

Counsel for Petitioner

SUPPLEMENTAL

APPENDIX

i

SUPPLEMENTAL APPENDIX

TABLE OF CONTENTS

Appendix A RHC Operating LLC, v. City of New

York, et al., 21-CV-9322 (JPO),

Opinion and Order in the United

States District Court Southern

District of New York

(March 30, 2022) . . . . . . . . Supp. App. 1

Supp. App. 1

APPENDIX A

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK

21-CV-9322 (JPO)

[Filed: March 30, 2022]

____________________________________________

RHC OPERATING LLC,

)

Plaintiff,

)

)

-v)

)

CITY OF NEW YORK, et al.,

)

Defendants.

)

____________________________________________ )

OPINION AND ORDER

J. PAUL OETKEN, District Judge:

Two years ago, the COVID-19 pandemic shuttered

New York City almost overnight. Many hotels closed

soon after, and many more laid off their workers. For

a year and a half, the federal government provided

supplemental unemployment benefits. When those

benefits expired, the City of New York enacted a law

generally requiring still-closed hotels to pay laid-off

workers five hundred dollars in severance pay for

thirty weeks, starting on October 11, 2021. Plaintiff

owns the Roosevelt Hotel, which closed to the public in

December 2020, and has not reopened.

Supp. App. 2

In this action, Plaintiff challenges the Severance

Law, asserting that it is preempted by the Employee

Retirement Income Act of 1974 (“ERISA”), 29 U.S.C.

§§ 1001, et seq., and the National Labor Relations Act

of 1935 (“NLRA”), 29 U.S.C. §§ 151, et seq. Plaintiff also

claims that the law violates the Contracts Clause, Due

Process Clause, and Equal Protection Clause. At the

outset, Plaintiff moves for a preliminary injunction to

enjoin the enforcement of the law. Because Plaintiff

has not shown a likelihood of success on the merits of

any federal claim, the motion is denied.

I.

Background

A. Factual and Statutory Background

The following background is drawn “from the

parties‘ submissions in connection with [the] motion for

a preliminary injunction,” including the complaint,

declarations, and attached exhibits. LSSi Data Corp. v.

Time Warner Cable, Inc., 892 F. Supp. 2d 489, 494 n.2

(S.D.N.Y. 2012). By March 2020, COVID-19 had

arrived in New York City. (See Dkt. No. 1 (“Compl.”)

¶ 18.) There was a widespread fear of infection. (See

Compl. ¶ 19.) That month, the federal government, the

State of New York, and the City of New York each

declared a state of emergency. (See Compl. ¶ 18.) They

restricted travel, banned gatherings, and prohibited

indoor dining. (See Compl. ¶ 18.)

Among everything else, hotels lost revenue. (See

Compl. ¶ 19.) In New York City, occupancy rates

plummeted to 35 percent. (See id.) By the end of the

year, two hundred of the City’s seven hundred hotels

had closed (see Compl. ¶ 20), including the Roosevelt

Supp. App. 3

Hotel, which furloughed most employees in March, laid

off the rest in October, and closed in December (see

Compl. ¶ 21). Although cases of COVID-19 have

dropped since, and many restrictions have been lifted,

occupancy rates have not returned to pre-pandemic

levels. (See Compl. ¶¶ 19-23.) At least ninety hotels

remain closed due to the pandemic. (See 21-CV-8321,

Dkt. No. 22 (“Dandapani Declaration”) ¶ 6.) Around

sixty percent of the City’s hotel workers are still

unemployed. (See Dkt. No. 32-1 (“First Committee

Report”) at 24.)

At the peak of the pandemic, Congress passed the

Coronavirus Aid, Relief, and Economic Security

(“CARES”) Act. See 15 U.S.C. §§ 9001, et seq. Among

other things, the CARES Act extended eligibility for

workers to apply for additional weeks of unemployment

benefits until September 5, 2021. See, e.g., id. § 9021.

It also supplemented unemployment benefits for

recipients by six hundred dollars a week from March

2020 until July 31, 2020, and three hundred dollars a

week from December 26, 2021 until September 5, 2021.

See id. § 9023.

B. The Severance Law

New York City’s Severance Law, Int. No. 2397-2021,

was introduced on September 9, 2021, and signed into

law on October 5, 2021. (See Compl. ¶ 26.) It applies

only to hotels that had at least a hundred rooms on

March 1, 2020, see Severance Law, § 1, and only to

hotels that had a “closure” or a “mass layoff” sometime

after March 1, 2020, see id. A “closure” generally means

“the closure of a hotel to the public.” Id. A “mass layoff”

generally means a “reduction in force” of “75 percent or

Supp. App. 4

more of the employees engaged in hotel service” during

“any 30-day period.” Id.

The Severance Law benefits “covered hotel service

employee[s]” at such hotels — employees who were

“employed by such hotel on March 1, 2020”; had been

employed at the time for at least a year “to perform

hotel service”; were not at the time “managerial,

supervisory or confidential employee[s] and did not

otherwise exercise control over the management of

such hotel”; and were “laid off after March 1, 2020 due

to a closure or a mass layoff.” Ibid.

The Severance Law directs “hotel employer[s]” at

such hotels to “provide to each covered hotel service

employee $500 in severance pay for each week, after

[October 11, 2021,] that such employee remains laid

off,” for up to 30 weeks. Id. § 2(a). That pay is offset,

however, by “any severance or similar pay provided or

owed for [those] week[s] to such employee by the hotel

employer.” Id. § 2(b). It must be given “within five days

after the end of each week.” Id. § 2(c).

The Severance Law provides that a covered hotel

need not pay such severance once the covered hotel

service employee is “recalled.” Id. § 3(b). Further, a

hotel that “experienced a closure” need not pay such

severance once it “reopens to the public and has

recalled 25% or more of its employees employed as of

March 1, 2020.” Id. Finally, a hotel that “has closed

permanently and has converted or is in the process of

converting to an alternate use” need not pay such

severance so long as “every covered hotel service

employee at such hotel is offered severance pay

specifically for such conversion in an amount that

Supp. App. 5

equals no less than pay for 20 days per year of service,

at the same rate that such employee is paid for paid

days off.” Id. § 3(a).

Where a hotel must pay such severance, any

“covered hotel service employee who has not received

severance pay . . . may bring an action . . . against a

hotel employer” in a New York State Supreme Court.

See id. § 4(a). If a violation is found, the court “shall

award . . . twice the amount of severance pay owed . . .

and such employee’s reasonable attorney’s fees and

costs.” Id. § 4(b).

The law expires on June 1, 2022. See id. § 5.

C. Procedural History

Plaintiff RHC Operating LLC owns the Roosevelt

Hotel. (See Compl. ¶ 10.) On November 10, 2021,

Plaintiff filed this action against the City of New York,

Mayor Bill De Blasio, and the New York City Council

Members who voted for the Severance Law. (See

Compl. at 1.) The complaint asserts that the Severance

Law is preempted by the Employee Retirement Income

Act of 1974 (“ERISA”), 29 U.S.C. § 1001 et seq., (see

Compl. ¶¶ 59-68, 138-139,) and the National Labor

Relations Act of 1935 (“NLRA”), 29 U.S.C. § 151 et seq.,

(see Compl. ¶¶ 69-91, 140-143.) It also asserts that the

law violates the Contracts Clause (see Compl. ¶¶ 101114, 148-153,) the Due Process Clause (see Compl.

¶¶ 115-130, 154-159,) and the Equal Protection Clause

of the United States Constitution, (see Compl.

¶¶ 131-137, 160-165.) Finally, Plaintiff asserts that the

Severance Law is preempted under state law by New

York’s comprehensive schemes for regulating

Supp. App. 6

unemployment benefits, see N.Y.L.L. §§ 550-51; and

labor relations, see N.Y.L.L. § 700. (See Compl.

¶¶ 92-100, 144-147.)

Plaintiff moves for a preliminary injunction to “stop

Defendants from enforcing” the Severance Law. (Dkt.

No. 19 (“Application for Preliminary Injunction”) at 1.)

The motion primarily relies on “the allegations made in

the Complaint,” which includes legal argument (id. at

4; see, e.g., Compl. ¶¶ 59-68), and a brief supplemental

memorandum of law (see Dkt. No. 30.)

The Hotel Association of New York City (“HANYC”),

which has filed a parallel lawsuit, has also filed a

memorandum in support of the motion for preliminary

injunction as an interested party. (See 21-CV-8321,

Dkt. No. 23.)

II.

Legal Standard

Federal Rule of Civil Procedure 65 authorizes a

court to issue a preliminary injunction. Such

injunctions are “never awarded as of right.” Winter v.

Nat. Res. Def. Council, Inc., 555 U.S. 7, 24 (2008).

Rather, “a preliminary injunction is an extraordinary

and drastic remedy, one that should not be granted

unless the movant, by a clear showing, carries the

burden of persuasion.” New York by James v. Griepp,

11 F.4th 174, 177 (2d Cir. 2021) (quoting 11A C.

Wright, A. Miller & M. Kane, Federal Practice and

Procedure § 2948 (3d ed. 2021)). Where, as here, “a

preliminary injunction will affect government action

taken in the public interest pursuant to a statute or

regulatory scheme, the moving party must demonstrate

(1) irreparable harm absent injunctive relief, (2) a

Supp. App. 7

likelihood of success on the merits, and (3) public

interest weighing in favor of granting the injunction.”

Kane v. De Blasio, 19 F.4th 152, 163 (2d Cir. 2021)

(quoting Agudath Isr. of Am. v. Cuomo, 983 F.3d 620,

631 (2d Cir. 2020)).

III.

Discussion

The Court considers the merits of each of Plaintiff’s

federal claims, ultimately concluding that it has not

shown a likelihood of success on any federal claim.

A. ERISA Preemption

ERISA mandates that employers use “certain

oversight systems and other standard procedures” to

make “benefits promised by an employer more secure.”

Rutledge v. Pharm. Care Mgmt. Ass’n, 141 S. Ct. 474,

480 (2020). To that end, ERISA aims to have employers

“establish a uniform administrative scheme [to]

provide[] a set of standard procedures to guide

processing of claims and disbursement of benefits.”

Fort Halifax Packing Co. v. Coyne, 482 U.S. 1 (1987).

Accordingly, ERISA “ensure[s] that plans and plan

sponsors [are] subject to a uniform body of benefits

law.” Rutledge, 141 S. Ct. at 480. The Act “supersede[s]

any and all State laws insofar as they . . . relate to any

employee benefit plan,” 29 U.S.C. § 1144(a), including

state statutes “that obligate[] an employer to establish

an employee benefit plan,” Simas v. Quaker Fabric

Corp. of Fall River, 6 F.3d 849, 852 (1st Cir. 1993).

The Severance Law does not obligate an employer

to establish an employee benefit plan. It is not enough

that a state statute compels an employer to give

“employee benefits”; to be preempted, a statute must

Supp. App. 8

compel an employer to establish an “employee benefit

plan[].” Fort Halifax, 482 U.S. at 7. ERISA defines an

“employee benefit plan” as “employee pension benefit

plan” or, as relevant here, an “employee welfare benefit

plan.” 29 U.S.C. § 1002(3). Among other things, an

“employee welfare benefit plan” is “any plan, fund, or

program . . . maintained by an employer. . . for the

purpose of providing for its participants or their

beneficiaries . . . any benefit described in section

186(c),” id. § 1002(1), which includes “severance or

similar benefits,” id. § 186(c). A statute compels an

employer to establish an employee welfare benefit

“plan” only when providing benefits would “require[] an

ongoing administrative program to meet the employer’s

obligation” under the statute. Fort Halifax, 482 U.S. at

11. Relevant factors include “whether the employer was

required to analyze the circumstances of each

employee’s termination separately in light of certain

criteria”; “whether the employer’s undertaking or

obligation requires managerial discretion in its

administration”; and “whether a reasonable employee

would perceive an ongoing commitment by the

employer to provide employee benefits.” Schonholz v.

Long Island Jewish Med. Ctr., 87 F.3d 72, 76 (2d Cir.

1996). The factors are not exclusive. Okun v. Montefiore

Med. Ctr., 793 F.3d 277, 278-79 (2d Cir. 2015).

On balance, the Severance Law likely does not

obligate an employer to create a plan because it does

not require an ongoing administrative program to

deliver mandated severance pay. A program is not

necessary to “analyze the circumstances of each

employee’s termination,” Schonholz, 87 F.3d at 76,

because compliance does not require an

Supp. App. 9

“individualized” assessment, Okun, 793 F.3d at 280.

Rather, an employer need only determine whether a

class of former employees were “laid off after March 1,

2020 due to a closure or a mass layoff.” (Severance

Law, § 1). Such “clerical determination[s]” do not

require an administrative program. James v.

Fleet/Norstar Fin. Grp., Inc., 992 F.2d 463, 468 (2d Cir.

1993). Identifying a “closure” requires “no

administrative scheme whatsoever.” Fort Halifax, 482

U.S. at 12. And “[w]hile the classification of a layoff

may entail some exercise of judgment,” that judgment

is not sufficient to turn a severance package into a

plan. Atkins v. CB&I, L.L.C., 991 F.3d 667, 671 (5th

Cir. 2021).1

The Hotel Association for New York City argues

that an employer will also need to determine whether

an employee was terminated for cause. (See

21-CV-8321, Dkt. No. 23 at 8.) But the Severance Law

does not require that. Again, it mandates benefits to

employees who were “laid off after March 1, 2020 due

to a closure or a mass layoff.” (Severance Law, § 1.) An

employer need only determine whether termination

reflected a “closure,” meaning “the closure of a hotel to

the public,” or a “mass layoff,” meaning a “reduction in

force” of “75 percent or more of the employees engaged

in hotel service” during “any 30-day period.” (Severance

Law, § 1.)

1

A hotel that is a member of HANYC and has union employees is

likely to have ready access to a list of laid-off employees. The

operative collective bargaining agreement requires it to “keep a list

of all employees laid off during the term of [the] [a]greement.”

(Dkt. No. 1-2, Art. 23(B).

Supp. App. 10

Next, a program is not necessary to navigate any

managerial discretion in administration. Plaintiff

argues that a program is necessary to navigate

decisions about an employee’s eligibility for severance

benefits. (See Compl. ¶ 64.) But to determine a laid-off

employee’s eligibility for severance pay, an employer

need only determine whether the employee was

employed “on March 1, 2020”; “had been employed” for

at least one year “to perform hotel service”; and was

not a “managerial, supervisory or confidential

employee.” (Severance Law, § 1.) Again, these are

categorical, “clerical determination[s].” James, 992 F.2d

at 468. They can be resolved through “a basic review of

the employer’s payroll system.” (21-CV-8321, Dkt. No.

14 at 9.) Indeed, that system is highly likely to classify

employees as “managerial, supervisory or confidential,”

because an employer must track that information to

comply with the National Labor Relations Act, see

NLRB v. Meenan Oil Co., L.P., 139 F.3d 311, 317, 319,

320 (2d Cir. 1998), and the Fair Labor Standards Act,

see Ramos v. Baldor Speciality Foods, Inc., 687 F.3d

554, 564 (2d Cir. 2012). If there is some discretion in

determining those classifications, it is not enough to

reflect a plan. Cf. Golden Gate Rest. Ass’n v. City &

Cnty. of San Francisco, 546 F.3d 639, 651 (9th Cir.

2008).

Plaintiff also argues that an administrative

program is necessary to navigate decisions about

whether an employer must continue to pay an eligible

employee over the lifetime of the statute. (See Compl.

¶ 64.) But to stop paying severance, an employer need

only determine that a laid-off employee has been

“recalled” (Severance Law, § 3(b)), or in the case of a

Supp. App. 11

closure, that the hotel has “reopen[ed] to the public”

and “recalled 25 percent or more of its employees”

(Severance Law, § 3(b)). Tracking those objective facts

is a “ministerial task” that does not give rise to an

administrative program. Kuhbier v. McCartney,

Verrino & Rosenberry Vested Producer Plan, 95 F.

Supp. 3d 402, 415 (S.D.N.Y. 2015); see Hardy v. Adam

Rose Ret. Plan, 957 F. Supp. 2d 407, 416 (S.D.N.Y.

2013). In any event, the Severance Law does not

require an employer to make those determinations to

comply with the statute; such provisions reflect safety

valves to escape the mandate, so they cannot serve as

the basis for finding a “plan.” See Peace v. Am. Gen.

Life Ins. Co., 462 F.3d 437, 441-42 (5th Cir. 2006)

(citing Fort Halifax, 482 U.S. at 11-12).

The Hotel Association for New York City further

argues that a covered hotel employer needs an

administrative program to decide how much severance

pay to give an employee. (See 21-CV-8321, Dkt. No. 14

at 9.) But the Severance Law is clear: It mandates that

an employer must pay “$500 in severance pay” each

week, offset by “any severance or similar pay” provided

or already owed for that week. (Severance Law, §§ 2(a),

2(b).) The law sets a $500 floor; to comply, the employer

just has to pay at least $500 in severance pay each

week in some form. There is little discretion in that

practice. And any calculations involved require only

“simple arithmetic” no more complex than “deduct[ing]

. . . social security taxes, health and medical benefits,

and 401k plans.” James, 992 F.2d at 467. Thus, no

administrative program is required.

Supp. App. 12

Lastly, and most significantly, the Severance Law

does not require an ongoing administrative program

because it does not ask an employer to make “an

ongoing commitment . . . to provide employee benefits.”

Schonholz, 87 F.3d at 76. The law envisions a

“one-time” project. See Fort Halifax, 482 U.S. at 12. It

addresses the lingering effects of a global pandemic.

(See Compl. ¶¶ 22-24.) It mandates payments on events

that are “unlikely to recur on a regular basis,” such as

a “closing.” Okun, 793 F.3d at 280; see Schonholz, 87

F.3d at 76-77; Fort Halifax, 482 U.S. at 12. It asks an

employer to watch for those triggers, and to make those

payments, only for “a short span of time.” Tischmann

v. ITT/Sheraton Corp., 145 F.3d 561, 566 (2d Cir.

1998); see James, 992 F.2d at 466. And the law has a

clear end date: June 1, 2022. (Severance Law, § 5.); see

Kosakow v. New Rochelle Radiology Assocs., P.C., 274

F.3d 706, 737 (2d Cir. 2001). Whatever scheme the

Severance Law requires, it is not one that reflects an

ongoing “plan.”

In sum, a hotel employer does not need an ongoing

administrative program to comply with the Severance

Law because an employer just has to make clerical

determinations for a brief period. The tests in this area

of law approximate “the extent and complexity of

administrative obligations.” Simas, 6 F.3d at 854. Here,

an employer can determine initial eligibility for

severance pay in one fell swoop using basic records. It

merely needs to list its employees as of March 1, 2020;

to identify the ones who had been there for at least a

year; to strike out the “managerial, supervisory or

confidential” employees; and to identify which

employees were laid off when the hotel closed or began

Supp. App. 13

operating with a skeleton crew. From there, it can

determine continued eligibility from objective facts. It

just needs to track whether a hotel reopens or an

employee returns. It can determine the amount of

severance pay with simple math. It simply needs to pay

eligible employees at least $500 in severance every

week. And it can rest assured that after thirty weeks,

the clerical project will end. Because the Severance

Law does not require an employer to set up an ongoing

administrative program, it does not mandate that an

employer establish an employee welfare benefits plan.

Accordingly, the Severance Law is likely not preempted

by ERISA.

B. NLRA Preemption

The National Labor Relations Act of 1935 “does not

contain an express preemption provision,” so “the

doctrine of labor law pre-emption concerns the extent

to which Congress has placed implicit limits on the

permissible scope of state regulation of activity

touching upon labor-management relations.” Ass’n of

Car Wash Owners Inc. v. City of New York, 911 F.3d 74,

80 (2d Cir. 2018) (alterations and marks omitted).

Plaintiff invokes two implied preemption doctrines:

Garmon preemption and Machinists preemption.

Neither supports an injunction here.

1. Garmon Preemption

Under San Diego Bldg. Trades Council v. Garmon,

359 U.S. 236 (1959), a state statute is preempted if it

“regulate[s] activity that the NLRA protects, prohibits,

or arguably protects or prohibits.” Healthcare Ass’n of

N.Y. State, Inc. v. Pataki, 471 F.3d 87, 95 (2d Cir.

Supp. App. 14

2006). The Severance Law does not regulate such

activity. Broadly stated, the NLRA “protects workers’

rights to engage in concerted activity” and prohibits

“unfair labor practices.” Domnister v. Exclusive

Ambulette, Inc., 607 F.3d 84, 89 (2d Cir. 2010). The

Severance Law does not regulate workers’ rights.

Although a law that mandates a benefit “potentially

limits an employee’s right to choose one thing by

requiring that he be provided with something else, it

does not limit the rights of self-organization or

collective bargaining protected by the NLRA.” Metro.

Life Ins. Co. Massachusetts, 471 U.S. 724, 758 (1985).

Nor does it compel an employer to engage in an

unfair labor practice. Plaintiff argues only that the

Severance Law compels covered hotel employers to

violate Section 8(a)(5) of the NLRA. As the argument

goes: (1) Section 8(a)(5) makes it an “unfair labor

practice” for an employer “to refuse to bargain

collectively with the representatives of his employees.”

29 U.S.C. § 158(a)(5). (2) A “refus[al] to bargain

collectively” includes the unilateral “terminat[ion]” or

“modif[ication]” of a collective bargaining agreement.

Id. § 158(d); see N.L.R.B. v. Katz, 369 U.S. 736, 743

(1962). And (3) the law compels covered hotel

employers to modify their collective bargaining

agreements. (See Compl. ¶¶ 88-89.) That logic fails

because the NLRA provides that “no party to such

contract shall terminate or modify such contract,” not

that the state may not do so. 29 U.S.C. § 158(d).

Indeed, “the mere fact that a state statute pertains to

matters over which the parties are free to bargain

cannot support a claim of preemption,” because “there

is nothing in the NLRA . . . which expressly forecloses

Supp. App. 15

all state regulatory power with respect to those issues

. . . that may be the subject of collective bargaining.”

Fort Halifax, 482 U.S. at 21-22 (quotation marks

omitted).

Moreover, nothing in the record here suggests that

an employer would have to modify any provision of the

relevant collective bargaining agreement to comply

with the Severance Law. The statutory obligations

merely supplement the contractual ones. For example,

under the operative collective bargaining agreement,

an employer is generally obligated by contract to pay

union employees “an amount equal to four (4) days of

regular wages for each year of service” in “the event of

termination resulting from the closing of a hotel.” (Dkt.

No. 20-2 (“Industry-Wide Agreement”), Art. 52.) The

Severance Law does not nullify that obligation. It just

provides that if the contractual severance does not

amount to $500 a week, an employer has to make up

the difference. (See Severance Law, § 2(b).) To be sure,

the parties could negotiate a collective bargaining

agreement in the future that is in greater tension with

the Severance Law. But “[s]etting a floor below which

the employer cannot fall, in advance, in no way

prevents a subsequent, full-throated bargaining

between union and employer, and it is certainly not a

unilateral change of an existing term or condition of

employment.” Cortese v. Skanska Koch, Inc., 544 F.

Supp. 3d 456, 465 (S.D.N.Y. 2021) (citation and marks

omitted). Accordingly, the Severance Law is not

preempted under San Diego Bldg. Trades Council v.

Garmon, 359 U.S. 236 (1959).

Supp. App. 16

2. Machinists Preemption

Plaintiff also argues that the Severance Law is

preempted under Lodge 76 Int’l Ass’n of Machinists &

Aerospace Workers, AFL-CIO v. Wis. Emp’t Relations

Comm’n, 427 U.S. 132 (1976). Under Machinists, “even

regulation that does not actually or arguably conflict

with the provisions . . . of the NLRA may interfere with

the open space created by the NLRA for ‘the free play

of economic forces.’” Pataki, 471 F.3d at 107 (quoting

Machinists, 427 U.S. at 140). Accordingly, a state

statute is preempted if it “intrud[es] upon the

labor-management bargaining process.” Ass’n of Car

Wash Owners, 911 F.3d at 81 (alterations and marks

omitted). The “crucial inquiry” is whether state action

“frustrate[s] effective implementation of the [NLRA’s]

processes.” Id. at 82 (quoting Golden State Transit

Corp. v. City of Los Angeles, 475 U.S. 608, 614 (1986)).

The Severance Law does not frustrate those

processes. For one, it is not “designed to encourage or

discourage employees in the promotion of their

interests collectively.” Concerned Home Care Providers,

Inc. v. Cuomo, 783 F.3d 77, 85 (2d Cir. 2015). The law,

by its terms, yields the same severance payment for

union and nonunion employees during its effective

period: $500 a week. (See Severance Law, §§ 2(a), (b).)

Plaintiff argues that the Severance Law in effect

provides unique “benefits . . . to union employees”

(Compl. ¶ 78), because union employees have already

received severance payments under the operative

collective bargaining agreement (Compl. ¶ 79), and are

promised severance payments under the agreement if

a hotel is converted (Compl. ¶ 80). But the collective

Supp. App. 17

bargaining agreement sets those incentives, and the

Severance Law does not affect them. Separately,

Plaintiff argues that the law provides unique

“protections to union employees” (Compl. ¶ 78) because

it states that it does “not affect the right, if any, of a

covered hotel service employee to be recalled to their

previous position” (Severance Law, § 2(d)). That

provision does not grant a protection; it disclaims one.

The law, by its terms, is neutral.

The Severance Law also does not “encourage []or

discourage the collective bargaining process[].” Metro.

Life, 471 U.S. at 755. Plaintiff argues that the law “was

prompted by the Union” for hotel employees. (Compl.

¶ 72.) Lobbying, however, “is present ‘with regard to

any state law that substantively regulates employment

conditions,’” and is not grounds for preemption.

Concerned Home Care Providers, 783 F.3d at 87

(quoting Fort Halifax, 482 U.S. at 21). Plaintiff further

emphasizes that the Mayor and City Council Members

made statements supporting unions. (See Compl. ¶ 72.)

But their intent is not relevant to Machinists

preemption. See Rest. L. Ctr. v. City of New York, 360

F. Supp. 3d 192, 237 (S.D.N.Y. 2019). Plaintiff asserts

that the law rewards the Union with “terms and

conditions that [the Union] did not and could not obtain

under . . . the collective bargaining process.” (Compl.

¶ 73.) But “Machinists preemption is not a license for

courts to close political routes to workplace protections

simply because those protections may also be the

subject of collective bargaining.” Concerned Home Care

Providers, 783 F.3d at 87.

Supp. App. 18

Nor does the Severance Law regulate the collective

bargaining process itself. A state statute typically

frustrates the NLRA’s processes only if it regulates the

use of “economic weapons of self-help, such as strikes

and lockouts.” Rondout Elec., Inc. v. NYS Dep’t of Lab.,

335 F.3d 162, 167 (2d Cir. 2003). The Severance Law,

like other laws that mandate benefits, does not deny

employees or employers any economic weapon, or

provide employees or employers with any economic

weapon. See, e.g., Fort Halifax, 482 U.S. at 20

(upholding severance mandate in part because it did

not “force a party to forgo the use of one of its economic

weapons”); Rondout Elec., 335 F.3d at 169 (upholding

prevailing wage mandate in part because it did not

“eliminate particular bargaining tools”); Rest. L. Ctr.,

360 F. Supp. 3d at 237 (upholding payroll deduction

mandate in part because it did not deny any economic

weapon).

At most, the Severance Law “fix[es] a minimum” for

a kind of post-termination compensation. Concerned

Home Care Providers, Inc. v. Cuomo, 783 F.3d 77, 85

(2d Cir. 2015). Setting a minimum may “restrict[] the

terms over which employer and employees may

negotiate,” but it does not undermine the NLRA,

because the NLRA is not concerned with the

“particular substantive terms of the bargain that is

struck.” Id. (upholding statute setting a “total

compensation floor”); see Metro. Life, 471 U.S. at 727

(upholding statute setting a minimum for mental

health care benefits); Rest. L. Ctr., 360 F. Supp. at 237

(upholding statute setting a minimum deduction). As

the Severance Law does not affect the NLRA’s

processes, it is not preempted by the NLRA.

Supp. App. 19

In addition, the Severance Law is not preempted

because it is a minimum labor standard. A “minimum

labor standard” is not preempted under Machinists.

Metro. Life, 471 U.S. at 755. That is because it merely

“set[s] a baseline for employment negotiations,”

Concerned Home Care Providers, 783 F.3d at 85, in the

same way that traditional “rights under state law” do,

Fort Halifax, 482 U.S. at 21. A minimum labor

standard typically “give[s] specific minimum

protections to individual workers” and “affect union

and nonunion employees equally.” Concerned Home

Care Providers, 783 F.3d at 85 (quoting Metro. Life, 471

U.S. at 755.) It reflects the “broad authority under [a

state’s] police powers to regulate the employment

relationship.” Id.

The Severance Law has all the markers of a

minimum labor standard. It sets minimum severance

pay for laid-off workers irrespective of their union

status. (See Severance Law, §§ 1, 2(a), 2(b).) As already

explained, it affects union and nonunion workers

equally. And, as a “severance payment law,” it reflects

an “unexceptional exercise of the [State’s] police

power.” Fort Halifax, 482 U.S. at 22. Accordingly, the

Severance Law is “a valid exercise of New York [City’s]

authority to set minimum labor standards.” Concerned

Home Care Providers, 783 F.3d at 85.

Plaintiff argues that the Severance Law does not

enact a minimum labor standard because it is not

generally applicable, as it only obligates a subset of

employers within one industry to make payments to a

subset of employees. (See Compl. ¶ 76.) But a state

statute can craft minimum labor standards for

Supp. App. 20

“particular industries,” Concerned Home Care

Providers, 783 F.3d at 86 (“home care”), particular

employers, see Rondout Elec., 335 F.3d at 164

(“contractor[s] or sub-contractor[s] engaged in the

performance of any public work”), and particular

employees, see Fort Halifax, 482 U.S. at 5 (“employees

who have worked in the plant at least three years”).

The Severance Law sets a minimum severance package

for tens of thousands of laid-off hotel employees from

still-closed hotels. (See Dkt. No. 32-1 at 24.) It is no

more “finely targeted” than the City’s Wage Parity

Law, a minimum labor standard that “set[] a minimum

rate of compensation for the hundreds of thousands of

home care aides who provide Medicaid-covered care in

New York City and the surrounding Counties.”

Concerned Home Care Providers, 783 F.3d at 86.

Finally, Plaintiff argues that the Severance Law

does not enact a minimum labor standard because its

mandate is more than “minimal.” (Compl. ¶ 82.) But

the Second Circuit has not adopted that standard. See

Concerned Home Care Providers, 783 F.3d at 86 n.8. It

has suggested instead that the “additional cost” from a

mandate has no bearing on preemption. Rondout Elec.,

335 F.3d at 168. In any event, the Severance Law is no

more burdensome than other minimum labor standards

that set a minimum severance package, see Fort

Halifax, 482 U.S. at 5, minimum health care benefits,

see Metro. Life, 471 U.S. at 727, minimum

compensation, see Concerned Home Care Providers, 783

F.3d at 86, or a minimum prevailing wage, see Rondout

Elec., 335 F.3d at 169. Accordingly, the Severance Law

is not preempted under Lodge 76 Int’l Ass’n of

Supp. App. 21

Machinists & Aerospace Workers, AFL-CIO v. Wis.

Emp’t Relations Comm’n, 427 U.S. 132 (1976).

C. Contracts Clause Claim

The Contracts Clause provides that “[n]o state shall

. . . pass any . . . Law impairing the Obligation of

Contracts.” U.S. art. I, § 10, cl. 1. And yet, “not all laws

affecting pre-existing contracts violate the Clause.”

Sveen v. Melin, 138 S. Ct. 1815, 1821 (2018). A state

law violates the Contracts Clause only if it “has

‘operated as a substantial impairment of a contractual

relationship.’” Id. at 1822 (quoting Allied Structural

Steel Co. v. Spannaus, 438 U.S. 234, 244 (1978)). Even

then, a state law will be upheld if it is “drawn in an

‘appropriate’ and ‘reasonable’ way to advance ‘a

significant and legitimate public purpose.’” Id. (quoting

Energy Reserves Grp. Inc. v. Kansas Power & Light Co.,

459 U.S. 400, 411-412 (1983)).

1. Substantial Impairment

It is not likely that the Severance Law substantially

impairs a contractual relationship here. It stands to

reason that any claim under the Contracts Clause

“must initially identify an impaired ‘contractual

relationship,’ . . . under which the plaintiff has rights.”

Domino’s Pizza, Inc. v. McDonald, 546 U.S. 470, 476

(2006) (analyzing 42 U.S.C. § 1981 claim). Plaintiff has

not made a showing that it has rights under any

contractual relationship. The only contract that

Plaintiff has alleged to be impaired is a collective

bargaining agreement between the New York Hotel

and Motel Trades Council, AFL-CIO and the Hotel

Association of New York City, Inc. (See Compl. ¶ 7.)

Supp. App. 22

But it is not clear that Plaintiff is a party to this

contract. (Id.) Plaintiff alleges that it owns the

Roosevelt Hotel, but it does not allege that the Hotel is

a member of HANYC (see Compl. ¶ 1), and it could not

make that representation at the motion hearing (see

Dkt. No. 34, at 21:22-22:2). Plaintiff further alleges

that the Roosevelt Hotel is operated by a management

company named Interstate Hotels, LLC, but it does not

allege that Interstate is a member of HANYC either.

(See Compl. ¶ 2.) Plaintiff does not argue that it is a

third-party beneficiary of the contract. And it is not

clear that Plaintiff would be one if it is not a member of

HANYC, because although Plaintiff alleges that

Roosevelt Hotel has union employees, it also alleges

that Interstate is their sole employer. (See id.) At

bottom, Plaintiff alleges that it “fund[s] . . . the

amounts due to employees for wages and/or other

compensation.” (Compl. ¶ 2.) That fact, without more,

is not enough to show that Plaintiff has rights or

obligations under the collective bargaining agreement.

Uncertainty about Plaintiff’s contractual rights counsel

against a preliminary injunction here.

In any event, the Severance Law likely does not

impair any contractual bargain. To assess a purported

impairment, courts consider “the extent to which the

law undermines the contractual bargain, interferes

with a party’s reasonable expectations, and prevents

the party from safeguarding or reinstating [its] rights.”

Melendez v. City of New York, 16 F.4th 992, 1032-33

(2d Cir. 2021) (quoting Sveen, 138 S. Ct. at 1822).

Plaintiff argues that the Severance Law undermines

the collective bargaining agreement in three ways.

Supp. App. 23

First, Plaintiff argues that the law “impairs . . . [the

collective bargaining agreement]’s provision regarding

the amount and duration of severance pay.” (Compl.

¶ 104.) But the Severance Law does not “repudiate[e]”

any obligation in the collective bargaining agreement

relating to severance pay. Id. at 1034. In “the event of

termination resulting from the closing of a hotel,” an

employer remains obligated by contract to pay union

employees “an amount equal to four (4) days of regular

wages for each year of service.” (Industry-Wide

Agreement, Art. 52.) The Severance Law merely

supplements that contractual obligation with a

statutory obligation. See Rhode Island Hosp. Ass’n v.

City of Providence ex rel. Lombardi, 667 F.3d 17, 41

(1st Cir. 2011) (finding no impairment where a

provision “remain[ed] fully operative under the

Ordinance”).

Plaintiff argues that the law nonetheless frustrated

its expectation that it would not have to “pay more”

than its contractual severance obligation to laid-off

employees. (Compl. ¶ 104.) But such an expectation

likely was not reasonable. When the parties negotiated

severance pay, they “operate[d] in an area already

subject to state regulation at the time.” Allied

Structural Steel Co. v. Spannaus, 438 U.S. 234, 250

(1978). The state authority to require employers to pay

a minimum compensation package was “well

established,” id. at 413; see, e.g., W. Coast Hotel Co. v.

Parrish, 300 U.S. 379, 400 (1937), including a

minimum severance package, see Fort Halifax, 482 U.S.

at 7; 26 M.R.S.A. § 625-B, and the hotel industry was

“heavily regulated,” Energy Rsrvs. Grp., 459 U.S. at

413; see, e.g., 12 N.Y.C.R.R. § 146 (“Hospitality

Supp. App. 24

Industry Wage Order”). A severance mandate was

therefore foreseeable, and thus incorporated into the

parties’ bargain. See Sullivan v. Nassau Cnty. Interim

Fin. Auth., 959 F.3d 54, 64 (2d Cir. 2020); cf. California

Grocers Ass’n v. City of Long Beach, No. 21-CV-524,

2021 WL 3500960, at *5 (C.D. Cal. Aug. 9, 2021)

(finding no impairment from a “mandat[e] that all

grocery workers in the area must be paid four dollars

($4.00) more than their hourly wage for a period of at

least 120 days” because “[o]ther minimum labor

standards impact the grocery industry and the parties

could have foreseen additional regulation”).

Plaintiff suggests that it was at least reasonable to

think that it would not have to give a second severance

package to employees who had already received one.

(See Compl. ¶ 107.) That may well be the case. But it is

not clear that Plaintiff bargained for that expectation.

The parties bargained over an initial severance

package. (See Industry-Wide Agreement, Art. 52.) That

severance package was “adequate when made” and

remains adequate under the Severance Law. Allied

Structural Steel, 438 U.S. at 246. Moreover, any

impairment of that expectation is not substantial.

Where it is foreseeable that a state may enact an

obligation prospectively, and the only expectation

frustrated is that a state imposed an obligation after

initial performance, the “severity of an impairment” is

measured by reliance interests. Id. at 245.

Significantly, Plaintiff has not shown — or even

alleged — that it organized its affairs differently on the

expectation that its first severance package would also

be its last (see, e.g., Compl. ¶¶ 104, 107) and that it did

so to its detriment. Cf. Allied Structural Steel, 438 U.S.

Supp. App. 25

at 246 (invalidating statute where company “relied

heavily, and reasonably, on [a] legitimate contractual

expectation in calculating its annual contributions to

[a] pension fund”). In all likelihood, Plaintiff would

have given the same initial severance package, because

that is what the collective bargaining agreement

required, and the Severance Law does not direct

otherwise. Plaintiff emphasizes that the law introduces

a new “financial burden[].” (Compl. ¶ 104.) But that is

true of all minimum compensation laws, mandatory

benefits laws, and severance mandates. On this record,

Plaintiff has not shown that the Severance Law

substantially impairs any contractual relationship

relating to the amount and duration of severance pay.

Second, Plaintiff argues that the Severance Law

impairs the collective bargaining agreement’s provision

governing what severance pay is due when “a signatory

Hotel is converted to residential use.” (Dkt. No. 30

(“Supp. Memo”) at 6; Industry-Wide Agreement, Art.

57.) However, Plaintiff has stated that it has no plans

to “transition the Roosevelt to an alternative use”

(Compl. ¶ 21; Dkt. No. 21 (“Ghaffar Decl.”) ¶ 6), so that

purported impairment does not affect Plaintiff.

Third, Plaintiff argues that the Severance Law

impairs the collective bargaining agreement’s

arbitration provision, because it “grant[s] employees a

private cause of action [under the Severance Law] with

double damages and attorney’s fees.” (Compl. ¶ 105.)

But a party to an arbitration agreement may compel

arbitration on a statutory claim even when a statute

creates a private cause of action and “describe[s] the

details of [that] cause[] of action, including the relief

Supp. App. 26

available, in the context of a court suit.” CompuCredit

Corp. v. Greenwood, 565 U.S. 95, 100 (2012).

Accordingly, the law’s private right of action does not

impair the arbitration clause either, and Plaintiff has

not shown any substantial impairment of the collective

bargaining agreement.

2. Significant

Purpose

and

Legitimate

Public

Even if the Severance Law substantially impairs

the collective bargaining agreement, the law still does

not violate the Contracts Clause, because it is drawn in

an appropriate and reasonable way to advance a

significant and legitimate public purpose. See Sveen,

138 S. Ct. at 121. For laws affecting private contracts,

the assessment of “purpose and means” varies with

“the degree of contract impairment.” Melendez, 16

F.4th at 1035. Where, as here, any impairment is not

severe, it is generally appropriate to defer to the

government’s “conclusion that its approach reasonably

promotes the public purposes for which the ordinance

was enacted.” Sal Tinnerello & Sons, Inc. v. Town of

Stonington, 141 F.3d 46, 54 (2d Cir. 1998); see CFCU

Cmty. Credit Union v. Hayward, 552 F.3d 253, 266 (2d

Cir. 2009); Buffalo Tchrs. Fed’n v. Tobe, 464 F.3d 362,

367 (2d Cir. 2006). Regardless, the law survives even

the more searching review that follows a severe

impairment — “a careful examination of the nature

and purpose” of the legislation. Melendez, 16 F.4th at

1035.

There can be no dispute that the law aims at a

significant and legitimate public purpose. “[T]he

COVID-19 pandemic . . . prompted a serious economic,

Supp. App. 27

as well as health, emergency in New York City.”

Melendez, 16 F.4th at 1036. It “put[] hotel workers in a

precarious state” and left “the hotel industry . . . in dire

straits.” (Dkt. No. 32-1 at 25.) The law aims to mitigate

these effects by “protecting [hotel] workers’ livelihoods”

and facilitating “economic recovery.” (Dkt. No. 32-2

at 16:4-6.). “[C]ontrolling precedent recognizes the

mitigation of economic emergencies as a public purpose

that can support contract impairment.” Melendez, 16

F.4th at 1036.

Plaintiff argues that the Severance Law only

“benefits certain hotel employees” (Compl. ¶ 108), so it

does not address “a broad, generalized economic or

social problem,” Allied Structural Steel Co., 438 U.S. at

242. But the two are not mutually exclusive. The

Severance Law benefits certain hotel employees, and

by doing so, addresses a broad economic problem:

economic distress caused by the pandemic. That focus

remains even if the law does not address every

instance. Cf. California Grocers Ass’n, 2021 WL

3500960, at *5 (upholding wage law for grocers because

“[t]he pandemic thurst grocers into an essential and

hazardous position, and the City designed the

Ordinance to ‘protect[] public health, support[] stable

incomes, and promote[] job retention’”).

Further, the Severance Law is designed so that the

benefits to hotel employees serve as an incentive for

hotels to take other actions, thereby addressing other

broad economic problems. Cf. Melendez, 16 F.4th at

1037. Specifically, the law is designed to encourage

hotels to reopen, where they would then “recall

workers,” “increase[] safety measures,” “accommodate

Supp. App. 28

increased travel . . . needs,” and attract tourists,

thereby “revitaliz[ing] . . . New York City’s hotel

industry.” (Dkt. No. 32-2 at 16:4-1.) A revitalized hotel

industry would help hotels “stay afloat” and increase

“tax revenues.” (Dkt. 32-1 at 25.) That interest in

economic recovery is significant and legitimate. Cf. San

Diego Cnty. Lodging Ass’n v. City of San Diego, No.

20-CV-2151, 2021 WL 4209437, at *6 (S.D. Cal. Sept.

16, 2021) (upholding law that gave “building service,

hospitality, and travel-related workers who were

discharged, laid off, or furloughed because of the

COVID-19 pandemic” a “right to return to their

previous jobs” because the law was adopted “to aid

economic recovery”); see also Energy Rsrvs. Grp., 459

U.S. at 416-17 (finding that “protect[ing] consumers

from the escalation of natural gas prices” is a

legitimate public interest); Sullivan, 959 F.3d at 65

(finding that acting “to alleviate . . . a fiscal crisis . . . is

a legitimate public purpose”); Buffalo Tchrs. Fed’n, 464

F.3d at 369 (finding that “addressing a fiscal

emergency is a legitimate public interest”).

3. Appropriate and Reasonable Means

It is also likely that the Severance Law is an

appropriate and reasonable means to further the

government’s interests in protecting workers’

livelihoods and facilitating economic recovery. In

conducting a “careful examination” of reasonableness,

a court considers factors like the “extent of

impairment,” the “record basis” that “link[s] purpose

and means,” and “tailor[ing].” Melendez, 16 F.4th at

1029, 1038-1047. These factors and others reflect the

reasonableness of the statute.

Supp. App. 29

Putting aside expectations, the Severance Law is

not so severe as to be unreasonable. Where the law

applies, a hotel must pay the mandated severance, and

that money cannot be recovered. See id. at 1038-39. But

it can avoid further payments by recalling an employee,

or in the case of a closed hotel, reopening and recalling

a quarter of its employees (see Severance Law § 3(b)) so

the hotel employer can “reinstat[e] his rights.”

Melendez, 16 F.4th at 1033. In addition, the law expires

on June 1, 2022. (See Severance Law § 5.) The law is

therefore “a temporary measure” that imposes an

obligation for months at most. Energy Rsrvs. Grp., 459

U.S. at 418; cf. San Diego Cnty. Lodging Ass’n, 2021

WL 4209437, at *7 (upholding ordinance on part on the

grounds that it “is a temporary measure to address a

temporary, but ongoing issue”).

Plaintiff objects that the law does not

“compensate[e]” hotels for the impairment of

contractual expectations. (Compl. ¶ 113.) But

compensation is not “always necessary to defeat a

Contracts Clause challenge,” Melendez, 16 F.4th at

1046, especially where, as here, the law is a benefits

mandate that at most impairs expectations. In any

event, the law does allow a hotel to offset the mandate

by other “severance or similar pay provided or owed”

where statutory and contractual obligations overlap.

(Severance Law, § 2(b).) The law is not unduly severe.

The legislative record also links the law to both of

its purposes. First, it reflects a basis for the legislature

to pass the Severance Law to protect “workers’

livelihoods.” (Dkt. No. 32-2 at 16:4-6.) There was

evidence of a risk to workers’ livelihoods: sixty percent

Supp. App. 30

of hotel workers were unemployed. (Dkt. No. 32-1 at

25; Dkt. No. 32-5 at 19.) And as members of the public

testified, for many hotel workers, “unemployment

[benefits] ha[d] exhausted,” so they “need[ed] to make

money to take care of [their] household.” (Dkt. No. 32-5

at 60:6-61:10; see id. at 61:16-62:8 (“Since [my]

unemployment [benefits] ended . . . it[ has] been really

hard for me and my family to make ends meet since

being laid off from my job.”), 71:9-72:5 (“Now that they

removed . . . the unemployment [benefits] from us, I

really don’t know how I’m going to . . . support my kids,

pay my rent. Just live in general.”), 75:8-76:3 (“Without

unemployment insurance or my job back, I’m worried

that we will have to pull my daughter out of school

because I cannot afford to help her anymore.”), 76:9-21

(“[M]y unemployment insurance benefits have suddenly

stopped . . . [and] I am very worried about being able to

take care of my family and my daughter.”).)

There was also reason to think that the Severance

Law would reduce the risks for workers. In general, the

law mandates that a hotel employer “provide to each

covered employee $500 in severance pay” each week

unless that employee is “recalled.” (Severance Law,

§§ 2(a), 2(b).) The law thus guarantees that an

unemployed hotel worker will receive either a stipend

or a job. (See Dkt. No. 32-5 at 16:12-17 (“[H]otels can

choose to either restore at least part of their workforce

and available rooms or pay moderate severance

to workers that continue . . . to experience

unemployment.”).) The legislature had a basis to think

that both outcomes would alleviate economic distress;

indeed, it heard testimony from an official from the

New York City Department of Consumer and Worker

Supp. App. 31

Protection that “job stability, both in terms of income

and scheduling, is key to improving the economic lives

of New Yorkers.” (Dkt. No. 32-2 at 24:4-10.)

Accordingly, the legislature had a basis to conclude

that the law would protect workers’ livelihoods. Cf.

Apartment Ass’n of Los Angeles Cnty., Inc. v. City of Los

Angeles, 10 F.4th 905, 914 (9th Cir. 2021) (upholding

ordinance in part because protections were “necessary

to avoid displacing residential tenants amidst a

pandemic” and fees could “caus[e] them to self-evict or

be evicted”).

Plaintiff argues that the Severance Law is not

appropriately tailored to that interest because it

obligates hotels to pay severance even to workers who

had “found other sources of income.” (See Compl.

¶ 111.) But the size of that class is unclear. The record

reflects that sixty percent of hotel workers are

unemployed. (Dkt. No. 32-1 at 25; Dkt. No. 32-5 at 19.)

Of the remaining forty percent, it is not clear how

many were laid off, how many were recalled, and how

many were hired away. Plaintiff does not submit

evidence to answer that question. In any event,

although “the fact that [a law] is not conditioned on

need” may sometimes be concerning, Melendez, 16

F.4th at 1043, that is not the case here, where it is

apparent why the City could not mandate benefits that

way. If a laid-off worker were eligible only upon a

“showing of need” (Compl. ¶ 111), then a hotel

employer would have to develop a highly discretionary

administrative scheme to assess “need.” If a laid-off

worker were ineligible if it “obtained other

employment,” “became eligible for social security and/or

retirement benefits,” or otherwise “found other sources

Supp. App. 32

of income” (Compl. ¶ 111), then a hotel employer would

have to develop an ongoing administrative scheme to

monitor laid-off employees, other employers, and

administrative agencies. In either case, the law would

likely be preempted under ERISA. See Schonholz v.

Long Island Jewish Med. Ctr., 87 F.3d 72, 76 (2d Cir.

1996) (preempting state law where eligibility turned in

part on “whether the employee was making a

reasonable and good faith effort to obtain suitable

employment elsewhere”). Because the Severance Law

could not be more narrowly tailored, it was

appropriate.

Second, the record reflects a basis for the legislature

to think that the law would facilitate “economic

recovery.” (Dkt. No. 32-2 at 16:4-6.) It had a record

reflecting the difficult economy post-pandemic: tourism

had “steeply declin[ed] in the City”; “the City’s tourism

industry had diminished substantially”; and those

effects had “been felt acutely by the hotel industry,”

leaving the hotel industry “in dire straits.” (Dkt. No.

32-5 at 17-19.) But the legislature had reason to think

that the Severance Law would improve the economy.

The law requires a hotel employer to provide $500 in

severance pay a week, but a hotel that “experienced a

closure” need not pay such severance once it “reopens

to the public and has recalled 25% or more of its

employees employed as of March 1, 2020.” (Severance

Law, § 3(b).) In this way, the law “incentivize[s] an

incremental reopening.” (Dkt. No. 32-2 at 16:12-22.)

The legislature reasoned that a reopening would align

incentives for hotels to “recall[] workers,” “increase[]

safety measures,” “accommodate increased travel . . .

needs,” and attract tourists, thereby “revitaliz[ing] . . .

Supp. App. 33

New York City’s hotel industry.” (Dkt. No. 32-2 at

16:4-11.) Again, it heard testimony from an official at

the New York City Department of Consumer and

Worker Protection that “job stability, both in terms of

income and scheduling, is key to improving the

economic lives of New Yorkers.” (Dkt. No. 32-2 at

24:4-10); cf. San Diego Cnty. Lodging Ass’n, 2021 WL

4209437, at *7 (upholding ordinance where council

determined that “the economy may better recover if

impacted workers can return to their previous jobs”).

Accordingly, the legislature had a basis to think that

the law would facilitate economic recovery.

Plaintiff suggests that the Severance Law is not a

reasonable way to facilitate recovery because it

“extract[s] . . . payments” from “[r]ational hotel

owners.” (Compl. ¶ 129.) Although the “allocation of . . .

economic burden” is sometimes relevant to

reasonableness, here, the burden “was tailored to the

party” with the power to change the status quo.

Melendez, 16 F.4th at 1042. The City seeks to have

hotel workers rehired and hotels reopened; hotels have

the power to recall workers and reopen hotels.

Accordingly, it is reasonable for the Severance Law to

pressure them. Cf. San Diego Cnty. Lodging Ass’n,

2021 WL 4209437, at *7 (upholding ordinance that

“require[ed] large employers, (e.g., owners of hotels

with over 200 guest rooms) in the sectors of the local

economy most impacted by the pandemic to offer open

positions to” laid-off employees).

Finally, Plaintiff raises a series of policy

disagreements. It argues that the mandated severance

pay is far “too much” for “far too long.” (Compl. ¶ 111.)

Supp. App. 34

It warns that there will be “significant negative

consequences on the finances of” hotels. (Compl. ¶ 126.)

It objects that the statute draws bright lines. (See

Compl. ¶ 123.) “[W]hether the legislation is wise or

unwise as a matter of policy is a question with which

we are not concerned.” Sullivan, 959 F.3d at 69. The

legislature is entitled to be bold, to take risks, and to

draw lines, so long as it enacts a law that is an

appropriate means reasonably tailored to legitimate

ends. The Severance Law is such a law. Accordingly, it

is not likely that it violates the Contracts Clause.

D. Due Process Clause Claims

Plaintiff is also not likely to succeed on any claim

that the Severance Law violates the Due Process

Clause of the Fourteenth Amendment.

1. Vagueness Claim

Plaintiff asserts that the Severance Law is

impermissibly vague because it “does not provide . . .

adequate . . . notice about who is eligible to receive the

severance payments.” (Compl. ¶ 115.) That claim is not

likely to succeed because the law provides that an

employee is eligible if he was “employed by [a covered]

hotel on March 1, 2020”; had been employed at the time

for at least a year “to perform hotel service”; was not at

the time a “managerial, supervisory or confidential

employee and did not otherwise exercise control over

the management of [the] hotel”; and was “laid off after

March 1, 2020 due to a closure or a mass layoff.”

(Severance Law, § 1.) That description gives “people of

ordinary intelligence a reasonable opportunity to

understand what conduct it prohibits.” Melendez, 16

Supp. App. 35

F.4th at 1015 (quoting Hill v. Colorado, 530 U.S. 703,

732 (2000)). Plaintiff argues that the statute does not

define “confidential employee.” (Compl. ¶ 16.) But it

does not need to do so; in the labor relations context, a

“confidential employee” is “an employee who acts in a

confidential capacity with respect to an individual who

formulates or effectuates management policies in the

field of labor-management relations.” 22 U.S.C. § 4102.

Such employees, for example, represent management

at meetings. See, e.g., Reeves v. City of Yonkers, 348 F.

Supp. 3d 264, 278 (S.D.N.Y. 2018); Alberti v. Cnty. of

Nassau, 393 F. Supp. 2d 151, 170 (E.D.N.Y. 2005).

Plaintiff also argues that the Severance Law is

impermissibly vague because it “does not provide . . .

adequate . . . notice about . . . how much each eligible

employee is entitled to receive.” (Compl. ¶ 115.) But

again, the law states that a covered hotel employer

must provide “$500 in severance pay,” offset by “any

severance or similar pay provided or owed for [the

relevant] week[s].” (Severance Law, §§ 2(a), (b).) A

person of ordinary intelligence understands that the

provision sets a floor for severance pay at $500 each

week for the effective period, and an employee must

end each week with $500 in severance pay in some

form. Plaintiff emphasizes that the statute does not

define “similar pay” that may be used to offset, but that

phrase just indicates that severance pay remains

severance pay even if it goes by another name.

Lastly, Plaintiff asserts that the Severance Law

“facilitates and even invites arbitrary or discriminatory

conduct.” (Compl. ¶ 116.); see Melendez, 16 F.4th at

1015 (quoting Hill, 530 U.S. at 732. Such allegations

Supp. App. 36

are conclusory. Ashcroft v. Iqbal, 556 U.S. 662, 678

(2009).

2. Substantive Due Process Claim

Separately, Plaintiff asserts that the Severance Law

violates substantive due process because it deprives

employers of “a substantial property interest,” but it is

“not rationally related to a legitimate public purpose.”

(Compl. ¶¶ 116.) A statute “adjusting the burdens and

benefits of economic life” is presumptively

constitutional, and “the burden is on one complaining

of a [substantive] due process violation to establish that

the legislature has acted in an arbitrary and irrational

way.” Usery v. Turner Elkhorn Mining Co., 428 U.S. at

15. For the reasons discussed above, the Severance

Law is not arbitrary or irrational; it is rationally

related to a legitimate purpose.

E. Equal Protection Claim

The Equal Protection Clause “embodies a general

rule that States must treat like cases alike, but may

treat unlike cases accordingly.” Winston v. City of

Syracuse, 887 F.3d 553, 560 (2d Cir. 2018) (quoting

Vacco v. Quill, 521 U.S. 793, 799 (1997)). Plaintiff does

not allege that it is a member of a protected class;

instead, it pursues a “class of one” theory. See Vill. of

Willowbrook v. Olech, 528 U.S. 562, 564 (2000). To

succeed, Plaintiff will have to show “that [it] has been

intentionally treated differently from others similarly

situated and that there is no rational basis for the

difference in treatment.” Id.

Plaintiff is not likely to succeed on a “class of one”

theory because Plaintiff has not identified that it has

Supp. App. 37

been treated differently from any “others similarly

situated.” On a class of one theory, a plaintiff must first

“establish that [it] and a comparator are ‘prima facie

identical.’” Hu. v. City of New York, 927 F.3d 81, 82 (2d.

Cir. 2019) (quoting Neilson v. D’Angelis, 409 F.3d 100,

105 (2d Cir. 2005)). To do so, a plaintiff must establish

that “(i) no rational person could regard the

circumstances of the plaintiff to differ from those of a

comparator to a degree that would justify . . .

differential treatment on the basis of a legitimate

government policy; and (ii) the similarity in

circumstances and difference in treatment are

sufficient to exclude the possibility that the defendant

acted on the basis of a mistake.” Id.

Plaintiff argues that it has been treated differently

from New York City businesses in the “dining, arts and

entertainment, construction,” and “airline” industries,

even though those businesses also “suffered during the

pandemic” and “had to lay off employees.” (Compl.

¶ 134.) But Plaintiff has not submitted evidence that

they did so to the same degree (see Dkt. No. 32-5 at 19),

that those businesses remain closed (see 21-CV-8321,

Dkt. No. 22 (“Dandapani Declaration”) ¶ 6), or that

60% of their workers remain unemployed (see Dkt. No.

32-5 at 19). It was rational for the legislature to focus

on the hotel industry given the evidence before it.

Plaintiff further argues that it has been treated

differently from other New York City hotels because

the Severance Law does not apply to hotels with fewer

than a hundred rooms. (See Severance Law, § 1.) But

smaller hotels do not employ as many workers, so their

severance payments support fewer people. And they do

Supp. App. 38

not have as many guests, so it is not as important to

the hospitality industry that they reopen. Accordingly,

it is not irrational to exclude them.

F. State-Law Claims

Finally, in its complaint Plaintiff asserts two

preemption claims under state law: that the Severance

Law is preempted by New York State’s comprehensive

schemes for regulating unemployment benefits, see

N.Y.L.L. §§ 550-51; and labor relations, see N.Y.L.L.

§ 700. (See Compl. ¶¶ 92-100, 144-147.).

Because Plaintiff is not likely to succeed on the

merits of any federal claim, it is not likely that the

Court will retain supplemental jurisdiction over the

remaining state law claims. In the “early stages of

litigation,” Klein & Co. Futures, Inc. v. Bd. of Trade of

City of New York, 464 F.3d 255, 262 (2d Cir. 2006),

“judicial economy, convenience, fairness, and comity”

are likely to counsel in favor of dismissing those claims

without prejudice to refiling in state court, Catzin v.

Thank You & Good Luck Corp., 899 F.3d 77, 81 (2d Cir.

2018). Accordingly, Plaintiff’s state-law claims cannot

serve as a basis to issue a preliminary injunction at

this time. See Motorola Credit Corp. v. Uzan, 322 F.3d

130, 135 (2d Cir. 2003); Bimber’s Delwood, Inc. v.

James, 496 F. Supp. 3d 760, 788 (W.D.N.Y. 2020)

(declining to consider “state-law claims in the context

of Plaintiffs’ request for injunctive relief” because the

court “would decline to exercise supplemental

jurisdiction”).

In any event, even if the Court were to consider

these claims it would conclude that they are unlikely to

Supp. App. 39

succeed on the merits. “It has long been recognized that

under home rule, [the City] has broad policing power to

act in furtherance of the welfare of its citizens.” Ctr. for

Independence of the Disabled v. Metro. Transp. Auth.,

184 A.D.3d 197, 202 (1st Dep’t 2020). The general

police power of local governments is “construed

liberally in New York.” N.Y. Pet Welfare Ass’n v. City of

N.Y., 850 F.3d 79, 92-93 (2d Cir. 2017). Given the City’s

strong interest in promoting economic welfare during

a pandemic, the Severance Law is likely within its

broad home rule powers. Nor is the Severance Law

likely preempted by New York State unemployment

insurance law or labor law. Neither Plaintiff nor the

Hotel Association of New York City points to a specific

conflict between either of those state laws and the

Severance Law, nor do they city any authority for the

proposition that state law is intended to “occupy the

field” in either of those areas. See Eric M. Berman, P.C.

v. City of New York, 25 N.Y.3d 684, 690 (2015). In any

event, because severance pay is distinct from

unemployment insurance and labor law, the Severance

Law likely would be held to involve regulation of a

separate field. See, e.g., id. at 691.

IV.

Conclusion

For the foregoing reasons, Plaintiff’s motion for a

preliminary injunction is DENIED.

The Clerk of Court is directed to close the motion at

Docket Number 19.

SO ORDERED.

Supp. App. 40

Dated:

March 30, 2022

New York, New York

/s/ J. PAUL OETKEN

J. PAUL OETKEN

United States District Judge