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Federal immigration law does not clearly pre-empt a New York law allowing undocumented workers to recover lost U.S. earnings where the award is not a “direct and positive obstacle” to the law’s objectives, the U.S. Court of Appeals for the Second Circuit has ruled. The circuit upheld a jury verdict in favor of Jose Raimondo Madeira, finding that compensatory damages for personal injury under New York’s Scaffold Law was not pre-empted by the Immigration Reform and Control Act of 1986. Judge Reena Raggi wrote the opinion in Madeira v. Affordable Housing Foundation, 04-3606-cv. She was joined by Judges Wilfred Feinberg and John M. Walker. Mr. Madeira, an illegal immigrant from Brazil, was hired to work for C&L Construction through the efforts of his brother, a supervisor with the company. He was severely injured on June 20, 2001, after falling from the top of a building under construction in Monroe, N.Y. Disabled by the accident, he filed suit in the Southern District against the owner of the site, Affordable, and its general contractor, Mountain Developers Associates, claiming violations of the New York Labor Law �240(1), or Scaffold Law. The defendants filed an indemnification claim against C&L. A jury in Judge Colleen McMahon’s White Plains courtroom awarded Mr. Madeira a total of $638,671 in compensatory damages. In the second phase of the trial, the jury found C&L was 82 percent liable and must indemnify Affordable and Mountain to that degree. On the appeal, C&L, Affordable and Mountain claimed that Mr. Madeira was not entitled to recover lost wages because he was an illegal immigrant — at least not at the rate of pay he was receiving in the United States. They claimed that, under Hoffman Plastic Compounds, Inc. v. NLRB, 535 U.S. 137, Judge McMahon was required to find federal immigration law precluded state tort or labor law from an award to an illegal immigrant. If there was to be any recovery, they argued, it should be at the pay rates of his native Brazil. But Judge Raggi noted that the New York Court of Appeals rejected a similar challenge to an illegal immigrant’s recovery just this year in Balbuena v. IDR Realty, 6 N.Y. 3rd 338 (NYLJ, Feb. 22). The Balbuena Court said the Scaffold Law was meant to protect “all workers in qualifying employment situations — regardless of immigration status.” And unlike Hoffman Plastic, the Court of Appeals noted, the illegal immigrants had not themselves violated federal immigration law in getting their jobs. The same was true here, Judge Raggi said, as Mr. Madeira had not used fraud to obtain his job even though his brother was well aware of his status as an illegal immigrant. It was also important for the Balbuena Court, Judge Raggi said, that the jury was instructed to consider an immigrant’s removability as a factor in determining whether lost U.S. earnings should be compensated. Federal objectives However, while the court referenced the Balbuena opinion, it decided to uphold Judge McMahon’s rulings on an independent ground — that the Immigration Reform and Control Act of 1996 (IRCA) does not clearly pre-empt New York law on compensatory damages for lost earnings at U.S. pay rates under these specific circumstances. Not only does New York law hold site owners and general contractors absolutely liable, she said, it “specifically extends the protections of that law to undocumented workers.” The federal law penalizes employers who employ illegal immigrants and subjects them to civil fines if they fail to check immigration status and criminal penalties if they engage in a pattern or practice of employing illegal workers. Amendments to the act in 1990 imposed penalties on workers themselves, but only if they knowingly or recklessly used false documents in obtaining employment. Hoffman Plastic, Judge Raggi said, did not “conclusively resolve the questions of IRCA’s preemption of state laws.” And, in any event, Hoffman Plastic, she said, was “distinguishable from this case in important factual and legal respects.” Hoffman concerned back pay for termination of an employee — and the employment relationship in Hoffman, she said, “originated in the worker’s own criminal violation of IRCA.” She said that “because the application of New York law for calculating compensatory damages against the various appellants liable for personal injury in this case does not require any ‘discounting’ of IRCA criminality by Madeira himself, the facts simply do not present the same concern for subversion of federal immigration law that was identified in Hoffman Plastic.” The legal distinction, Judge Raggi said, is that Hoffman Plastic was trying to reconcile two federal statutes, while, here, “appellants urge us to hold that immigration law stands as an absolute bar to well-established state law relating to compensable damages for personal injury.” And, in the context of compensatory damages for personal injury, she said, Congress neither explicitly nor implicitly pre-empted state law, she said, and an award of lost U.S. wages does not “stand as a direct and positive obstacle to IRCA’s objectives.” Referencing Balbuena, the judge said that pre-emption is also not present where, as here, the employee had not used fraud to procure employment and the jury was instructed to consider Mr. Madeira’s removability. Garth Wolfson and Cornelius Mahoney of Mahoney & Keane represented Mr. Madeira. Donald Feerick represented Mountain Developers. Dennis Lynch of Dorfman, Lynch & Knoebel in Nyack represented Affordable Housing. David Samel of Jeffrey Samel & Partners represented C&L. Mark Hamblett can be reached at [email protected]

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