(CN) – A federal judge in Manhattan shot down HSBC Mortgage’s latest attempt to distance itself from an employment discrimination claim brought by the New York City Commission on Human Rights. U.S. District Judge Robert W. Sweet refused to reconsider a November 2009 ruling that denied HSBC’s motion to dismiss the suit.
The conflict stems from the commission’s finding that the bank wrongfully denied Fangshoul Hsu employment after a background check revealed that a misdemeanor charge for making a false report was put on hold by a judge pending her behavior. The charges against her in Queen’s criminal court were later dismissed.
Though the records were supposed to be sealed, the bank was still able to access them while conducting its search. Hsu had already been offered a retail loan consultant position, but it was rescinded due to the arrest.
Hsu’s ensuing human rights claim was a success, with the commission finding that HSBC violated a New York City administrative code that prohibits employment discrimination based on an applicant’s arrest record.
The bank sued the human rights commission, saying the code conflicts with the National Bank Act of the Federal Deposit Insurance Act. The commission filed a cross-action “on the grounds that the court should abstain from interfering with an ongoing state proceeding,” according to Judge Sweet.
After the motion to dismiss was denied, HSBC Mortgage argued that the charges against it should be tossed because it is not a party in the administrative proceedings.
But Judge Sweet decided HSBC Mortgage and HSBC Bank “are clearly intertwined,” which was enough to satisfy the requirement set down by the 2nd Circuit. He added that the mortgage branch is a “wholly-owned subsidiary of HSBC Bank, and both entities are related in ownership and management, including management and control of employment decisions.”
Sweet concluded: “Granting HSBC Mortgage’s request for declaratory relief would allow it to refuse employment to Hsu and undermine a finding in Hsu’s favor by the commission. Thus, HSBC Mortgage’s declaratory judgment action would, as a practical matter, constitute the type of direct interference with a state proceeding Younger abstention seeks to avoid.”