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UPDATE 3-Judge hands Amazon a setback in New York lawsuit over COVID-19 shortfalls

(Adds statement from New York attorney general)

NEW YORK, April 9 (Reuters) - A federal judge on Friday ruled against Amazon.com Inc as the company defends against New York Attorney General Letitia James’ lawsuit claiming it prioritized profit over worker safety during the COVID-19 pandemic at two New York City warehouses.

U.S. District Judge Jed Rakoff in Manhattan granted James’ request to return her lawsuit to a New York state court, and rejected Amazon’s bid to move it to Brooklyn federal court, where the online retailer had sued James to stop her from suing.

James accused Amazon of ignoring its duty to take reasonable steps to protect workers from the coronavirus at a Staten Island fulfillment center and a Queens distribution center, and retaliating against workers who complained.

An Amazon spokeswoman declined to comment. Rakoff said he will explain the reasoning behind his two-paragraph order later.

“Amazon has forced its employees to work in unsafe conditions throughout this pandemic,” James said in welcoming her lawsuit’s move back to state court, “where it belongs.”

While the ruling did not address the dispute’s merits, it is a setback for Seattle-based Amazon, which accused James of overstepping her authority and said federal laws rather than New York’s should govern workplace safety.

Amazon said both lawsuits belonged in the Brooklyn court because Queens and Staten Island are in that jurisdiction, and suing in different courts was wasteful.

James said Amazon had “cut corners” in protecting workers because doing more could threaten productivity, sales volume and profitability.

She said she had authority to enforce New York state law “to promote proper business conduct and ensure that current and future Amazon employees have a safe and honest workplace.”

Her lawsuit seeks improved worker protections, and damages for two Amazon workers who allegedly faced retaliation.

One, Christian Smalls, was fired one year ago, purportedly for violating a paid quarantine when leading a protest over conditions at the Staten Island warehouse.

James sued Amazon on Feb. 16, four days after Amazon sued her. Amazon then moved James’ lawsuit to federal court. (Reporting by Jonathan Stempel in New York; Editing by Matthew Lewis, Aurora Ellis and Daniel Wallis)

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