author: Chief Judge Kaye.

text:
    [647 NE2d 1286, 623 NYS2d 778]
    The People of the State of New York, Respondent, v Patsy Capolongo, Appellant.
    Argued January 5, 1995;
    decided February 21, 1995

      POINTS OF COUNSEL

      Kevin P. Gilleece, White Plains, and Lanna & Coppola, Yonkers, for appellant.

      Jeanine Pirro, District Attorney of Westchester County, White Plains (John J. Sergi and Richard E. Weill of counsel), for respondent.
   OPINION OF THE COURT

Chief Judge Kaye.

The central question we confront is whether New York law —in particular CPL article 700 — governs admissibility in New York prosecutions of foreign wiretap evidence. This question, not expressly answered by our comprehensive statutory scheme for electronic eavesdropping or previously addressed by us, foreshadows issues that will undoubtedly recur as boundaries dissolve in an era of electronic and satellite communication.

We turn first to consideration of the events here, which included independent investigations in New York and Canada and culminated in defendant’s conviction for gambling offenses.

The New York Investigation

Acting upon a tip from Texas State Police, in late 1989 New York State Police began investigating an alleged gambling ring operating in Westchester and Bronx Counties. By April 1990, enough evidence had been gathered through surveillance and inspection of telephone records to persuade Bronx Supreme Court to issue an eavesdropping warrant for telephone lines assigned to the last-known addresses of partidpants of the ring. As a result of that phase of the investigation, several suspects were arrested and gambling equipment seized.

Months later, on July 5, 1990, Westchester Supreme Court authorized placement of a PEN register — a device that recorded all outgoing telephone numbers — on the telephone of Todd Alpert, a suspected member of the ring, and on August 27, 1990, the same court signed an eavesdropping warrant for Alpert’s telephone. Among the calls intercepted were numerous conversations between Alpert and defendant concerning gambling.

The authorities then secured warrants authorizing search of eight separate locations, including defendant’s home, which were executed simultaneously on September 10, 1990. At defendant’s home, the police seized shopping bags filled with packets of gambling records, each marked with dates between September 1989 and April 1990, as well as two locked metal boxes. One box — for which defendant produced the key — contained $70,000 in cash. Additional documents were determined to be defendant’s daily records of bets taken, and some entries corresponded to conversations intercepted pursuant to the wiretap authorized on August 27th. Defendant was arrested immediately.

Three days later, on September 13, the wiretap was terminated and sealed by the issuing Judge. The People filed a felony complaint charging defendant with seven instances of promoting gambling based on bets "received and placed during a court-ordered eavesdropping warrant, during the period of August 27, 1990 through September 10, 1990.” A Grand Jury indicted defendant on January 24, 1991, additionally charging defendant with possession of records on sporting events during January and September of 1990. Defendant was arraigned on this indictment, No. 91-0038, on February 1, 1991.

On March 12, 1991, defendant moved to suppress all evidence seized and all intercepted communications on the ground that the Westchester County wiretap warrant and affidavits were not turned over to defendant within 15 days of arraignment. The People conceded their failure to comply with the statutory mandate of GPL 700.70, and themselves moved for dismissal of the indictment since, without the wiretap evidence, they lacked sufficient evidence to go forward with prosecution of the indictment. On May 3, 1991, the court entered an order of dismissal in the interest of justice pursuant to CPL 210.40 (1).

Based upon presentation of still more gambling records seized from defendant’s house on September 10, 1990, the People secured a second indictment, No. 91-0650. The first count of this indictment was identical to the first count of indictment No. 91-0038, charging first degree possession of gambling records on September 10, 1990. Additional counts charged various gambling offenses on 35 days between September 25, 1989 and April 1, 1990. At his arraignment on April 19, 1991, defendant received copies of the Westchester warrants and supporting affidavits, which included the April 23, 1990 Bronx wiretap warrant.

Defendant moved to dismiss the second indictment on several grounds, including that dismissal of the first indictment had resolved the charges, and that failure to give timely notice of wiretap evidence in the first prosecution precluded use of that evidence and all evidence derived from it in any subsequent prosecutions. A hearing was ordered to determine whether the People possessed probable cause as to the April 23, 1990 Bronx eavesdropping warrant.

The Canadian Investigation

On January 6, 1992, when the parties appeared for trial, the People for the first time informed defendant of their intent to offer additional wiretap evidence obtained by Canadian authorities during the course of an entirely independent investigation. During investigation into an Ontario gambling ring that began October 24, 1989 and concluded on January 11, 1990, Canadian authorities recorded hundreds of conversations between their suspect in Ontario and defendant in New York. Under circumstances not disclosed to the court, New York authorities first learned of the Canadian investigation on December 18, 1990. In spring of 1991, a Canadian inspector met with authorities at the Bronx District Attorney’s office and exchanged information with law enforcement agencies in New York.

On January 18, 1991, the People had obtained a copy of the Canadian court’s authorization for placement of the wiretap, but were informed that the accompanying affidavit was sealed and not available for inspection under Canadian law. A partially redacted copy was received nearly a year later, on January 13, 1992, and immediately turned over to defendant.

Defendant moved pursuant to CPL article 710 to suppress evidence of the Canadian wiretaps on the grounds that, in violation of CPL 700.70, he had not received the wiretap warrants and supporting affidavits within 15 days of his arraignment. While acknowledging that he would not be entitled to such notice under Federal wiretapping laws, he argued that New York law was "far more stringent, expansive and protective” of the rights of its citizens in the area of eavesdropping. The People sought to establish good cause for late notice on the grounds that the wiretap affidavit had not been obtained from Canadian authorities until the very day of the hearing.

Citing United States v Cotroni (527 F2d 708), the court denied defendant’s motion, reasoning that the objective of suppressing unlawfully seized evidence — to deter improper activity by law enforcement officers — is not furthered by suppressing, in a New York prosecution, evidence gathered in Canada. Absent a showing the evidence was obtained under circumstances that "shocked the conscience” or with the participation of United States law enforcement personnel, a defendant was not entitled to challenge admissibility of foreign wiretap evidence. Accordingly, the court determined defendant had received reasonable notice of the evidence, and was not entitled to strict compliance with the 15-day notice requirement of CPL 700.70.

At the subsequent bench trial, Inspector Sandelli of the Metropolitan Toronto Police Force testified that the master tape recording of the intercepted telephone conversations was kept in storage once the surveillance ended, but was not sealed. Defendant objected to admission of the tapes on the ground that, as a matter of statutory law, the procedures employed fell short of New York’s sealing standard. No allegation was made that the procedures followed fell short of Canada’s own legal standards. The court, after inquiry into the safeguards taken to preserve the integrity of the master tape, overruled defendant’s objection. Defendant was convicted of numerous gambling-related offenses, and the Appellate Division affirmed.

Before this Court, defendant asserts four claims: that the Canadian wiretap evidence should have been precluded because of the People’s failure to provide timely notice under CPL 700.70; that preclusion of the Westchester wiretap evidence for lack of timely notice following the first indictment barred the People from seeking to use that evidence — and any evidence derived from it — upon prosecution of the second indictment; that the People failed to comply with the statutory sealing requirements following termination of the Westchester wiretap; and that defendant was deprived of his right to a speedy trial.

We now reverse on the first and second grounds.

I

Condemned as a nuisance at common law (4 Blackstone, Commentaries, at 168) and long recognized as highly intrusive (Berger v New York, 388 US 41, 45), eavesdropping has grown more simple and yet infinitely more complex in the modern communication age.

New York State attempted to regulate wiretapping and other forms of electronic surveillance as early as 1895 (Berger v New York, 388 US 41, 46) and created a State constitutional privacy interest in electronic communications long before Federal recognition that the Fourth Amendment protects against electronic eavesdropping (NY Const, art I, § 12 [1938]; Katz v United States, 389 US 347 [1967]). Despite our stated public policy, unauthorized wiretaps by law enforcement officials far outnumbered legal wiretaps (Note, Wiretapping in New York, 31 NYU L Rev 197, 214), and evidence gathered as a result of these illegal wiretaps was routinely admitted into evidence in criminal proceedings (People v Variano, 5 NY2d 391; People v Dinan, 11 NY2d 350).

In 1962, however, the Legislature enacted CPLR 4506, barring admission in any action of eavesdropping evidence unlawfully obtained by any person (L 1962, ch 308). This State exclusionary provision, therefore, applies not simply to eavesdropping evidence unlawfully obtained by law enforcement officers, but also to such evidence gathered by any individual, and serves to deter both unlawful governmental conduct and that of private individuals (cf., State v Mollica, 114 NJ 329, 554 A2d 1315 [overriding purpose of exclusionary rule is to deter unlawful State conduct]).

In 1968, New York’s statutory procedure for obtaining wiretap authorization was struck down as unconstitutional (Berger v New York, 388 US 41). Congress, in response to Berger and Katz (supra), enacted Title III of the Omnibus Crime Control and Safe Streets Act of 1968 (18 USC § 2510 et seq.), imposing upon the States minimum standards for electronic surveillance. By a grant of enabling power at 18 USC § 2516, Congress permitted the States to adopt procedures and standards more restrictive than those imposed by the Federal Act or even to prohibit wiretapping within their borders altogether.

New York’s electronic surveillance laws, codified at CPL article 700, brought State standards for court-authorized eavesdropping warrants into conformity with those mandated by Title HI (People v Mastrodonato, 75 NY2d 18, 23, quoting Governor’s Mem, L 1969, eh 1147, 1969 McKinney’s Session Laws of NY, at 2586). While the article originally established the procedure in New York for obtaining warrants to engage in wiretapping or mechanical overhearing of conversation— commonly known as "bugging” — in 1988, following passage of the Federal Electronic Communications Privacy Act of 1986, the scope of article 700 was expanded to include regulation of video surveillance and interceptions of transmissions over facsimile machines, computer modems, paging devices, electronic mail, closed circuit television, and any other "electronic communication” (CPL 700.05 [3]). New York’s law now requires suppression of both aural and electronic communications intercepted in violation of statutory standards, a broader remedy than provided by Federal law, where suppression of evidence is still limited to statutory violations in intercepting aural communications (Preiser, Practice Commentaries, McKinney’s Cons Laws of NY, Book 11A, CPL art 700, 1995 Cum Ann Pocket Part, at 106-107).

Indeed, this Court requires scrupulous compliance with article 700, for without such compliance State officials lack authority to wiretap, any interceptions they make are unlawful, and any evidence derived from the wiretap is inadmissible (People v Sher, 38 NY2d 600, 604). Beyond the question of authority, however, stands our strong public policy of protecting citizens against the insidiousness of electronic surveillance by both governmental agents and private individuals (CPLR 4506; CPL art 700; People v Liberatore, 79 NY2d 208, 213, quoting People v Washington, 46 NY2d 116, 124).

New York State has, therefore, responded to the problems raised by electronic surveillance with greater protection than is conferred under Federal law, and continues to assert this strong public policy, through evolving legislation, as technology advances.

II

While the law may be clear as to wiretaps authorized and recorded within the boundaries of this State, this case presents a different question: where interception of a telephone conversation originating in New York is accomplished on foreign soil, by foreign authorities pursuant to foreign law, what application does our State law have when New York prosecuting authorities later seek to introduce that evidence in a New York court? Our statutory scheme is silent on this point (cf., Mustafa v State, 323 Md 65, 591 A2d 481).

The parties offer simple — and irreconcilable — answers. According to defendant, “any” intercepted communication, in the words of CPL 700.70 and CPLR 4506, sought to be introduced in a New York proceeding must meet all of the requirements of New York law. By contrast, the People point out that literal compliance with article 700 would be impossible, and would exempt out-of-State foreign eavesdropping evidence from our statutory scheme, limiting any challenge to the narrow grounds that have evolved under search and seizure jurisprudence: instances where the conduct of the foreign government "shocks the conscience” or was the result of a joint New York-foreign investigation. While each side points to logical support for its position, our statutory scheme, reflecting our State history and policies, leads us to conclude that the answer to the particular question posed lies somewhere in between.

We reject defendant’s threshold contention that interception in Toronto of a telephone conversation between the Canadian suspect and defendant — located in New York — constituted a violation of New York’s privacy act (Penal Law art 250). Although no doubt technologically possible for an individual in Canada to tap into a telephone in New York State, here the interception was of a Canadian telephone. Penal Law article 250 criminalizes the act of "intentional overhearing or recording of a telephonic * * * communication” (Penal Law §250.00 [1]). Monitoring of defendant’s conversations was incidental to intentional surveillance of the Canadian suspect’s conversations. The result might be different, of course, if the objective of foreign authorities had been to monitor defendant’s telephone conversations while circumventing the New York privacy act (see, CPL 20.20 [2] [a] [defining jurisdiction of offenses where conduct occurs outside of State]).

While New York law governing acquisition of wiretap evidence in New York State is, by its terms, inapplicable to the methods by which foreign law enforcement officials procure wiretap evidence (see, n 4, supra), New York law does at a minimum control the conduct of New York prosecutors seeking to introduce wiretap evidence into our courts. The statutory procedure applicable to admissibility of electronic eavesdropping evidence — independent of any questions concerning the authorization and acquisition of such evidence— obligated the People to provide defendant, within 15 days of arraignment, with copies of the Canadian wiretap warrant and affidavits to permit him to investigate grounds for suppression.

Under New York’s comprehensive statutory scheme governing electronic eavesdropping (CPL art 250, 700, 710.20 [2]; CPLR 4506), CPLR 4506 establishes the ground rules for admission. Subdivision (1), the suppression provision, bars evidentiary use of the "contents of any overheard or recorded communication, conversation or discussion, or evidence derived therefrom, which has been obtained by conduct constituting the crime of eavesdropping. ” In civil cases, the three recognized grounds for suppression parallel those set forth in the Federal wiretap provisions (18 USC §§ 2515, 2518 [10] [a]; see, People v McGrath, 46 NY2d 12, 26), and include a determination that

(a) The communication, conversation or discussion was unlawfully overheard or recorded;
(b) The eavesdropping warrant under which it was overheard or recorded is insufficient on its face; or
(c) The eavesdropping was not done in conformity with the eavesdropping warrant.

By contrast, and in a departure from Title III, grounds for suppression in criminal proceedings are expanded and separately codified at CPL 710.20 (2) — a criminal defendant may seek suppression of any communication on the broad grounds that it was "obtained under circumstances precluding admissibility thereof.”

The notice provision that sets in motion a defendant’s right to seek suppression under CPL 710.20 (2) appears at CPL 700.70: within 15 days, the People must furnish a defendant with a copy of the eavesdropping warrant and accompanying application under which interception was authorized or approved. Absent compliance with this notice provision, "[t]he contents of any intercepted communication, or evidence derived therefrom, may not be received in evidence or otherwise disclosed upon a trial of a defendant,” although the 15-day period may be extended by the trial court "upon good cause shown” if the extension would not prejudice defendant.

Because CPL 700.70 is intended to afford a criminal defendant an opportunity to seek to suppress inadmissible eavesdropping evidence, a defendant is entitled to notice of any electronic surveillance evidence which is subject to suppression under GPL 710.20 (2).

At a minimum — -as the People concede — a defendant has a right to seek suppression of evidence gathered by foreign law enforcement authorities on the grounds that the challenged search was conducted in connection or cooperation with domestic law enforcement authorities (Elkins v United States, 864 US 206, 221-222; Byars v United States, 273 US 28, 33; Stonehill v United States, 405 F2d 738 [9th Cir]) or that the conduct of the foreign authorities would shock the conscience of our courts (Stowe v Devoy, 588 F2d 336 [2d Cir]; United States v Callaway, 446 F2d 753, cert denied sub nom. De Vyver v United States, 404 US 1021; State v Mollica, 114 NJ 329, 554 A2d 1315, 1325). Because grounds for suppression of foreign wiretap evidence exist, a defendant has a correlative right to notice of foreign wiretap evidence under CPL 700.70.

Since defendant in the present case was not provided with copies of the Canadian eavesdropping warrant and supporting affidavit within 15 days of his arraignment, the People failed to meet their notice obligations. While the People made a superficial claim of good cause for the delay based on their inability, under Canadian law, to procure the sealed documents, the Appellate Division noted (197 AD2d 3, 13) the People’s "apparent lack of good faith” in not promptly disclosing the existence of the Canadian wiretap evidence (which was known to them as early as December 1990), not providing preliminary notice of an intent to use the wiretap evidence, and in not disclosing the Canadian warrant and supporting papers as soon as they were received from Canadian authorities.

Untimely acquisition could constitute good cause for failure to meet the disclosure requirements of CPL 700.70, but the record does not support that inference here.

Our decision today rests solely on statutory grounds. We note that, because defendant’s threshold claim of statutory entitlement to notice was rejected, no suppression motion followed. Defendant therefore raises no claim before this Court that would afford us an opportunity to address the troubling vestiges of the "silver platter doctrine” that arise when a foreign jurisdiction provides this State with evidence obtained in violation of our own State standards (see, e.g., State v Williams, 94 Wash 2d 531, 617 P2d 1012, 1017 [Federally seized wiretap evidence suppressed under Washington’s privacy act, not its Constitution]) or those of the foreign jurisdiction itself, or both (see, State v Lucas, 372 NW2d 731 [Minn]).

States differ on whether to allow prosecutors to employ wiretap evidence seized in another jurisdiction pursuant to conduct that would clearly render that evidence inadmissible under the State’s own standards. Some adhere to the Federal view that the overriding purpose of the exclusionary rule is to deter unlawful governmental conduct, and that one State’s laws have no deterrent effect on conduct of governmental agents of another jurisdiction (see, e.g., United States v Mitro, 880 F2d 1480; United States v Cotroni, 527 F2d 708 [2d Cir]; Saldana v State, 846 P2d 604 [Wyo]).

Support also exists for approaching the question as a choice-of-law problem, and choosing the law either of the forum State or the State where the seizure occurred (Preston v United States, 376 US 364, 366; United States v Rowell, 903 F2d 899 [2d Cir]; United States v McNulty, 729 F2d 1243, on rehearing en banc 729 F2d 1264 [10th Cir]; People v Blair, 25 Cal 3d 640, 602 P2d 738; Commonwealth v Bennett, 245 Pa Super 457, 369 A2d 493; State v Williams, 94 Wash 2d 531, 617 P2d 1012, supra). In another case, therefore, we will be called to decide whether to apply our State law to suppress foreign electronic eavesdropping evidence that offends our State standards (see, e.g., State v Davis, 313 Ore 246, 834 P2d 1008; State v Thompson, 114 Idaho 746, 760 P2d 1162; State v Minter, 116 NJ 269, 561 A2d 570; State v Harms, 233 Neb 882, 449 NW2d 1; cf., People v Guerra, 65 NY2d 60, 63; People v Di Raffaele, 55 NY2d 234, 242 [in cases predating CPL art 705, declining to find greater State constitutional interest under article I, § 12 in privacy of telephone numbers dialed out by defendant]).

III

Because there must be a reversal and new trial without the Canadian wiretap evidence, we briefly address defendant’s remaining preserved contentions that preclusion of the Westchester wiretap evidence for lack of timely notice following the first indictment barred the People from seeking to use that evidence upon prosecution of the second indictment; and that defendant was deprived of a speedy trial.

While we have previously reversed a conviction due to the People’s failure to comply with the notice requirements of CPL 700.70 (People v Schulz, 67 NY2d 144), the question was not put to us in that case whether the precluded evidence could be used on retrial or — as is the case here — in a subsequent prosecution. CPL 700.70 states that "[t]he contents of any intercepted communication, or evidence derived therefrom, may not be received in evidence or otherwise disclosed upon a trial of a defendant unless the people, within fifteen days after arraignment and before the commencement of the trial, furnish the defendant with a copy of the eavesdropping warrant, and accompanying application.”

We conclude that in the present case the People’s effort to cure their initial failure to provide defendant with timely notice of the Westchester County eavesdropping warrant and supporting application by commencing a new prosecution and serving him a second time, immediately upon his arraignment on the second indictment, was unavailing. If the People, unable to establish good cause for delay, were simply allowed to begin a new prosecution at which defendant were furnished timely notice of intent to use wiretap evidence, the notice provision would be easily sidestepped and of little force. Nor would a permissive reading conform to our bedrock principle that there must be “strict compliance with the provisions of New York’s eavesdropping statute * * * and that the burden of establishing such compliance rests with the prosecution” (People v Schulz, 67 NY2d 144, 148, supra).

While one purpose of the notice requirement — to provide a defendant with an opportunity to obtain a pretrial ruling on the admissibility of wiretap evidence — would not be diminished if such evidence were permitted to be used in a second prosecution, the requirement of prompt notice serves an ancillary purpose as well: imposition of orderliness in pretrial motion practice.

The Legislature imposed stringent time requirements to effect its goal of orderly pretrial practice because of the People’s prior practice of withholding necessary discovery material until late in the process, causing delay and inconvenience (see, 21st Ann Report of NY Jud Conf, 4th Ann Report by Advisory Committee on CPL, at 339-340, 348-349 [1976]). Because of our especially strong State interest in regulating use of wiretap evidence, the timeliness requirements under CPL 700.70 are more strict than those under CPL 710.30 (People v Schulz, 67 NY2d 144, supra; People v Basilicato, 64 NY2d 103, supra). Preclusion for procedural failure under CPL 700.70 is therefore a true sanction, imposed without regard to the absence of prejudice to a defendant from the delay.

The permissive reading of our wiretap provisions urged by the People is particularly unwarranted in the present case, where the People commenced a second prosecution designed to circumvent impediments brought about by their initial, unexplained failure to comply with their statutory duty. The crimes charged in the second indictment, while for the most part occurring on different dates, were in other respects the same as those charged in the first indictment. The sheer volume of gambling-related evidence intercepted and seized in this case provided the People with the basis for countless criminal charges against defendant. Notably, the first counts of both indictments were identically worded, and charged the identical crime: possession of gambling records. While the People claim that each charge was based on possession of different gambling records, all were concededly selected from among the dozens of records seized on September 10th memorializing numerous gambling transactions on numerous dates in the months preceding the raid.

The question remains whether all of the second indictment must be dismissed as based on "evidence derived” from the unnoticed Westchester warrant (see, CPL 700.70). Because the People have not been given a full opportunity to establish whether probable cause for the search warrant executed on September 10, 1990 was derived solely from the fruits of the Westchester County wiretap or independent evidence supported that warrant, the matter must be remanded (People v Whitehurst, 25 NY2d 389). Upon remand, any counts contained in the second indictment that duplicate counts of the first indictment must be dismissed.

Therefore the order of the Appellate Division should be reversed and the ease remitted to Westchester County Court for further proceedings in accordance with this opinion.

Titone, J. (dissenting in part). I concur in Parts I and II of the Chief Judge’s writing insofar as they address the application of CPL 700.70 to the wiretap evidence obtained by the Canadian Government. I cannot concur, however, in Part III, which holds that the prosecution’s failure to comply with CPL 700.70’s notice requirements taints the undisclosed evidence so indelibly that neither it nor any of its "fruits” may be used in any future criminal proceeding involving the defendant. In my view, the majority’s holding on this point confuses substantive suppression with procedural preclusion and, in the process, creates a remedy that extends far beyond what is necessary and appropriate to achieve CPL 700.70’s limited legislative purpose. Accordingly, I dissent from the majority’s holding insofar as it requires "suppression” of the Westchester County wiretap evidence in this second prosecution involving new crimes.

Initially, the majority’s assumptions about the scope of the remedy afforded for CPL 700.70 notice violations are not justified by the language of that statute. CPL 700.70 forbids the use of "[t]he contents of any intercepted communication, or evidence derived therefrom” "upon a trial of a defendant unless the people, within fifteen days after arraignment and before commencement of the trial, furnish the defendant with a copy of the eavesdropping warrant, and accompanying application.” The foregoing statutory language establishes a timetable for disclosure that is keyed to a critical stage in the prosecution, i.e., the arraignment. Since the statutory preclusion penalty is predicated on a violation of this timetable, there is no logical basis for extending that remedy to all "trials of [the] defendant,” including other future prosecutions in which the disclosure timetable has been — or at least could be — observed. Accordingly, the statute’s own design suggests that the effect of any preclusion order should be limited to the particular criminal proceeding in which the notice violation occurred.

Moreover, to extend CPL 700.70 preclusion beyond the particular proceeding in which the notice violation occurred is to use that remedy in a way that bears no relationship to the statute’s purpose, i.e., promoting the efficient conduct of criminal prosecutions and "afford[ing] a criminal defendant an opportunity to seek [suppression]” (majority opn, at 162; see, People v Liberatore, 79 NY2d 208, 213-214; People v Schulz, 67 NY2d 144, 150-151; People v Basilicato, 64 NY2d 103, 118; Bellacosa, Practice Commentary, McKinney’s Cons Laws of NY, Book 11A, CPL 700.70, at 525; see also, People v O’Doherty, 70 NY2d 479, 488). The evil to which the statute was addressed is the belated disclosure of potentially suppressible evidence "to the great and unfair surprise of an accused” and the ultimate "frustration of] the omnibus pre-trial motion procedures” resulting in "delayed motions and hearings being had at the eve of trial” (Practice Commentary, op. cit., at 525).

These identified categories of harm occur and are, indeed, complete when the People fail to furnish the defense with a copy of the necessary papers within 15 days of the defendant’s arraignment, thereby depriving it of the opportunity to launch a timely challenge to the admission of the wiretap evidence. It is at that point in the proceeding that a preclusion directive is meaningful, since it serves to neutralize the unfair surprise to the defense and obviate the need for an eleventh-hour suppression hearing. In contrast, once the proceeding in which the violation occurred has been terminated and a new indictment containing new charges has been filed, the process of arraignment, disclosure and pretrial motion practice begins again and any harm arising from the earlier prosecutorial lapse is dissipated. As long as the People furnish the required material within the requisite 15 days of the arraignment in the second proceeding, the purposes of CPL 700.70 are satisfied. At that point, the defense has adequate time to assess and prepare its case for suppression and the court can conduct any necessary hearings within the time frame contemplated by the Legislature. Applying the remedy of preclusion at this stage is gratuitous, serving no sound jurisprudential purpose.

It is not persuasive to suggest that preclusion of the undisclosed evidence for all future purposes is required in order to deter prosecutorial disregard of CPL 700.70’s mandate. First, there is no support in either the case law or the statute’s legislative history for the notion that CPL 700.70’s preclusion provisions have some overarching deterrent purpose apart from that which is incidental to the primary goal of nullifying the harm resulting from delayed disclosure. Second, even if there were a secondary deterrent purpose, that purpose is adequately served by forbidding the use of the evidence in the proceeding in which the disclosure mandate was disobeyed. Extending the prohibition to other criminal proceedings, including those involving other crimes is, simply stated, judicial overkill.

Notably, in this instance, the preclusion order that was issued in the first proceeding as a result of the People’s belated disclosure led to the permanent dismissal of the criminal charges involved in that proceeding (see, majority opn, at 166, n 8). As such, that situational penalty should certainly have been serious enough to constitute an effective deterrent. The fact that the People in this case were able to salvage the situation by identifying additional crimes is a fortuity occasioned in part by prosecutorial tenacity and creativity and in part by chance. In view of the broad joinder and double jeopardy provisions in CPL article 40, there is little practical risk that prosecutors will routinely "hold back” some of the available charges as insurance against the possibility of a CPL 700.70 preclusion order in the original proceeding. Hence, the deterrent value of extending the effect of such an order to whatever new proceedings might be commenced is, at best, minimal.

I also take issue with the majority’s analysis and result because they blur the important distinction between substantive suppression and procedural preclusion. Substantive suppression occurs when a piece of evidence is deemed inadmissible because of some constitutional or statutory wrong — such as the absence of probable cause, the violation of the right to counsel or the failure to comply with the sealing requirements of the wiretap statute — which affects the legality of the evidence itself. Where such a wrong has been found to have occurred, it makes sense to suppress the resulting evidence for all, or at least most, future purposes, since the wrong is complete and cannot be cured. The same cannot be said when the underlying wrong is the violation of a rule governing the conduct of the criminal proceeding itself. In such cases, the deleterious effect of the misconduct is limited to the proceeding in which it occurred and it is logically anomalous to extend the penalty beyond the confines of that proceeding.

Finally, it is also illogical to distinguish, as the majority has done, between CPL 700.70 preclusion and the preclusion remedy contemplated in CPL 710.30 for late disclosure of statements and pretrial identification procedures (see, majority opn, at 166, n 8). The legislative goal of "orderly pretrial practice,” on which the majority itself relies (id., at 165), is common to both provisions (see, e.g., People v O’Doherty, supra). Indeed, the present timing requirements of the two statutes’ disclosure rules were enacted simultaneously as part of a single act "to amend the criminal procedure law, in relation to effectpng] prompt disposition of pre-trial motions to suppress evidence” (see, L 1976, ch 194). The Sponsor’s "justification” statement made no distinction between the two statutes, noting that the timeliness requirements were necessary because

"[a]t present, because of lack of communication or unawareness or carelessness on the part of the prosecutor, the defendant very often is presented for the first time on the eve of trial with a notice by the People that they intend to offer certain evidence against him. Defense counsel is then precluded from having a reasonable time or opportunity to make a motion to suppress”. (Mem of Assemblyman Herbert J. Miller, Bill Jacket, L 1976, ch 194.)

The majority’s citation to People v Schulz (supra) and People v Basilicata (supra) as support for the suggestion that preclusion under CPL 700.70 was intended to be broader than preclusion under CPL 710.30 represents a misstatement of those cases’ holdings. First, both cases concern the implementation of the 15-day notice requirement, not the penalty for noncompliance. Second, and more importantly, the holding in both cases rested on specific differences in the "plain language” of CPL 700.70 and 710.30 and not on any perceived differences in the statutes’ underlying goals (People v Schulz, supra, at 150-151; People v Basilicato, supra, at 117-118). In fact, the Court conceded in both Schulz and Basilicato that the notice requirements of CPL 700.70 and CPL 710.30 "serve the same purpose” and stressed that it was the concrete language differences in the two statutes that led it to reject parallel construction (People v Schulz, supra, at 150-151; People v Basilicato, supra, at 117-118). Those specific language differences are, of course, not pertinent to the question presented here regarding the proper scope of the statutes’ respective preclusion remedies.

Similarly, while this State’s "long-standing commitment to affording * * * protection against the insidious threat * * * of electronic surveillance” is indeed a strong one (majority opn, at 166, n 8), it is certainly no stronger than our well-established commitment to protecting citizens against tainted identifications or unconstitutionally obtained statements — the subjects to which CPL 710.30’s disclosure provisions pertain. Accordingly, if, as the majority holds, broad judicial policies are an appropriate factor to consider in determining the proper scope of a statutorily created remedy, those policies would seem to compel application of the majority’s new rule of permanent preclusion to CPL 710.30 cases as well as to cases that arise, like this one, under CPL 700.70.

In summary, there is neither precedential support nor a sound reason in CPL 700.70’s language or purpose to prevent the People from introducing the previously precluded wiretap evidence in this new criminal proceeding. There may be some who find ground for annoyance at "the People’s effort to cure their initial [default] * * * by commencing a new prosecution” (majority opn, at 165). However, in my view, it is inappropriately and unnecessarily punitive to penalize the People for their procedural default in the first proceeding by applying CPL 700.70’s preclusion remedy to the present one involving new and separate charges. Accordingly, I vote to reverse the order affirming the conviction and direct a new trial, but I would not preclude the future use of the evidence derived from the previously disclosed wiretap warrants and applications.

Judges Bellacosa, Smith and Ciparick concur with Chief Judge Kaye; Judge Titone dissents in part in a separate opinion in which Judges Simons and Levine concur.

Order reversed, etc.

      . The People conceded that eight counts in the second indictment were duplicative, and were granted permission to amend the indictment, which they accomplished on November 26,1991.

      . Congress passed the Federal Communications Act in 1934. Section 605 of the Act prohibited unauthorized interception and disclosure of the contents of communication, and was held to cover wiretapping by State or Federal officials as well as private persons (Nardone v United States, 302 US 379; Benanti v United States, 355 US 96) and to apply to intrastate as well as interstate communications (Weiss v United States, 308 US 321).

      . 18 USC § 2516, for example, permits a State to authorize wiretapping within its borders if there exists an applicable State statute authorizing the principal prosecuting attorney of the State or a political subdivision to make application to a State court Judge of competent jurisdiction for an order authorizing or approving interception of communications in accordance with 18 USC § 2518.

      . For example, 18 USC § 2516 requires State warrant applications to be brought solely by the "principal prosecuting attorney” before a State court Judge "of competent jurisdiction.” In New York, these duties are performed by the Attorney-General or District Attorney (CPL 700.05 [5]), before a Justice of the Supreme Court in which the eavesdropping warrant is to be executed (CPL 700.05 [4]). Thus, under article 700, a Toronto law enforcement agency cannot apply for permission to place a wiretap on a New York telephone, and a New York Justice cannot authorize execution of an eavesdropping warrant in Toronto.

      . The felony offense of "eavesdropping” is defined at Penal Law § 250.05: "A person is guilty of eavesdropping when he unlawfully engages in wiretapping, mechanical overhearing of a conversation, or intercepting or accessing of an electronic communication.” "Unlawfully,” defined at Penal Law § 250.00 (8), means "not specifically authorized” pursuant to CPL articles 700 or 705.

      . This notice provision was amended simultaneously with CPL 710.30, the notice provision for evidence of identification and statements (L 1976, ch 194, § 3). Strict time limits were imposed in both provisions to ensure that defendants were afforded "a reasonable opportunity to make a motion to suppress” an eavesdropping warrant or a statement or identification testimony (see, Bill Jacket, Mem of Sponsor Assemblyman Herbert J. Miller, May 12, 1976; People v Basilicata, 64 NY2d 103, 118).

      . Defendant’s contention that the Westchester County eavesdropping warrant was not sealed in accordance with CPL 700.50 (2) (People v Bialostok, 80 NY2d 738) is unpreserved for our review.

      . Contrary to the suggestion of the dissent, the effect of a CPL 710.30 violation is not implicated here. Whatever the similarities between that provision and CPL 700.70 (see, dissenting opn, at 170-171), our decision today stands on our State’s longstanding commitment to affording citizens strong protection against the insidious threat to privacy of electronic surveillance (CPLR 4506; CPL art 700; People v Liberatore, 79 NY2d 208, 213, supra, quoting People v Washington, 46 NY2d 116, 124, supra), a concern not present under CPL 710.30.

      . The first indictment was dismissed in the interests of justice under CPL 210.40 (1) and 210.20 (1) (i). Under CPL 210.20 (4), the absence of authorization of the court to resubmit constituted a bar to any further prosecution of that charge in Westchester County as to any count that was contained in the first indictment.
      To the extent defendant’s speedy trial claim turns on the claimed identity of counts between the first and second indictments (People v Osgood, 52 NY 2d 37), that claim becomes moot upon dismissal of those counts for failure to obtain authorization to resubmit. The remainder of defendant’s speedy trial contentions are unpreserved or meritless.

      . The majority has also elected to preclude the use of the Canadian wiretap evidence upon the retrial of this proceeding. For the reasons that follow, I would conclude that this application of CPL 700.70’s preclusion remedy is equally flawed.

      . The same observation may be made in a case where a conviction has been reversed on appeal and the case has been remitted for further proceedings on the outstanding accusatory instrument. In such cases, "in the absence of express appellate court direction to the contrary,” "the criminal action is * * * restored to its pre-pleading status,” affording an occasion for a new arraignment and a new set of disclosure and motion deadlines (CPL 470.55 [2]).


source: Caselaw Access Project

author: Simons, J.

license: Public Domain

text:
    [647 NE2d 1298, 623 NYS2d 790]
    In the Matter of Larry Salvano et al., Respondents, v Merrill Lynch, Pierce, Fenner & Smith, Inc., Appellant.
    Argued January 4, 1995;
    decided February 21, 1995

      POINTS OF COUNSEL

      Rubin & Associates (Marsha L. Levick, Gregory S. Rubin and Christopher P. Stief, of the Pennsylvania Bar, admitted pro hac vice, of counsel), and Sullivan & Marshall, New York City (William T. Marshall, Jr., of counsel), for appellant.

      Smith Campbell & Paduano, New York City (Thomas M. Campbell of counsel), for respondents.
   OPINION OF THE COURT

Simons, J.

Petitioners Salvano and Coon were formerly employed as account executives in respondent Merrill Lynch’s Northbrook, Illinois, office. Petitioner Tate was similarly employed in Louisville, Kentucky. On October 30, 1992, each abruptly resigned his position with Merrill Lynch and began working with Prudential Bache, one of Merrill Lynch’s competitors. On November 2, respondent Merrill Lynch brought two separate actions for damages and injunctive relief in the Federal courts of Illinois and Kentucky. On November 4 the Illinois court temporarily enjoined petitioners Salvano and Coon from soliciting or accepting business from their former Merrill Lynch customers and against using, disclosing or retaining copies of any Merrill Lynch records pending determination of the disputes by arbitrators. Petitioners filed a demand for arbitration before the New York Stock Exchange on November 5, 1992. The Kentucky court enjoined Tate on November 10.

On November 4 petitioners also moved in New York Supreme Court for an order compelling respondent to submit to expedited arbitration pursuant to article 75 of the CPLR On November 6, Supreme Court granted the petition, ordering the parties to proceed to expedited arbitration. It issued a further order on November 10, in response to petitioners’ motion, directing that the arbitration take place on November 12. The issue on this appeal is whether Supreme Court had the authority to order the parties to proceed absent any provision explicitly authorizing expedited arbitration in the parties’ agreements. We conclude that it did not.

I

When petitioners started working for respondent, each signed two documents: an Account Executive Trainee Agreement (the contract of employment) and the standard Uniform Application for Securities Industry Registration (Form U-4). Form U-4 provides in paragraph 5 that any claim or controversy between the applicant and his firm will be arbitrated under the rules, constitutions or by-laws of the organizations in which the applicant is registered. The parties agree that the Constitution and Rules of the New York Stock Exchange govern their arbitration. They differ on whether the provisions of those documents allow a court to compel expedited arbitration.

When first ordered to proceed to expedited arbitration, respondent wrote Robert Clemente, then the Manager (and now the Director) of Arbitration at the NYSE requesting that the arbitration be carried out in strict compliance with the NYSE Rules. Those relevant to this matter require eight days’ notice of the arbitration, 20 days in which to answer the claim, the opportunity to file and exchange pleadings and conduct discovery, and an opportunity to join third parties. The Rules also require that, after evaluating the acceptability of the arbitrators, a party may submit one peremptory challenge and unlimited challenges for cause to the members of the panel. Respondent asserted its right to exercise these provisions as well. Respondent was advised that it would not be permitted to exercise a peremptory challenge, because there was no provision for peremptory challenges "[u]nder the procedures for an expedited arbitration.” The NYSE Constitution and Rules, however, contain no provision for expedited arbitration. Indeed, in a later affidavit, Clemente admitted that the New York Stock Exchange is not empowered to expedite arbitration of a claim without the consent of both parties to the arbitration: expedited arbitration is permitted only if the Exchange is a party to the arbitration and then only pursuant to a court order.

After the parties agreed that petitioners’ claims for damages would be heard under the normal arbitration schedule, the arbitration of petitioners’ claims for injunctive relief went forward on November 12, as ordered, over respondent’s objections. Although respondent executed all the consents required to effect the expedited arbitration, it made clear that it did so only to avoid being held in contempt of Supreme Court’s order. The arbitrators subsequently entered an award "lifting the injunctions” against petitioners Salvano and Coon and the "freeze order” against petitioner Tate. Petitioners moved to confirm, and respondent cross-moved to vacate, the award. On January 8, 1993, Supreme Court confirmed the arbitrators’ award. The Appellate Division affirmed, concluding that Supreme Court had authority to order expedited arbitration pursuant to CPLR 7506 (b) and that the order was neither preempted by, nor inconsistent with, the provisions of the Constitution and Rules of the New York Stock Exchange or the Federal Arbitration Act (200 AD2d 431). We granted respondent leave to appeal.

II

Petitioners maintain that the court’s order for expedited arbitration was warranted under both State and Federal statutes and the arbitration agreement.

Under settled law, the arbitration of disputes concerning employment in the securities industry and the enforceability of the arbitration clause embodied in petitioners’ U-4 Form applications are governed by the Federal Arbitration Act (FAA) (see, Fletcher v Kidder, Peabody & Co., 81 NY2d 623, cert denied — US —, 114 S Ct 554; Singer v Jefferies & Co., 78 NY2d 76; Flanagan v Prudential-Bache Sec., 67 NY2d 500). If the parties’ arbitration agreement contains a choice of law clause providing that the law of a particular State will govern their arbitration, the parties’ choice will be given effect if to do so will not conflict with the policies underlying the FAA; otherwise, the FAA applies (see, Volt Information Sciences v Leland Stanford Jr. Univ., 489 US 468; Matter of Smith Barney, Harris Upham & Co. v Luckie, 85 NY2d 193 [decided today]). Volt makes clear, however, that only an explicit choice will displace the provisions of the FAA. Here, the parties’ membership in the New York Stock Exchange and their agreement to arbitrate according to its Constitution and Rules, even taken together, do not rise to the level of an explicit choice of New York State law to govern their arbitration. Accordingly, the provisions of the FAA, and not those of CPLR article 75, apply in this case.

Preliminarily, it should be noted that even if article 75 applied, as the courts below believed, it does not provide a basis for Supreme Court’s order of expedited arbitration. CPLR 7506 (b) authorizes the court to direct the arbitrator, but not the parties, to proceed promptly with the arbitration. CPLR 7503 (a) authorizes the court to compel arbitration where one party is aggrieved by the failure of the other to arbitrate. But the arbitrators did not delay arbitration here and respondent did not object to arbitration of the parties’ dispute, or fail to participate in the arbitration; it merely objected to the expedited procedure. Finally, CPLR 7502 (c) grants the court only the limited authority to issue an order of attachment or a preliminary injunction in connection with an arbitrable controversy and does not, despite petitioners’ contentions, endow the court with broad discretionary powers to fashion other injunctive orders "in aid of arbitration.”

Nor does the FAA contain any provision which by its terms authorizes an order of expedited arbitration. Under section 3 a court’s power to stay an action pending arbitration is limited by "the terms of the agreement”. Similarly, section 4, which provides that "[a] party aggrieved by the alleged failure, neglect or refusal of another to arbitrate under a written, agreement for arbitration” may petition the court for an order directing that such arbitration proceed, empowers the court to proceed only "in the manner provided for in such agreement” (see, 9 USC §§ 3, 4).

Petitioners contend that because the FAA also contains no provision precluding expedited arbitration, there is no barrier to invoking either a State statute, or the court’s general equitable power, to order the parties to arbitrate on an expedited basis. However, Volt makes abundantly clear that the primary policy and purpose of the FAA is to "ensure the enforceability, according to their terms, of private agreements to arbitrate” (see, Volt Information Sciences, supra, at 476). The goal of the statute is not to promote arbitration as an end in itself, or even to promote "the expeditious resolution of claims” but to "rigorously enforce” arbitration agreements according to their terms (see, Dean Witter Reynolds v Byrd, 470 US 213, 219-221). Accordingly, courts have refused to consolidate related arbitration hearings in the absence of any provision for consolidation in the parties’ agreement, even though consolidation would result in a more economical arbitration process (see, Government of United Kingdom v Boeing Co., 998 F2d 68, 72-73 [2d Cir]; Weyerhauser Co. v Western Seas Shipping Co., 743 F2d 635 [9th Cir], cert denied 469 US 1061), or to direct that the parties arbitrate in a forum other than that specified in their agreement, even though permitting the choice of a different forum might seem fairer or more suited to the needs of a particular party (see, PaineWebber, Inc. v Rutherford, 903 F2d 106 [2d Cir]; Merrill Lynch, Pierce, Fenner & Smith v Georgiadis, 903 F2d 109 [2d Cir]).

These decisions do not specifically address the question of expedited arbitration, but their rulings illustrate that in the absence of an established ground for setting aside a contractual provision, such as fraud, duress, coercion or unconscionability, a court must enforce the parties’ arbitration agreement according to its terms. Supreme Court’s order would have been proper only if the arbitration agreement itself — here the Constitution and Rules of the New York Stock Exchange— provided for expedited arbitration.

Finally, petitioners seek support for the court’s order in the provisions of the agreement. They contend that Rule 621 of the NYSE, which gives the arbitrators the power "to interpret and determine the applicability of all provisions under this Code”, implicitly provides the arbitrators with the authority to compel expedited arbitration. If the arbitrators can compel expedited arbitration, so the argument goes, so can the courts.

The short answer to that contention is that arbitration agreements are contracts and must be interpreted under the accepted rules of contract law (see, Matter of Cowen & Co. v Anderson, 76 NY2d 318; Matter of American Ins. Co. [Messinger — Aetna Cas. & Sur. Co.], 43 NY2d 184). The court’s role is limited to interpretation and enforcement of the terms agreed to by the parties; it does not include the rewriting of their contract and the imposition of additional terms (see, Matter of Astoria Med. Group [Health Ins. Plan], 11 NY2d 128). To read into the NYSE Rules a provision authorizing compulsory expedited arbitration would be to fundamentally modify the terms of the parties’ contract and force respondent to arbitrate in a manner contrary to the agreement to which it has assented (see, Matter of Cowen, supra, at 321-322; Szuts v Dean Witter Reynolds, 931 F2d 830, 831-832 [11th Cir]). As the Supreme Court has stated:

"Arbitration under the [FAA] is a matter of consent, not coercion, and parties are generally free to structure their arbitration agreements as they see fit. Just as they may limit by contract the issues which they will arbitrate [citation omitted] so too may they specify by contract the rules under which that arbitration will be conducted” (see, Volt Information Sciences v Leland Stanford Jr. Univ489 US 468, 479, supra).

Petitioners note, correctly, that respondent has on prior occasions sought and obtained orders from other courts directing expedited arbitration before the New York Stock Exchange. That does not preclude it, however, from arguing here, albeit inconsistently, that the NYSE Constitution and Rules do not authorize such orders.

III

Inasmuch as the Supreme Court was without power to order expedited arbitration, the award must be vacated. However, the authority for that judicial action is not readily found in either the FAA or article 75 of the CPLR. The recognized statutory grounds for vacatur include setting aside an award procured by corruption, fraud or undue means; partiality or corruption on the part of the arbitrators; misconduct or misbehavior by the arbitrators, by which the rights of a party were prejudiced; and action by the arbitrators in excess, or imperfect execution, of their powers (see, CPLR 7511; 9 USC § 10 [d]). Not even an error of law on the part of the arbitrators will suffice without a showing of one of these statutory grounds for vacatur.

Respondent contends that the arbitrators committed misconduct when they refused to postpone the hearing "upon sufficient cause shown”, and by their other actions taken in furtherance of the expedited procedure (see, 9 USC § 10 [a] [3]). We cannot agree that the arbitrators’ actions can be so viewed when they were undertaken to comply with a court order. Nevertheless, the wholesale abrogation of respondent’s procedural and substantive rights under the arbitration agreement may properly be characterized as action exceeding the scope of the arbitrators’ powers, even when undertaken at the direction of the court. When the arbitrators act in excess of their powers, the award can be vacated even in the absence of a specific showing that the rights of any party have been prejudiced (see, 9 USC § 10 [a] [4]).

Addressing the matters raised by the dissent, we find little purpose in analyzing what the Federal court in Illinois, which first acquired jurisdiction in the Salvano and Coon matter, or the Federal court in Kentucky, could or should have done in exercising their equitable powers under the FAA. Manifestly, the Federal court orders were authorized by the parties’ contracts, as well as by the provisions of the FAA, but this is not an equity proceeding and the propriety or sufficiency of those orders is not before us. This is a contract action involving an order of a State court compelling expedited arbitration contrary to the parties’ agreement and the dissent fails to identify any authority, in the contract or elsewhere, justifying the order under attack.

The court could not compel expedited arbitration under State law nor did Federal law clearly authorize its action. The dissent contends that sections 3 and 4 of the Federal Arbitration Act justified the court’s action. It bases its position on general language found in Southland Corp. v Keating (465 US 1, 12; see, dissenting opn, at 189-190) but the Supreme Court has never held that State courts may use the procedures embodied in sections 3 and 4 to implement the substantive powers granted the courts by section 2. Because the power to stay trial of an arbitrable matter contained in section 3 refers ambiguously to a suit "in any of the courts of the United States,” the State courts have read its provisions as equally applicable in State as well as Federal court. However, as the Supreme Court itself has pointed out, it is "less clear * * * whether the same is true of an order to compel arbitration under §4 of the Act,” because section 4 speaks only of the authority of "any United States district court” to issue such an order (see, Moses H. Cone Hosp. v Mercury Constr. Corp., 460 US 1, 26). Indeed, the Supreme Court has expressly noted that the question of whether sections 3 and 4 apply to State courts remains open (see, Volt Information Sciences v Leland Stanford Jr. Univ., 489 US 468, 477, n 6, supra).

Nor could the State court’s power to expedite arbitration be derived from the arbitration agreement itself because the agreement contains no provisions dealing with expedited arbitration. The dissent maintains that the contract’s silence on the subject can somehow be interpreted as a grant of power to the courts to expedite arbitration and that it should be so interpreted by applying the familiar rule that ambiguities in a contract are to be construed against the draftsman (dissenting opn, at 191). Assuming such an ambiguity can be found, however, the contract provisions governing the parties’ arbitration in this case are found in the Rules and Constitution of the New York Stock Exchange and Merrill Lynch did not draft either the Rules or the Constitution.

To be sure, in arbitration as in other areas, the procedures of the law can be used for personal advantage, by employees no less than employers (see, e.g., Downing v Merrill Lynch, Pierce, Fenner & Smith, 725 F2d 192). The protection against being prejudiced by such maneuvering in arbitration cases is a contract which clearly and unambiguously sets forth the rights of both parties.

We conclude that the contract in this case did not give petitioner a right to expedited arbitration and since no other authority justified Supreme Court’s order, the arbitration award must be vacated. We vacate, not because we believe the arbitrators were guilty of legal error or because they misread the contract, as the dissent contends (see, dissenting opn, at 191-192), but because an erroneous court order compelled the arbitrators to expedite the proceedings contrary to the provisions of the arbitration contract and resulted in Merrill Lynch’s losing several substantial contract rights. In vacating the arbitration award, we recognize the purpose of the FAA is to foster arbitration but to do so on the parties’ terms.

Accordingly, the order of the Appellate Division, insofar as appealed from, should be reversed, without costs, the arbitrators’ award dated December 7, 1992 vacated, and the parties are directed to submit their claims in arbitration to a panel of New York Stock Exchange Arbitrators in accordance with the provisions of the New York Stock Exchange Constitution and Rules.

Chief Judge Kaye (dissenting). Having obtained its proverbial "cake” in the form of a Federal court injunction prohibiting former employees from soliciting or accepting business from their former customers (thus impairing their ability to work in the securities industry), Merrill Lynch is getting to eat it too, by denial in the State court of expedited arbitration. Indeed, Merrill Lynch effectively gets a double helping, in that the firm will now have the opportunity to relitigate the injunctions which the arbitration panel more than two years ago decided should be terminated.

The situation presented in this case — former Merrill Lynch employees, hamstrung from soliciting clients, who seek to resolve the underlying controversy between them by expediting arbitration — is one familiar to courts, both Federal and State, throughout the Nation (see, e.g., Merrill Lynch, Pierce, Fenner & Smith v Bradley, 756 F2d 1048, 1051, n 1 [4th Cir] ["This situation represents a recurring problem. In their briefs to this Court the parties have cited sixty-four (64) federal and state cases involving similar fact patterns. Most of these decisions are unreported.”]).

Thus, where a Merrill Lynch broker has left its employ to work for a competitor, the firm has promptly filed a motion in Federal court for a preliminary injunction and then, upon securing that relief, opposed the employee’s subsequent efforts to proceed expeditiously in the very arbitration process in which the firm contractually obligated itself to engage. As one Federal court characterized it:

"To provide an avenue for injunctive relief in the district courts, even though the subject matter of the case is arbitrable under the [Federal] Arbitration Act, will add yet another weapon in a litigant’s arsenal of delaying tactics. Thus, even if a recalcitrant party knows its dispute is subject to arbitration under the Arbitration Act, it will file a motion for a preliminary injunction in federal district court in an attempt to delay arbitration and divert its opponent’s attention and resources away from expeditiously presenting the substance of the controversy to the arbitrators.” (Merrill, Lynch, Pierce, Fenner & Smith v Thomson, 574 F Supp 1472, 14784479 [ED Mo 1983], supra; see also, Moses H. Cone Hosp. v Mercury Constr. Corp., 460 US 1, 26 [describing "recalcitrant party free to sit and do nothing,” while its adversary "would have no sure way to proceed with its claims except to return to federal court * * * a pointless and wasteful burden on the supposedly summary and speedy procedures prescribed by the (Federal) Arbitration Act.”].)

Like the trial court and Appellate Division in the case now before us, I am convinced that neither the law nor the arbitration agreements at issue require us to countenance such an unjust result, and therefore I respectfully dissent.

There can be little question that the Federal courts in Kentucky and Illinois which originally issued the preliminary injunctions in the cases before us would have had the authority also to expedite the arbitrations. Indeed, such orders would have been no more than a natural corollary to the courts’ jurisdiction in equity.

The seemingly curious failure of these courts to expedite the arbitrations may be explained by the particular chronology of these litigations, which began with applications in New York State court to compel expedited arbitration. Thus, when the Kentucky court first issued injunctive relief on November 10, 1992, New York Supreme Court had already signed an order, dated November 6, 1992, instructing the parties to proceed with an expedited arbitration. As the Kentucky court wrote 10 days later, "It is appropriate for New York courts to interpret * * * the arbitration provision * * * New York courts have ordered arbitration * * * Although Merrill Lynch has appealed the New York arbitration order, this Court has no interest in or reason to interfere with the work of the arbitration panel”.

The mere fortuity that the New York court was the first and only jurisdiction asked to consider the question of arbitrability in these matters, while the Federal courts were asked to provide Merrill Lynch with temporary injunctive relief against solicitation by the brokers, should not yield a different result.

As noted above, like the arbitrators in a recent Second Circuit case, the New York Stock Exchange (NYSE) panel here, after a full evidentiary hearing, ultimately decided that the Federal court preliminary injunctions were unwarranted and should be terminated:

"The heart of the controversy * * * was plaintiffs’ ability to carry on business with their alleged clients * * * The crux of the relief sought by Merrill Lynch was an injunction against the plaintiffs to counter the potential harm to the firm from the former brokers’ continued solicitation of their old customers. Merrill Lynch was squarely rebuffed by the arbitrators in this regard.” (Blumenthal v Merrill Lynch, Pierce, Fenner & Smith, 910 F2d 1049, 1055 [2d Cir 1990], supra; see also, Blumenthal v Merrill Lynch, Pierce, Fenner & Smith, 1991 US Dist LEXIS 8555 [SD NY] [court issued sanctions against Merrill Lynch in connection with its filing of motion seeking to overturn the NYSE arbitration panel’s decision].)

The same statutory provisions and policies underlying the Federal Arbitration Act (FAA) which courts originally used to justify the issuance of preliminary injunctions in these types of disputes supports the issuance of an order expediting the process here. Specifically, section 2 of the FAA provides that arbitration agreements involved in interstate commerce are valid and enforceable. Section 3 accordingly gives courts the authority to stay the "trial of [an] action” pending arbitration in accordance with the terms of the parties’ agreement. Section 4 of the FAA, in turn, grants a court the authority, once it has determined that a valid arbitration agreement is in place, to "make an order directing [a recalcitrant party] to proceed to arbitration in accordance with the terms of the agreement.”

Though section 4 of the FAA speaks of enforcement in "any United States district court,” the Supreme Court has held that the substantive provisions of section 2 are binding as well upon State courts (Southland Corp. v Keating, 465 US 1, 14-15) and has suggested that State courts should apply the policy, if not the explicit language, behind the procedural provisions contained in sections 3 and 4 (Southland Corp. v Keating, 465 US, at 12; Moses H. Cone Hosp. v Mercury Constr. Corp., 460 US, at 26; see also, Note, The Reach of the Federal Arbitration Act: Implications of State Procedural Law, 70 N Dak L Rev 459, 461 [1994]).

Applying these provisions, the Second Circuit affirmed a District Court’s order compelling expedited arbitration in conjunction with the issuance of a preliminary injunction, reasoning as follows:

"[I]n our view, the pro-arbitration policies reflected in [the FAA and Supreme Court decisions interpreting it] are furthered, not weakened, by a rule permitting a district court to preserve the meaningfulness of the arbitration through a preliminary injunction. Arbitration can become a 'hollow formality’ if parties are able to alter irreversibly the status quo before the arbitrators are able to render a decision in the dispute. [Citations omitted.] A * * * court must ensure that the parties get what they bargained for — a meaningful arbitration of the dispute.” (Blumenthal v Merrill Lynch, Pierce, Fenner & Smith, 910 F2d 1049, 1053, supra.)

In Merrill Lynch, Pierce, Fenner & Smith v Bradley (756 F2d 1048, 1052 [4th Cir]), the Fourth Circuit reached the same result, concluding:

"We do not believe that Congress would have enacted a statute intended to have the sweeping effect of stripping the federal judiciary of its equitable powers in all arbitrable commercial disputes without undertaking a comprehensive discussion and evaluation of the [FAA’s] effect. Accordingly, we conclude that the language of § 3 [of the FAA] does not preclude a district court from granting one party a preliminary injunction to preserve the status quo pending arbitration.”

Given the logic of these cases on the one hand — that courts retain their equitable power under the FAA to issue preliminary injunctions pending arbitration — it seems analytically inconsistent for this Court to rule, on the other hand, that courts lack the authority to issue orders expediting the arbitration process. If it was appropriate for courts to interpret the language of section 3 of the FAA broadly enough to permit the issuance of court-ordered preliminary injunctions pending arbitration, the policy, if not the language, underlying section 4 appears sufficiently general to allow a court to order expedited arbitration so that the terms of the preliminary injunction are indeed only preliminary. Otherwise, the arbitration process which Merrill Lynch agreed to undertake becomes precisely the "hollow formality” the Second Circuit predicted in Blumenthal.

I therefore cannot agree that the FAA — which unquestionably applies in this case — negates any authority a court may have to order the parties to engage in expedited arbitration.

I disagree as well with the Court’s conclusion that the parties’ agreement precludes expedited arbitration. In essence, the majority reasons that though the Form U-4 and applicable NYSE Rules are silent as to the availability of expedited arbitration, the parties, by their silence, implicitly agreed that no expedited process was permissible and thus, under the FAA, the court lacked the authority to expedite the arbitration. While I understand that the FAA requires that arbitration agreements be interpreted according to their terms as the contracts they are, when interpreting Merrill Lynch’s intent with respect to the agreement itself, it seems relevant that the New York Stock Exchange had in fact conducted expedited arbitrations in the past, at times even upon the request of Merrill Lynch.

I am also mindful that the agreement was a form agreement written by Merrill Lynch, and that basic principles of contract law support strictly interpreting the agreement against the drafter. Moreover, "[g]ood faith performance or enforcement of a contract emphasizes * * * consistency with the justified expectations of the other party * * * Subterfuges and evasions violate the obligation of good faith in performance even though the actor believes his conduct to be justified.” (Restatement [Second] of Contracts § 205, comments a, d; see also, Wood v Duff-Gordon, 222 NY 88 [Cardozo, J.].)

Finally, I am concerned that the Court is misconstruing the limited nature of judicial review of arbitral awards under the FAA. As the Court acknowledges, the FAA does not permit a losing party to appeal an arbitrator’s decision solely on grounds of legal error. Accordingly, the Supreme Court has made it clear that the provisions of the FAA which permit courts to vacate or modify arbitral awards under certain limited circumstances should be strictly construed (Shearson/ American Express v McMahon, 482 US 220, 232; Wilko v Swan, 346 US 427, 435; 9 USC §§ 10, 11). By vacating the award here based on its own independent view that the applicable agreement and rules prohibited an expedited process, the Court is doing what the Supreme Court cautioned against when interpreting the analogous provisions of the Labor-Management Relations Act of 1947 (29 USC § 141 et seq.) — substituting its own reading of arguably ambiguous provisions for that of the arbitrator (Paperworkers v Misco, Inc., 484 US 29, 38 ["Courts * * * do not sit to hear claims of factual or legal error by an arbitrator as an appellate court does in reviewing decisions of lower courts * * *. The arbitrator may not ignore the plain language of the contract; but the parties having authorized the arbitrator to give meaning to the language of the agreement, a court should not reject an award on the ground that the arbitrator misread the contract.”]).

I would therefore affirm the Appellate Division order confirming the arbitrators’ award denying injunctive relief.

Judges Titone, Bellacosa, Smith and Ciparick concur with Judge Simons; Chief Judge Kaye dissents in a separate opinion; Judge Levine taking no part.

Order, insofar as appealed from, reversed, etc.

      . At oral argument the parties acknowledged that the damage arbitration had been resolved while the appeals in this matter were pending.

      . Respondent appealed Supreme Court’s November 10 order to the Appellate Division, First Department, and requested a stay of the arbitration. A Justice of that Court denied the stay upon the ground that the arbitration process was already underway and, on December 8, 1992, one day after the arbitrators rendered their award, the Court dismissed respondent’s appeal as moot.

      . The contracts of employment contain choice of law provisions. In the case of petitioners Salvano and Coon, the Trainee Agreement provided that it "shall be construed, and the validity, performance and enforcement thereof shall be governed by the laws of the State of Illinois.” Petitioner Tate’s Agreement contained the same provision, specifying the laws of New York. However, petitioners do not contend that these contracts govern the arbitration, which is controlled by the separate agreement embodied in the Constitution and Rules of the New York Stock Exchange.
      The employment contracts of petitioners Salvano and Coon also contain a clause by which the employee consents to the imposition of temporary or permanent injunctive relief. Merrill Lynch inserted such an express provision into its standard Account Executive Agreement in response to recurring litigation over whether Merrill Lynch was entitled to restrain, pending arbitration, its former employees from soliciting Merrill Lynch clients and from using documents and information obtained during their employment. Petitioner Tate executed his contract of employment prior to Merrill Lynch’s adoption of this form Agreement. Thus, his contract contains no such express consent. Petitioners do not contend, however, that Tate was improperly subjected to injunctive relief by the Federal District Court, or that his position materially differs from that of the other two petitioners.

      . The disparity between the dates the Illinois and New York courts acquired jurisdiction as stated in this opinion and in the dissent rest upon the dissent’s assumption that the proceeding in New York was commenced on November 2, 1992 when petitioner sought a request for judicial intervention and the majority’s reliance on November 4, the date petitioners’ motion was returnable and argued before the New York Supreme Court. The date is relevant only insofar as the dissent contends that the Illinois court could have and would have expedited arbitration except that Supreme Court had already ordered expedited arbitration. Nothing in the record indicates, however, that the District Court was aware of any proceedings in the New York courts or that, but for the Supreme Court’s "action”, it would have expedited the arbitration.

      . The dissent notes that Federal courts which have been faced with a request for expedited arbitration have divided nearly equally on its availability. None of the cited appellate decisions involves a determination that expedited arbitration is available, however, and most of the District Court decisions are no more than unpublished summary trial court orders, not full decisions. The vast majority of them are singularly devoid of analysis. In Merrill Lynch, Pierce, Fenner & Smith v Tobias (US Dist Ct, ND 111, index No. 90C-2Q210), one of the few cases in which the court both engaged in analysis and addressed the actual terms of the parties’ arbitration agreement, the court concluded in a few brief lines that it had no authority to order expedited arbitration because the Constitution and Rules of the New York Stock Exchange made no provision for it.

      . As is evident from the numerous reported and unreported decisions appended to each of the parties’ briefs, a slim majority, or 12 out of the 22 courts to have grappled with this issue, have concluded that a court does have the authority to impose expedited arbitration in these circumstances. (See, Merrill Lynch, Pierce, Fenner & Smith v Bradley, 756 F2d 1048 [4th Cir], supra; Merrill, Lynch, Pierce, Fenner & Smith v Thomson, 574 F Supp 1472 [ED Mo]; Blumenthal v Merrill Lynch, Pierce, Fenner & Smith, 910 F2d 1049 [2d Cir]; Merrill Lynch, Pierce, Fenner & Smith v DeCaro, 577 F Supp 616 [WD Mo]; Merrill Lynch, Pierce, Fenner & Smith v Murphy, US Dist Ct, D NJ, Nov. 29, 1993, Debevoise, J., index No. CV-93-5262; Merrill Lynch, Pierce, Fenner & Smith v Kamberis, US Dist Ct, D Kan, Dec. 21, 1992, O’Connor, J., index No. 92-2496; Merrill Lynch, Pierce, Fenner & Smith v Sheff, US Dist Ct, ND Tx, May 10 and 19, 1991, Fish, J., index No. CA-3-91-0877-G; Bradford & Co. v Brown, Cir Ct, Va, Jan. 22, 1991, index No. 9100033; Rainer v Merrill Lynch, Pierce, Fenner & Smith, US Dist Ct, ED Pa, Sept. 26 and Oct. 31, 1988, Newcomer, J., index No. 88-8306; Merrill

        Lynch, Pierce, Fenner & Smith v Neihart, US Dist Ct, D Kan, Aug. 10, 1988, O’Connor, J., index No. 88-2397-0; Kerr v Merrill Lynch, Pierce, Fenner & Smith, 1987 US Dist LEXIS 5363 [ED Pa]; Tramo v Merrill Lynch, Pierce, Fenner & Smith, 1987 US Dist LEXIS 1582 [ED Pa]; but see, Merrill Lynch, Pierce, Fenner & Smith v Cunningham, 736 F Supp 887 [ND Ill]; Merrill Lynch, Pierce, Fenner & Smith v Mathes, US Dist Ct, ED Wash, Aug. 2, 1990, McDonald, J., index No. CY-90-3060-AAM; Merrill Lynch, Pierce, Fenner & Smith v Tobias, US Dist Ct, ND Ill, July 26, 1990, Roszkowski, J., index No. 90C-20210; Merrill Lynch, Pierce, Fenner & Smith v Patinkin, 1991 WL 83163 [ND Ill]; Merrill Lynch, Pierce, Fenner & Smith v Rowell, US Dist Ct, MD Ga, June 19, 1991, Owens, J., index No. CA-91-170-2-MAC; Merrill Lynch, Pierce, Fenner & Smith v Price, 1989 WL 108412 [Del Ch]; Merrill Lynch, Pierce, Fenner & Smith v Brady, US Dist Ct, ED Pa, Aug. 13, 1990, Gawthrop, J., index No. 90-5044; Johanneman v Merrill Lynch, Pierce, Fenner & Smith, US Dist Ct, ED Ky, Jan. 29, 1993, Forester, J., index No. 92-517; Merrill Lynch, Pierce, Fenner & Smith v Martin, US Dist Ct, MD Fla, May 8 and 15, 1992, Schlesinger, J., index No. 92-386-Civ-ORL-20; Merrill Lynch, Pierce, Fenner & Smith v Gesten, US Dist Ct, SD Fla, Aug. 15,1994, King, J., index No. 94-1446.)

      . The majority notes that petitioners moved in Supreme Court on November 4 (majority opn, at 178) and that the Illinois Federal court "first acquired jurisdiction” in two of the three cases involving petitioners (majority opn, at 184). In fact, on November 2, 1992, relief was sought both by the brokers in New York State court (seeking expedited arbitration) and by Merrill Lynch in Illinois Federal court (seeking an order temporarily restraining the brokers from soliciting clients). Merrill Lynch’s complaint in the Illinois action made no mention of the fact that the parties’ dispute was subject to binding arbitration. In granting the order temporarily restraining solicitation, the Illinois court expedited discovery, but that action was ultimately subsumed in the New York arbitration.

      . See, e.g., Merrill Lynch, Pierce, Fenner & Smith v Salvano, 999 F2d 211, 214 (7th Cir) (”[T]he weight of federal appellate authority recognizes some equitable power on the part of the district court to issue preliminary injunctive relief in disputes that are ultimately to be resolved by an arbitration panel”); see also, Comment, Injunctions Pending Arbitration and the Federal Arbitration Act: A Perspective From Contract Law, 54 U Chi L Rev 1373. As the Court notes at footnote 3 of its opinion, Merrill Lynch ultimately amended its employment forms to include a provision whereby its employees consented to the imposition of injunctive relief. Only two of the three employee agreements in this case, however, contain the amended provision.