author: Titone, J. Smith, J.

text:
    [619 NE2d 998, 601 NYS2d 686]
    Alphonse Fletcher, Jr., Appellant, v Kidder, Peabody & Company, Inc., Respondent. Rita Reid, Appellant, v Goldman, Sachs & Co. et al., Respondents.
    Argued May 5, 1993;
    decided July 9, 1993

      POINTS OF COUNSEL

      Chadbourne & Parke, New York City (Stanley S. Arkin, Robert J. Hausen, James T. Wicks and Foster J. Gibbons of counsel), for appellant in the first above-entitled action.
    I. Because legislative history of the Federal statute running parallel to New York’s Human Rights Law demonstrates Congress’ intention to preclude compulsory arbitration of race discrimination claims, New York law is not preempted by Federal law favoring arbitration. (Moses H. Cone Hosp. v Mercury Constr. Corp., 460 US 1; Singer v Jefferies & Co., 78 NY2d 76; Flanagan v Prudential-Bache Sec., 67 NY2d 500, 479 US 931; Southland Corp. v Keating, 465 US 1; Gilmer v Interstate/Johnson Lane Corp., 500 US 20, 111 S Ct 1647; Rodriguez de Quijos v Shearson/Am. Express, 490 US 477; Shearson/Am. Express v McMahon, 482 US 220; Mitsubishi Motors v Soler Chrysler-Plymouth, 473 US 614.) II. Supported by public policy, New York law clearly prohibits compulsory arbitration of claims of race discrimination in employment brought under the Human Rights Law. (Matter of Wertheim & Co. v Halpert, 48 NY2d 681; DeSapio v Josephthal & Co., 143 Misc 2d 611; De Sapio v Kohlmeyer, 35 NY2d 402; Mayer v Manton Cork Corp., 126 AD2d 526; McDonnell Douglas Corp. v Green, 411 US 792; Matter of Holland v Edwards, 307 US 38; Matter of Imperial Diner v State Human Rights Appeal Bd., 52 NY2d 72; Merrill Lynch, Pierce, Fenner & Smith v Bobker, 808 F2d 930; Caso v Coffey, 41 NY2d 153; Barrentine v Arkansas-Best Frgt. Sys., 450 US 728.)

      Epstein Becker & Green, P. C., New York City (Ronald M. Green of counsel), and Thomas A. Dubbs, New York City, for respondent in the first above-entitled action.
    I. The Federal Arbitration Act and the court below’s decision in Gilmer require arbitration of Fletcher’s claims. (Moses H. Cone Hosp. v Mercury Constr. Corp., 460 US 1; Perry v Thomas, 482 US 483; Southland Corp. v Keating, 465 US 1; Mitsubishi Motors v Soler Chrysler-Plymouth, 473 US 614; Singer v Jefferies & Co., 78 NY2d 76; Flanagan v Prudential-Bache Sec., 67 NY2d 500, 479 US 931; Gilmer v Interstate/Johnson Lane Corp., 500 US 20, 111 S Ct 1647; Shearson/Am. Express v McMahon, 482 US 220; Rodriguez de Quijas v Shearson/Am. Express, 490 US 477; Bender v Edwards & Sons, 971 F2d 698.) II. The statutory language and legislative history of the Civil Rights Act of 1991 encourage arbitration of title VII claims. (Goodyear Atomic Corp. v Miller, 486 US 174; Johnson v First Natl. Bank, 719 F2d 270, 465 US 1012; Rubin v United States, 449 US 424; Immigration & Naturalization Serv. v Cardoza-Fonseca, 480 US 421; Consumer Prod. Safety Commn. v GTE Sylvania, 447 US 102; Burlington N. R. R. Co. v Oklahoma Tax Commn., 481 US 454; Connecticut Natl. Bank v Germain, 503 US —, 112 S Ct 1146; Gilmer v Interstate/Johnson Lane Corp., 500 US 20, 111 S Ct 1647; Nelsen v Colieary, 152 Misc 2d 81.) III. Because there is no congressional intent to preclude arbitration, New York public policy is not relevant and, in any event, does not require a contrary conclusion. (Southland Corp. v Keating, 465 US 1; Perry v Thomas, 482 US 483; Singer v Jefferies & Co., 78 NY2d 76; Flanagan v Prudential-Bache Sec., 67 NY2d 500; Matter of Wertheim & Co. v Halpert, 48 NY2d 681; DeSapio v Josephthal & Co., 143 Misc 2d 611; Matter of Aimcee Wholesale Corp. v Tomar Prods., 21 NY2d 621; Shearson/Am. Express v McMahon, 482 US 220; Rodri

      guez de Quijos v Shearson/Am. Express, 490 US 477; Cullen v Paine Webber Group, 689 F Supp 269.)

      Douglas S. McDowell and Robert E. Williams, of the District of Columbia Bar, admitted pro hac vice, for the Equal Employment Advisory Council, amicus curiae, in the first above-entitled action.
    I. Both the language of the Civil Rights Act of 1991 and its legislative history support the use of alternative dispute resolution procedures for resolving discrimination claims. (Gilmer v Interstate/Johnson Lane Corp., 500 US 20, 111 S Ct 1647; Wards Cove Packing Co. v Atonio, 490 US 642; Patterson v McLean Credit Union, 491 US 164; Lorance v AT&T Technologies, 490 US 900; Goodyear Atomic Corp. v Miller, 486 US 174; Cannon v University of Chicago, 441 US 677; Native Vil. of Venetie I.R.A. Council v State of Alaska, 944 F2d 548; Estate of Wood v Commissioner of Internal Revenue, 909 F2d 1155; Alexander v Gardner-Denver Co., 415 US 36; DeVargas v Mason & Hangar-Silas Mason Co., 911 F2d 1377.) II. Arbitration of discrimination claims is consistent with the statutory framework of Civil Rights Act title VII, the 1991 Civil Rights Act and the Americans with Disabilities Act. (Mitsubishi Motors v Soler Chrysler-Plymouth, 473 US 614; Saari v Smith Barney, Harris Upham & Co., 968 F2d 877; Mago v Shearson Lehman Hutton, 956 F2d 932; Alford v Dean Witter Reynolds, Inc., 939 F2d 229; Willis v Dean Witter Reynolds, Inc., 948 F2d 305; Bender v Edwards & Sons, 971 F2d 698.)

      Brown & Wood, New York City (A. Robert Pietrzak and Michele L. McNichol of counsel), for Securities Industry Association, Inc., amicus curiae, in the first above-entitled action.
    I. Arbitration is a fair and judicially recognized means of resolving employment disputes. (Rodriguez de Quijos v Shearson/ Am. Express, 490 US 477; Mitsubishi Motors v Soler Chrysler-Plymouth, 473 US 614; Shearson/Am. Express v McMahon, 482 US 220.) II. The Federal Arbitration Act preempts State law. (Perry v Thomas, 482 US 483; Southland Corp. v Keating, 465 US 1; Moses H. Cone Hosp. v Mercury Constr. Corp., 460 US 1; Singer v Jefferies & Co., 78 NY2d 76; Flanagan v Prudential-Bache Sec., 67 NY2d 500, 479 US 931.) III. Agreements for arbitration of statutory employment claims must be enforced. (Rodriguez de Quijos v Shearson/Am. Express, 490 US 477; Shearson/Am. Express v McMahon, 482 US 220; Mitsubishi Motors v Soler Chrysler-Plymouth, 473 US 614; Alexander v Gardner-Denver Co., 415 US 36; Chisolm v Kid

      der, Peabody Asset Mgt, 810 F Supp 479; Nelsen v Colleary, 152 Misc 2d 81; Matter of Wertheim & Co. v Halpert, 48 NY2d 681; DeSapio v Josephthal & Co., 143 Misc 2d 611.) IV. There is no legislative intent to preclude the arbitration of discrimination claims. (Mitsubishi Motors v Soler Chrysler-Plymouth, 473 US 614; Alford v Dean Witter Reynolds, Inc., 939 F2d 229; Willis v Dean Witter Reynolds, Inc., 948 F2d 305; Mago v Shearson Lehman Hutton, 956 F2d 932; Bender v Edwards & Sons, 971 F2d 698; Gilmer v Interstate/Johnson Lane Corp., 500 US 20, 111 S Ct 1647.)

      Shiff & Tisman, New York City (Stephen E. Tisman and Laurence Shiff of counsel), for appellant in the second above-entitled action.
    I. If the Federal Arbitration Act does not apply, the order appealed from must be reversed because State Human Rights Law claims are not arbitrable. (Matter of Wertheim & Co. v Halpert, 48 NY2d 681; Harris v Iannaccone, 107 AD2d 429, 66 NY2d 728; Matter of Fallon v Greater Johnstown School Dist., 118 AD2d 936, 68 NY2d 603; DeSapio v Josephthal & Co., 143 Misc 2d 611, 160 AD2d 636.) II. The Federal Arbitration Act does not apply here because section 1 excludes contracts of employment of workers in interstate commerce. (Southland Corp. v Keating, 465 US 1; American Postal Workers Union v United States Postal Serv., 823 F2d 466; Willis v Dean Witter Reynolds, Inc., 948 F2d 305; International Union United Furniture Workers v Colonial Hardwood Flooring Co., 168 F2d 33; Prima Paint v Flood & Conklin, 388 US 395; United Food & Commercial Workers v Safeway Stores, 889 F2d 940; Posadas de Puerto Rico Assocs. v Asociación de Empleados, 873 F2d 479; Occidental Chem. Corp. v International Chem. Workers Union, 853 F2d 1310; Derwin v General Dynamics Corp., 719 F2d 484; Service Empls. Intl. Union v Office Ctr. Servs., 670 F2d 404.) III. Affirmance of the order below would enforce an involuntary, unknowing waiver of the substantial right to have discrimination claims heard in court. (Alexander v Gardner-Denver Co., 415 US 36; Alford v Dean Witter Reynolds, Inc., 905 F2d 104, 939 F2d 229; Utley v Goldman, Sachs & Co., 883 F2d 184, 493 US 1045; Jacobsen v ITT Fin. Servs. Corp., 762 F Supp 752; Barrentine v Arkansas-Best Frgt. Sys., 450 US 728; McDonald v West Branch, 466 US 284; Matter of Silverman [Benmor Coats], 61 NY2d 299; McDonnell Douglas Corp. v Green, 411 US 792; Texas Dept. of Community Affairs v Burdine, 450 US 248; State Div. of Human Rights v Kilian Mfg. Corp., 35 NY2d 201, 420 US 915.)

      Sullivan & Cromwell, New York City (Theodore O. Rogers, Jr., and Tariq Mundiya of counsel), for respondents in the second above-entitled action.
    I. The courts below correctly held that the Federal Arbitration Act applied to Reid’s claims. (Flanagan v Prudential-Bache Sec., 67 NY2d 500; Alford v Dean Witter Reynolds, Inc., 975 F2d 1161; Willis v Dean Witter Reynolds, Inc., 948 F2d 305; DiCrisci v Lyndon Guar. Bank of N. Y., 807 F Supp 947; Chisolm v Kidder, Peabody Asset Mgt., 810 F Supp 479; Sacks v Richardson Greenshield Sec., 781 F Supp 1475; Singer v Jefferies & Co., 78 NY2d 76; Matter of Lory Fabrics [Dress Rehearsal], 78 AD2d 262; Matter of American Multimedia v Dalton Packaging, 143 Misc 2d 295.) II. This Court may wish to reconsider its statements in Matter of Wertheim & Co. v Halpert (48 NY2d 681). (Gilmer v Interstate/Johnson Lane Corp., 500 US 20, 111 S Ct 1647; Rodriguez de Quijas v Shearson/Am. Express, 490 US 477; Shearson/Am. Express v McMahon, 482 US 220; Pearce v E.F. Hutton Group, 828 F2d 826; Haviland v Goldman, Sachs & Co., 947 F2d 601; Southland Corp. v Keating, 465 US 1; Moses H. Cone Hosp. v Mercury Constr. Corp., 460 US 1; Dean Witter Reynolds, Inc. v Byrd, 470 US 213; DeSapio v Josephthal & Co., 143 Misc 2d 611, 160 AD2d 636.)

      Vladeck, Waldman, Elias & Engelhard, P. G, New York City (Laura S. Schnell and Ellen A. Harnick of counsel), for the National Employment Lawyers Association/New York, amicus curiae, in the second above-entitled action.
    I. This Court is not required to order arbitration of claims of discrimination under the Executive Law. (Gilmer v Interstate/Johnson Lane Corp., 500 US 20, 111 S Ct 1647; Wieder v Skala, 80 NY2d 628; Matter of Wertheim & Co. v Halpert, 48 NY2d 681.) II. Forcing discrimination claims into arbitration will deprive victims of discrimination of a fair opportunity to prove illegal discrimination. (Matter of Holland v Edwards, 307 NY 38; Matter of State Div. of Human Rights v County of Onondaga Sheriff’s Dept., 71 NY2d 623; Labor Bd. v Express Publ. Co., 312 US 426; Ramseur v Chase Manhattan Bank, 865 F2d 460; Schmitz v St. Regis Paper Co., 811 F2d 131; Thornbrough v Columbus & Greenville R. R. Co., 760 F2d 633; Chipollini v Spencer Gifts, 814 F2d 893, 483 US 1052; Rosen v Thornburgh, 928 F2d 528; McDonnell Douglas Corp. v Green, 411 US 792; Texas Dept. of Community Affairs v Burdine, 450 US 248.)
   OPINION OF THE COURT

Titone, J.

In Matter of Wertheim & Co. v Halpert (48 NY2d 681), this Court held that because of the strong public policies embodied in Federal, State and local antidiscrimination laws, anticipatory agreements to arbitrate are unenforceable in the context of disputes involving claims of unlawful discrimination. The issue before us on these appeals is whether subsequent case law has rendered that holding obsolete in cases where the enforceability of the arbitration clause is governed by the Federal Arbitration Act (the FAA) (9 USC § 1 et seq.). We hold that, in light of recent Supreme Court decisions, most notably the Court’s decision in Gilmer v Interstate/Johnson Lane Corp. (500 US 20, 111 S Ct 1647), our 1979 decision in Wertheim should no longer be followed in cases governed by the FAA. Instead, the arbitrability of statutory discrimination claims is henceforth to be determined by reference to Congress’ intent with regard to alternative dispute resolution of that class of claims.

Fletcher v Kidder, Peabody & Co.

Plaintiff, an African-American formerly employed in defendant’s equity trading department, commenced this judicial action under the State Human Rights Law, alleging that he had been the victim of racial discrimination in employment in violation of Executive Law § 296 (1) (a). In response, defendant moved to stay the action and compel arbitration on the basis of the broad arbitration clause contained in the Uniform Application for Securities Industry Registration or Transfer (the U-4 Form) that plaintiff had signed as part of his application for registration with the various securities exchanges. The motion was predicated on defendant’s contention that the FAA, which preempts State law, is applicable and that that Federal statute mandates enforcement of plaintiff’s promise to submit "controversies] * * * arising out of [his] employment” to arbitration.

The IAS Court denied the motion, reasoning that "it would be against public policy to contract in advance for a [waiver of the right to obtain judicial redress of alleged racial discrimination].” The Appellate Division, however, reversed and granted the requested relief after concluding that the FAA and the cases decided under that statute mandated enforcement of plaintiff's arbitration agreement (184 AD2d 359).

Reid v Goldman, Sachs & Co.

Initially hired as a research assistant, plaintiff subsequently became a registered securities representative for defendant investment firm. As part of her registration application filed with the New York Stock Exchange, plaintiff was required to execute a U-4 Form containing a broad agreement to submit disputes arising out of her employment to arbitration. Some 13 years later, plaintiff was terminated from her position as a vice-president within defendant’s firm.

Following her termination, plaintiff commenced the present action, alleging that she had been the victim of gender-based discrimination in violation of the State Human Rights Law (Executive Law § 290 et seq.). In response, defendant invoked the arbitration clause in the U-4 Form plaintiff had signed, contending that the dispute fell within the clause’s terms and that the FAA mandated the clause’s enforcement.

The IAS Court held in defendant’s favor, concluding that plaintiff was obliged to arbitrate the discrimination claim. On plaintiff’s appeal, the Appellate Division affirmed. Relying on Gilmer v Interstate/Johnson Lane Corp. (supra), the Court reasoned that plaintiff could be "compelled to arbitrate a State-based sex discrimination claim under the [FAA]” (188 AD2d 350).

I.

We begin with the premise, which is now well embedded in our case law, that the enforceability of the arbitration clause contained in these plaintiffs’ U-4 Form applications is governed by the FAA (see, Singer v Jefferies & Co., 78 NY2d 76, 81; Flanagan v Prudential-Bache Sec., 67 NY2d 500). A further basic principle that is essential to our analysis is the corollary tenet that, in situations where the FAA is applicable, it preempts State law on the subject of the enforceability of arbitration clauses (Southland Corp. v Keating, 465 US 1; see, Singer v Jefferies & Co., supra, at 81). Indeed, the provisions of the FAA are controlling even though the dispute itself may arise under State law (see, Southland Corp. v Keating, supra). Thus, regardless of what our own State’s policies or case law might dictate in other circumstances, we are bound by the policies embodied in the Federal statute and the accompanying case law, and our prior State law holdings remain independently operative only to the extent that they have not been preempted by Federal law and policy.

In Matter of Wertheim & Co. v Halpert (supra), this Court held that an arbitration clause contained in a U-4 Form similar to those signed by plaintiffs was unenforceable in a dispute concerning a claim of discriminatory conduct in employment. At that time, the Court reasoned that important public policies are implicated in this area "where particular remedies are afforded by both State and Federal statutes” and, further, that allowing the employer to force the employee into arbitration "risks chilling the exercise of the statutory right” (id., at 683). The FAA and the impact of Federal law were not discussed, although the Court did make passing reference to Alexander v Gardner-Denver Co. (415 US 36), an employment discrimination case involving an arbitration clause that was not governed by the FAA.

The legal developments in the 13 years since Wertheim was decided necessitate a reexamination of that precedent. Although the United States Supreme Court has not squarely and directly addressed the enforceability of anticipatory arbitration clauses for disputes involving statutory prohibitions against racial and gender discrimination, it has considered the same issue in the context of a statutory age discrimination dispute and, in the process, has established a clear analytical framework for use in all cases in which an FAA-governed arbitration contract is invoked to force a nonjudicial resolution of a claim arising from statute (Gilmer v Interstate/ Johnson Lane Corp., 500 US 20, 111 S Ct 1647, supra).

Contrary to the dissent’s urgings, we cannot cling to the 13-year-old holding in Wertheim in the face of this recent definitive Supreme Court ruling solely because the nature of the statutorily prohibited discrimination alleged in Gilmer differs from the types of statutorily prohibited discrimination challenged in these two cases (see, Dean Witter Reynolds, Inc. v Alford, — US —, 111 S Ct 2050, on remand 939 F2d 229 [remanding for reconsideration of arbitrability of title VII gender discrimination claim in light of Gilmer v Interstate/ Johnson Lane Corp., supra]). While adherence to State precedent may be justified in the absence of clear guidance from the Supreme Court (see, Herzog Bros. Trucking v State Tax Commn., 72 NY2d 720), we are bound to follow both the holding and the rationale of the Nation’s highest Court on this and other questions of Federal law when, as here, there is no ambiguity in the Court’s position (see, Flanagan v Prudential-Bache Sec., supra, at 505-506). Indeed, any argument about the continued vitality of Wertheim is, necessarily, a "red herring,” since, as the dissent itself acknowledges, even the plaintiff in Fletcher would utilize the methodology mandated in Gilmer v Interstate/Johnson Lane Corp. (supra) to establish his right to be relieved of the obligations imposed by his agreement to arbitrate (dissenting opn, at 640).

Under that methodology, the party seeking to avoid enforcement of an arbitration clause governed by the FAA must demonstrate a congressional intent "to preclude a waiver of a judicial forum” for disputes based on a particular statutory right (Gilmer v Interstate/Johnson Lane Corp., 500 US, at —, 111 S Ct, at 1652, supra; see also, Mitsubishi Motors v Soler Chrysler-Plymouth, 473 US 614, supra; Singer v Jefferies & Co., 78 NY2d 76, supra; cf., Alexander v Gardner-Denver Co., 415 US 36, supra [involving arbitration agreement that was not subject to the FAA]). Where the right is predicated on a State or local statute rather than on a congressional enactment, it is undisputed by these parties that the courts are obliged to draw an analogy to the equivalent Federal law, where possible, and to consider Congress’ intentions with regard to the rights created by that law.

The closest Federal analog to Executive Law § 296 (1) (a), under which these plaintiffs’ claims arise, is title VII of the Civil Rights Act (42 USC § 2000e et seq.). Contrary to the Fletcher plaintiff’s contentions, there is nothing in the legislative history of either that Federal statute itself or the recently adopted amendments to that statute (Pub L 102-166, 105 US Stat 1Q71 [the Civil Rights Act of 1991]) that would suggest the existence of a congressional intent to override the general rule that anticipatory contracts to arbitrate are enforceable under the FAA.

The amendment that the dissent cites, which authorizes the use of alternative dispute resolution methods for controversies arising under title VII (Pub L 102-166, tit I, § 118, 105 US Stat 1081), merely adds to the existing, statutorily created right to seek relief in judicial and administrative forums (see, 42 USC § 2000e-5 [b], [c], [f]). That amendment does not shed any light on Congress’ intentions with regard to anticipatory agreements to use arbitral forums in the event of a future dispute. It is true that the amendment’s cosponsor, Congressman Edwards, stated in the Congressional Record that the amendment was "intended to be consistent with decisions such as Alexander v Gardner-Denver Co. [supra], which protect employees from being required to agree in advance to arbitrate disputes” and that "[n]o approval whatsoever is intended of the Supreme Court’s recent decision in [Gilmer] v. Interstate Johnson Lane Corp. [supra] * * * or any application or extension of it” (137 Cong Rec H9530 [daily ed, Nov. 7, 1991]). However, this statement cannot be viewed as indicative of the intentions of Congress as a whole, since it expresses only the position of the individual legislator who made it.

Similarly, the Reports of the House Education and Labor Committee (HR Report No. 102-40 [I], 102d Cong, 1st Sess 97, reprinted in 1991 US Code Cong & Admin News 549, 635) and the House Judiciary Committee (HR Report No. 102-40 [II], 102d Cong, 1st Sess 41, reprinted in 1991 US Code Cong & Admin News 694, 735), on which the plaintiff in Fletcher relies, are not useful indicators of congressional intent with regard to the enforceability of arbitration contracts in title VII disputes. While those reports have more persuasive value than do Representative Edwards’ personal remarks in terms of their ability to reflect Congress’ intent, they are not particularly helpful to plaintiffs’ positions here, because they merely set forth the committees’ understanding of the enforceability of arbitration agreements in discrimination disputes under the then-existing Supreme Court precedent. Indeed, the section of the committee report on which the dissent relies states only that the committee "believes that any agreement to submit disputed issues to arbitration * * * does not preclude the affected person from seeking relief under the enforcement provisions of Title VII[, a] view [which] is consistent with the Supreme Court’s interpretation of Title VII in Alexander v. Gardner-Denver Co. [supra]” (HR Report No. 102-40 [I], op. cit, at 97, reprinted in 1991 US Code Cong & Admin News 635 [emphasis added]). This section, of course, says nothing about what Congress actually intended.

It is true that the legislative history of title VII and its recent amendments does not demonstrate that Congress affirmatively intended to authorize anticipatory agreements to arbitrate claims arising from the statute’s provisions. However, the Gilmer formula makes such a showing unnecessary. The FAA itself evidences a broad congressional intention to enforce agreements to arbitrate in accordance with their terms. Thus, under Gilmer, the burden is on the party seeking to avoid arbitration of a statutory claim to show that Congress specifically intended to preclude waivers of the right to judicial remedy for such claims. Here, the cited legislative history does not satisfy that burden. Consequently, in the absence of clear and unambiguous proof of legislative intent to the contrary, we are obliged to hold that these cases are governed by the presumption of arbitrability that is established by the FAA.

II.

Since there is no evidence that Congress intended to limit the enforceability of FAA-governed arbitration agreements in the context of this class of disputes, the courts below were correct in concluding that plaintiffs’ State Human Rights Law claims should be submitted to arbitration under the terms of the U-4 Forms they signed. To the extent that our decision in Matter of Wertheim & Co. v Halpert (48 NY2d 681, supra) suggests the contrary, it has been superseded by subsequent Supreme Court precedent and is not to be followed.

In response to the dissent’s argument that the waiver of judicial review implicit in plaintiff’s U-4 Form should not be enforced because it was "involuntary” (dissenting opn, at 647), we note only that the argument cannot be maintained in light of Gilmer v Interstate/Johnson Lane Corp. (supra), as well as Singer v Jefferies & Co. (supra) and Flanagan v Prudential-Bache Sec. (supra). In each of those cases, the arbitration agreement contained in the U-4 Form was enforced even though the agreement had been signed as a condition to becoming a registered representative and a refusal to sign would have meant "exclusion from the industry” (dissenting opn, at 647). Indeed, the dissent cannot seriously suggest that the various financial exchanges cannot enforce the thousands of U-4 Forms that have been signed by would-be registrants, since such a conclusion would destabilize long-standing practices in this highly regulated industry and would wreak havoc with the regulatory system.

Similarly, the concerns about the adequacy of the arbitral forum that plaintiffs and the dissent raise have already been considered, and presumably balanced, by the Congress that enacted the FAA and thereby expressed its own preference for enforcing the parties’ arbitration agreements. To the extent that the Supreme Court expressed a degree of mistrust for the arbitral process in Alexander v Gardner-Denver Co. (supra, at 57-58), that sentiment has clearly been supplanted by the more current view that arbitration is an important and respected method of resolving private disputes (see, Gilmer v Interstate/Johnson Lane Corp., 500 US, at —, n 5, 111 S Ct, at 1656, n 5, supra; see also, Shearson/Am. Express v McMahon, 482 US 220, 231-232). Indeed, as the Supreme Court noted in Rodriguez de Quijos v Shearson/Am. Express (490 US 477, 481), concerns about arbitration "as a method of weakening the protections afforded in the substantive law to would-be complainants” are "far out of step with [the] current strong endorsement [by the Federal courts] of the * * * statutes favoring this method of resolving disputes.” While the submission of a dispute to arbitration inevitably does involve the loss of some procedural rights, a party who agrees to arbitration "trades th[ose] procedures and [the] opportunity for review * * * for the simplicity, informality, and expedition of arbitration” (Mitsubishi Motors v Soler Chrysler-Plymouth, supra, at 628). The value that expeditious resolution may have to a person deprived of his or her statutory rights is an element that the dissent’s discussion of the weakness of the arbitral forum completely overlooks.

Finally, we stress that there is no disagreement among the members of this Court about the general proposition that racial, gender, and all other forms of invidious discrimination, are ugly realities that cannot be countenanced and that should be redressable through the widest possible range of remedies (see, dissenting opn, at 647-648). However, the issue before us is not whether discrimination is a social evil that should be eradicated with whatever tools we have. Rather, the issue is whether, under existing precedent, the important public policies underlying title VII of the Federal Civil Rights Act may be deemed to override the " 'emphatic’ national policy favoring arbitration” (Singer v Jefferies & Co., supra, at 81, citing Moses H. Cone Hosp. v Mercury Constr. Corp., 460 US 1, 24-25), as reflected in the FAA. The Supreme Court has already ruled, in the context of an age-discrimination suit arising under the Age Discrimination in Employment Act (29 USC § 621 et seq.), that the proper question is not whether the courts can discern a sound reason in public policy to refuse enforcement of FAA-governed arbitration contracts, but rather whether Congress, in creating a statutory remedy, intended that arbitration of the statutorily established claim would be foreclosed (Gilmer v Interstate/Johnson Lane Corp., supra). The dissent has offered no principled reason to apply either a different analysis or a different remedy in cases in which the statutorily based claim involves discrimination on the basis of the claimant’s race rather than the claimant’s age, gender, religion or national origin.

III.

Having concluded that there is nothing in the language or history of the relevant Federal statutes to indicate a congressional intent to foreclose arbitration of race- and gender-discrimination claims, we turn now to the sole argument raised by the plaintiff in Reid: whether the arbitration clause in the U-4 Form that she and many others in financial services industry have signed is an agreement governed by the FAA. The gist of the Reid plaintiffs argument is that the U-4 Form is, in essence, a contract of employment and that it is therefore within the exclusionary provisions of section 1 of the FAA (9 USC § 1). That section provides that the terms of the FAA, including its provisions for enforcement of arbitration agreements, do not "apply to contracts of employment of seamen, railroad employees, or any other class of workers.”

The Federal courts have debated the scope of this statutory exclusion. A majority of the lower Federal courts that have considered the issue have held that the exclusion is not limited to employment contracts of seamen, railroad employees and other classes of workers within the transportation industries, but rather extends to employment contracts in all industries (e.g., Willis v Dean Witter Reynolds, Inc., 948 F2d 305; Occidental Chem. Corp. v International Chem. Workers Union, 853 F2d 1310). Although the issue was raised and briefed by several of the amicus curiae in Gilmer v Interstate/ Johnson Lane Corp. (500 US, at —, n 2, 111 S Ct, at 1651-1652, n 2, supra), the Supreme Court declined to resolve it there. Indeed, the Gilmer Court concluded that resolving the question was unnecessary because the arbitration agreement before it, the plaintiffs U-4 Form application, was "a contract with the securities exchanges, not with [the plaintiffs employer]” and, thus, was not a "contract of employment” at all (id., 500 US, at —, n 2, 111 S Ct, at 1651-1652, n 2).

In view of this clear holding, the Reid plaintiffs present contention that the U-4 Form she signed was a "contract of employment” within the meaning of the section 1 exclusion cannot be maintained. Contrary to plaintiffs assertions on this appeal, the Supreme Court’s unambiguous statement rejecting the proposition she now advances cannot fairly be characterized as mere dictum, since that statement was essential to the Court’s ultimate holding. And, contrary to the dissent’s suggestion that the Gilmer holding "does not say that a U-4 Form can never be a part of an employment contract” (dissenting opn, at 643), the statement of the Gilmer Court on this issue was clear and unequivocal and was obviously intended to establish a principle of law that would extend to all cases involving U-4 Forms executed as part of an individual’s application for registration with a regulated exchange. Accordingly, any attempt to bring the standard U-4 Form application within the exclusion provided in section 1 of the FAA is foreclosed by the Gilmer Court’s definitive rejection of that position.

In sum, the arbitration agreement contained in the U-4 Form application that these plaintiffs signed is within the class of agreements that are governed by the FAA. Further, under the language of that statute as well as the recent decisional law construing it, that arbitration agreement is fully enforceable in disputes that fall within its terms, even where the underlying claim concerns an alleged breach of a local, State or Federal law barring racial or gender discrimination. While those categories of disputes undoubtedly implicate important public policies and, as such, demand heightened sensitivity in decision-making, there is no reason to assume that such sensitive decision-making cannot be had in the arbitral forum. Even more importantly, there is nothing in the present body of Federal law that supports carving out a special "public policy” exception from the general rule of arbitrability mandated by the FAA.

Accordingly, the orders of the Appellate Division in Fletcher v Kidder, Peabody & Co. and Reid v Goldman, Sachs & Co. should be affirmed, with costs.

Smith, J.

(dissenting in Fletcher v Kidder, Peabody & Co.). The majority opinion erroneously applies the holding in Gilmer v Interstate/Johnson Lane Corp. (500 US 20, 111 S Ct 1647) to claims of racial discrimination, ignores Alexander v Gardner-Denver Co. (415 US 36), unnecessarily overrules Matter of Wertheim & Co. v Halpert (48 NY2d 681) and on the basis of an inapplicable footnote in a Supreme Court opinion, abandons the statutory and constitutional mandate to resolve racial discriminatory disputes in a court of law and in accordance with the equal protection of the laws. Accordingly, I dissent.

The issue before the Court is whether Federal substantive law permits the compulsory arbitration of claims of racial discrimination in employment in violation of State law. Plaintiff, an African-American male graduate of Harvard College, commenced this action, pursuant to the Human Rights Law, alleging constructive discharge from his employment as a result of racial discrimination. Plaintiff is a registered broker-dealer with the New York Stock Exchange, the National Association of Securities Dealers and the American Stock Exchange. From November 1989 until his resignation in March 1991, plaintiff was employed by defendant as a trader analyst. As a condition of his employment, plaintiff was required to execute the standard Uniform Application for Securities Industry Registration or Transfer, the so-called "U-4 Form”, which compels arbitration of any dispute between plaintiff (registered representative) and defendant (member) required by the exchanges to be arbitrated.

The complaint alleges that plaintiff resigned his position after a dispute over compensation. Specifically, it is contended that under the terms negotiated with a managing director of Kidder, Peabody, his annual compensation was to be no less that 20%, and no more than 25%, of his trading profits and that his 1990 bonus payment would be paid no later than early 1991. It is further alleged that plaintiff generated net profits of over $25.5 million in 1990, the largest in his department, entitling him to between $5 and $6.5 million in compensation. It is further alleged that defendant concluded that "the amount it was obligated to pay Mr. Fletcher was simply too much money to pay a young black man.” Thus, defendant allegedly reneged on the agreement by withholding 50% of his bonus compensation, deferring payment for up to 18 months, and requiring him to pay for trading losses on a dollar for dollar basis — all terms to which plaintiff’s white counterparts were not subjected. Plaintiff, in part, bases his contention that these breaches were racially motivated on a conversation he allegedly had with defendant’s head of human resources/equal employment opportunity officer wherein plaintiff was advised that he should not complain because he was "one of the highest paid black males” in the country. Subsequently, plaintiff resigned, submitted his contract dispute to arbitration and commenced this action.

Defendant moved to stay the action and compel arbitration of the racial discrimination claim pursuant to sections 2, 3 and 4 of the Federal Arbitration Act (FAA) (9 USC § 1 et seq.) and CPLR 7503 (a). Supreme Court denied the motion, concluding that "[t]he simple act of accepting employment and agreeing to arbitration does not constitute a waiver of the right to seek redress in a judicial forum for alleged racial discrimination” and that "it would be against public policy to contract in advance for a limiting forum to hear such claims.”

The Appellate Division reversed, on the law, and granted the motion, thereby staying the action and directing plaintiff to proceed to arbitration (Fletchter v Kidder Peabody & Co., 184 AD2d 359). Essentially, the Appellate Division concluded that the motion court had misconstrued and misapplied United States Supreme Court cases it held to be controlling— specifically, Gilmer and Dean Witter Reynolds, Inc. v Alford (— US —, 111 S Ct 2050, on remand 939 F2d 229 [5th Cir 1991]). The Appellate Division construed Federal case law to pose no barrier to compulsory arbitration of statutory employment discrimination claims such as the case at bar (Fletcher v Kidder, Peabody & Co., 184 AD2d 359, 361-362). This Court granted leave to appeal.

Before this Court, plaintiff argues that Federal law favoring arbitration does not preempt New York law because the legislative history of the Civil Rights Act of 1991, i.e., the amendments to title VII of the Civil Rights Act of 1964 (42 USC § 2000e et seq.), demonstrates the intent to preclude compulsory arbitration of race discrimination claims. This Federal legislation corresponds to the Human Rights Law and, pursuant to Federal law, that intent to preclude such compulsory arbitration is extended to analogous State claims. Plaintiff cites the House of Representatives Education and Labor Committee Report which mirrored the language of the Report of the House Judiciary Committee that its approval of alternative dispute resolution mechanisms was not intended "to preclude rights and remedies that would otherwise be available.”

Plaintiff argues also that the waiver of the right to a judicial determination of a racial discrimination claim should be permissible only after the claim has arisen. He contends further that the prospective waiver of this right is contrary to public policy because potential minority securities industry employees should not be required to anticipate that they will be subjected to discrimination and that such a claim would best be resolved by an industry-sponsored, industry-screened, and industry-selected tribunal.

Defendant contends that the execution of the arbitration agreement was voluntary and, therefore, binding and that Federal law establishes that compulsory arbitration of a claim of racial discrimination under these circumstances is permissible. Plaintiffs contentions are disputed by defendant and it is alleged that the arbitration procedures are fair and adequate.

In Gilmer, the Supreme Court held that a claim pursuant to the Age Discrimination in Employment Act (ADEA) (29 USC § 621 et seq.) could be subjected to compulsory arbitration (500 US, at —, 111 S Ct, at 1650). There the respondent Interstate/ Johnson Lane Corporation had hired Gilmer as a manager of financial services in May 1981. Gilmer, as a condition of employment, had to register as a securities representative with several stock exchanges. The registration application, the U-4 Form, committed all disputes between Gilmer and his employer to arbitration. Gilmer was terminated after six years, at age 62. Gilmer subsequently brought suit in United States District Court pursuant to the ADEA and he filed a claim with the Equal Employment Opportunity Commission (EEOC). The employer moved, without success, to compel arbitration, but the Fourth Circuit Court of Appeals reversed.

In upholding the compulsory arbitration of Gilmer’s claim, the Supreme Court reasoned (1) that compulsory arbitration of an age discrimination claim was not inconsistent with the underlying social policy of the ADEA (500 US, at —, 111 S Ct, at 1653); (2) that claimant remained free to file charges with the EEOC (id.); (3) that there was no evidence of congressional intent in the ADEA to preclude the waiver of the judicial forum (500 US, at —, 111 S Ct, at 1653-1654); (4) that the arbitration procedures were adequate (500 US, at —, 111 S Ct, at 1654-1655); and (5) that Alexander v Gardner-Denver Co. (415 US 36, supra) and its progeny were not controlling because they did not involve the compulsory arbitration of a statutory claim, the arbitration clauses at issue were in the context of collective-bargaining agreements, and the FAA was not applicable (500 US, at —, 111 S Ct, at 1656-1657). In addition, without determining the scope of the exclusion in section 1 that the FAA did not apply to "contracts of employment * * * of workers engaged in foreign or interstate commerce”, the Supreme Court held in a footnote "that § l’s exclusionary clause does not apply to Gilmer’s arbitration agreement” because the U-4 Form was not a part of his employment contract (500 US, at —, n 2, 111 S Ct, at 1651-1652, n 2).

The dissenters, Justices Stevens and Marshall, questioned the majority’s failure to address the issue of whether the FAA was applicable to employment contracts and concluded that the majority had construed the section 1 exclusion too narrowly. The dissenters would read section 1 to exclude "any agreements by the employee to arbitrate disputes with the employer arising out of the employment relationship, particularly where such agreements to arbitrate are conditions of employment” (500 US, at —, 111 S Ct, at 1659). The dissenters also stated that compulsory arbitration conflicted with the legislative intent evidenced in the ADEA (500 US, at —, 111 S Ct, at 1660-1661).

As stated, in this case the majority opinion erroneously applies Gilmer to the facts here, without necessity or justification overrules the decision in Wertheim and, on the basis of an inapplicable footnote in a Supreme Court decision, abandons the statutory and constitutional mandate to resolve claims of racial discrimination in the courts and in accordance with the equal protection of the laws.

First and foremost, the majority misapplies Gilmer to the facts here. Gilmer is distinguishable from the case at bar. Gilmer is not a racial discrimination case and, in fact, does not mention racial discrimination. The Supreme Court has neither addressed the precise issue before us nor provided any indication that Gilmer would sanction the compulsory arbitration of racial discrimination claims.

Footnote 2, which the majority contends excludes the U-4 agreement from being a part of any employment contract, does no such thing. It should be clear that the Supreme Court’s holding in Gilmer was simply that a claim under the ADEA could be subjected to compulsory arbitration pursuant to an arbitration clause in a securities registration application (U-4) form. The holding in Gilmer is given in the first paragraph of the opinion. The Supreme Court stated:

"The question presented in this case is whether a claim under the Age Discrimination in Employment Act of 1967 (ADEA), 81 Stat. 602, as amended, 29 U.S.C. § 621 et seq., can be subjected to compulsory arbitration pursuant to an arbitration agreement in a securities registration application. The Court of Appeals held that it could, 895 F.2d 195 (CA4 1990), and we affirm” (500 US, at —, 111 S Ct, at 1650).

The holding does not say that a U-4 Form can never be a part of an employment contract. Moreover, it does not say that any arbitration clause in a U-4 Form can be used to compel arbitration of a racial discrimination claim.

The footnote in Gilmer should be interpreted for what it is, a determination that the U-4 agreement in Gilmer, as opposed to all cases, was not a part of an employment agreement. The Supreme Court did not hold there that such a U-4 agreement could never be a part of an employment contract. This view is confirmed, first, by the Supreme Court’s own reference to the fact that while several amici curiae had argued that section 1 "excludes from the coverage of the FAA all 'contracts of employment,’ ” Gilmer had not raised the issue in the lower courts or in his petition for certiorari. It is confirmed, second, by the Supreme Court’s statement that "we leave for another day the issue raised by amici curiae.” (500 US, at —, n 2, 111 S Ct, at 1651-1652, n 2.)

Second, the majority ignores Alexander v Gardner-Denver Co. (supra) and overrules Matter of Wertheim & Co. v Halpert (supra) without necessity or justification. In the absence of an unequivocal ruling from the Supreme Court on this issue, this Court should adhere to the principles articulated in Alexander and in Wertheim. In Alexander, the Supreme Court held that an employee’s statutory right to a trial de novo under title VII of the Civil Rights Act of 1964 was not precluded by the prior submission of his claim to arbitration in accordance with a collective-bargaining agreement (415 US, at 52). The Supreme Court distinguished contractual rights from statutory rights and found no impediment to utilization of different forums to enforce those distinctly separate rights even though violation of those rights was based upon the same facts (415 US, at 49-51). The Alexander Court considered the purpose of title VII— "to assure equality of employment opportunities by eliminating those practices and devices that discriminate on the basis of race, color, religion, sex, or national origin” (415 US, at 44) —its statutory scheme of providing for consideration of employment discrimination claims in several forums (415 US, at 47), and its legislative history manifesting "a congressional intent to allow an individual to pursue independently his rights under both Title VII and other applicable state and federal statutes” (415 US, at 48). It also stated that, "we think it clear that there can be no prospective waiver of an employee’s rights under Title VII” (415 US, at 51). Also, with respect to the arbitrability of a title VII claim, the Alexander Court stated, "Arbitral procedures, while well suited to the resolution of contractual disputes, make arbitration a comparatively inappropriate forum for the final resolution of rights created by Title VII [because among other things] * * * the specialized competence of arbitrators pertains primarily to the law of the shop, not the law of the land * * * [and] the resolution of statutory or constitutional issues is a primary responsibility of courts, and judicial construction has proved especially necessary with respect to Title VII, whose broad language frequently can be given meaning only by reference to public law concepts” (415 US, at 56-57).

In Wertheim this Court declined to require arbitration of plaintiff’s claim of sex discrimination against her employer, a member of the New York Stock Exchange. This Court stated:

"[1] Although arbitration is a favored method of dispute resolution, arbitration agreements are unenforceable where substantive rights, embodied by statute, express a strong public policy which must be judicially enforced (Matter of Sprinzen [Nomberg], 46 NY2d 623; see, also, Matter of Aimcee Wholesale Corp. [Tomar Prods.], 21 NY2d 621). This is especially true in the area of discrimination where particular remedies are afforded by both State and Federal statutes (see 300 Gramatan Ave. Assoc. v State Div. of Human Rights, 45 NY2d 176, 183-184).” (48 NY2d, at 683.)

Since Wertheim and even before, the policy of this State has been to resolve such claims of discrimination in the courts.

Third, it needs emphasis that equality of opportunity in employment in New York State is a civil right which is to be enforced by the courts. Article I, § 11 of the State Constitution reads as follows:

"No person shall be denied the equal protection of the laws of this state or any subdivision thereof. No person shall, because of race, color, creed or religion, be subjected to any discrimination in his civil rights by any other person or by any firm, corporation, or institution, or by the state or any agency or subdivision of the state.”

The Human Rights Law is "deemed an exercise of the police power of the state * * * in fulfillment of the provisions of the constitution of this state concerning civil rights” (Executive Law § 290 [2]). The Human Rights Law makes the opportunity to obtain employment a civil right (Executive Law § 291). That section reads as follows:

"The opportunity to obtain employment without discrimination because of age, race, creed, color, national origin, sex or marital status is hereby recognized as and declared to be a civil right.” (§ 291 [1].)

That civil right is protected by the right of an aggrieved person to go into a court of law.

The Human Rights Law expressly grants persons claiming to be aggrieved by an unlawful discriminatory practice, such as discrimination in employment on the basis of race, the right to seek judicial enforcement of State antidiscrimination laws. Thus, Executive Law § 297 (9) reads:

"Any person claiming to be aggrieved by an unlawful discriminatory practice shall have a cause of action in any court of appropriate jurisdiction for damages and such other remedies as may be appropriate, unless such person had filed a complaint hereunder or with any local commission on human rights, or with the superintendent pursuant to the provisions of section two hundred ninety-six-a of this chapter, provided that, where the division has dismissed such complaint on the grounds of administrative convenience, such person shall maintain all rights to bring suit as if no complaint had been filed” (emphasis supplied).

The legislative history of the 1991 amendment of title VII indicates that the congressional intent was to preclude the compulsory arbitration of racial discrimination claims. By addressing alternative dispute resolution methods and clarifying that they were not to preclude other available rights and remedies, Congress specifically articulated what was already implicit in the multiple forum scheme of title VII — that these rights and remedies were coextensive. A passage from the Judiciary Committee Report supporting the amendments makes this clear. It reads:

"This section encourages the use of alternative means of dispute resolution, where appropriate and to the extent authorized by law. These methods include settlement negotiations, conciliation, facilitation, mediation, factfinding, mini-trials and arbitration.
"This amendment was adopted to encourage alternative means of dispute resolution that are already authorized by law. A virtually identical amendment was enacted as part of the Americans with Disabilities Act, 42 U.S.C. § 12101 et seq.
"The Committee emphasizes, however, that the use of alternative dispute resolution mechanisms is intended to supplement, not supplant, the remedies provided by Title VII. Thus, for example, the Committee believes that any agreement to submit disputed issues to arbitration, whether in the context of a collective bargaining agreement or in an employment contract, does not preclude the affected person from seeking relief under the enforcement provisions of Title VII. This view is consistent with the Supreme Court’s interpretation of Title VII in Alexander v. Gardner-Denver Co., 415 U.S. 36 (1974). The Committee does not intend for the inclusion of this section be [sic] used to preclude rights and remedies that would otherwise be available.”

The majority’s decision sanctions the involuntary waiver of the statutory right to judicial review of a claim of racial discrimination. The waiver is involuntary because it is a condition of employment — failure to register precludes one from being a representative and registration requires agreement to arbitrate disputes with the employer. There is no negotiation of this term. Refusal means exclusion from the industry. Thus, this case arguably comes within the statement in Gilmer that " 'courts should remain attuned to well-supported claims that the agreement to arbitrate resulted from the sort of fraud or overwhelming economic power that would provide grounds’ ” for revoking a contract (500 US, at —, 111 S Ct, at 1656, quoting Mitsubishi Motors v Soler Chrysler-Plymouth, 473 US 614, 627). The involuntariness of this waiver is highlighted by the fact that it is prospective. As noted above, the Alexander Court stated its objection to the prospective waiver of rights under title VII and that objection has yet to be rescinded. Also, the waiver was not knowing because the full panoply of rights now alleged to have been waived were in no way specified in the U-4 Form.

At the core of the instant controversy is racial discrimination — a reality that continues to hinder the full realization of the principles upon which this country was founded. The Supreme Court stated in Gilmer, " '[S]o long as the prospective litigant effectively may vindicate [his or her] statutory cause of action in the arbitral forum, the statute will continue to serve both its remedial and deterrent function’ ” (500 US, at —, 111 S Ct, at 1653, quoting Mitsubishi Motors v Soler Chrysler-Plymouth, 473 US 614, 637, supra). Although all forms of discrimination are reprehensible, as this statement recognizes, the remedies needed to eradicate one form of unlawful discrimination may be different from those needed to eliminate another form. This Court and any court should hesitate before forcing victims of discrimination into one single remedy, chosen by those who allegedly discriminated against them. The historical reality of racial discrimination as opposed to age discrimination would seem to compel a different treatment. Claims of racial discrimination have been a large part of litigation for over a century. Age discrimination claims have not. In the face of this history and without any evidence of the experience of courts dealing with the issues at the trial level, I cannot agree that these long-standing grievances can be arbitrated away.

Accordingly, the order of the Appellate Division should be reversed.

In Fletcher v Kidder, Peabody & Co.: Order affirmed, with costs.

Chief Judge Kaye and Judges Simons, Hancock, Jr., and Bellacosa concur with Judge Titone; Judge Smith dissents and votes to reverse in another opinion.

In Reid v Goldman, Sachs & Co.: Order affirmed, with costs.

Chief Judge Kaye and Judges Simons, Hancock, Jr., and Bellacosa concur; Judge Smith taking no part.

      . Under paragraph 5 of the U-4 Form he executed, plaintiff promised "to arbitrate any dispute, claim or controversy that may arise between [himself] and [his] firm * * * that is required to be arbitrated under the rules, constitutions or by-laws of the organizations with which I register.” Rule 347 of the Rules of the New York Stock Exchange requires arbitration of "[a]ny controversy between a registered representative and any member or member organization arising out of the employment or termination of employment of such registered representative.”

      . To the extent that the dissent’s argument is directed toward the wisdom of the United States Supreme Court’s recent pronouncements on the subject before us, its arguments are misdirected. In this area, which is governed by preemptive Federal statutes, the Supreme Court’s decisions are unquestionably the final word and, as such, are not subject to second-guessing at the State level.

      . Similarly, the dissenter’s extensive reliance on the holding and rationale of Alexander v Gardner-Denver Co. (415 US 36, supra) is misplaced. While that case involved the arbitrability of a dispute arising under title VII, the arbitration agreement in issue was not one governed by the FAA (see, Gilmer v Interstate/Johnson Lane Corp., 500 US, at —, 111 S Ct, at 1657, supra), with its " 'liberal federal policy favoring arbitration’ ” (Mitsubishi Motors v Soler Chrysler-Plymouth, 473 US 614, 625). As the dissent itself acknowledges (dissenting opn, at 641). the Supreme Court made clear in Gilmer that Alexander is not relevant where the congressionally adopted FAA is controlling.

      . For this reason, the dissent’s reliance on article I, § 11 of the State Constitution and the antidiscrimination provisions of the State Human Rights Law (Executive Law § 290 [2]; §§ 291, 297 [9]; see, dissenting opn, at 645-646) is puzzling. No party to this litigation has suggested that the intentions of the New York State Legislature or the framers of the State Constitution should be consulted in resolving this question concerning the proper application of Federal law. Moreover, the State law that the dissent cites does not support the dissent’s primary contention that racial discrimination should be treated differently from other forms of discrimination for purposes of determining the proper remedial forum. Executive Law § 297 (9), which provides for a judicial cause of action for unlawful discrimination, does not distinguish between the various forms of discrimination and, in fact, treats racial discrimination the same way as it treats discrimination "because of age, * * * creed, color, national origin, sex [and] marital status” (see, id., § 291).

      . The dissent’s suggestion that the issue is one that the Supreme Court has " Te[ft] for another day’ ” is simply inaccurate (see, dissenting opn, at 644 and 644, n 3). As it is quoted in the dissenting opinion itself, the Supreme Court’s opinion in Gilmer makes clear that the Court chose to "follow * * * the weight of authority, and * * * hold that § l’s exclusionary clause does not apply to” the U-4 Form used in the securities industry (500 US, at —, n 2, 111 S Ct, at 1651-1652, n 2 [emphasis supplied]). As previously noted, the question "le[ft] for another day” was not whether U-4 Forms are "contracts of employment” within the meaning of the section 1 exclusion from the FAA’s coverage, but whether the exclusion applies to all employment contracts rather than being limited to employment contracts in the transportation industry alone.

      . HR Report No. 102-40 (I), 102d Cong, 1st Sess, at 97 (1991) and HR Report No. 102-40 (II), 102d Cong, 1st Sess, at 41 (1991) and the interpretive memorandum of the cosponsor of the 1991 amendments (Interpretive Mem on Civil Rights Act of 1991, 137 Cong Rec H9530 [daily ed, Nov. 7, 1991] are authoritative statements of the legislative intent. Plaintiff argues further that State constitutional, statutory and decisional law preclude the arbitration of the dispute here.

      . The Supreme Court’s remand of Dean Witter Reynolds, Inc. v Alford (— US —, 111 S Ct 2050) "for further consideration in light of Gilmer” does not alter this fact. The Supreme Court specifically did not direct the court to decide the case as Gilmer was decided.

      . The entire footnote 2 reads as follows: "Section 1 of the FAA provides that nothing herein contained shall apply to contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.’ 9 U.S.C. § 1. Several amici curiae in support of Gilmer argue that that section excludes from the coverage of the FAA all 'contracts of employment.’ Gilmer, however, did not raise the issue in the courts below, it was not addressed there, and it was not among the questions presented in the petition for certiorari. In any event, it would be inappropriate to address the scope of the § 1 exclusion because the arbitration clause being enforced here is not contained in a contract of employment. The FAA requires that the arbitration clause being enforced be in writing. See 9 U.S.C. §§ 2, 3. The record before us does not show, and the parties do not contend, that Gilmer’s employment agreement with Interstate contained a written arbitration clause. Rather, the arbitration clause at issue is in Gilmer’s securities registration application, which is a contract with the securities exchanges, not with Interstate. The lower courts addressing the issue uniformly have concluded that the exclusionary clause in § 1 of the FAA is inapplicable to arbitration clauses contained in such registration applications. See, e.g., Dickstein v. DuPont, 443 F.2d 783 (CA1 1971); Malison v. Prudential-Bache Securities, Inc., 654 F. Supp. 101, 104 (WDNC 1987);
        Legg, Mason & Co. v. Mackall & Coe, Inc., 351 F. Supp. 1367 (DC 1972); Tonetti v. Shirley, 219 Cal.Rptr. 616, 618, 173 Cal.App.3d 1144 (1985); See also Stokes v. Merrill Lynch, Pierce, Fenner & Smith, 523 F.2d 433, 436 (CA6 1975). We implicitly assumed as much in Perry v. Thomas, 482 U.S. 483 (1987), where we held that the FAA required a former employee of a securities firm to arbitrate his statutory wage claim against his former employer, pursuant to an arbitration clause in his registration application. Unlike the dissent, see post, at 1659-1660, we choose to follow the plain language of the FAA and the weight of authority, and we therefore hold that § l’s exclusionary clause does not apply to Gilmer’s arbitration agreement. Consequently, we leave for another day the issue raised by amici curiae. ” (500 US, at —, n 2, 111 S Ct, at 1651-1652, n 2.)

      . Under title VII, employment discrimination claims may be considered in several forums (see, 42 USC § 2000e-5 [b] [EEOC]; 42 USC § 2000e-5 [c] [State and local agencies]; 42 USC § 2000e-5 [f] [Federal courts]).

        . HR Report No. 102-40 (II), at 41, op. cit.


source: Caselaw Access Project

author: Bellacosa, J.

license: Public Domain

text:
    [621 NE2d 1195, 602 NYS2d 588]
    Joseph Criscuola et al., Appellants, v Power Authority of the State of New York et al., Respondents.
    Argued September 2, 1993;
    decided October 12, 1993
    POINTS OF COUNSEL

      Michael Rikon, P. C, New York City (Michael Rikon of counsel), for appellants.
    I. Claimants should be compensated for the loss of value of their land because of the public’s fear of health hazards emanating from electromagnetic fields generated by the Power Authority’s high voltage transmission line. (Matter of City of New York [Lincoln Sq. Slum Clearance Project], 15 AD2d 153, 16 NY2d 497; Matter of Town of Islip [Mascioli] 49 NY2d 354; Keator v State of New York, 23 NY2d 337; McDonald v State of New York, 42 NY2d 900; Acme Theatres v State of New York, 26 NY2d 385; Matter of City of New York [Fourth Ave.] 255 NY 25; South Buffalo Ry. Co. v Kirkover, 176 NY 301; Hill v Mohawk & Hudson R. R. Co., 7 NY 152; Ross v State of New York, 24 NY2d 80; Diocese of Buffalo v State of New York, 24 NY2d 320.) II. New York should adopt a rule allowing consequential damages which result from the public’s fear of electromagnetic radiation.

      Bond, Schoeneck & King, Albany (Carl Rosenbloom of counsel), Charles M. Pratt, New York City, and Crowell and Moring, of the District of Columbia Bar, admitted pro hac vice, for respondents.
    I. Appellants’ claim for consequential damages due to cancerphobia, jointly litigated by appellants with 46 other claims and rejected in the Zappavigna case, cannot be collaterally attacked on this appeal. (Miller v State of New York, 117 Misc 2d 444; Matter of Gowan v Tully, 45 NY2d 32; Schuylkill Fuel Corp. v Nieberg Realty Corp., 250 NY 304; Matter of Kempf v Town of Esopus, 92 AD2d 1076; Business Council of N. Y. State v Cooney, 102 AD2d 1001; Matter of Jackson v New York State Urban Dev. Corp., 67 NY2d 400; Matter of City of New York v New York State Bd. of Equalization & Assessment, 65 NY2d 656.) II. It is an affirmed finding of fact that appellants have failed to offer sufficient proof that installation of a transmission line on their property caused any devaluation of their remainder. (Matter of Adirondack Mtn. Reserve v Board of Assessors, 64 NY2d 727; Hylan Flying Serv. v State of New York, 49 NY2d 840.) III. This Court should not reject the majority rule that proof of a rational basis for fear of cancer is a prerequisite to recovery of consequential damages resulting from the fear. (Loretto v Teleprompter Manhattan CATV Corp., 58 NY2d 143; New York, Ontario & W. Ry. Co. v Livingston, 238 NY 300; Searl v School Dist., Lake County, 133 US 553; Garrison v City of New York, 88 US 196; Windham v State of New York, 34 AD2d 590, 27 NY2d 481; Priestly v State of New York, 23 NY2d 152; Smith v State of New York, 49 Misc 2d 985, 29 AD2d 1050; Hicks v

      United, States, 266 F2d 515; Hare v State of New York, 143 Misc 2d 281, 173 AD2d 523; Doe v Doe, 136 Misc 2d 1015.)
   OPINION OF THE COURT

Bellacosa, J.

Appellants are claimants who seek direct and consequential market value damages for a high voltage power line easement acquired by the Power Authority of the State of New York (PASNY) over their Delaware County property. The only issue before us centers on the claim for consequential damages, based on the claimants’ assertion that "cancerphobia” and the public’s perception of a health risk from exposure to electromagnetic emissions from power lines negatively impact upon the market value of their property and "will render the remainder valueless.” They argue that they should not have to prove the "reasonableness” of this perception as a separate, additional component of diminished market value. We agree and reverse the order of the Appellate Division.

A bit of procedural context is necessary. For purposes of establishing consequential damages from "cancerphobia,” claimants here successfully moved to have their claim tried together with 47 other similar claims in a case with the lead title of Zappavigna v State of New York. The Court of Claims in Zappavigna, as affirmed by the Appellate Division (186 AD2d 557), held, inter alia, that claimants had not met their burden of proving that the "cancerphobia” was reasonable, and therefore denied consequential damages. Nonetheless, claimants-appellants here are not precluded from raising the issue of whether reasonableness of a perceived danger must be proven in an eminent domain proceeding. The determination of the reasonableness aspect of the evidentiary issue in Zappavigna became an integral part of each claimant’s case. It does not bind and bar the present claimants-appellants because of the limited purpose of the joint trial arrangement and because the claimants-appellants here had no independent right to appeal and seek discrete review of the evidentiary issue.

Thus, we conclude that the evidentiary issue is before us pursuant to this Court’s grant of leave to appeal. We must thus resolve whether proof of reasonableness is required before a claimant can recover consequential damages for an eminent domain taking of property, whose value may be affected by a perceived public fear of danger or of health risks.

We are satisfied that there should be no requirement that the claimant, as a separate and higher component of its market value proofs, must establish the reasonableness of a fear or perception of danger or of health risks from exposure to high voltage power lines. The issue in a just compensation proceeding is whether or not the market value has been adversely affected (see, San Diego Gas & Elec. Co. v Daley, 205 Cal App 3d 1334, 253 Cal Rptr 144; see generally, 4A Nichols, Eminent Domain § 14.02 [1] [b], at 14-30 [Sackman 3d ed 1993]). This consequence may be present even if the public’s fear is unreasonable. Whether the danger is a scientifically genuine or verifiable fact should be irrelevant to the central issue of its market value impact. Genuineness and proportionate dollar effects are relevant factors, to be sure, but in the usual evidentiary framework. Such factors should be left to the contest between the parties’ market value experts, not magnified and escalated by a whole new battery of electromagnetic power engineers, scientists or medical experts. "Adverse health effects vel non is not the issue in eminent domain proceedings: full compensation to the landowner for the property taken is” (Florida Power & Light Co. v Jennings, 518 So 2d 895, 897 [Fla]). As the Court of Appeals of Kansas has noted:

"Logic and fairness * * * dictate that any loss of market value proven with a reasonable degree of probability should be compensable, regardless of its source. If no one will buy a residential lot because it has a high voltage line across it, the lot is a total loss even though the owner has the legal right to build a house on it. If buyers can be found, but only at half the value it had before the line was installed, the owner has suffered a 50% loss” (Willsey v Kansas City Power & Light Co., 6 Kan App 2d 599, 611, 631 P2d 268, 277-278).

Thus, relying on Willsey, the Supreme Court of Kansas concluded, and we agree, that "evidence of fear in the marketplace is admissible with respect to the value of property taken without proof of the reasonableness of the fear” (Ryan v Kansas Power & Light Co., 249 Kan 1, 7, 815 P2d 528, 533).

Although this issue is a matter of first impression in this Court, it has been well ventilated in sibling jurisdictions whose precedents offer some useful instruction. The Court of Appeals of Kansas summarized the three prevailing views as of 1981 in Willsey v Kansas City Power & Light Co. (6 Kan App 2d 599, 631 P2d 268, supra). The Willsey court noted that the characterizations and labels attached to the varieties of test are inaccurate. Thus, the so-called "majority” view, in which evidence of the effect on market value of a fear of danger from power lines was unequivocally rejected, was actually followed by only four States in 1981 (id., 631 P2d, at 273-274 [Ala, Fla, Ill, W Va]). In contrast, the "minority” view, in which such evidence is routinely admitted on a simple showing that the fear exists and affects market value, was followed by 11 States and the Sixth Circuit (id., 631 P2d, at 274 [Ark, Cal, Ind, Iowa, La, NC, Ohio, Okla, SD, Va, Wash]). In these jurisdictions, the reasonableness of the fear is either assumed or deemed irrelevant or collateral to the market value issue and the considerations that customarily pertain to its just resolution. Although it preferred the so-called "minority rule,” the Willsey court held it was unnecessary to determine whether to adopt that rule since, on the facts of that case, the "intermediate” test, "the most stringent rule which can justifiably be applied,” was met (Willsey v Kansas City Power, 6 Kan App 2d, at 611, 631 P2d, at 278, supra).

Recently, Florida, California and Kansas reaffirmed that reasonableness is not a factor in determining whether consequential damages may be awarded for a diminution or elimination of market value due to a fear of health risks from exposure to power lines. In Florida Power & Light Co. v Jennings (518 So 2d 895, supra), the Supreme Court of Florida held the "public’s Tear’ as a factor which may be relevant to the issue of just compensation may be utilized as a basis for an expert’s valuation opinion regardless of whether this fear is objectively reasonable.” In San Diego Gas & Elec. Co. v Daley (205 Cal App 3d 1334, 1349, 253 Cal Rptr 144, 152, supra), the California Court of Appeal added that "the question was whether the fear of the danger existed and would affect market value” in holding that reasonableness is not a factor that need be considered.

We, of course, do not hold that claimants are relieved from giving any proof to establish their claims and just compensation damages. Rather, claimants must still establish some prevalent perception of a danger emanating from the objectionable condition. As the Ryan court noted, "no witness, whether expert or non-expert, may use his or her personal fear as a basis for testifying about fear in the marketplace. However, any other evidence that fear exists in the public about the dangers of high voltage lines is admissible” (Ryan v Kansas Power & Light Co., 249 Kan 1, 7, 815 P2d 528, 533-534, supra). This standard protects, as a countermeasure, the legitimate municipal concern against spurious claims and unjust encroachments against the public treasury. Some credible, tangible evidence that a fear is prevalent must be presented to prove the adverse market value impact. Claimants should have to connect the market value diminution of the property to the particular fear in much the same manner that any other adverse market effects are shown, e.g., by proffering evidence that the market value of property across which power lines have been built has been negatively affected in relation to comparable properties across which no power lines have been built (see generally, 4 Nichols, Eminent Domain § 12.02 [Sackman 3d ed 1993]).

To add the extra component of reasonableness, as PASNY urges, because the condition may not be something within common knowledge or experience, like an obscured lovely landscape view, is not supportable or necessary. Thus, while a personal or quirky fear or perception is not proof enough, the public’s or the market’s relatively more prevalent perception should suffice, scientific certitude or reasonableness notwithstanding.

Accordingly, the order of the Appellate Division should be reversed, with costs, and the case remitted to the Court of Claims for further proceedings in accordance with this opinion.

Chief Judge Kaye and Judges Simons, Titone, Hancock, Jr., and Smith concur; Judge Levine taking no part.

Order reversed, etc.


author: Simons, J.

text:
    [622 NE2d 288, 602 NYS2d 788]
    In the Matter of Max Cohen, Appellant, v Grainger, Tesoriero & Bell et al., Respondents.
    Argued September 9, 1993;
    decided October 14, 1993

      POINTS OF COUNSEL

      Irving W. Fein, New York City, for appellant.
    I. Appellant’s statutory lien pursuant to Judiciary Law § 475 was not affected by the fact that the cause of action was ultimately disposed of in another court. (Lai Ling Cheng v Modansky Leasing Co., 73 NY2d 454; Matter of Istim, Inc. v Chemical Bank, 78 NY2d 342; Morgan v Drewry, S. A. R. L., 285 App Div 1; Neimark v Martin, 7 AD2d 934; Greenberg, Cantor & Reiss v State of New York, 128 AD2d 939; Johnson v Jahr, 1 AD2d 579; Matter of Barnum v Srogi, 96 AD2d 723; Matter of Chorosh v Woodbury, 135 Misc 910.) II. Appellant’s attorney’s fees should have been measured by a contingent percentage fee based on the final recovery. (Marcelli v United Parcel Serv., 80 AD2d 827.) III. Appellant did not waive an election to recover a contingent percentage fee based upon the recovery in the case. (Lai Ling Cheng v Modansky Leasing Co., 73 NY2d 454.)

      Florrie L. Wertheimer, P. C., New York City (Jay M. Solomon of counsel), respondent, pro se, and for Grainger, Tesonero & Bell and others, respondents.
    The court below did not err since it would be unconscionable to permit appellant to elect to recover a "contingent” percentage fee after a recovery had already been obtained. (Reubenbaum v B. & H. Express, 6 AD2d 47; Matter of Istim, Inc. v Chemical Bank, 78 NY2d 342; Lai Ling Cheng v Modansky Leasing Co., 73 NY2d 454.)
   OPINION OF THE COURT

Simons, J.

This appeal presents two questions: (1) does a discharged attorney who has instituted a personal injury action in State courts have a statutory lien on a recovery obtained for the client on the same claim sued by a successor attorney in Federal courts; (2) when must a discharged attorney, retained on a contingent fee basis, elect the method of computing the fee.

The dispute arises from these facts.

Petitioner Cohen, an attorney, entered into a written agreement to represent James Staffer in his claim for personal injuries against his employer, Bouchard Transportation Co., Inc. The agreement called for Cohen to receive a contingent fee equaling 3316% of any sum recovered for Staffer. In November 1985, following investigation and preparation, Cohen commenced an action on behalf of Staffer in Supreme Court, Richmond County. He continued handling the case until June 1986. At that time Staffer sent Cohen a letter discharging him, asking Cohen to deliver his file and stating that his new attorney would contact him. The new attorneys did not contact Cohen, however, and it was not until April 1987 that he learned from a third party that Staffer’s new counsel was respondent Florrie Wertheimer, P. C., and that the Wertheimer firm had commenced a separate action on the same claim in United States District Court. Some 19 months later, after Staffer had won a $480,650.30 judgment in Federal court, Cohen brought this special proceeding to enforce his attorney’s lien under Judiciary Law § 475. He seeks a fee based on a percentage of the judgment recovered.

Supreme Court held that the statute grants a lien only to the attorney of record in the court where plaintiff obtains a recovery. Because the recovery was gained in Federal court and Cohen was not the attorney of record there, Supreme Court concluded that his fee must be measured by quantum meruit and, applying that rule, determined the amount. The Appellate Division modified the judgment by increasing the fee but otherwise affirmed.

Section 475 of the Judiciary Law provides that “[flrom the commencement of an action * * * the attorney who appears for a party has a lien upon his client’s cause of action * * * which attaches to a verdict, report, determination, decision, judgment or final order in his client’s favor, and the proceeds thereof in whatever hands they may come; and the lien cannot be affected by any settlement between the parties”.

While we have never passed on the question, the parties now agree that Cohen has a statutory lien which attaches to the recovery notwithstanding that the final judgment was obtained in Federal court. That rule has been applied repeatedly in the Appellate Division by decisions holding that the lien is imposed on the cause of the action and that the proceeds, wherever found, are subject to it. And this is so even if recovery is obtained in an action different from the one in which the services were rendered (see, Neimark v Martin, 7 AD2d 934, 935; Morgan v Drewry, S. A. R. L., 285 App Div 1, 4; Matter of Lourie, 254 App Div 555; see also, Matter of Board of Water Supply [Bell], 179 App Div 877, 878). Were the rule otherwise, the client and the successor attorney could easily frustrate the remedial purposes of the statute by the simple expedient of instituting a new action, thereby extinguishing the prior action, and leaving the discharged attorney without security (see, Morgan v Drewry, S. A. R. L., supra, at 5). Accordingly, we hold that Cohen’s rights attached when he commenced the State action and he is entitled to a statutory lien against the proceeds of the Federal action.

The question remaining is whether attorney Cohen lost his right to a contingent fee by failing to promptly elect that method of computing his fee. We conclude that petitioner is entitled to a percentage of the fee actually recovered by the Wertheimer firm based upon the pro rata share of the work the two attorneys performed in obtaining the recovery.

It is settled that a client may discharge an attorney at any time, with or without cause (Lai Ling Cheng v Modansky Leasing Co., 73 NY2d 454, 457; Matter of Montgomery, 272 NY 323, 326). As against the client, a discharged attorney may recover the "fair and reasonable value” of the services rendered (Matter of Montgomery, supra, at 326-327), determined at the time of discharge and computed on the basis of quantum meruit (id.; Reubenbaum v B. & H. Express, 6 AD2d 47, 48). Only if the client and attorney agree may the attorney receive a fee based on a percentage of the recovery (Lai Ling Cheng v Modansky Leasing Co., 73 NY2d, at 457-458; Reubenbaum, supra, at 48).

But when the dispute is between attorneys, as here, the rules are somewhat different. The discharged attorney may elect to receive compensation immediately based on quantum meruit or on a contingent percentage fee based on his or her proportionate share of the work performed on the whole case (Cheng, supra, at 458 [citations omitted]). That right can only be limited by waiver or operation of law.

When Cohen discovered that the Wertheimer firm had taken over the case, he notified it that he would seek his fee "at an appropriate time” but he did not state what method of computation he elected. The Wertheimer firm took no action then but it now contends that Cohen waived his right to a contingent fee by failing to promptly and explicitly set forth his election when he was discharged. Any other rule would be "unconscionable”, it asserts, because it would allow the discharged attorney to wait until the end of the litigation and claim a contingent fee when nothing remains contingent. The converse, however, is that requiring a discharged attorney who remains silent to accept a quantum meruit fee would provide a form of "insurance” by guaranteeing a fee, even if the underlying litigation was ultimately unsuccessful.

While no New York case has specifically ruled on the subject, we have held that an outgoing attorney’s assertion to an incoming attorney that the fee "would be 'determined at the conclusion of the litigation’ ” should be construed to mean that the outgoing attorney was opting to have the fee measured by a percentage of the recovery (Cheng, supra, at 459). While Cheng dealt with what type of election was made by the discharged attorney, it lends support to the idea that an attorney’s decision to put off payment is inconsistent with a demand for quantum meruit. Indeed, other cases have held that when a notice of substitution is involved, the discharged attorney should be compelled either to elect quantum meruit at the time of departure or to accept a contingent fee computed as a percentage of the recovery at the conclusion of the case (see, Podbielski v Conrad, 286 App Div 1040, 1041).

This presumption, that a contingent fee is desired if no election is made, follows logically. As a practical matter, quantum meruit valuation of services rendered by a discharged attorney can best be determined at the time of discharge, rather than some months or years later when the case finally ends, whereas the calculation of a contingent percentage fee is better left to the conclusion of the litigation "when the amount of the recovery and the relative contributions of the lawyers to it can be ascertained” (Cheng, supra, at 459). The presumption would also avoid the imposition of a quantum meruit fee if the litigation was unsuccessful.

Rather than adopt a hard and fast rule, we leave the determination of fees in these cases to the election of the departing attorney, as demonstrated by his or her conduct. Where an election is not made or sought at the time of discharge, the presumption should be that a contingent fee has been chosen. This result avoids both the problem of belated claims for compensation when proof of services rendered is hard to rebut and the inequity involved in allowing the discharged attorney to wait until the case is lost and then demand a fee measured quantum meruit. Our holding places the discharged attorney in the position of having to demand payment of a fixed sum at the time of discharge, or if he or she remains silent, of collecting payment only if the litigation proves successful and then on a contingency basis. Of course, if the parties are uncertain of their positions either may obtain a judicial determination of the fee at any time.

In this case, both the record and the presumption work in favor of attorney Cohen. First, Cohen never received notice of substitute counsel and can hardly be blamed for not making a timely election when he did not know against whom to assert his rights. Second, nothing in the record suggests that Cohen ever elected quantum meruit. Instead, when he found out that the Wertheimer firm had taken over the case, he indicated that he would seek his fee "at an appropriate time”. That wording is more indicative of an election to be paid a percentage of the recovery than to seek quantum meruit. Inasmuch as Cohen did not elect to receive compensation on a quantum meruit basis, he is entitled to receive a prorated share of the contingent fee paid the Wertheimer firm.

Accordingly, the order of the Appellate Division should be reversed, with costs, and matter remitted to Supreme Court, Richmond County, for further proceedings in accordance with this opinion.

Chief Judge Kaye and Judges Titone, Hancock, Jr., Bellacosa, Smith and Levine concur.

Order reversed, etc.


author: Chief Judge Kaye.

text:
    [623 NE2d 1, 603 NYS2d 280]
    The People of the State of New York, Respondent, v Jerome Walker, Appellant.
    Argued September 2, 1993;
    decided October 12, 1993

      POINTS OF COUNSEL

      Edward J. Nowak, Public Defender of Monroe County, Rochester (David Juergens of counsel), for appellant.
    The court below committed reversible error by holding that Jerome Walker’s 1983 New York conviction for larceny was a "predicate felony conviction” within the meaning of Penal Law § 70.06. (People v Oliver, 1 NY2d 152; People v Behlog, 74 NY2d 237; People v Bellinger, 269 NY 265; Matter of Gunning v Codd, 49 NY2d 495; Matter of Keogh v Wagner, 15 NY2d 569; Matter of Richetti v New York State Bd. of Parole, 300 NY 357; People v Morse, 62 NY2d 205; People v Pacheco, 73 AD2d 370, 53 NY2d 663; People v Bergos, 170 AD2d 611; People v Love, 71 NY2d 711.)

      Howard R. Relin, District Attorney of Monroe County, Rochester (Elizabeth Clifford of counsel), for respondent.
    The court below was correct in holding that defendant’s 1983 conviction for grand larceny was a "predicate felony conviction” within the meaning of Penal Law § 70.06. (People v Behlog, 74 NY2d 237; People v Ware, 148 Misc 2d 943; People v Catalanotte, 72 NY2d 641; People v Morse, 62 NY2d 205; People v Pacheco, 53 NY2d 663; People v Parker, 41 NY2d 21; People v Carter, 173 AD2d 631.)
   OPINION OF THE COURT

Chief Judge Kaye.

Should defendant be sentenced as a second felony offender when the first crime — which was a felony at the time of his first sentencing — has been reclassified as a misdemeanor by the time of his second felony offender sentencing? The Appellate Division answered this question in the affirmative, as do we.

In February 1984, in Monroe County, defendant was sentenced following a conviction for grand larceny, third degree, a class E felony, then defined as a theft of property valued in excess of $250 (Penal Law former § 155.30 [1]). The conviction was based on theft of a radio worth more than $250 but less than $1,000. Effective November 1, 1986, the statute was amended to increase the minimum value to $1,000, and renamed grand larceny, fourth degree (L 1986, ch 515, § 1). After the 1986 amendments, a theft of property below $1,000, in the absence of aggravating factors, became petit larceny, a class A misdemeanor (Penal Law § 155.25).

In November 1990 defendant was indicted on felony drug possession charges and later found guilty after trial. The People sought to have him sentenced as a second felony offender (see, Penal Law § 70.06), but the trial court declined, reasoning that the conduct for which he was sentenced as a felon in 1984 would constitute only a misdemeanor under existing law. On the People’s appeal, the Appellate Division reversed and remitted for resentencing as a second felony offender, concluding that defendant should not have the benefit of the 1986 amendments because his conviction was final before their effective date. A Judge of this Court granted defendant leave to appeal, and we now affirm.

To qualify as a predicate felony offense for purposes of sentence enhancement, a prior "conviction must have been in this state of a felony, or in any other jurisdiction of an offense for which a sentence to a term of imprisonment in excess of one year or a sentence of death was authorized and is authorized in this state irrespective of whether such sentence was imposed” (Penal Law § 70.06 [1] [b] [i]). Defendant urges that his 1984 conviction should not be considered a felony for present purposes because of (1) the language of the second felony offender statute, read with the definition of felony, (2) the doctrine of amelioration, and (3) equal protection principles. We disagree.

Statutory Language and History

Penal Law § 10.00 (5) defines felony as "an offense for which a sentence to a term of imprisonment in excess of one year may be imposed.” Under Penal Law § 70.06 (1) (b) (i), for a prior in-State conviction to constitute a predicate felony conviction, "[t]he conviction must have been in this state of a felony.” Defendant would weave these two statutes together to read that a predicate felony conviction "must have been in this state of an offense for which a sentence to a term of imprisonment in excess of one year may be imposed.”

Placing great emphasis on the verb "may,” defendant would have us hold that a prior in-State felony conviction may be deemed a predicate felony conviction for purposes of second felony offender determination only if the prior felony was for an act that is, at the time of second felony offender sentencing, punishable in New York by a term of imprisonment in excess of one year. Defendant’s argument for this strained construction of a provision clear on its face is unpersuasive.

Penal Law § 10.00 (5) is part of the generally applicable definition section of the Penal Law in which 18 terms are defined, all in the present tense, as is standard dictionary practice in defining words. There is no evidence that the Legislature’s use of the present tense here is anything more than an example of this practice.

It is a rule of construction that in the event of an apparent conflict between parts of a statutory scheme the specific overrides the general, and a word’s broad meaning may be restricted by other parts of the statute to which it relates (see, McKinney’s Cons Laws of NY, Book 1, Statutes § 113, at 235-238). Penal Law § 70.06 (1), defining "second felony offender,” is specifically applicable to the second felony offender statute at issue. There is no indication that the Legislature intended the general definition of "felony” to be incorporated into the specific definition of "second felony offender” in a manner that would contradict its plain meaning. On the contrary, a close reading of section 70.06 (1) indicates that the Legislature had no such intent.

The second felony offender statute of necessity addresses past events — previous criminal acts. The statute’s goal is to deter recidivism by enhancing the punishments of those who, having been convicted of felonies, violate the norms of civil society and commit felonies again. A retrospectivity, inherent in such a goal, is evident in the language of the statute: to be deemed a predicate felony conviction "[t]he conviction must have been in this state of a felony” (Penal Law § 70.06 [1] [b] [i] [emphasis added]). The Legislature’s definition in the second felony offender statute signals its intent to look to the time of the prior crime — and the law at that time — when considering whether the prior crime is a predicate felony for second felony offender purposes.

If the Legislature intended that prior in-State crimes be evaluated for second felony offender purposes in relation to the law at the time of the subsequent crime, it could have said so explicitly, as it did with respect to out-of-State crimes. To be considered a predicate felony conviction, a conviction in any jurisdiction other than New York State must have been "of an offense for which a sentence to a term of imprisonment in excess of one year or a sentence of death was authorized and is authorized in this state” (§ 70.06 [1] [b] [i] [emphasis added]). The contrast in language makes the legislative intent all the more plain.

Defendant’s reading of the legislative history is no more persuasive. When first passed in 1973, the statute did not include the phrase "and is authorized in this state” regarding out-of-State felonies (L 1973, ch 277, §9). Thus, a crime committed in a jurisdiction other than New York and punishable in that jurisdiction by death or imprisonment in excess of one year was deemed a predicate felony conviction in New York for purposes of second felony offender sentencing, even if the criminal act committed in the other jurisdiction was punishable by less than one year in prison under the Penal Law.

The statute was criticized as unduly harsh in instances where another State’s felony laws were substantially more severe than ours (People v Pacheco, 53 NY2d 663, 668 [Cooke, Ch. J., concurring]), and as possibly violative of equal protection principles (see, 1975 NY Legis Ann, at 64 [Mem of Assemblyman Arthur Eve]). Responding to these concerns, in 1975 the Legislature added the phrase "and is authorized in this state” to section 70.06 (1) (b) (i) (L 1975, ch 784, § 1) to remove this " 'purely arbitrary’ harshness * * * and to take what has been characterized as a 'fairer and more logical approach’ ” (Pacheco, 53 NY2d, at 668).

Where a statute is plain on its face, we need only apply it in accordance with its meaning. Given that the phrase "and is authorized in this state” was made applicable only to crimes committed in other jurisdictions, reclassification of an act from a felony to a misdemeanor would benefit only defendants whose previous felonies were committed in other jurisdictions. The Legislature could have avoided the distinction — and, of course, still can — by making the 1975 language generally applicable, but it instead left an unambiguous distinction in the statute which we are not free to ignore.

Ameliorative Nature of the Amendment

Defendant next argues that the 1986 amendment was ameliorative in nature, and should therefore be applied to the 1984 conviction.

When, between the time a person commits a criminal act and the time of sentencing, a criminal statute is repealed or a penalty reduced because of a changed view regarding the gravity of the crime, the amelioration doctrine dictates that the punishment standard at the time of sentencing should guide the sentence (People v Oliver, 1 NY2d 152). The doctrine is rooted in the view that where a reduction in the penalty for a crime indicates a legislative judgment that the lesser penalty adequately meets all the legitimate ends of the criminal law, imposing a harsher penalty would be an exercise in vengeance, which the law does not permit (Oliver, 1 NY2d, at 160).

We previously have recognized that the 1986 amendment to Penal Law § 155.30 (1) — the preamendment version of which was the basis for defendant’s 1984 conviction and sentence — is ameliorative in nature (People v Behlog, 74 NY2d 237). Defendant argues that the principles of Oliver, as applied in Behlog, require us now to evaluate his 1984 felony conviction by the standards of the 1986 amendment for second felony offender purposes. This argument misapprehends the amelioration doctrine.

Absent a constitutional violation, the validity and effect of a final judgment of conviction — which includes sentencing— are properly evaluated under "the law existing at the time the conviction was obtained or by subsequent law applicable to the judgment under principles of retroactivity” (People v Catalanotte, 72 NY2d 641, 644-645). When, prior to sentencing, the Legislature makes a judgment that the crime a defendant has committed warrants a lesser punishment, the defendant may be punished in accordance with the new standards because they represent society’s most up-to-date evaluation of the nature of his offense. However, the doctrine does not require reconsideration of final judgments under statutes that are later amended. Defendants whose cases are complete prior to the effective date of an ameliorative amendment have been properly evaluated under the standards of the criminal law in effect at the time of the proceedings against them (Oliver, 1 NY2d, at 163).

Defendant argues that his appearance before the court for sentencing as a second felony offender, after the 1986 amendment, revived his 1984 felony conviction for reconsideration by the court, thereby subjecting it to amelioration (see, Oliver, 1 NY2d, at 160). This is not so.

When a defendant is sentenced as a second felony offender, the initial felony case is not reopened, nor is defendant punished again for his initial crime. The initial case is, and remains, complete. Rather, the defendant is punished more for the second felony — solely the second felony — because recidivism evidences a lack of rehabilitation and a greater danger to society. As we have noted, "a sentence as a multiple offender 'is not to be viewed as either a new jeopardy or additional penalty for the earlier crimes. It is a stiffened penalty for the latest crime, which is considered to be an aggravated offense because a repetitive one’ ” (People v Morse, 62 NY2d 205, 217-218; see also, People v Parker, 41 NY2d, at 26).

Defendant’s sentencing as a second felony offender did not entail reevaluation of his initial conviction, nor is reevaluation warranted by the amelioration doctrine.

Equal Protection Principles

Defendant argues, finally, that his construction of the second felony offender statute is necessary to avoid an equal protection violation that would otherwise result from the disparate treatment of in-State and out-of-State felonies under Penal Law § 70.06 (1) (b) (i). While the statute does indeed treat these categories differently, there is no equal protection violation under the State or Federal Constitution.

"The equal protection clause does not mandate absolute equality of treatment but merely prescribes that, absent a fundamental interest or suspect classification, a legislative classification be rationally related to a legitimate State purpose” (People v Parker, 41 NY2d 21, 25). As there is neither a suspect class nor a fundamental right at issue here, the statute need only be supported by some rational basis to survive constitutional scrutiny.

In applying the rational basis test, we defer to the Legislature, which is presumed to know all facts that would support a statute’s constitutionality — a presumption which must be rebutted beyond a reasonable doubt. The Legislature’s actual purpose need not be apparent, for a statute is constitutional if rationally related to any conceivable legitimate State purpose (see, Maresca v Cuomo, 64 NY2d 242, 250-251).

An equal protection challenge to Penal Law § 70.06 (1) (b) (i), based on the same statutory categories raised by defendant here, came before this Court in 1981 (People v Pacheco, 53 NY2d 663). While the majority in Pacheco did not address the equal protection claim, because defendant lacked standing to raise it, three Judges in concurrence would have reached the merits and upheld the statute under both the State and Federal Constitutions (Pacheco, 53 NY2d, at 669-670). As the concurrence explained, New York has a legitimate interest in upholding the State’s Penal Law, and in furtherance of this interest it was not irrational for the Legislature to punish those who repeatedly violate New York’s criminal laws more harshly than those who have violated our laws but once. We find this reasoning persuasive, and the distinction drawn by section 70.06 (1) (b) (i) therefore rationally related to the legitimate State purpose of enforcing New York’s criminal laws.

Accordingly, the order of the Appellate Division should be affirmed.

Judges Simons, Titone, Hancock, Jr., Bellacosa and Smith concur; Judge Levine taking no part.

Order affirmed.

       In 1976, shortly after passage of the amendment, this Court upheld the preamendment second felony offender statute as not violative of the Equal Protection Clause of the State or Federal Constitution (People v Parker, 41 NY2d 21).