author: Wachtler, J. Jasen, J.

text:
    Oak Beach Inn Corp. et al., Appellants, v Babylon Beacon, Inc., Doing Business as Babylon Beacon Newspaper, et al., Respondents.
    Argued February 15, 1984;
    decided May 10, 1984

      POINTS OF COUNSEL

      Patrick Kevin Brosnahan, Jr., and Patricia S. Muhlrad for appellants.
    I. The “Shield Law” of the State of New York is not a barrier to the disclosure ordered by the trial court. (.People v Monroe, 82 Mise 2d 850; Matter of Andrews v Andreoli, 92 Mise 2d 410; People v Zagarino, 97 Mise 2d 181; Branzburg v Hayes, 408 US 665; New York Times Co. v Sullivan, 376 US 254; People v Cruz, 48 NY2d 419; People v Iannaccone, 112 Mise 2d 1057; People v Le Grand, 67 AD2d 446; Matter of Back [Beni Broadcasting}, 101 Mise 2d 490; Matter of Wolf v People, 69 Mise 2d 256, 39 AD2d 864.) II. The sanctions imposed by the court below were appropriate since defendants-respondents willfully violated an order for pretrial discovery crucial to plaintiffs-appellants’ cause of action. (Matter of Porter, 64 Mise 2d 1016; Katz v Travelers Ind. Co., 39 AD2d 516; Electorque Assoc, v Ar-verne Houses, 73 AD2d 682; Katz v Katz, 68 AD2d 536; Rodriguez v Sklar, 56 AD2d 537; Rosenberg v Trachtman, 103 Mise 2d 472; Bycel v Freeman, 95 Mise 2d 270; Feingold v Walworth Bros., 238 NY 446; People v Henriques & Co., 267 NY 398; Chapadeau v Utica Observer-Dispatch, 38 NY2d 196.)

      Bartholomew J. Rebore for respondents.
    I. The court should direct the entry of an order dismissing the complaint. (New York Times Co. v Sullivan, 376 US 254; James v Gannett Co., 40 NY2d 415; Rinaldi v Holt, Reinhart & Winston, 42 NY2d 369; Orr v Lynch, 60 AD2d 949, 45 NY2d 903; Trails West v Wolff, 32 NY2d 207; Greenberg v CBS, Inc., 69 AD2d 693; Kadish v Dressner, 86 AD2d 622; Di Lorenzo v New York News, 78 AD2d 669; Brown v Johnson Newspapers Corp., 84 AD2d 636.) II. The Shield Law of the State of New York is a barrier to disclosure. (Hennigan v Buffalo Courier Express Co., 85 AD2d 924; Matter of Superior Ct. ofN.J. [Jascalevich], 63 AD2d 903; Matter of Wolf v People, 69 Mise 2d 256, 39 AD2d 864; People v Marahan, 81 Mise 2d 637; People v Le Grand, 67 AD2d 446; People v Fischer, 41 AD2d 687.) III. Assuming, arguendo that New York State Shield Law does not apply, the balance of interests test protects respondent from disclosure. (Branzburg v Hayes, 408 US 665; Garland v Torre, 259 F2d 545, 358 US 910; Cervantes v Time, Inc., 464 F2d 986, 409 US 1125; Shultz v Readers Digest Assn., 468 F Supp 551; Schwartz v Time, Inc., 71 Mise 2d 769.) IV. The ultimate and severe sanctions imposed by Special Term were improper and an abuse of discretion. (Feingold v Walworth Bros., 238 NY 446; People v Henriques & Co., 267 NY 398; Láveme v Incorporated Vil. of Laurel Hollow, 18 NY2d 635.)
   OPINION OF THE COURT

Wachtler, J.

The question on this appeal is whether a newspaper, which has been sued for publishing an allegedly libelous letter to the editor, can be precluded from answering the complaint or making any defense to the suit if it refuses to disclose to the plaintiff the name of the person who wrote the letter. The trial court found the sanction appropriate for refusal to comply with its order directing the newspaper to satisfy plaintiff’s demand for disclosure of the letter writer’s identity. The Appellate Division reversed relying on section 79-h of the Civil Rights Law, popularly known as the Shield Law, which grants a journalist an exemption from being “adjudged in contempt” for refusing or failing to disclose the “source” of any particular news item. The Appellate Division also granted the plaintiffs leave to appeal to this court on a certified question as to the correctness of its order.

The Babylon Beacon is a weekly newspaper published on Long Island. Robert Matherson is the owner of the Oak Beach Inn which is also located on Long Island. In March of 1981 Matherson ran a paid advertisement in the paper in which he criticized local officials for failing to take action to protect the public from a dangerous curve on Montauk Highway. The advertisement was captioned “Let’s Stop The Slaughter On Our Highways”. On April 9, 1981 the newspaper published a letter to the editor accusing Math-erson of contributing to the problem and otherwise endangering the public safety in his management of the Oak Beach Inn. The letter alleged, for example, that obviously intoxicated persons were served alcoholic beverages at the Inn, that fire code violations were reported, and that the Inn and the adjacent parking lot were permitted to become dangerously overcrowded. This letter was printed under the caption “Hypocrisy Cited In O.B.I. Advertisement”. At the end of the letter the paper noted that the writer’s name had been “withheld upon request”.

In September of 1981 the plaintiffs commenced a libel action against the newspaper, its owner, and various members of the staff, claiming that the letter contained false statements which had been maliciously published by the defendants. Simultaneously the plaintiffs served a show cause order demanding that the defendants be compelled “pursuant to CPLR Sec. 3102(c)” to disclose “the name and last known address of the writer or writers” of the letter to the editor. In an affidavit attached to the show cause order plaintiffs contended that “knowledge of this matter is necessary in order for the plaintiffs to determine who to sue, pursuant to CPLR 3102(c)”. The defendants opposed the application claiming that the motion for disclosure was premature because issue had not been joined. The defendants also contended that the demand for disclosure raised “serious constitutional questions of freedom of speech and freedom of the press”. In reply plaintiffs observed that “CPLR 3102(c) permits an examination prior to commencement of an action for the purpose of identifying prospective defendants to plaintiffs’ contemplated suit”. The court granted the plaintiffs’ motion and directed defendants to furnish a copy of the letter to the plaintiffs.

The defendants then moved for reargument. They stated that it is the policy of the newspaper to require those who submit letters to the editor to provide their names, addresses and telephone numbers, if they wish the letters to be published. Defendants noted, however, that it was also the policy of the paper to print letters anonymously when, as in this case, the letter writer so requests. They argued that compelling disclosure of the letter writer’s identity under these circumstances would infringe the defendants’ First Amendment rights and would also violate section 79-h of the Civil Rights Law of this State. The court granted reargument but adhered to its original decision stating: “Civil Rights Law § 79-h, from a plain reading of its terms, does not prevent disclosure. What it does is eliminate contempt as a remedy for failure to comply with court-ordered disclosure. (See CPLR R.3124). Contempt aside, there are other remedies available. (See CPLR § 3126).”

When the defendants still refused to disclose the name of the letter writer, the plaintiffs moved to have them held in contempt for disobeying the court’s order which: “thereby deprived [plaintiffs] of their cause of action against the author of said letter”. This however was only requested “in the alternative”. The primary relief requested was an order, pursuant to CPLR 3126, striking the defendants’ answer and directing the entry of a default judgment against the defendants on the libel complaint. In support of their contention that this remedy was appropriate, the plaintiffs now urged that: “the information sought goes to the heart of the plaintiffs’ libel action. It is an essential element in plaintiffs’ proof of malice; and may conceivably reveal that defendant newspaper had no reliable source, or that his reliance upon this particular source showed a reckless disregard for the truth”. In response to this latter contention the defendants urged that there was “no need for the drastic remedy” of striking their answer because the defendants did not intend to make “affirmative use” of the anonymous letter writer in defending against the complaint. They stated that they intended to defend the suit completely on the basis of their own actions, “without relying on any of the investigation or underlying material that the source may or may not have used”.

The court held that the remedy of contempt is barred by section 79-h of the Civil Rights Law. The court also held, however, that the Shield Law “in no way inhibits the other remedies” specified in CPLR 3126, “which may be imposed upon a party for refusal to comply with an order directing disclosure”. Relying on CPLR 3126 (subd 3), the court ordered that the defendants’ answer be stricken and that the plaintiffs be permitted to move for summary judgment, or other appropriate relief, unless the defendants made the letter available for inspection within 15 days.

The Appellate Division granted a stay and then reversed. The appellate court noted that privileged material was exempt from discovery under CPLR 3101 (sübd [b]) and concluded that section 79-h of the Civil Rights Law established such a privilege for journalists with respect to their sources. The court observed that the latter statute only speaks in terms of shielding the journalist from contempt, but held that it “would be unduly restricted if journalists invoking the privilege were subjected to large monetary judgments in civil actions upon their refusal to reveal news sources simply because a contempt proceeding was not involved”. (92 AD2d, p 104.) The court also held that a letter to the editor qualifies as “news” within the meaning of the statute.

Although we agree with the Appellate Division that the order of the trial court should be set aside, we do so for different reasons.

The Shield Law was adopted in 1970 as section 79-h of the Civil Rights Law (L 1970, ch 615, § 1). The sponsor of the bill stated that it was intended to protect “newsmen from being held in contempt for refusing to disclose their news sources before a court inquiry, legislative hearing or any other body having contempt powers” and had been prompted by recent efforts made by Federal authorities to subpoena journalists in order to obtain evidence which could later be used in criminal prosecutions (see NY Legis Ann, 1970, pp 33-34). When the Governor signed the bill he also noted that it “protects journalists and newscasters from charges of contempt” and observed that the “threat to a newsman of being charged with contempt and of being imprisoned for failure to information or its sources can significantly reduce his ability to gather vital information” by cutting off “valuable sources of information” (see NY Legis Ann, 1970, p 508).

By its terms the statute expressly provides for “Exemption of professional journalists and newscasters from contempt” (Civil Rights Law, § 79-h, subd [b]). Subsequent amendments have clarified and broadened the statute in some respects (see L 1975, ch 316, § 1; L 1981, ch 468, §§ 1-3). However, the Legislature has never established ah absolute right or granted journalists complete immunity from all legal consequences of refusing to disclose evidence relating to a news source. At the time of these proceedings the relevant portion of the statute provided that “no professional journalist or newscaster * * * shall be adjudged in contempt by any court, the legislature or other body having contempt powers, nor shall a grand jury seek to have a journalist or newscaster held in contempt by any court, legislature or other legislative body having contempt powers for refusing or failing to disclose any news or the source of any such news” (Civil Rights Law, § 79-h, subd [b]).

Contempt is the traditional remedy employed by public bodies against those who have refused to comply with orders to testify or disclose information. It usually involves imprisonment, a fine or both (see, e.g., CPLR 2308; Judiciary Law, § 753). It is considered a drastic measure (see Siegel, Practice Commentaries, McKinney’s Cons Laws of NY, Book 7B, CPLR C3126:4) and often is defined and prosecuted as a criminal offense (see Penal Law, §§ 215.50, 215.60, 215.65; Judiciary Law, § 750, subd A, pars 3, 5, 7). The sanctions authorized by CPLR 3126 and its predecessors were designed to provide a court with alternative, less drastic, means to enforce disclosure in civil cases (see Feingold v Walworth Bros., 238 NY 446; Siegel, op. cit., C3126:4). A person against whom these sanctions are properly employed cannot be said to have been held or adjudged in contempt (see Feingold v Walworth Bros., supra). Indeed contempt is not a penalty enumerated in CPLR 3126 and a court must resort to other more general provisions of the law in the rare instances where it may be necessary to hold a person in contempt for failure to make disclosure in a civil case (see Siegel, op. cit., C3126:l, C3126:3, C3126:4).

The Shield Law’s unqualified immunity from contempt granted to journalists who refuse to disclose their sources, would preclude a court from employing that remedy against such a journalist in a civil case, even in those rare instances where it might otherwise be considered the only appropriate or effective remedy. However, the statutory “[e]xemption * * * from contempt” cannot be fairly read to general exemption from the sanctions authorized by CPLR 3126, most of which function to prevent a party who has refused to disclose evidence from affirmatively exploiting or benefiting from the Unavailability of the proof during the pending civil action.

Of course, if fully utilized some of those sanctions, such as the power of the court to strike pleadings (CPLR 3126, subd 3) may be only theoretically less drastic than contempt in a particular case. A newspaper involved in a substantial libel action may well find the threat of contempt less intimidating than the thought of being entirely stripped of its defenses if it continues to preserve the confidentiality of its source. This type of practical consideration should be taken into account whenever CPLR 3126 is invoked against a newspaper or journalist for failure to disclose a source in a civil case. The consequences of nondisclosure imposed pursuant to the CPLR should not create new obstacles to newsgathering or undermine the strong legislative policy expressed in the Shield Law. The general rule, that the demanding party should not be granted more relief for nondisclosure than is reasonably necessary to protect legitimate interests (Feingold v Walworth Bros., supra), should be applied with special force in cases involving nondisclosure of sources by newspapers and journalists.

In this case there was no need for the court to strike the defendants’ answer and thus subject them to a default or summary judgment on the libel complaint. To the extent, as the plaintiffs belatedly contend, the defendants’ refusal to identify the letter writer may deprive them of evidence relevant to the issue of malice, other remedies are available. CPLR 3126 broadly permits a court to make such orders “as are just” including an order prohibiting the noncomplying party from “supporting or opposing designated claims”, or introducing evidence on a particular point (subd 2). Relief of this nature should adequately protect the plaintiffs’ interests without intolerably burdening the newspaper. Indeed, as indicated, the publication agreed to accept such a limitation in defense of the suit by stating its willingness to defend that allegation of malice by relying on proof of its own independent investigation, without placing any reliance on its source. The court should have limited its order accordingly. A newspaper should not be required to accept substantial financial loss as the price for continuing to honor a commitment to maintain the confidentiality of one of its sources.

To the extent the plaintiffs demand disclosure of the letter writer’s identity in order to commence a suit against the author, which was the original basis for the demand, the sanctions authorized by CPLR 3126 are not available. That request has no bearing on the plaintiffs’ action against these defendants. In fact the information was not requested by notice or stipulation pursuant to CPLR 3102 (subd [b]) which prescribes the “normal method” for disclosure between parties to a pending suit. It was sought pursuant to CPLR 3102 (subd [c]) which provides for disclosure “[b]efore an action is commenced * * * to aid in bringing an action” by, for instance, supplying the name of a potential defendant (see Siegel, Practice Commentaries, McKinney’s Cons Laws of NY, Book 7B, CPLR C3102:4). This permits disclosure between persons who are not parties to a suit for which the evidence is requested when, as here, a court order is obtained (CPLR 3102, subd [c]). Against a nonparty the appropriate and only effective remedy generally is contempt (Siegel, op. cit., C3126:l; First Prelim of Advisory Comm on Practice and Procedure, NY Rep, Legis Doc, 1957, No. 6[b], p 160). The alternative sanctions available under CPLR 3126 apply exclusively to a “party, or a person who at the time a deposition is taken or an examination or inspection is made, is an officer, director, member, employee or agent of a party or otherwise under a party’s control” (see, also, Siegel, op. cit., C3126:4).

Holding the defendants in contempt for failure to supply the information necessary to commence a suit against the letter writer is prohibited by the Shield Law. Use of alternative sanctions pursuant to CPLR 3126 should also be precluded, not only because the plaintiffs treated these defendants as nonparties when they obtained the discovery order to aid the contemplated suit, but because the basic policy of the Shield Law would be undermined if CPLR 3126 were not strictly read to accord journalists that status under these circumstances. As indicated above, the theory behind the Shield Law is that many valuable sources of news will be lost if journalists can be compelled on threat of contempt to reveal their sources in public forums, thus exposing them to legal, and possibly illegal, risks. This policy would be subverted if the alternatives to contempt authorized by CPLR 3126 could be invoked solely to coerce a newspaper into exposing its source to a potential civil suit for damages.

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

Jasen, J.

(dissenting). Although the majority concedes, as it must, that the sole purpose of the Shield Law is to protect journalists from charges of contempt and that this statutory “ ‘[e]xemption * * * from contempt’ cannot be fairly read to include general exemption from the sanctions authorized by CPLR 3126”, it, nevertheless, refuses to enforce the trial court’s disclosure order or to affirm that court’s order conditionally striking defendants’ answer unless defendants disclose to plaintiffs the identity of the letter writer. Because I do not believe the trial court abused its discretion in imposing a sanction specifically authorized by CPLR 3126 (subd 3), I respectfully dissent and vote to reverse the order of the Appellate Division.

Preliminarily, I note my complete agreement with the majority that section 79-h of the Civil Rights Law was enacted solely to protect journalists from being held in contempt for refusing to disclose the source of any particular news item. (NY Legis Ann, 1970, pp 33-34, 508.) I also agree that “the Legislature has never established an absolute right or granted journalists complete immunity from all legal consequences of refusing to disclose evidence relating to a news source” (majority opn, p 165) and that the Shield Law “cannot be fairly read to include general exemption from the sanctions authorized by CPLR 3126” (p 166). Thus, the majority today correctly eschews reliance upon the reasoning of the Appellate Division. Indeed, to hold otherwise would be to engage in a flagrant exercise of judicial legislation whereby journalists would be cloaked with absolute immunity from having to disclose the source of news reports. While it may be that such a law is desirable, the fact remains that the Legislature, which in our scheme of separation of powers is the body charged with making such determinations, has decided otherwise.

Notwithstanding the clear intent of the Shield Law not to exempt journalists from the sanctions authorized by CPLR 3126, the majority affirms the order of the Appellate Division upon the ground that the sanction imposed by the trial court — striking defendants’ answer — was unnecessary because the defendants agreed “to defend th[e] allegation of malice by relying on proof of its own independent investigation, without placing any reliance on its source.” It is with this reasoning, offered without supporting authority, that I cannot agree.

In seeking enforcement of the court’s disclosure order, plaintiffs asserted that “the information sought goes to the heart of the plaintiffs’ libel action. It is an essential element in plaintiffs’ proof of malice; and may conceivably reveal that defendant newspaper had no reliable source, or that [its] reliance upon this particular source showed a reckless disregard for the truth.” Although the importance to plaintiffs of learning the author’s identity could not then and cannot now be seriously disputed, the disobedient defendants blithely replied that there was “no need” to strike the answer because they did not intend to make “affirmative use” of the anonymous author’s name in defending the action. However, defendants’ novel suggestion that they may control the course of plaintiffs’ lawsuit by dictating what plaintiffs may discover, simply stating that they do not intend to rely on certain information which is of great importance to plaintiffs’ case, in preparing their defense and thereby preclude plaintiffs from obtaining that information, is outrageous. Not only is such a rule grossly unfair to the innocent plaintiffs here, but it also ignores well-settled principles governing discovery procedures and distorts the adversarial process.

CPLR 3101 (subd [a]) makes clear what information may be obtained by parties to a lawsuit: “There shall be full disclosure of all evidence material and necessary in the prosecution or defense of an action, regardless of the burof proof”. (Emphasis supplied.) We have consistently construed the discovery provisions of the CPLR liberally “to require disclosure ‘of any facts bearing on the controversy which will assist [parties’] preparation for trial’”. (Cynthia B. v New Rochelle Hosp. Med. Center, 60 NY2d 452, 461, quoting from Allen v Crowell-Collier Pub. Co., 21 NY2d 403, 406.) There can be no doubt that the identity of the letter writer in the case before us is relevant to the issue of malice. Indeed, plaintiffs’ ability to satisfy the standard set forth in New York Times Co. v Sullivan (376 US 254) by proving that defendants acted with actual malice in publishing the letter may well turn upon their learning the identity and, insofar as known, the motivation of the author.

Inasmuch as the information sought is relevant to the subject controversy and will assist plaintiffs in preparing for trial, it is discoverable pursuant to CPLR 3101 (subd [a]) and, as the majority concedes, the trial court correctly ordered disclosure. Thus, by wrongfully refusing to comply with the disclosure order the defendants subjected themselves to the penalties set forth in CPLR 3126 even though, by virtue of the Shield Law, they could not be held in contempt. The majority concedes this fact as well.

My departure from the majority, therefore, concerns the proper sanction to be imposed upon defendants for wrongfully refusing to comply with the court’s disclosure order. While we all agree that first and foremost the sanction imposed upon the disobedient defendants must adequately protect the plaintiffs’ interests (Feingold v Walworth Bros., 238 NY 446), the majority, without holding that the trial court abused its discretion in striking defendants’ answer pursuant to CPLR 3126 (subd 3), believes a different remedy, presumably less drastic, should have been imposed pursuant to CPLR 3126. However, a brief glimpse at the alternative sanction which the majority would impose — precluding defendants from “ ‘supporting or opposing designated claims’, or introducing evidence on a particular point” (CPLR 3126, subd 2) (majority opn, p 167) — reveals that it is no sanction at all and does nothing to protect plaintiffs’ interests in obtaining lawfully discoverable information such as the identity of the letter writer.

The majority would allow defendants to defy the lawful disclosure order and to deprive plaintiffs of important discoverable information simply because defendants promised not to use the information in preparing their defense. Furthermore, the sanction the majority favors would be meaningless because there would be no need for defendants to introduce evidence on the issue of malice if plaintiffs were prevented from obtaining information — the letter writer’s identity — essential to the preparation of their case. Indeed, depriving plaintiffs of the information they seek and which this court agrees is discoverable will effectively sound the death knell for plaintiffs’ lawsuit. It is not surprising, therefore, that defendants themselves suggested such a sanction as an alternative to disclosure, for to allow this would be to effectively preclude a plaintiff from ever successfully prosecuting a defamation action against journalists. A rule which compels such a result should come from the Legislature, not this court.

To be distinguished from this case is a situation such as that in Feingold v Walworth Bros. (238 NY 446, supra). In that case, plaintiff sought discovery of documents necessary to establish the value of the corporate stock of which he alleged he was defrauded by defendants. Plaintiff claimed it was worth $200,000, while defendants pegged its value at $20,000. Since plaintiff sought the disputed records solely for purposes of proving the stock was worth $200,000, this court held that an order precluding defendants from asserting a claim that the value of the stock was less than $200,000, rather than an order striking defendants’ answer, was the appropriate sanction. The court correctly reasoned that the more limited sanction was adequate to fully protect plaintiff’s interest in securing the documents he requested and that a harsher penalty would exceed the court’s power to punish defendants for failing to obey an order of disclosure. By sharp contrast, the sanction the majority would impose in the instant case would not begin to protect plaintiffs’ interests.

Accordingly, I would reverse the order of the Appellate Division and reinstate the order of Supreme Court.

Chief Judge Cooke and Judges Jones, Meyer, Simons and Kaye concur with Judge Wachtler; Judge Jasen dissents and votes to reverse in a separate opinion.

Order affirmed, with costs. Question certified answered in the affirmative.

       That does not mean, as the dissent states, that the defendants “may control the course of plaintiffs’ lawsuit by dictating what plaintiffs may discover”. We simply note that the concession made by the defendants in this case appears to provide reasonable protection to the plaintiffs, who have not contended otherwise or proposed any alternative sanction which would more adequately assist them in pursuing their suit without knowledge of the source’s identity. The plaintiffs have simply taken the position that any failure on the part of the defendants to make full disclosure of every item “reasonably” demanded, should entitle the plaintiffs to obtain a default judgment.

         By way of illustration, consider the following hypothetical situation: the anonymous letter writer was a reporter for the defendant newspaper who harbored a widely known personal animosity toward the proprietors of the Oak Beach Inn and who had publicly declared long ago that he would some day make trouble for plaintiffs. Clearly, the letter writer’s identity would be relevant and extremely important to plaintiffs in helping them to prove that defendants acted with malice or in reckless disregard for the truth in publishing the allegedly defamatory letter. However, under the majority’s reasoning, plaintiff would never learn the author’s identity simply because defendants wrongfully refused to disclose it. Worse yet, the trial court would be powerless to order the defendants’ answer stricken pursuant to CPLR 3126 (subd 3) because defendants promised not to make “affirmative use” of the author’s identity in preparing their defense. Such a rule finds no support in the statutes, case law or logic.


source: Caselaw Access Project

author: Jones, J.

license: Public Domain

text:
    Retail Shoe Health Commission, Plaintiff, and Jack Maltz et al., as Trustees of Retail Shoe Health Commission, Appellants, v Charles G. Reminick et al., Individually and Doing Business as Reminick, Aarons & Company, Defendants. Charles G. Reminick et al., Individually and Doing Business as Reminick, Aarons & Company, Third-Party Plaintiffs-Respondents, v Jack Maltz et al., Third-Party Defendants-Appellants; Tolley International Corporation, Third-Party Defendant-Respondent, et al., Third-Party Defendants.
    Argued March 28, 1984;
    decided May 17, 1984

      POINTS OF COUNSEL

      Arthur D. Felsenfeld and Martin I. Shelton for appellants.
    The courts of this State lack subject matter jurisdiction to adjudicate claims based on alleged breaches of duty by trustees of an employee benefit plan covered by ERISA. (Alessi v Raybestos-Manhattan, Inc., 451 US 504; Nach-man Corp. v Pension Benefit Guar. Corp., 446 US 359; Malone v White Motor Corp., 435 US 497, 444 US 911; Hotel & Rest. Employees & Bartenders Int. Union v Dan-zinger, 709 F2d 815; Stone & Webster Eng. Corp. v Ilsley, 690 F2d 323; Delta Air Lines u Kramarsky, 650 F2d 1287, 666 F2d 21; Marshall v Snyder, 430 F Supp 1224, 572 F2d 894; Hewlett-Packard Co. v Barnes, 425 F Supp 1294, 571 F2d 502, 439 US 831; Morrissey v Curran, 567 F2d 546; Marshall v Chase Manhattan Bank, 558 F2d 680.)

      Andrew R. Simmonds, Robert E. Meshel and William M. Ried for Charles G. Reminick and others, third-party plaintiffs-respondents.
    The court below correctly upheld its subject matter jurisdiction over the third-party action for indemnity and/or indemnification. (Smith v Sapienza, 52 NY2d 82; Malone v White Motor Co., 435 US 497; Retail Clerks v Schermerhorn, 375 US 96; Young v Sheet Metal Workers', 112 Mise 2d 692; Alessi v Raybestos-Manhattan, Inc., 451 US 504; Dole v Dow Chem. Corp., 30 NY2d 143; Kelly v Long Is. Light. Co., 31 NY2d 25; United States Fid. & Guar. Co. v Franklin, Mise 2d 506, 43 AD2d 844; Stone v Stone, 450 F Supp 919; Cornell Mfg. Co. v Mushlin, 70 AD2d 123.)

      Dorit S. Heimer and Peter N. Wang for Tolley International Corporation, third-party defendant-respondent.
    The New York State court has subject matter jurisdiction over Tolley’s claims. (.Hibernia Bank v International Brotherhood of Teamsters, 411 F Supp 478; McNeil v Suffolk County Painters, 431 F Supp 387; National Bank v Local 553 Pension Fund, 463 F Supp 636; Alessi v Raybestos-Manhattan, Inc., 451 US 504; Cornell Mfg. Co. v Mushlin, 70 AD2d 123; American Tel. & Tel. Co. v Merry, 592 F2d 118; Cody v Riecker, 454 F Supp 22, 594 F2d 314; Stone v Stone, 450 F Supp 919, 632 F2d 740, cert den sub nom. Carpenters Pension Trust v Stone, 453 US 922; Matter of Pardee v Operating Engrs. Pension Trust, 408 F Supp 666; Cogollos v Cogollos, 93 Mise 2d 406.)
   OPINION OF THE COURT

Jones, J.

The pre-emptive provisions of ERISA govern the judicial determination of breach of fiduciary duty claims against the trustees of an employee welfare benefit plan within the embrace of that Act and preclude actions in State courts for the enforcement of such claims. Accordingly, where such a plan has brought an action in our State courts against its accountants and consultants for their alleged failure to detect and report substantial misappropriations by the administrator of the plan, our courts are foreclosed from entertaining claims over by the accountants and consultants against the individual trustees of the plan for contribution or indemnity based on allegations that breach of their fiduciary duties by the trustees contributed to the losses sustained by the plan.

In the initial action, Retail Shoe Health Commission, a collectively bargained, multiemployer, jointly administered Welfare Fund (Fund), and the individual trustees of the Fund sought to impose liability on Reminick, Aarons & Company, a partnership, and its individual partners on the theory that as public accountants and auditors of the Fund they had failed and neglected to detect and report the misappropriation by Jerome Simon, the administrator of the Fund, of some $675,000 of Fund assets. Reminick then served a third-party complaint against the trustees individually and Tolley International Corporation (which had been engaged by the Fund to provide actuarial and consulting services), seeking judgment over by way of contribution or indemnity or both. Tolley thereupon served counterclaims against Reminick, the Fund and the trustees individually as well as a cross claim against the trustees individually, all similarly seeking contribution or indemnification or both.

The individual trustees moved to dismiss the third-party complaint of Reminick and the counterclaim and cross claim of Tolley on the ground that the court lacked subject matter jurisdiction of the claims and that Tolley lacked standing to sue. The theory of the motion to dismiss was that the various claims against the individual trustees were governed and controlled by the provisions of the Employee Retirement Income Security Act of 1974 (ERISA, 88 US Stat 829, US Code, tit 29, § 1001 et seq.) and that dismissal was mandated to give effect to the resulting Federal pre-emption.

Supreme Court denied the motion to dismiss, holding that ERISA does not pre-empt State law when a vital State interest is involved and is tangential to the employee benefit plan and that the stated causes of action for contribution and indemnification came within such exception. The Appellate Division affirmed, without opinion, and granted the individual trustees leave to appeal to our court on a certified question. We reverse.

Inasmuch as it is undisputed that the Fund is an employee welfare benefit plan within the embrace of ERISA (ERISA, § 3, subd [1], US Code, tit 29, § 1002, subd [1]), resolution of the issues posed on this appeal turns on the effect the provisions of ERISA have on the claims here sought to be dismissed.

We start with the ineluctable premise that the Federal law pre-empts State regulation of ERISA employee benefit plans. The Act provides expressly that its provisions shall supersede all State laws insofar as they may relate to any employee benefit plan within its embrace. The individual trustees are fiduciaries within the meaning of subdivision (21) of section 3 of ERISA (US Code, tit 29, § 1002, subd [21]) and the gravamen of the claims of both Reminick and Tolley against them is breach of fiduciary duties (i.e., that the trustees should have known of the embezzlements and defalcations of Simon, that they permitted and condoned his misconduct, that by acts of omission and commission they participated in that misconduct, that they breached their obligation to report such misconduct, and in general that they are liable in consequence of breaches of duty, want of due care, and other fault). As a matter of substantive law, the nature and scope of the duties and liability of the trustees in this regard are determinable under the provisions of ERISA (e.g., ERISA, §§ 404, 405, 409, US Code, tit 29, §§ 1104, 1105, 1109). It is substantive claims of just this character that fall squarely within the scope and thus the of ERISA.

The question then arises as to whether these claims may be asserted in a State court action such as the present. Here again, it is the provisions of ERISA which are determinative. Subdivision (e) of section 502 of ERISA (US Code, tit 29, § 1132, subd provides that the District Courts of the United States shall have exclusive jurisdiction over civil actions arising under ERISA (with an exception not now pertinent). Accordingly, we are obliged to conclude that the present claims asserted by Reminick and Tolley against the trustees may not be entertained in our State courts.

Reminick and Tolley argue that because they do not come within the literal terms of subdivision (a) of section 502 of ERISA, which lists the persons empowered to bring a civil action under the Act, the Congress cannot have intended that ERISA would preclude their claims. This argument is wide of the mark. Inasmuch as ERISA preempts all claims based on alleged breach of fiduciary duty on the part of ERISA trustees and vests jurisdiction for their enforcement exclusively in the Federal courts, the circumstance that persons in the outboard position of Re-minick and Tolley may have no statutory standing to bring such an action under the Federal regulatory scheme is merely an aspect of that scheme. If there is a deficiency or inequity in the scope of subdivision (a) of section 502, it is attributable to the Act itself and any petition for remedy or correction must be addressed to the Congress.

The same response must be made to the arguments of Reminick and Tolley that they are entitled to assert their claims for contribution and indemnity under State law (e.g., CPLR art 14; Dole v Dow Chem. Co., 30 NY2d 143) in our State courts. The State laws in this regard, too, have been superseded and the claims pre-empted under ERISA (cf. Michota v Anheuser-Busch, Inc., Nos. 76-193, 77-2543 [DCNJ, decided Oct. 7, 1983, unpublished opn]).

Finally, Tolley argues that there should at least be no dismissal of its claims against the individual trustees to the extent that they arise out of transactions which took place prior to January 1,1975, the effective date of ERISA. It is accurate to say, of course, that ERISA pre-emption does not apply with respect to any act or omission which occurred prior to that date (ERISA, § 514, subd [b], par [1], US Code, tit 29, § 1144, subd [b], par [1]). Tolley did not, however (nor did the Fund and the individual trustees in the initial action) plead claims based on pre-1975 transactions separately or seek discrete relief with respect thereto; Tolley’s pleading of all claims is lumped in a single cause of action which must stand or, in this instance, fall as a unit. Nevertheless, our dismissal of Tolley’s pleadings now before us is without prejudice to the right of Tolley, if it be so advised, to apply at Supreme Court for leave to replead to state separately claims it would assert based on acts and omissions that occurred prior to January 1, 1975.

For the foregoing reasons the order of the Appellate Division should be reversed, with costs, the motion of the individual trustees granted, and the counterclaim, the cross claims, and the third-party complaint against them dismissed, without prejudice to the right of Tolley to apply for leave to replead as indicated.

Assuming the truth of respondents’ allegations, as we must on this motion to dismiss, the result reached by the court allows the trustees to escape responsibility for losses due in whole or in part to their own derelictions, and leaves respondents with a potential massive liability and no effective remedy against plaintiffs who are also wrongdoers. I do not believe that ERISA requires this unpalatable result, and therefore would affirm the order below.

ERISA allows a civil action to be brought by the Secretary of Labor or a participant, beneficiary or fiduciary (US Code, tit 29, § 1132, subd [a]) and in such actions it provides for exclusive Federal jurisdiction: “Except for actions under subsection (a)(1)(B) of this section, the district courts of the United States shall have exclusive jurisdiction of civil actions under this subchapter brought by the Secretary or by a participant, beneficiary, or fiduciary” (US Code, tit 29, § 1132, subd [e], par [1]). A pivotal assumption underlying the majority’s holding is that respondents’ claims are barred because they are not within the classes of persons authorized to bring a civil action under ERISA. But a claim for relief is not necessarily pre-empted or extinguished because the initiating party falls outside the enumerated categories of subdivision (a) of section 1132. (See Franchise Tax Bd. v Construction Laborers Vacation Trust, 463 US 1.)

Nor is the provision for exclusive Federal jurisdiction a bar to entertaining respondents’ claims. First, that provision applies, by its own terms, only to actions brought by the enumerated persons, which do not include respondents. Second, it is well established that even where statutes preempt State law and provide for exclusive Federal jurisdiction State courts may, applying Federal law, decide issues necessary to the resolution of State causes of action (Hathorn v Lovorn, 457 US 255, 266, n 18; Pan Amer. Corp. v Superior Ct., 366 US 656, 664-665). Though the exclusive jurisdiction provision of ERISA might prohibit the commencement of a State court action seeking affirmative relief against the trustees for their derelictions as trustees, it still would not prevent the State court from considering such questions when they are part and parcel of defenses to a cause of action premised on State law. (See, e.g., Weiner v Shearson, Hammill & Co., 521 F2d 817; Shareholders Mgt. Co. v Gregory, 449 F2d 326; Birenbaum v Bache & Co., 555 SW2d 513 [Tex]). The same rationale should apply here. Sustaining respondents’ claims against the trustees would not alter substantive rights created by ERISA or disturb any allocation of responsibility among employers subject to ERISA (Michota v Anheuser-Busch, Inc., Nos. 76-193, 77-2543 [DCNJ, decided Oct. 7, 1983, unpublished opn]), but would simply allow respondents to maintain apportionment claims in one action, as is common in tort cases in the State courts.

Since the result reached by the courts below complied with the State law and transgressed no overriding Federal interest, I vote to affirm.

Judges Jasen, Meyer and Simons concur with Judge Jones; Judge Kaye dissents and votes to affirm in a separate opinion in which Chief Judge Cooke and Judge Wachtler concur.

Order reversed, with costs, motion of the individual trustees granted, and the counterclaim, cross claims and third-party complaint against them dismissed, without prejudice to the right of Tolley International Corporation to apply for leave to replead as indicated in the opinion herein. Question certified answered in the negative.

      . ERISA (§ 514, subd [a], US Code, tit 29, § 1144, subd [aD provides in pertinent part:
      “(a) * * * [T]he provisions of this subchapter and subchapter III of this chapter shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan * * *

        “(c) For purposes of this section:
      “(1) The term ‘State law’ includes all laws, decisions, rules, regulations, or other State action having the effect of law, of any State.”

      . This provision reads as follows:
      “(e)(1) Except for actions under subsection (a)(1)(B) of this section [actions by a participant or beneficiary to recover benefits or to enforce rights under the plan, see n 3, infra], the district courts of the United States shall have exclusive jurisdiction of civil actions under this subchapter brought by the Secretary or by a participant, beneficiary, or fiduciary. State courts of competent jurisdiction and district courts of the United States shall have concurrent jurisdiction of actions under subsection (a)(1)(B) of this section.
      “(2) Where an action under this subchapter is brought in a district court of the United States, it may be brought in the district where the plan is administered, where the breach took place, or where a defendant resides or may be found, and process may be in any other district where a defendant resides or may be found.”

      . ERISA (§ 502, subd [a], US Code, tit 29, § 1132, subd [a]) provides in relevant part:
      “Persons empowered to bring civil action
      “(a) A civil action may be brought —
      “(1) by a participant or beneficiary —
      “(2) by the Secretary, or by a participant, beneficiary or fiduciary for appropriate relief under section 1109 of this title;
      “(3) by a participant, beneficiary or fiduciary (A) to enjoin any act or practice which violates any provision of this subchapter or the terms of the plan, or (B) to obtain other appropriate equitable relief (i) to redress such violations or (ii) to enforce any provisions of this subchapter or the terms of the plan;
      “(4) by the Secretary, or by a participant, or beneficiary for appropriate relief in the case of a violation of 1025(c) of this title”.

       Appellants have not sought to strike respondents’ affirmative defense, which thus remains part of the action, raising the very issues this court concludes are beyond the jurisdiction of the State court.


author: Jasen, J. Simons, J.

text:
    In the Matter of Robert Abrams, as Attorney-General of the State of New York, Respondent. John Anonymous et al., Appellants.
    Argued February 22, 1984;
    decided May 15, 1984

      POINTS OF COUNSEL

      Roy R. Kulcsar for appellants.
    I. Since the Attorney-General’s office lacks jurisdiction pursuant to section 399-n of article 26-A of the General Business Law to conduct a general, “in-house,” criminal investigation into the possible acceptance of unlawful gratuities by box office employees of the sports arena, the subpoenas issued to the individual appellants herein must be quashed. (People v Boulet, 88 Mise 2d 353; Matter of District Attorney of Suffolk County, 58 NY2d 436.) II. That portion of the order of Justice Alexander, as affirmed by the court below, which bars “John Anonymous” from any further representation of or rendering of legal assistance to any of the individual respondents-appellants, in connection with the Attorney-General’s investigation into the practices of the arena’s box office personnel should and indeed must be reversed. CMat-ter of Taylor, 567 F2d 1183; Matter of Investigation Before April 1975 Grand Jury, 531 F2d 600; Abraham v United

      States, 549 F2d 236; United States v Armedo-Sarmiento, 524 F2d 591; Matter of Grand Jury, 446 F Supp 1132; People v Doe, 98 Mise 2d 805.) III. Since the order of Justice Alexander entered on May 25, 1982 expressly denies an application to quash a subpoena, it is appealable and the application of petitioner-respondent before the court below seeking to dismiss the instant appeal was correctly denied. {Matter of Santangello v People, 38 NY2d 536; Matter of Boikess v Aspland, 24 NY2d 136; Matter of Inter-City Assoc. [People], 308 NY 1044; Matter of Ryan [Hogan], 306 NY 11; People v Doe, 247 App Div 324, 272 NY 473; Matter of Herlands v Surpless, 282 NY 647; Matter of La Belle Creole Int. v Attorney-General of State ofN. Y., 10 NY2d 192; Matter of Sun-Ray Cloak Co., 256 App Div 620.) IV. Since the order of Justice Alexander appealed from, which bars respondent-appellant-attorney from rendering any further legal representation or legal assistance to the individually named respondents-appellants in connection with the Attorney-General’s investigation, is an appeal-able order, the application of the Attorney-General’s office before the court below seeking to dismiss the appeal was correctly denied. {Matter of Investigation Before April 1975 Grand Jury, 531 F2d 600; Cohen v Beneficial Loan Corp., 337 US 541; Carroll v United States, 354 US 394; Arizona v Manypenny, 451 US 232; Matter of Santangello v People, 38 NY2d 536; Hull v Celanese Corp., 513 F2d 568; Draganescu v First Nat. Bank, 502 F2d 550; Richardson v Hamilton Int. Corp., 469 F2d 1382, 411 US 986; United States vHankish, 462 F2d 316.)

      Robert Abrams, Attorney-General {Howard W. Newman and Peter H. Schiff of counsel), for respondent.
    I. There being no statutory authority for direct appellate review, the order of Criminal Term is not appealable; the appeal to this court should be dismissed and the case remitted to the court below with a direction to dismiss the appeal taken to that court. {Matter ofKavanagh v Vogt, 88 AD2d 1049, 58 NY2d 678; Matter ofAlphonso C. [Morgenthau], 50 AD2d 97, 38 NY2d 923; Matter of Santangello v People, 38 NY2d 536; Matter of State of New York v King, 36 NY2d 59; Matter of Hynes v Karassik, 47 NY2d 659; Matter of Abe A., 56 NY2d 288; Matter of Brunswick Hosp. Center v Hynes,
      52 NY2d 333; People v De Jesus, 54 NY2d 447; Matter of Merola v Walsh, 75 AD2d 163, 53 NY2d 704; Virag v Hynes, 54 NY2d 437.) II. The office of the Attorney-General has criminal jurisdiction to investigate and prosecute theatre and sporting event personnel for violations of section 399-n of the General Business Law. (.People v Smith, 34 AD2d 524, 29 NY2d 831; People v Bradick, 16 Mise 2d 1080; Dunham v Ottinger, 243 NY 423; Matter ofGreenthal & Co. v Lefkowitz, 32 NY2d 457; Matter ofSigety v Hynes, 38 NY2d 260, cert den sub nom. Kent Nursing Home v Office of Special State Prosecutor, 425 US 974; Matter of Sussman v New York State Organized Crime Task Force, 39 NY2d 227; People v Rappaport, 47 NY2d 308, 444 US 964; Red Hook Cold Stor. Co. v Department of Labor, 295 NY 1; Matter of Hammond v Joseph, 271 App Div 677, 297 NY 574.) III. Respondent-appellant-attorney’s multiple representation of essential witnesses at the Attorney-General’s article 26-A inquiry constitutes an actual conflict of interest that cannot be waived. {Matter of Bronx County Grand Jury [Rodriguez], 102 Mise 2d 153; Matter of Taylor, 567 F2d 1183; United States v Garafola, 428 F Supp 620, affd sub nom. United States v Dolan, 570 F2d 1177; Matter of Grand Jury Proceedings, 428 F Supp 273; Matter of Grand Jury, 446 F Supp 1132; People v Hall, 46 NY2d 873, 444 US 848; Matter of Grand Jury Investigation, 436 F Supp 818, 576 F2d 1071, cert den sub nom. Matter of Janavitz, 439 US 953; Matter ofHentz & Co. v Lefkowitz, 22 AD2d 475,16 NY2d 544; Matter of Kelly, 23 NY2d 368.) IV. The public’s overriding interest in the thorough and effective investigation of criminal activity outweighs appellants’ choice of particular counsel. {United States v Dolan, 570 F2d 1177; Matter of Bronx County Grand Jury [Rodriguez], 102 Mise 2d 153; Matter of Investigation Before April 1975 Grand Jury, 403 F Supp 1176, 531 F2d 600; Matter of Gopman, 531 F2d 262; United States v Flanagan, 679 F2d 1072.) V. The courts of this State, in the exercise of their supervisory authority over members of the Bar, have the power to enforce ethical standards through the disqualification of attorneys. {United States v Silva, 611 F2d 78; United States v Sexton, 473 F2d 512; United States v Dolan, 570 F2d 1177; Ceramco, Inc. v Lee Pharms., 510 F2d 268;
      United States v Hobson, 672 F2d 825; United States v James, 555 F Supp 794; Cardinale v Golinello, 43 NY2d 288; People v Shinkle, 51 NY2d 417; Emle Inds. v Patentex, Inc., 478 F2d 562.)
   OPINION OF THE COURT

Jasen, J.

The issues raised on this appeal concern the power of the Attorney-General to investigate the allegedly illegal sale and distribution of tickets to events held at a large sports arena (arena). More specifically, we are asked to decide whether the Attorney-General is statutorily authorized to conduct such an investigation and to issue subpoenas pursuant thereto. We are also called upon to decide whether the respondent-attorney was properly disqualified from representing any of the individual respondents-employees in connection with the subject investigation.

Pursuant to article 26-A of the General Business Law, the Attorney-General commenced an investigation into allegedly unlawful practices of arena box office personnel. The thrust of the investigation appears to be focused upon the manner in which tickets to certain rock concerts and a hit stage production were distributed.

In connection with the concerts, the arena announced that tickets would be available to fill mail order requests postmarked on or after October 1, 1980. However, due to the enormous volume of ticket requests, the arena’s box office allegedly honored only those requests postmarked October 1, 1980. Even then, only a fraction of those requests could be filled. Records of the names and addresses of persons who received tickets were kept by the box office.

The Attorney-General alleges that many of the names and addresses of ticket recipients listed in the box office records are of nonexistent people or people who never requested or received tickets to the concerts. It is further alleged that several of the money orders cashed by the arena as proceeds of the ticket sale were purchased weeks after the October 1 deadline. As a result, the Attorney-General proceeded to gather additional evidence which he claims reveals that certain of the arena’s box office employees personally received “ice” (money in excess of regular ticket prices) from ticket brokers in return for accepting their falsely completed money orders and furnishing them with quantities of tickets which these brokers later “scalped” (sold for a price in excess of the allowable surcharge above the face value of the ticket), all in violation of sections 399-n, 399-Z and 169-k of the General Business Law. The money orders allegedly provided by the brokers to the ticket vendors contained names and addresses of fictitious people or people who neither requested nor received tickets.

Furthermore, it is alleged by the Attorney-General that additional evidence indicates that members of the arena’s box office staff provided large quantities of Ticketron tickets to a successful stage production to ticket brokers in return for the payment of “ice”.

In furtherance of his efforts to identify the individual members of the arena staff responsible for these illegal activities, the Attorney-General subpoenaed 14 box office employees (respondents herein) to appear and testify at an inquiry concerning ticket distribution practices preceding the afore-mentioned events. All 14 witnesses are now represented by respondent-attorney and were so at the time they appeared before the Attorney-General.

When called, seven of the witnesses invoked their Fifth Amendment privilege. Five of those seven were excused subject to recall and the other two were subsequently granted immunity pursuant to section 399-i of the General Business Law and testified. Their testimony, however, failed to inculpate any arena employees. Because the Attorney-General believes that the substance of their testimony is contradicted by other evidence, he is expanding his investigation for possible development of perjury cases against both witnesses. The remaining seven witnesses appeared at the Attorney-General’s office, but were excused subject to recall pending the outcome of the Attorney-General’s application to disqualify their attorney from continuing in his multiple representation. The latter seven witnesses were not questioned, did not invoke their Fifth Amendment privilege and were not offered immunity.

The Attorney-General’s application to disqualify was brought in Criminal Term of the New York County Supreme Court by order to show cause dated November 17, 1981. Respondents opposed the application and requested that the Attorney-General’s subpoenas be quashed pending a showing by the Attorney-General that he was authorized to issue them. Supreme Court granted the Attorney-General’s application to disqualify and denied respondents’ motion to quash. On appeal by respondents to the Appellate Division, the Attorney-General argued for dismissal of the appeal as brought without statutory authority. The Appellate Division refused to dismiss the appeal but, nevertheless, affirmed the order of Supreme Court. This court granted respondents’ motion for leave to appeal (59 NY2d 603).

At the outset, we reject the Attorney-General’s claim that the order of Supreme Court is not appealable to either the Appellate Division or this court. His argument is premised on the rule that direct appellate review of orders issued in a criminal proceeding is not available absent statutory authority therefor. (See Matter of Santangello v People, 38 NY2d 536, 538; Matter of Alphonso C. [Morgenthau], 38 NY2d 923, 924-925.) The flaw in the Attorney-General’s position is that the instant proceedings cannot be properly characterized as criminal in nature.

Certainly, the jurisdiction of this court or the Appellate Divisions cannot be defined by the fortuitous assignment of a matter in dispute to one part of Supreme Court rather than another, as the dissent suggests. That such is not the law in this State is aptly demonstrated by this court’s decision in Matter of Cunningham v Nadjari (supra), where we held that a proceeding involving a motion to quash subpoenas in a criminal investigation was civil by nature even though the matter was heard in an Extraordinary Term of Supreme Court which was created by the Governor solely to facilitate ongoing criminal investigations. What was dispositive in that case was the fact that the order to quash was issued by a term of Supreme Court which possesses both criminal and civil jurisdiction. Thus, the statement in the dissent that it is beside the point that Supreme Court also possesses civil jurisdiction is incorrect.

In cases with procedural postures similar to the one before us, rather than simply looking to the part of Supreme Court where the motion was originally heard, we have looked to the true nature of the proceeding and to the relief sought in order to determine whether the proceeding was criminal or civil. In Matter of Santangello v People (supra), the petitioner sought to compel the Special State Prosecutor to inquire of Federal authorities as to whether they had conducted electronic surveillance of him and also requested the prosecutor to state whether any of the questions asked of him before the Grand Jury were the product of such surveillance. Recognizing that the relief sought was part and parcel of the ongoing criminal investigation and that the proceeding was clearly criminal in nature, this court dismissed the appeal to our court and remitted to the Appellate Division to dismiss the appeal taken to that court as lacking statutory authority therefor. Similarly, proceedings whereby the petitioners-District Attorneys requested the court to order the respondents to appear in a lineup and to provide handwriting exemplars were characterized as criminal and the appeals from the orders of nisi prius were dismissed in light of the fact that the proceedings were criminal in nature and the relief requested, if granted, would have become an integral part of the criminal investigation. (Matter of Alphonso C. [Morgenthau], 38 NY2d 923, supra.)

By sharp contrast, this court has held that the denial of an application to quash subpoenas issued in furtherance of a criminal investigation into drug abuse on the SUNY at Stony Brook campus was a final and appealable order in a special proceeding on the civil side of a court vested with civil jurisdiction. (Matter of Boikess v Aspland, 24 NY2d 136; see, also, Matter of Cunningham v Nadjari, supra, at p 317.) Implicit in Boikess and Cunningham is this court’s view that a motion to quash subpoenas, even those issued pursuant to a criminal investigation, is civil by nature and not subject to the rule restricting direct appellate review of orders in criminal proceedings.

It should be clear, therefore, that insofar as the subject proceedings concern the denial of respondents’ motion to quash the Attorney-General’s subpoenas, the order appealed from is final and appealable. (Matter of Cunningham v Nadjari, supra; Matter of Boikess v Aspland, supra.)

We reach the same conclusion after analyzing the motion to disqualify respondent-attorney. At the outset, we note that the dissenters’ reliance on Flanagan v United States (465 US_, 104 S Ct 1051), Matter of Kavanagh v Vogt (58 NY2d 678, affg 88 AD2d 1049) and Matter of Schumer v Holtzman (60 NY2d 46) for the proposition that the subject proceeding is criminal is clearly misplaced. In Flanagan, four police officers were arrested and charged by a Federal Grand Jury in a 13-count indictment with allegedly conspiring to make illegal arrests and arresting and abusing eight people. The District Court, pursuant to rule 44 (c) of the Federal Rules of Criminal Procedure (in US Code, tit 18, Appendix), disqualified the criminal defendants’ attorney. The United States Court of Appeals affirmed and the United States Supreme Court dismissed the appeal, holding that the order was not appealable under section 1291 of title 28 of the United States Code. Not only do the facts of that case differ markedly from those in the appeal now before us, but the Federal statutes and case law applied by the Supreme Court in reaching its decision are inapposite to the consideration of our own State appellate jurisdictional limits. Moreover, there is no analysis in Flanagan (and because of the different facts of that case there may have been no need for any) of the question whether the proceeding was civil or criminal in nature. Nor do this court’s decisions in Matter of Kavanagh v Vogt (supra) or Matter of Schumer u Holtzman (supra) support the dissenters’ position, for the jurisdictional question presented here was not even an issue in those cases. In Matter of Kavanagh v Vogt (58 NY2d 678, affg 88 AD2d 1049, supra), we held that the extraordinary remedy of prohibition does not lie to review a County Court’s action in disqualifying an attorney. The questions whether the proceeding was criminal or civil or whether appellate review of disqualification orders is permitted were never raised, considered or addressed in that case. These questions were similarly absent in Matter of Schumer v Holtzman (60 NY2d 46, supra), where we held only that because no actual prejudice or a substantial risk thereof was demonstrated by the objector “the conditions petitioner raises do not come within that narrow area in which a court may consider whether counsel should be removed from a particular case.” (Id., at p 55.) Original review, not appellate review, of disqualification requests was at issue in Matter of Schumer. The question of what distinguishes a civil from a criminal proceeding had no relevance to that case whatsoever and was, therefore, never raised by the parties nor considered by this court. Thus, it is difficult to see how the dissenters can rely on those decisions as support for the proposition that this proceeding commenced by the Attorney-General to disqualify counsel is a criminal proceeding.

Employing the mode of analysis which this court has consistently adhered to in deciding whether a proceeding is criminal or civil, we look to the nature of the proceeding and the relief sought. In doing so, we recognize that at some time in the future the Attorney-General may file criminal charges against certain members of the arena’s box office staff and thereby arguably commence a criminal proceeding. However, to date the only aspect of the subject proceeding that is criminal in nature is the Attorney-General’s investigation, and even that may only result in the imposition of civil penalties or in no criminal charges or civil complaints being filed at all. Furthermore, there have been no criminal charges filed and no arrests made in this case and criminal prosecution has not even been threatened with respect to particular respondents. Additionally, there has been no Grand Jury empaneled. (Compare Flanagan v United States, supra.)

All that is involved in the subject proceeding, apart from the motion to quash, is a motion to disqualify respondent-attorney. Unlike the petitioner’s request in Matter of Santangello v People (38 NY2d 536, supra) to compel the Special State Prosecutor to make inquiries of Federal law enforcement authorities concerning electronic surveillance and to require the prosecutor to reveal the source of questions asked of him before a Grand Jury, the subject proceeding involves a motion to disqualify based upon an alleged conflict of interest which would be treated the same whether it arose in the context of a purely civil lawsuit or, as it did here, in the context of a criminal investigation. The proceeding at issue here is likewise distinguishable from a proceeding to compel an individual to appear in a lineup and to provide handwriting exemplars as was the case in Matter of Alphonso C. (Morgenthau) (38 NY2d 923, supra).

We believe that the request to disqualify an attorney is more akin to a motion to quash subpoenas. (See Matter of Boikess v Aspland, supra; Matter of Cunningham v Nadjari, supra.) As to both such requests, the relief sought has nothing inherently to do with criminal substantive or procedural law and either type of motion may arise as easily in the context of a purely civil lawsuit as in a purely criminal case. We hold, therefore, that in the posture in which the subject proceeding arose, the motion to disqualify was, and is, predominantly civil by nature and the proceeding in which it was brought must be deemed civil as well. As a result, this appeal may be entertained.

Turning then to the merits of this appeal, we first address respondents’ claim that the Attorney-General lacks jurisdiction to conduct the criminal investigation and hold that this position is untenable. Subdivision 4 of section 399-n of the General Business Law makes it illegal for any person to sell tickets to theatrical productions until the person controlling the distribution of said tickets files a “ticket distributor registration” containing the names of all personnel connected with the ticket distribution. The statute further provides that a person who accepts a premium in excess of the established price of the ticket, plus lawful taxes, from ticket brokers or others may be canceled or suspended from eligibility as a ticket vendor under the registration. It is illegal for any person not named in the registration or whose eligibility has been canceled or suspended to participate in the distribution of tickets. Section 399-l provides that any person violating any of the provisions of article 26-A shall be guilty of a misdemeanor. It is clear, therefore, that contrary to the respondents’ contentions, the thrust of article 26-A is not purely civil. Thus, there is no bar to the Attorney-General undertaking a criminal investigation pursuant thereto. Indeed, it appears that the Attorney-General’s investigation in this case is aimed at conduct which has been specifically made criminal under article 26-A, as well as section 169-k of article 10-B of the General Business Law.

Moreover, article 26-A gives the Attorney-General broad power to investigate suspected violations of this article (General Business Law, § 399-d), to subpoena witnesses to appear and testify before him (General Business Law, § 399-d, subd 2) and to confer immunity upon witnesses (General Business Law, § 399-i). At the conclusion of his investigation, the Attorney-General is authorized to “prosecute every person charged with a criminal offense in violation of this article and regulations issued thereunder.” (General Business Law, § 399-j.)

In light of this broad grant of power to pursue criminal investigations under article 26-A, including specifically the right to subpoena witnesses to appear before him, and the direction to construe this article liberally to effect the purposes thereof (General Business Law, § 399-o), we hold that the Attorney-General has not acted without jurisdiction by issuing the subject subpoenas in furtherance of this criminal investigation. Thus, the respondents’ motion to quash the subpoenas was properly denied by both courts below.

The more troublesome issue which we now address is whether, under the facts of this case, it was proper to disqualify the respondent-attorney from continuing to represent the 14 respondents-employees. We hold that it was not.

We begin our consideration of this issue, which has not been previously addressed by this court, by recognizing that although an individual possesses no absolute right to representation by an attorney of his choice (Greene v Greene, 47 NY2d 447, 452; People v Hall, 46 NY2d 873, cert den 444 US 848; United States v Hobson, 672 F2d 825, and cases cited in footnote, at p 829, cert den 459 US 906; United States v Cunningham, 672 F2d 1064, 1071; United States v Armedo-Sarmiento, 524 F2d 591, 592; United States v Sexton, 473 F2d 512, 514), any restriction imposed on that right will be carefully scrutinized. (United States v Hobson, supra; People v Doe, 98 Misc 2d 805.) An individual’s right to select an attorney who he believes is most capable of providing competent representation implicates both the First Amendment guarantees of freedom of association (N. A.A.C.P. v Button, 371 US 415; NY Const, art I, § 9) and the Sixth Amendment right to counsel (cf. Faretta v California, 422 US 806; NY Const, art I, § 6) and will not yield unless confronted with some overriding competing public interest (Matter of Kelly, 23 NY2d 368, 378, n 3; People v Doe, supra; Matter of Gopman, 531 F2d 262, 268).

The Attorney-General argues that the public has an overriding interest in ensuring the swift and effective investigation of criminal activity which must prevail over the right of suspects to be represented by an attorney of their choice whenever that attorney’s advice to his multiple clients hampers an ongoing investigation. In such cases, the Attorney-General contends, the court is duty-bound to disqualify the attorney. Respondents, however, claim that their right to select a particular attorney is too precious to be disregarded merely because the subject multiple representation has prevented the Attorney-General from being able to obtain testimony from them without first providing immunity. Although not pressed by either side, we take note of two additional considerations tangentially related to this dispute — the right of an individual to the effective assistance of counsel which may be impaired if an attorney’s loyalty to that individual is adversely affected by a conflict of interest existing as a result of the attorney’s representation of multiple clients (see People v Gomberg, 38 NY2d 307, 313) and the courts’ duty to protect the integrity of the judicial system and preserve the ethical standards of the legal profession (see United States v Dolan, 570 F2d 1177, 1184; see, also, Code of Professional Responsibility, Canon 5, DR 5-101, EC 5-14, 5-15; Canon 9; see, generally, Canon 4). Because we believe that existing safeguards are adequate to protect an individual’s right to effective assistance of counsel, the integrity of the legal system, and to ensure that criminal investigations will be conducted effectively, we decline, in the absence of a showing that some overriding public interest is threatened, to lend the weight of the courts to the Attorney-General’s investigative efforts in this case by disqualifying the respondent-attorney.

Turning first to the interest of the public in having suspected criminal activity investigated quickly and effectively, we note that there are a number of tools available to the prosecution which can be used to ensure that an investigation will not be unduly hindered. The crux of the Attorney-General’s complaint in this case is that his efforts directed at imposing criminal responsibility upon individual targets are being frustrated by the respondents-employees’ refusal, upon their attorney’s advice, to testify without immunity. Assuming this to be so, we are in no way persuaded that the instant situation calls for the relief which the Attorney-General seeks. All that the employees have done so far in this case (and only seven of them at that) is assert their Fifth Amendment right to remain silent. The fact that respondent-attorney may have advised his clients to do so, coupled with the Attorney-General’s frustration at not being able to compel the testimony of the individual respondents without providing them with immunity, does not indicate that the respondent-attorney has to date committed any legal or ethical impropriety. Accordingly, nothing has happened in this case which requires that the attorney be disqualified.

Furthermore, in light of the Attorney-General’s failure to use the investigative procedures available to him, it is difficult to see how his investigation has been, in his words, “stonewalled”. Of the 14 witnesses called to appear, seven never asserted their privilege against self incrimination; and of the seven who did, only two were granted immunity. Moreover, those two testified fully by answering all questions put to them. Thus, the Attorney-General has many investigative avenues still open to him. He can summon and question the seven employees who did not assert their right to remain silent and, as to the witnesses who assert or have asserted their Fifth Amendment privilege, their testimony can be elicited simply by granting them immunity pursuant to section 399-i of the General Business Law. Indeed, the power to grant immunity is precisely the tool which was designed by our Legislature to serve as an accommodation between the individual’s right to remain silent and the government’s interest in compelling testimony necessary to uncover criminal wrongdoing. With these tools yet untried, the Attorney-General’s claim that his investigation has ground to a halt is untenable.

Additionally, even if those tools were to prove fruitless, there are other means of dealing with uncooperative witnesses and their attorney. If a witness who is offered immunity nevertheless decides to remain silent, he may be prosecuted for contempt or, if he decides to testify but does so falsely, he can be charged with perjury. If the witnesses take either of these actions upon their attorney’s advice, the attorney may also face criminal liability. Additionally, the attorney may face disciplinary action if he refuses to withdraw from representing multiple clients where his ability to act for one is adversely affected by his representation of others. (Matter of Kelly, 23 NY2d 368, 375, supra; see, also, Code of Professional Responsibility, DR 5-101.) We hold, therefore, that, except in an exceptional case, the Attorney-General must make full use of the investigatory and prosecutorial procedures available to him before asking the courts to take the extraordinary measure of disqualifying an individual’s chosen attorney. We further hold that disqualification of an attorney representing multiple witnesses in the same matter may never be ordered if it is found that the sole reason for the request is to allow the prosecutor or the investigator to pit the witnesses against each other so that the maximum amount of testimony can be obtained while granting the least amount of immunity. An individual’s right to an attorney of his choice is too important to be disregarded simply because the prosecutor’s or the investigator’s task may be made easier if he is allowed to divide and conquer his perceived opposition. As a result, the instant application to disqualify is patently premature.

Turning next to the courts’ interest in protecting an individual’s right to effective assistance of counsel, we note that some courts take a highly paternalistic approach and disqualify attorneys from representing multiple clients whenever a potential conflict of interest arises even though the clients may have expressly waived their right to conflict-free representation. (United States v Dolan, 570 F2d 1177, supra; Matter of Gopman, 531 F2d 262, supra; Matter of Grand Jury Proceedings, 428 F Supp 273.) In at least one decision, a similarly paternalistic approach was justified largely on the court’s duty to protect the integrity of the judicial system and to enforce the ethical standards of the bar. (United States v Flanagan, 679 F2d 1072, revd on other grounds 465 US_, 104 S Ct 1051, supra.) While we believe the concerns of those courts are laudable, we do not think it necessary to interfere with an individual’s choice of counsel before a criminal proceeding has been commenced in order to protect either that individual’s right to effective assistance of counsel or the integrity of our judicial system. Other existing safeguards are adequate for those tasks.

In this case, the Attorney-General has not filed charges against the respondents-employees, no arrests have been made and criminal prosecution has not in any way been threatened. In short, the employees have not been placed in jeopardy and, indeed, may never be. Thus, we perceive no need at this point in time to require the courts to take measures designed to ensure that the employees are provided with meaningful representation — i.e., that they are aware of the potential or actual conflict of interest and the attendant risks and have knowingly and intelligently waived their right to conflict-free representation. This is not to say, however, that if a criminal proceeding is eventually commenced against the respondents, the courts may blindly permit them to proceed to trial without inquiring as to whether they recognize and appreciate the risks of multiple representation. To the contrary, at the time respondents appear for trial, the court is required to make such an inquiry and satisfy itself that they have knowingly waived their right to separate counsel. (People v Macerola, 47 NY2d 257; People v Gomberg, 38 NY2d 307, supra.) Until charged with a crime, however, the respondents are free, absent extraordinary circumstances, to employ the attorney or attorneys of their choice without interference by the courts.

Applying the afore-mentioned principles to the facts of this case, it becomes at once clear, upon the record before us, that disqualification of respondent-attorney was inappropriate. The Attorney-General failed to show that his investigation has in fact been unduly hindered and has refused to utilize existing tools (questioning witnesses, granting immunity, or prosecuting for contempt, perjury, or subornation of perjury) in his investigatory efforts. Thus, the public’s interest in an effective investigation of suspected criminal activity has not been threatened by the respondent-attorney’s representation of multiple clients in this case and the Attorney-General’s application to disqualify is, therefore, premature. Furthermore, the Attorney-General has not demonstrated the existence of any overriding public interest sufficient to warrant judicial interference with an individual’s right to select an attorney of his choice.

Accordingly, the order of the Appellate Division should be modified by reversing so much thereof as disqualified respondent-attorney from representing the respondents-employees, and, as so modified, affirmed.

Simons, J.

(dissenting). I dissent because the majority has, without justification, created an exception to the general rule which prohibits appeals in criminal matters unless authorized by statute. I would dismiss the appeal, therefore, and remit the matter to the Appellate Division with instructions to dismiss the appeal taken to that court.

The Attorney-General commenced this proceeding by motion dated November 17, 1981, returnable in Supreme Court, Criminal Term, November 20, 1981. He sought an order disqualifying counsel from representing certain witnesses because he believed respondents, the 14 witnesses involved and their attorney, were acting in concert to frustrate his criminal investigation into the unlawful sale of entertainment tickets pursuant to article 26-A of the General Business Law. Between November, 1980 and early October, 1981 the Attorney-General had issued subpoenas to all 14 witnesses. Seven appeared and invoked their Fifth Amendment privileges against testifying. Two of these subsequently testified under a grant of immunity but the Attorney-General believes their testimony was false. The seven remaining witnesses appeared to testify but before they did so the examination was adjourned and this proceeding initiated. Criminal Term granted the motion to disqualify and after an Appellate Division affir-mance the parties are before us by our leave.

It is established law that appellate review of orders issued in a criminal proceeding is not available absent statutory authority (see Matter of Kavanagh v Vogt, 58 NY2d 678, affg 88 AD2d 1049; Matter of Santangello v People, 38 NY2d 536, 538; Matter of Alphonso C. [Morgenthau], 38 NY2d 923, 924-925; see, also, CPL 450.20). A criminal proceeding is defined as “any proceeding which * * * (b) occurs in a criminal court and is related to a prospective, pending or completed criminal action * * * or involves a criminal investigation” (CPL 1.20, subd 18). This special proceeding brought by the Attorney-General related to a pending criminal investigation and a prospective criminal action in which respondent witnesses were questioned substantively about possible criminal violations of the General Business Law. The application was returnable in Supreme Court, Criminal Term, a “criminal court” (CPL 1.20, subd 19; 10.10, subds 1, 2). That Supreme Court also possesses civil jurisdiction under the Constitution is beside the point. As the majority notes, a motion may be civil because of its nature even though brought before an Extraordinary Term of Supreme Court assigned solely to criminal matters (see Matter of Cunningham v Nadjari, 39 NY2d 314). It does not follow, however, that a motion in a Criminal Term of Supreme Court, regardless of its nature, becomes a civil motion and appealable because Supreme Court has civil jurisdiction. If that were so, orders in all preliminary motions in criminal cases prosecuted in Supreme Court would be appealable to the same extent as orders in civil motions. The court in this proceeding was convened as a criminal court, its jurisdiction was first invoked by the Attorney-General concerning a criminal matter and it was exercising its criminal powers when it made the order appealed (see Matter of Alphonso C. [Morgenthau], supra). Thus the Attorney-General’s application came within the statutory definition of a criminal proceeding and the order which he obtained, insofar as it disqualified counsel, was not subject to appeal because no cited legal authority permits review of such preliminary orders (see Matter of Abe A., 56 NY2d 288, 293; Matter of Alphonso C. [Morgenthau], supra; Matter of Santangello v People, supra). Specifically there is no authority permitting review of orders disqualifying counsel before final judgment (see Matter of Kavanagh v Vogt, 58 NY2d 678, affg 88 AD2d 1049, supra; see, also, Flanagan v United States, 465 US_, 104 S Ct 1051; and cf. Matter of Schumer v Holtzman, 60 NY2d 46).

Nevertheless respondents contend, and the majority hold, that this is a civil proceeding. Respondents in their brief relied upon the reasoning underlying the Federal rule permitting the preliminary appeal of disqualification orders as a “final collateral order” (see Cohen v Beneficial Loan Corp., 337 US 541). That contention is entitled to little credit, however, because the Supreme Court has refused to follow the Cohen case in criminal appeals (see Flanagan v United States, supra). The majority have decided to review this matter by analogizing it to cases involving motions to quash subpoenas, proceedings on the civil side of court in which the final order denying a motion to quash, even when issued in furtherance of a criminal investigation, is appealable (Matter of Cunningham v Nadjari, 39 NY2d 314, 317, supra; Matter of Boikess v Aspland, 24 NY2d 136, 138-139). They hold here, for the first time, that a preliminary motion to disqualify is also a civil proceeding which may be appealed. Orders granting or denying a motion to quash are appealable, however, only as an exception to the general rule prohibiting appeals in criminal matters, an exception we have described in the past as “asymmetrical” and which we have followed only in deference to principles of stare decisis (see Matter of Cunningham v Nadjari, supra, at p 317). Without citing any legal authority supporting this new exception and without any persuasive reason requiring it, the majority have extended the rule applied to quash motions to create a new exception and they have done so although we have recently expressed our disapproval of the delay occasioned by entertaining preliminary motions to disqualify counsel (Matter of Schumer v Holtzman, 60 NY2d 46, 55, supra) and we have refused to entertain collateral proceedings raising the issue (Matter of Kavanagh v Vogt, 58 NY2d 678, affg 88 AD2d 1049, supra).

Criminal appeals are limited by statute to avoid unnecessary delay and eliminate appellate proliferation (see Matter of Santangello v People, 38 NY2d 536, 538, supra; Matter of State of New York v King, 36 NY2d 59, 63; see, also, Matter of Schumer v Holtzman, supra, at p 55). The courts should not create new exceptions to this general rule without sound reasons for doing so. Rather they should insist on compliance with it to prevent frustration of the laws’ purposes by the skillful manipulation of appeals and collateral proceedings by those interested in delay. This appeal presents a classic example of why that is so. By pursuing appellate review of the preliminary order respondents have managed to delay this investigation over two years thus barring any future misdemeanor prosecutions.

Judges Jones, Wachtler, Meyer and Kaye concur with Judge Jasen; Judge Simons dissents and votes to dismiss the appeal in a separate opinion in which Chief Judge Cooke concurs.

Order modified, with costs to appellants, in accordance with the opinion herein and, as so modified, affirmed.

      . Supreme Court ordered the record in this case sealed in order to maintain the confidentiality of the investigation and protect the identity and reputations of the box office personnel. We continue to maintain the confidentiality of the parties involved.

      . Section 399-n and other relevant provisions of the General Business Law have been repealed effective December 31, 1983. The subject matter contained in those provisions is now covered by the Arts and Cultural Affairs Law.

      . Also without merit is respondents’ claim that the subject rock concerts are not “theatrical productions” as that term is used in subdivision 4 of section 399-n and defined in subdivision 2 of section 399-n. Construing the term “theatrical production” liberally, as we must in accordance with section 399-0, it seems clear that the subject concerts should be classified as “dramatic-musical productions which hereafter are shown to the public in a theatre run for profit.” (General Business Law, § 399-n, subd 2.) As such, article 26-A is applicable to those concerts as well as to the stage production.

      . We recognize the differing constitutional implications of restricting an individual’s right to counsel of his choice in the civil as opposed to the criminal context. However, inasmuch as similar policy considerations are often involved in both situations, we will at times throughout this opinion rely on the reasoning of a small number of civil cases. Similarly, although most existing case law deals with Grand Jury, rather than Attorney-General, investigations, the policy considerations applicable to each are so similar that examination of decisions discussing Grand Jury investigations is instructive.

      . Because we hold that the Attorney-General’s application for disqualification is patently premature, we need not and do not decide in what situations, if any, disqualification of an individual’s attorney might be an appropriate remedy.