author: Kaye, J.

text:
    In the Matter of Morgan Guaranty Trust Company of New York, as Successor Trustee Under American Motors Corporation Union Retirement Income Plan, Respondent, v Tax Appeals Tribunal of the New York State Department of Taxation and Finance et al., Appellants.
    Argued March 25,1992;
    decided June 9, 1992

      POINTS OF COUNSEL

      Robert Abrams, Attorney-General (Daniel Smirlock, Jerry Boone and Peter H. Schiff of counsel), for Commissioner of New York State Department of Taxation and Finance, appellant.
    I. State tax laws are preempted by ERISA only insofar as they "relate to” benefit plans. (Retirement Fund Trust of Plumbing v Franchise Tax Bd., 909 F2d 1266.) II. The real property transfer gains tax does not "relate to” employee benefit plans. (Rebaldo v Cuomo, 749 F2d 133; Ingersoll-Rand Co. v McClendon, 498 US 133; Shaw v Delta Air Lines, 463 US 85; FMC Corp. v Holliday, 498 US 52; Mackey v Lanier Collection Agency & Serv., 486 US 825; Fort Halifax Packing Co. v Coyne, 482 US 1; Aetna Life Ins. Co. v Borges, 869 F2d 142, 493 US 811; Sommers Drug Stores Co. Employee Profit Sharing Trust v Corrigan Enters., 793 F2d 1456; Firestone Tire & Rubber Co. v Neusser, 810 F2d 550.)

      John A. Corry and Leslie J. Altus for respondent. I. The Third Department correctly determined that ERISA preempts the gains tax’s imposition upon ERISA-covered pension plans.

      (Shaw v Delta Air Lines, 463 US 85; Sasso v Vachris, 66 NY2d 28; FMC Corp. v Holliday, 498 US 52; Ingersoll-Rand Co. v McClendon, 498 US 133; Pilot Life Ins. Co. v Dedeaux, 481 US 41; Alessi v Raybestos-Manhattan, Inc., 451 US 504; Metropolitan Life Ins. Co. v Massachusetts, 471 US 724; Lane v Goren, 743 F2d 1337; Aetna Life Ins. Co. v Borges, 869 F2d 142, 493 US 811; Planned Consumer Mktg. v Coats & Clark, 71 NY2d 442.) II. Appellants erroneously assert that the gains tax does not relate to the Plan. (Alessi v Raybestos-Manhattan, Inc., 451 US 504; Pilot Life Ins. Co. v Dedeaux, 481 US 41; Shaw v Delta Air Lines, 463 US 85; Sasso v Vachris, 66 NY2d 28; Aetna Life Ins. Co. v Borges, 869 F2d 142; Rebaldo v Cuomo, 749 F2d 133; Sommers Drug Stores Co. Employee Profit Sharing Trust v Corrigan Enters., 793 F2d 1456, 479 US 1034, 1089.)

      Charles Rothfeld and Donald M. Falk, of the District of Columbia Bar, admitted pro hac vice, for Lehndorff & Babson Real Estate Counsel, amicus curiae.

    ERISA preempts application of the gains tax to a plan. (Metropolitan Life Ins. Co. v Massachusetts, 471 US 724; Mackey v Lanier Collection Agency & Serv., 486 US 825; Greater Wash. Bd. of Trade v District of Columbia, 948 F2d 1317; Arkansas Blue Cross & Blue Shield v St. Mary’s Hosp., 947 F2d 1341; Sommers Drug Stores Co. Employee Profit Sharing Trust v Corrigan Enters., 793 F2d 1456, 479 US 1034, 1089; Gilbert v Burlington Indus., 765 F2d 320, 477 US 901; Firestone Tire & Rubber Co. v Neusser, 810 F2d 550; Boise Cascade Corp. v Peterson, 939 F2d 632; Massachusetts v Morash, 490 US 107; National Carriers’ Conference Comm, v Heffeman, 454 F Supp 914.)
   OPINION OF THE COURT

Kaye, J.

This appeal calls upon us to determine whether a State tax of general application — in this case a tax on gains derived from real property transfers within the State — is preempted by the Employee Retirement Income Security Act (ERISA). Based on the structural, administrative and economic impact of the tax on the qualified employee benefit plan in issue in this case, we conclude that the tax relates to the employee benefit plan in more than a tenuous, remote or peripheral way, therefore requiring preemption.

The relevant facts have been stipulated. Respondent, Morgan Guaranty Trust Company, served as trustee under the American Motors Corporation Union Retirement Income Plan —a qualified employee benefit plan — during 1984, the year in issue.

In 1965, nine years prior to ERISA, the Plan purchased real property in Greenburgh, New York, from an American Motors affiliate for $723,014 and entered into a 25-year leaseback arrangement. In December 1983, counsel advised American Motors that the lease was a "prohibited transaction” under ERISA because the 1965 rent schedule lagged behind current market rates, and that the applicable transitional exemption would soon expire. Counsel suggested that the lease be revised, a further exemption requested, or the Plan’s interest in the property transferred. Failure to take any action would subject the Plan to tax penalties. The property was sold in June 1984 to a second American Motors affiliate for $2,775,640.

The New York tax is imposed on the gain derived from a property transfer (Tax Law § 1441; see, Trump v Chu, 65 NY2d 20, 23, appeal dismissed 474 US 915). "Gain” is defined as "the difference between the consideration for the transfer of real property and the original purchase price of such property, where the consideration exceeds the original purchase price” (Tax Law § 1440 [3]). The consideration received must exceed $1 million, but the tax is imposed on 10% of the entire gain (Tax Law §§ 1441, 1443). On this transaction, Morgan paid the State $205,262.

In May 1985, Morgan filed a refund claim with the Department of Taxation and Finance on the ground that imposition of the gains tax was preempted by ERISA. The Audit Division denied the claim based on the Department’s position that ERISA preempted only those State laws designed to regulate employee benefit plans. Morgan then filed an administrative petition for refund with the Tax Appeals Bureau of the State Tax Commission.

The Administrative Law Judge granted the petition, holding that "the transfer itself was of a Plan asset, was made by the Plan itself, was a course of action dictated by ERISA rules regarding investment requirements and resulted in a direct tax upon the Plan.” Accordingly, the ALJ concluded that it was "clear that in this limited instance, the gains tax directly relates to and affects the Plan and hence must be held preempted.”

On appeal, the Tax Appeals Tribunal reversed the ALJ, holding that imposition of the gains tax on the Plan was "too tenuous, remote and peripheral to require preemption.” The two majority members of the Tribunal noted that options to sale of the parcel were available and that any administrative burden resulting from imposition of the tax was de minimis. The dissenting Tribunal member found that where "the tax is imposed directly on the earnings from the sale of a Plan’s assets, that in itself is sufficient to reach the conclusion that the tax 'relates to’ the Plan in an impermissible way and is preempted.”

Morgan brought this proceeding in the Appellate Division to set aside the Tribunal’s determination. In annulling the determination, Justice Yesawich, writing for a unanimous court, reasoned that the gains tax, which was imposed directly on income derived from the sale of a Plan asset, was related to the Plan and preempted by ERISA. We now affirm.

ERISA Preemption Principles

ERISA preemption of State law has been the subject of substantial recent litigation (see generally, Gregory, ERISA Law in the Rehnquist Court, 42 Syracuse L Rev 945 [1991]). Controversy has centered on preemption of State law causes of action that offer remedies for the violation of rights expressly guaranteed by ERISA (see, e.g., Pilot Life Ins. Co. v Dedeaux, 481 US 41; Tingey v Pixley-Richards W, 953 F2d 1124 [9th Cir]). The question before us is different.

None of the cases has considered the issue presented here— preemption of a State tax law of general application — which, nevertheless, is determined by settled ERISA preemption principles.

Analysis begins with the presumption that State law has not been preempted by Federal statute "in the absence of persuasive evidence to the contrary” (Sassa v Vachris, 66 NY2d 28, 33). The focus is on congressional intent: " '[t]he purpose of Congress is the ultimate touchstone.’ ” (Malone v White Motor Corp., 435 US 497, 504, quoting Retail Clerks v Schermerhom, 375 US 96, 103.) As the Supreme Court has noted, where Congress "has expressly included a broadly worded pre-emption provision in a comprehensive statute such as ERISA, our task of discerning congressional intent is considerably simplified.” (Ingersoll-Rand Co. v McClendon, 498 US 133,138.)

ERISA’s preemption clause is indeed broad: all State laws are superseded "insofar as they may now or hereafter relate to any employee benefit plan” (29 USC § 1144 [a] [emphasis added]).

The clause was designed to establish pension plan regulation as exclusively a Federal concern. (Ingersoll-Rand Co. v McClendon, 498 US, at 138.) Broad preemptive authority was intended to facilitate the "emergence of a comprehensive and pervasive Federal interest and the interests of uniformity with respect to interstate plans” (Statement of Senator Javits, 120 Cong Rec 29942 [1974]). That Federal interest was invoked, and ERISA promulgated, to address the concern that "the soundness and stability of plans with respect to adequate funds to pay promised benefits may be endangered.” (29 USC § 1001 [a].)

The ERISA preemption clause is "conspicuous for its breadth” (FMC Corp. v Holliday, 498 US 52, 58), "virtually unique” (Franchise Tax Bd. v Laborers Vacation Trust, 463 US 1, 24, n 26), "one of the broadest preemption clauses ever enacted.” (Evans v Safeco Life Ins. Co., 916 F2d 1437, 1439 [9th Cir]; see also, Gregory, The Scope of ERISA Preemption of State Law: A Study in Effective Federalism, 48 U Pitt L Rev 427, 431-432 [1987].) The scope of the preemption clause prompted one court to remark that in "considering Congress’ intent in the ERISA context, all roads lead to Rome.” (McCoy v Massachusetts Inst, of Technology, 950 F2d 13, 17 [1st Cir].)

Moreover, it is evident from the legislative history that Congress intended exactly this broad effect. As described by the Supreme Court:

"The bill that became ERISA originally contained a limited pre-emption clause, applicable only to state laws relating to the specific subjects covered by ERISA. The Conference Committee rejected these provisions in favor of the present language, and indicated that the section’s pre-emptive scope was as broad as its language.” (Shaw v Delta Air Lines, 463 US 85, 98 [citing HR Conf Rep No. 93-1280, at 383 (1974); S Conf Rep No. 93-1090, at 383 (1974)].)

State laws specifically designed to affect employee benefit plans are viewed as preempted by ERISA (see, Mackey v Lanier Collection Agency & Serv., 486 US 825, 829). If, as with the tax law at issue in the present case, the State law is not specifically designed to affect employee benefit plans — if it is a law of general application — the next step is to determine whether the law "relate[s] to” employee benefit plans (Mackey v Lanier Collection Agency & Serv., supra, at 830-831).

The phrase "relate[s] to” must be given a " 'broad commonsense meaning’ ” (Ingersoll-Rand Co. v McClendon, 498 US, at 139, supra). Does the law have "a connection with or reference to such a plan” (Shaw v Delta Air Lines, 463 US, at 97, supra)? Even in the absence of an express link to an employee benefit plan, State law is preempted "insofar as” the law applies to benefit plans in particular cases (Shaw v Delta Air Lines, supra, at 97, n 17). Thus, a State law may be preempted even though not specifically designed to affect such plans, and even though any effect is only indirect (Ingersoll-Rand Co. v McClendon, 498 US, at 138-139, supra).

Two recent preemption cases, Ingersoll-Rand and FMC Corp., have put to rest the contention that only laws relating to the terms, conditions or administration of a plan are preempted (see, Ingersoll-Rand Co. v McClendon, supra; FMC Corp. v Holliday, 498 US, at 58-60, supra [Congress did not intend to preempt only State laws dealing with subject matters covered by ERISA, such as reporting, disclosure and fiduciary duties]). Likewise, the argument that only State laws that "purport to regulate” an ERISA plan are preempted has been rejected (Ingersoll-Rand Co. v McClendon, 498 US, at 141-142; see also, Smith v Dunham-Bush, Inc., 959 F2d 6, 9, n 3 [2d Cir]). It is apparent that the Supreme Court has consistently expanded the scope of ERISA preemption while identifying certain limits "which allow for the independent operation of some narrowly prescribed state laws.” (Smith v Dunham-Bush, Inc., 959 F2d, at 9, supra.)

Despite the breadth of the preemption clause, certain State laws "may affect employee benefit plans in too tenuous, remote, or peripheral a manner to warrant a finding that the law 'relates to’ the plan.” (Shaw v Delta Air Lines, 463 US, at 100, n 21.) Several Federal courts have referred to that language in upholding State laws of general application against challenges based on ERISA preemption (see, Matter of Dyke, 943 F2d 1435, 1447 [5th Cir]; see also, Gregory, op. cit., 48 U Pitt L Rev 427, 465-466 ["Unfortunately, the Court presented no principled formula by which to ascertain which state laws were so 'tenuous, remote, or peripheral’ as to avoid the broad scope of ERISA preemption.”]).

Thus, in the present case we must determine whether this tax law of general application "relate[s] to” benefit plans in more than a tenuous, remote or peripheral way so as to warrant preemption. We conclude that it does.

Preemption of the Gains Tax

Even State tax laws of general application, representing a traditional exercise of State authority, may be preempted when they "relate to” ERISA plans (see, Firestone Tire & Rubber Co. v Neusser, 810 F2d 550, 556 [6th Cir]).

While explicitly exempting other State laws of general application — State criminal law, for example — ERISA made no mention of tax law in the original preemption provision (see, 29 USC § 1144 [b] [2] [A]; [4]). In 1983, Congress amended the statute to exempt Hawaii’s Prepaid Health Care Act and at the same time affirmed that the preemption clause applied to "any State tax law relating to employee benefit plans” (29 USC § 1144 [b] [5] [B] [i]; see, HR Conf Rep No. 97-984, 97th Cong, 2d Sess 18, reprinted in 1982 US Code Cong & Admin News 4598, 4603). The fact that a State tax law of general application is at issue is therefore not determinative of ERISA preemption.

Applying the broad commonsense meaning of the statutory phrase "relate[s] to,” we conclude that this gains tax has more than a tenuous, remote or peripheral connection to employee benefit plans and is therefore preempted by ERISA. We reach that conclusion from analysis of the structural, administrative and economic impact of the tax on the Plan, viewed against the backdrop of the terms and objectives of ERISA (see, Mackey v Lanier Collection Agency & Serv., 486 US 825, supra; Firestone Tire & Rubber Co. v Neusser, supra; Aetna Life Ins. Co. v Borges, 869 F2d 142 [2d Cir]).

The gains tax clearly impacts on the structure and administration of the Plan. As the dissenting Tribunal member noted, the gains tax would impose certain recordkeeping and reporting requirements on the Plan, mandating administrative procedures pertaining to asset disposition not required in other jurisdictions (see, Tax Law § 1447 [2]; § 1448 [2], [3]).

Far more significant than this administrative burden, however, is the influence the gains tax will necessarily have on the Plan’s investment strategy. ERISA imposes Federal standards of conduct on the managers of benefit plans, and fiduciaries are required to tailor investment strategy to those guidelines (see, 29 USC §§ 1101-1114; 29 CFR 2509.75-5, 2550.404a-l). Although real estate transactions such as the one in issue are sanctioned by ERISA, New York fiduciaries will have to consider the State law that, by directly taxing gains on the sale of such assets, makes them less attractive investments. By the same token, an administrator taking the cost of the New York gains tax into account may be required to retain an asset that would otherwise have been liquidated.

As the Supreme Court has made clear, it is undesirable to require plans and employers to tailor their conduct "to the peculiarities of the law of each jurisdiction” (Ingersoll-Rand Co. v McClendon, 498 US, at 142, supra). Indeed, such a result is "fundamentally at odds with the goal of uniformity that Congress sought to implement.” (Id.; see also, FMC Corp. v Holliday, 498 US, at 58-60, supra.) Moreover, this is not a "cost of doing business” law, as appellants argue but a tax applied directly to the income derived from appreciation of a Plan asset.

In the present case, the effect on the Plan’s structure and administration is even more direct: this transaction was a response to ERISA’s "prohibited transaction” rules, which required that some action be taken. The Tribunal noted that the sale was not the sole option available to the Plan. However, as Morgan points out, the other options — exacting a higher rent or requesting an extended exemption — were not feasible, forcing the Plan to pay either the gains tax on the profit realized or a penalty under ERISA. Either would affect the operation of the Plan.

Finally, preemption in this case would be consistent with the favorable tax treatment given to benefit plans under the Internal Revenue Code.

Congress designed ERISA "to make sure to the greatest extent possible that those who do participate in * * * plans actually receive benefits and do not lose their benefits as a result of * * * failure to accumulate and retain sufficient funds to meet its obligations.” (HR Rep No. 93-807, 93d Cong, 2d Sess 8, reprinted in 2 Sen Subcomm on Labor of Comm on Labor and Pub Welfare, Legislative History of ERISA, at 3129 [1976]; see also, Massachusetts v Morash, 490 US 107, 115.) In furtherance of this goal, earnings on a plan’s assets are exempt from Federal taxation (see, 26 USC § 501 [a]; § 401 [a]; see also, 26 USC §512 [b] [5]). This favorable tax treatment was a mainstay of prior pension legislation and its continuation considered essential to ERISA (see, Statement by Senator Humphrey, Cong Rec — Senate [Aug. 12, 1974], reprinted in 3 Legislative History of ERISA, op. cit., at 4778).

Unlike other forms of general State regulation that may have only incidental effect on plan resources, the gains tax "directly depletes the funds otherwise available for providing benefits” and flies "in the face of ERISA’s goal of assuring the financial soundness of such plans.” (Birdsong v Olson, 708 F Supp 792, 801 [WD Tex].) As Morgan points out, imposition of the gains tax on ERISA plans withdraws plan assets Congress sought to protect, levying against the very funds Congress denied the Federal treasury.

Appellants urge that this tax is indistinguishable from others that have been allowed, but analysis of appellants’ cases reveals material differences. For example, this tax is significantly different from one imposed upon employees regardless of whether their income was subsequently contributed into an ERISA plan (Firestone Tire & Rubber Co. v Neusser, 810 F2d 550, supra), or a tax levy or withholding procedure on payments-out from the plan to the beneficiaries (Retirement Fund Trust of Plumbing v Franchise Tax Bd., 909 F2d 1266). Unlike those examples, the gains tax here directly depletes Plan assets.

As one court has noted, the gains tax is not like a stamp or documentary transfer tax — taxes generally imposed on the entire consideration paid, at a rate of less than 1%, irrespective of profit (995 Fifth Ave. Assocs. v New York State Dept, of Taxation & Fin., 963 F2d 503). Instead, this gains tax is contingent on the profitability of the underlying transaction: a 10% tax is imposed directly on the gain — as defined by the provisions of the gains tax — accruing to the transferor (id.; compare, Tax Law §§ 1402, 1402-a [real estate transfer tax]). Thus the gains tax is not, as appellants argue, "akin to a sales tax,” and as such a "cost of doing business in New York.” It is a direct tax on Plan profits.

The magnitude of the effect is underscored by the estimate that most of the asset increase projected for ERISA plans in the next decade will be attributable to the income earned from existing assets in established ERISA plans (see, Gregory, op. cit., 48 U Pitt L Rev, at 436). Depletion of those earnings, projected as the primary source of future funding necessarily increases the cost of the Plan — for the employer or the employees — or decreases the benefits (see, E-Systems, Inc. v Pogue, 929 F2d 1100, 1103, cert denied sub nom. Barnes v E-Systems, Inc., — US —, 112 S Ct 585).

Appellants would ignore the direct impact and make the test one of comparison only: a generally applicable law should not be preempted if it is applied to a covered plan in the same way, and for the same reasons, as it would be applied to any other citizen, even though application of the law may burden the Plan (see, dissenting opn, at 56-57). That argument is unsupported and unsound.

Appellants draw on language from the Ingersoll-Rand decision where the Supreme Court noted that it was not dealing "with a generally applicable statute that makes no reference to, or indeed functions irrespective of, the existence of an ERISA plan.” (498 US, at 139, supra.) Taken in context, however, it is plain that the Supreme Court was not making the sweeping declaration that all such laws are exempt from preemption but rather referring to the specific laws at issue in Mackey (supra) and Fort Halifax Packing Co. v Coyne (482 US 1).

Similarly, appellants’ reliance on Mackey is mistaken. The Supreme Court in Mackey did not exempt the Georgia garnishment scheme from preemption based on the failure of the statute to refer to ERISA plans, nor did it reject the notion that a law will be preempted because it burdens or affects a covered plan. In Mackey, the Court reasoned that, because ERISA plans may "sue or be sued,” State law methods for collecting money judgments must, as a general matter, remain undisturbed by ERISA; otherwise, there would be no way to enforce such a judgment won against a plan. (486 US, at 834; see also, Retirement Fund Trust of Plumbing v Franchise Tax Bd., 909 F2d 1266, 1275, supra.) No similar reasoning underlies appellants’ test.

Thus, there is no basis for determining preemption by whether a general law applies to covered plans in the same way, and for the same reasons, as it applies to other citizens. It is this proposed test that is "pioneering” (dissenting opn, at 60), both for its widespread implications — especially in the area of State taxation — and for its inattention to the actual impact a State law of general application may have on covered plans. Analyzed from the correct perspective of statutory principles and Supreme Court precedents, it is clear that this gains tax is preempted because it affects the structure, administration and economics of a covered plan, and therefore "relate[s] to” it in more than a tenuous, remote or peripheral way.

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

Titone, J. (dissenting). In 1984, in order to comply with ERISA requirements, petitioner, the trustee of a large pension fund governed by the Federal ERISA statute (see, 29 USC § 1001 et seq.), sold some real property that had previously been held under a leaseback arrangement. The issue in this appeal brought by respondent State Tax Appeals Tribunal is whether ERISA preempts the application of New York State’s real property transfer gains tax (see, Tax Law § 1441) to the gain from that sale. Relying on the generally broad preemption policy that is unquestionably reflected in the relevant ERISA provisions (29 USC § 1144 [a], [b] [5] [B] [i]), the majority holds that petitioner is exempt from the tax, essentially because the tax will have an economic impact on an ERISA covered plan. However, since all taxes inevitably have an economic impact, this criterion is clearly an inadequate one for determining whether a particular tax is preempted under ERISA. Furthermore, although the majority has attempted to supplement its economic-impact analysis with arguments about the tax’s effect on the plan’s structure and administration, its arguments are unconvincing. Finally, contrary to the majority’s conclusion, the relevant case law suggests that this generally applicable tax on gains was not the type of local enactment that was within Congress’s overall preemptive intent. Accordingly, I must, respectfully, dissent.

L

There are two relevant preemption provisions. The first of these States that "the provisions [of ERISA] shall supersede any and all State laws insofar as they may now or hereafter relate to any [covered] employee benefit plan” (29 USC § 1144 [a] ). The second states, more specifically, that State tax laws that "relate to” ERISA plans are preempted (29 USC § 1144 [b] [5] [B] [i]).

As the majority stresses, the Supreme Court has consistently endorsed a broad construction of these preemption provisions (e.g., FMC Corp. v Holliday, 498 US 52; IngersollRand Co. v McClendon, 498 US 133, 139-140; Pilot Life Ins. Co. v Dedeaux, 481 US 41; Shaw v Delta Air Lines, 463 US 85, 98; Alessi v Raybestos-Manhattan, Inc., 451 US 504, 525). Yet, the reach of ERISA’s preemption clause is not limitless (see, Shaw v Delta Air Lines, supra, at 100, and n 21). Both 29 USC § 1144 (a) and (b) (5) (B) (i), whose identical language requires "the same preemption analysis” (Retirement Fund Trust of Plumbing v Franchise Tax Bd., 909 F2d 1266, 1276), apply only to the extent that the challenged State law "relates to” a covered plan. Thus, notwithstanding the Supreme Court’s general statements about Congress’s broad preemptive intent, Congress chose to preempt something less than all local laws that affect or impact upon covered ERISA plans.

Unfortunately, the Supreme Court’s discussions of what constitutes a law that "relates to” a covered plan have not, to date, produced a workable test for preemption. The Court has said that the term "relates to” should be given "its broad common-sense meaning” (Metropolitan Life Ins. Co. v Massachusetts, 471 US 724, 739) and that a State law "relates to” a covered plan " 'if it has a connection with or reference to such a plan’ ” (Ingersoll-Rand Co. v McClendon, 498 US, at 139, supra; accord, Shaw v Delta Air Lines, supra, at 96-97). The Court has also said that a State law may be preempted "even if [it] is not specifically designed to affect [covered] plans, or the effect is only indirect” (Ingersoll-Rand Co. v McClendon, 498 US, at 139, supra), but that there will be no preemption where the State law "affectfs] employee benefit plans in too tenuous, remote, or peripheral a manner” (Shaw v Delta Air Lines, 463 US 85, 100, n 21, supra). While these formulations are somewhat helpful, none is sufficiently specific to provide a definitive basis for resolving the issue in this case: whether Congress intended to exempt covered plans from liability for generally applicable State taxes. Thus, further analysis and an exploration of the specific contexts in which 29 USC § 1144 (a) has been applied are required.

IL

In our view, a simple reading of the relevant case law demonstrates that a generally applicable law does not "relate to” the plan upon which its burden is to be imposed unless the law either (1) specifically refers to covered plans or (2) does not operate, either in general or in the particular case, without reference to the plan’s existence. In other words, the Federal ERISA statute does not require preemption of a generally applicable law if it is being applied to a covered plan in the same way, and for the same reasons, as it would be applied to any other entity, even though application of the law may, in fact, burden the plan.

Initially, the Supreme Court’s opinion in Ingersoll-Rand Co. v McClendon (498 US, at 139-140, supra), on which the majority places much reliance, specifically appears to sanction this formula. Although the Ingersoll-Rand Court found the particular local law before it to be preempted by ERISA, the Court went on to suggest that the outcome would have been otherwise if it had been "dealing * * * with a generally applicable statute that makes no reference to, or indeed functions irrespective of, the existence of an ERISA plan” (id., at 139; emphasis supplied). Further, the Court bolstered the point by noting that a finding of preemption was warranted in the case before it because "the existence of a pension plan [was] a critical factor in establishing liability under the State’s * * * law” (id., at 139-140), suggesting once again that the outcome would have been different if liability were being imposed without regard to the existence of a covered plan. A similar conclusion may be inferred from Mackey v Lanier Collection Agency & Serv. (486 US 825, 833, and n 8), in which the Supreme Court took note of the virtually universal assumption that ERISA plans may be subjected to liability for "run-of-the-mill state-law claims such as unpaid rent, failure to pay creditors, or even torts [they commit].”

Further, many of the lower Federal courts that have considered the ERISA preemption issue have reached their conclusions using the analysis suggested in Ingersoll-Rand. In Lane v Goren (743 F2d 1337, 1340), for example, the Ninth Circuit Court of Appeals held that a generally applicable antidiscrimination law was not preempted by ERISA because it was being applied to a covered plan "only * * * in [the plan’s] capacity as an employer, and [only] in a way that all other employers are affected.” Significantly, the Lane court contrasted the State antidiscrimination statute before it with the antidiscrimination statute at issue in Shaw v Delta Air Lines (supra), which was specifically directed toward the structure of certain covered employee benefit plans (see, 463 US, at 96-97; see also, 743 F2d 1340-1341 [distinguishing Alessi v Rayhestos-Manhat tan, Inc. (supra) on the ground that it involved a State statute "directed at or affect(ing) the internal operations of the trust”]). Moreover, the Ninth Circuit squarely rejected the argument that the statute at issue in Lane should be held preempted because its application would increase the plan’s cost of doing business. In the court’s view, that argument was not persuasive because the same could be said about virtually any local law that regulates zoning, health and safety (id., at 1340).

A similar view was adopted by the Sixth Circuit in Firestone Tire & Rubber Co. v Neusser (810 F2d 550, 556), in which the court acknowledged the broad reach of ERISA’s preemption provisions but nevertheless upheld a municipal income tax applied to wages contributed directly to a covered ERISA plan because it was a "neutral * * * tax of general application” "affecting * * * employees in their capacity as employees, without regard to their status as participants in an ERISA plan.” Like the Lane court, the Firestone court rejected the contention that a State statute that increases the cost of doing business should be deemed preempted for that reason alone (id., at 555; accord, Rebaldo v Cuomo, 749 F2d 133, 139 [2d Cir], cert denied 472 US 1008 ["mere fact that the statute has some economic impact on the plan does not require that the statute be invalidated”]). The position that generally applicable State laws are not preempted if they burden covered ERISA plans only in the same way that all other similarly situated citizens would be burdened was also adopted in Retirement Fund Trust of Plumbing v Franchise Tax Bd. (supra) and In re Seolas (140 Bankr 266 [ED Cal]). In light of this formidable list of cases, it is difficult to understand the majority’s unqualified assertion that "there is no basis for determining preemption by whether a general law applies to covered plans in the same way, and for the same reasons, as it applies to other citizens” (majority opn, at 54).

Finally, a clear pattern emerges from a review of the facts in virtually all of the leading Federal ERISA preemption cases, and that pattern supports the foregoing analysis. The courts tend to find preemption either where a State law refers specifically to covered ERISA plans (FMC Corp. v Holliday, supra; Mackey v Lanier Collection Agency & Serv., supra; Shaw v Delta Air Lines, supra; Alessi v Raybestos-Manhattan, Inc., 451 US 504, supra; E-Systems, Inc. v Pogue, 929 F2d 1100, cert denied sub nom. Barnes v E-Systems, Inc., — US —, 112 S Ct 585; General Motors Corp. v California State Bd. of Equalization, 815 F2d 1305, cert denied sub nom. General Motors Corp. v Bennett, 485 US 941; In re Seolas, supra; Birdsong v Olson, 708 F Supp 792) or where the particular application of a "generally applicable” State law depends on the existence of a covered plan (Ingersoll-Rand Co. v McClendon, supra; Pilot Life Ins. Co. v Dedeaux, 481 US 41, supra; Cefalu v B.F. Goodrich Co., 871 F2d 1290). In contrast, where the challenged law is a "generally applicable” one and is being applied to a covered plan in a way that is no different than it would be applied to all other citizens, the courts tend to hold that its application is not preempted (Mackey v Lanier Collection Agency & Serv., supra; Retirement Fund Trust of Plumbing v Franchise Tax Bd., supra; Firestone Tire & Rubber Co. v Neusser, supra; Lane v Goren, supra; Aetna Life Ins. Co. v Borges, 869 F2d 142, cert denied 493 US 811; In re Seolas, supra).

Thus, there exists a substantial body of case law that strongly suggests the validity of respondent’s contention that generally applicable State laws are not preempted when they "[make] no reference to, [and] indeed function[J irrespective of, the existence of an ERISA plan” (Ingersoll-Rand Co. v Mc-Clendon, 498 US, at 139, supra [emphasis added]). Even more importantly, with one possible exception of dubious precedential worth, none of the leading Federal cases goes so far as to find preemption — as the majority does here — where a State law of general application is being applied to a covered plan in the same way as it would be applied to any other entity doing business in the State. Since nothing in the majority’s opinion provides a persuasive rationale for its pioneering position, we conclude that that position is analytically unsound.

¡IL

The precise basis of the majority’s holding remains unclear. The majority begins with a brief reference to the legislative history of 29 USC § 1144 (b) (5) (B) (i) (majority opn, at 50-51), the specific ERISA provision dealing with preemption of local tax laws, but it draws no useful conclusions from the cited history. This restraint seems well advised, since the legislative history establishes no more than that Congress did not wish to give State tax laws favored status vis-á-vis the preemption rule. It would require a great leap of logic to infer from this history that Congress intended to accord State tax laws a disfavored status and to mandate their preemption in all circumstances.

The majority also seems to adopt petitioner’s argument that State tax laws are preempted under ERISA because, by their nature, they deplete plan assets and thereby undermine one of the central purposes of the Federal legislation: to ensure "to the greatest extent possible that those who do participate in * * * plans * * * do not lose their benefits as a result of * * * failure to accumulate and retain sufficient funds to meet [plan] obligations” (HR Rep No. 93-807, 93d Cong, 2d Sess 8, reprinted in 2 Sen Subcomm on Labor of Comm on Labor and Pub Welfare, Legislative History of ERISA, at 3129 [1976]). However, the argument has little support in the case law.

In Lane v Goren (supra, at 1340), the court specifically rejected a preemption argument based on the fact that the local law increased the cost of doing business, thereby reducing plan assets. In Arkansas Blue Cross & Blue Shield v St. Mary’s Hosp. (947 F2d 1341,1348, cert denied — US —, 112 S Ct 2305), the court stated that, with regard to the preemption analysis, economic impact may be relevant, but it should not be dis-positive. The problem of fund depletion was expressly considered in E-Systems, Inc. v Pogue (supra) and Birdsong v Olson (supra, at 801), but even in those cases it was not the dispositive factor, since the challenged tax statute in both instances made specific and direct reference to ERISA plans.

The primary weakness of the fund-depletion argument is that it is based on a skewed view of Congress’s purpose in enacting ERISA. The goal of this legislation was to safeguard the soundness of employee benefit funds, not to maximize their profitability (In re Seolas, supra). This goal was to be achieved by providing a uniform national system of substantive and procedural rules to govern the administration of these plans — a system that was not to be disrupted or undermined by conflicting (or even harmonizing) local legislation. It does not follow from Congress’s stated goal of protecting plan assets, however, that Congress also intended ERISA’s preemption provisions to protect plans from the ordinary costs of doing business in various localities and thereby assure plan participants the maximum possible benefits.

In an apparent effort to reconcile its argument with Federal cases in which local taxes affecting covered ERISA plans have been upheld (e.g., Firestone Tire & Rubber Co. v Neusser, supra), the majority contends that the gains tax challenged here is different because it directly depletes plan assets (see also, Birdsong v Olson, supra, at 801). However, the argument does not withstand analysis. First, it is inconsistent with the majority’s own suggestion that some taxes that directly deplete plan assets, such as sales, stamp and documentary transfer taxes, are permissible (majority opn, at 53). Second, it cannot logically be reconciled with the majority’s central asset-depletion theory, which presumably should apply without regard to whether the depletion occurs through direct or indirect means. Indeed, taken to its logical conclusion, the majority’s asset-depletion theory would seem to require line-drawing based not on the direct or indirect nature of the tax, but rather on the amount of money involved. Of course, that is an unwieldy and inherently implausible means of determining whether preemption is required.

Apparently recognizing these serious flaws in its asset-depletian theory, the majority also relies on the tax’s impact on the plan’s "structure” and "administration” as a basis for finding preemption. However, the majority’s analysis on these points is equally flawed.

The majority concludes that the tax law at issue here affects the "structure and administration” of the plan because it imposes "certain recordkeeping and reporting requirements * * * mandating administrative procedures * * * not required in other jurisdictions” (majority opn, at 51). Yet, the record-keeping and reporting requirements imposed by New York’s gains tax law are certainly no more burdensome than were the recordkeeping and reporting requirements established by the garnishment laws that were held not to be preempted in Mackey v Lanier Collection Agency & Serv. (supra) or the levy and withholding procedures that were held not preempted in Retirement Fund Trust of Plumbing v Franchise Tax Bd. (supra). Furthermore, "[wjhat triggers ERISA preemption is not just any indirect effect on administrative procedures but rather an effect on the primary administrative functions of benefit plans, such as determining * * * eligibility for a benefit and the amount of that benefit” (Aetna Life Ins. Co. v Borges, supra, at 146-147). Clearly, requiring a plan to keep some additional records for tax purposes does not fall within this category.

As for the majority’s repeated appeals to the gains tax’s impact on plan "structure,” it is significant that no specific effect is ever identified. A plan’s "investment strategies,” a consideration stressed by the majority, are plainly not part of the plan’s "structure” — a term that denotes internal relationships, rules and methods of operation. Moreover, however it is characterized, the fact that a particular State law may influence a plan’s investment strategy is an unsatisfactory ground for finding preemption because the same could be said about a host of local laws, including zoning laws, that inevitably have an affect upon citizens’ economic choices. Indeed, a similar argument was recently rejected in In re Seolas (supra), where the court declined to find a local usury law preempted despite the fact that the law incidentally influenced an ERISA plan’s investment choices.

Finally, the majority’s reliance on the plan’s exemption from certain Federal taxes is misplaced. If Congress had wished to insulate covered ERISA plans from local income and gains taxes, it could easily have specifically provided as much, as it, in fact, did in the case of Federal income and certain real property gains taxes (see, 26 USC § 401 [a]; § 501 [a]; § 512 [b] [5]). Instead, it provided for a rule of preemption that applies only to the extent that the local tax "relates to” covered ERISA plans. Thus, it is evident that no blanket prohibition against State taxation was intended. Further, all that can really be inferred from the enactment of the Federal taxation exemption is that, as a matter of national policy, Congress elected to use its broad taxing authority to promote the growth of ERISA plans. Nothing in that legislation, or in the relevant provisions of the ERISA statute itself, suggests the existence of an entirely different congressional intention to override local tax laws that do not affirmatively promote such growth in the same manner.

CONCLUSION

A review of the case law, as well as the language and purpose of the ERISA preemption provision, reveals no sound reason to hold a generally applicable tax on gains from real property sales to be preempted solely because the entity to be taxed happens to be the operator of a covered ERISA plan. Although Congress intended to protect ERISA plans from State laws that would regulate or "relate to” their operations as covered pension and welfare programs, it clearly did not intend to immunize such plans against all local legislation that might burden or otherwise affect them. The test for preemption that respondent advances — which would reject preemption when a generally applicable State statute does not refer to covered plans and, in fact, functions irrespective of such plans’ existence — would seem sufficient to protect both ERISA’s goals and the legitimate, non-plan-related goals of the States. Accordingly, I dissent from the majority’s position and vote to reverse the Appellate Division order precluding imposition of the tax.

Chief Judge Wachtler and Judges Simons and Bellacosa concur with Judge Kaye; Judge Titone dissents and votes to reverse in a separate opinion in which Judge Hancock, Jr., concurs.

Order affirmed, with costs..

      . Appellants’ reliance on Mackey’s statement that run-of-the-mill State law claims — such as unpaid rent and failure to pay creditors — may be brought against covered plans is even more puzzling (see, dissenting opn, at 57). The Court mentioned such claims only as they supported the conclusion that some garnishment or enforcement proceeding was required to render any recovery meaningful (486 US, at 833). No similar need for the gains tax is advanced by appellants.

      . The dissent’s heavy reliance on In re Seolas (140 Bankr 266 [ED Cal]), a decision of a Federal District Court Judge in California, is misplaced. At issue in Seolas was preemption of the California usury law. Like the examples of State garnishment and antidiscrimination laws on which the dissent rests, the usury example provides no analogy to a tax imposed on gain realized by an ERISA plan from the sale or exchange of plan assets. Moreover, preemption of the California usury law would entail both civil and criminal sanctions, and criminal laws are expressly exempt from ERISA preemption.

      . The majority’s effort to minimize the significance of the above-quoted language in Ingersoll-Rand (majority opn, at 53-54) is simply not supported by a plain reading of the decision.

      . The majority’s effort to distinguish In re Seolas (supra) (majority opn, at 54, n 2) is wholly unpersuasive. The majority’s first assertion that the usury law at issue in that case "provides no analogy to [the] tax imposed [here]” is too conclusory to have any analytical value. The majority’s alternative argument that applying the preemption rule in Seolas would have "entailfed] both civil and criminal sanctions” even though the latter are expressly exempt is simply inaccurate. The only issue in Seolas was the right of a covered plan under California’s civil law to enforce a usurious loan contract. The enforceability of the State’s criminal usury laws was not, in fact, implicated. Finally, notwithstanding the majority’s creative effort to demonstrate that Seolas does not really support respondent’s position, the fact remains that the Seolas court’s rationale — i.e., that the challenged State law was "a provision of general application dealing with all nonexempt lenders in a uniform manner” (140 Bankr, at 272) — is precisely the rationale that respondent urges here.

      . In Ingersoll-Rand Co. v McClendon (supra), for example, the State lawsuit that was held to be preempted was based on generally applicable common-law "wrongful discharge” principles, but its underlying theory— that the discharge had been "wrongful” because it was motivated by a desire to circumvent the employer’s ERISA obligations — plainly required "reference to” a covered plan.

      . In Northwest Airlines v Roemer (603 F Supp 7), the court found a generally applicable State law requiring withholding as a means of recovering delinquent taxes to be preempted to the extent that the State sought to apply it to covered ERISA plan benefits. This decision differs from the others in that it extends preemption to a situation in which the State law neither referred to ERISA plans nor required the existence of an ERISA covered plan in order to operate. However, the Supreme Court’s subsequent decision in Mackey v Lanier Collection Agency & Serv. (supra) upholding application of a general State garnishment law to a covered plan brings the continued validity of Northwest Airlines into serious question.

      . The majority asserts that the particular tax at issue here, a tax imposed on the gain from the sale of real property, is not properly characterized as a "cost of doing business,” because it is "not like a stamp or documentary transfer tax” and is also not "akin to a sales tax” (majority opn, at 53). However, the majority never explains why the class of expenses that may be characterized as "costs of doing business” should be limited to the three-enumerated types of tax. Nor does it explain why the manner in which the tax is measured or the fact that the tax is higher than 1% are relevant to the preemption inquiry. In fact, since buying and selling assets— and realizing a gain on their assets’ appreciation — are, unquestionably, primary "business” goals of employee benefit plans, a tax imposed on that gain is a "cost of doing” business to a benefit plan in precisely the same way that a sales tax imposed on the goods its purchases would be.


source: Caselaw Access Project

author: Per Curiam.

license: Public Domain

text:
    The People of the State of New York, Respondent, v Anthony Carpenito, Appellant.
    Argued June 2, 1992;
    decided July 7, 1992

      POINTS OF COUNSEL

      Kevin P. Gilleece for appellant. The court below erred in holding that an alleged informant need not be produced for an ex parte in camera Darden hearing if law enforcement claims the informer is fearful and will not testify.

      (People v Berrios, 28 NY2d 361; People v Darden, 34 NY2d 177; Franks v Delaware, 438 US 154; People v Salgado, 57 NY2d 662; People v Fulton, 86 AD2d 675, 58 NY2d 914; People v West, 56 AD2d 955, 44 NY2d 656; People v Clark, 54 NY2d 941; People v Coffey, 12 NY2d 443, 13 NY2d 726, 376 US 916; People v Goggins, 34 NY2d 163; People v Jenkins, 41 NY2d 307.)

      Carl A. Vergari, District Attorney (Diane E. Selker and Richard E. Weill of counsel), for respondent.
    I. This Court should clarify the relationship between People v Darden (34 NY2d 177) and People v Alfnito (16 NY2d 181) to provide guidance regarding any ordering of in camera examinations of confidential informants who provide probable cause for search warrants. (People v Little, 48 AD2d 720; People v Carpenito, 171 AD2d 45; People v Patti, 59 AD2d 949; People v Vega, 160 AD2d 752; People v Maucieri, 125 AD2d 600; People v Hines, 62 AD2d 1067; Franks v Delaware, 438 US 154; Spinelli v United States, 393 US 410.) II. The court below correctly ruled that suppression was not an appropriate response to the People’s inability to produce the informant. (People v Carpenito, 171 AD2d 45; United States v Harris, 403 US 573; People v Lipsky, 57 NY2d 560; People v Wachowicz, 22 NY2d 369; Matter of Holtzman v Hellenhrand, 92 AD2d 405; People v Sweeper, 122 Misc 2d 386; People v Hamilton, 127 AD2d 691; People v Huggins, 36 NY2d 827; People v Fulton, 86 AD2d 675; People v Berrios, 28 NY2d 361.)
   OPINION OF THE COURT

Per Curiam.

On July 26, 1988, a search warrant was issued for defendont, his wife, their residence in North White Plains and any vehicles owned or operated by them. In the application for the warrant, Detective Lawrence Burns of the Mount Pleasant Police Department stated that beginning in January of 1988, based upon information from a confidential informant, the Department had begun an investigation into cocaine trafficking within the Town. The warrant application also contained detailed information from a second informant and the results of independent police surveillance, both of which linked the defendant to this alleged drug network. On July 27, 1988, Detective Burns executed the warrant and seized drugs, hypodermic needles, weapons, sales records and other drug paraphernalia.

Defendant was indicted on charges of criminal possession of a controlled substance in the second degree, criminal possession of a weapon in the fourth degree, two counts of criminally possessing a hypodermic instrument, and unlawful possession of marihuana. Defendant moved to suppress the physical evidence and challenged certain of the statements made by the second confidential informant as false and perjurious. He requested an in camera hearing in advance of trial into the informant’s existence, in accordance with this Court’s holding in People v Darden (34 NY2d 177).

By decision and order filed May 17, 1989, County Court, Westchester County, granted defendant’s motion only to the extent of ordering a hearing regarding the existence of the second informant, in order "to guard against fabrication of informants.” The People were unable to produce the informant for an in camera Darden examination, and at proceedings held on October 5, 1989, the People informed the Judge that the informant had been threatened with bodily harm and was too frightened to appear in court for the Darden examination. The People moved to reargue that portion of the May 17, 1989 decision in which the Judge had granted the defendant the Darden examination. In addition, the People offered to produce a detective who would, under oath and in camera, disclose the informant’s name, recount conversations he had had with the informant, and describe his efforts to secure the informant’s presence at the Darden examination.

The defendant again moved to suppress the physical evidence seized, and by decision and order entered November 3, 1989, the defendant’s motion was granted. The People appealed and the Appellate Division reversed, holding that although it was not improper to have ordered a Darden examination in this case, the hearing court should not have ordered the evidence suppressed without considering alternative evidence regarding the existence of the informant (171 AD2d 45, 50-55). A Judge of this Court granted defendant’s motion for leave to appeal.

The People argue that the hearing court should not have ordered a Darden examination in the first instance. We are not able to consider the People’s argument on this appeal. Were we to hold that the Judge indeed abused his discretion in ordering the examination, as the People urge, we would in essence be affording affirmative relief to a nonappealing party, and this we are not empowered to do (see, People v Gamble, 70 NY2d 885, 886).

We thus turn to defendant’s argument that suppression is the appropriate remedy where the prosecution cannot produce a confidential informant because the informant allegedly fears personal injury. It is consistent with Darden to permit the People to establish the existence of confidential informants through extrinsic evidence once the People have demonstrated that the informant is legitimately unavailable (see, People v Fulton, 86 AD2d 675, affd 58 NY2d 914; People v West, 56 AD2d 955, revd on other grounds 44 NY2d 656). The defendant does not seriously dispute this general point, but instead argues that a different rule should apply if the informant’s unavailability results not from death or disappearance, but from fear. We refuse to create such a blanket exception. Where, as here, the Court is convinced that the informant’s unavailability is, in fact, the result of actual fear of death or injury to the informant or his family, there is no practical reason for the exception. Moreover, adoption of defendant’s argument would provide criminal defendants with an incentive to intimidate suspected informants in an effort to secure suppression of damaging physical evidence. Thus, we agree with the Appellate Division that once the People have established to the Trial Judge’s satisfaction that a confidential informant is unavailable because of fear, the court has the discretion to permit the People to establish the informant’s existence through alternative means. If the People are not able to meet this initial threshold, however, the court similarly has the discretion to require production of the informant. We leave to a case-by-case determination the nature and degree of evidence that will be required to establish unavailability under these circumstances.

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

Chief Judge Wachtler and Judges Simons, Kaye, Titone, Hancock, Jr., and Bellacosa concur in Per Curiam opinion.

Order affirmed.

       [1] To the extent that our decision in People v Johnson (39 NY2d 364) suggests that GPL 470.35 (2) (b) gives this Court the power to grant affirmative relief to a nonappealing party, it is hereby overruled.


author: Chief Judge Wachtler. Titone, J.

text:
    In the Matter of Martin Wolpoff et al., Respondents, v Mario M. Cuomo, Individually and as Governor of the State of New York, et al., Respondents, and Saul Weprin, Individually and as Speaker of the New York State Assembly, et al., Appellants. In the Matter of Reeves Dixon et al., Respondents, v Mario M. Cuomo, Individually and as Governor of the State of New York, et al., Respondents, and Ralph Marino, Individually and as Temporary President and Majority Leader of the New York State Senate, Intervenor-Appellant.
    Argued June 29,1992;
    decided June 30, 1992

      POINTS OF COUNSEL

      Michael A. Carvin and Charles J. Cooper, of the District of Columbia Bar, admitted pro hac vice, and Gregg M. Mashberg for Ralph Marino, appellant in the first above-entitled proceeding and intervenor-appellant in the second above-entitled proceeding.
    I. The rulings below directly conflict with this Court’s decisions in Schneider and Bay Ridge. (Matter of Schneider v Rockefeller, 31 NY2d 420; Bay Ridge Community

      Council v Carey, 103 AD2d 280, 66 NY2d 657; Gaffney v Cummings, 412 US 735; Sincock v Roman, 233 F Supp 615; Wells v Rockefeller, 311 F Supp 48, 398 US 901; Bush v Martin, 251 F Supp 484; Mahan v Howell, 410 US 315; Cook v Luckett, 735 F2d 912; Black Political Task Force v Connolly, 679 F Supp 109; Travis v King, 552 F Supp 554.) II. The courts below erred by ignoring the Voting Rights Act. (Thornburg v Gingles, 478 US 30; Meek v Metropolitan Dade County, 908 F2d 1540, 918 F2d 184; Jeffers v Clinton, 730 F Supp 196; Major v Treen, 574 F Supp 325; Jordan v Winter, 604 F Supp 807; Carstens v Lamm, 543 F Supp 68; Goddard v Babbitt, 536 F Supp 538; Kirksey v Board of Supervisors, 554 F2d 139; Moore v Leflore County Bd. of Election Commrs., 502 F2d 621; Garza v County of Los Angeles, 756 F Supp 1298, 918 F2d 763.) III. The courts below improperly reversed the presumption of constitutionality and impermissibly struck down a legislative enactment on the basis of unresolved factual disputes. (Matter of Fay, 291 NY 198; People ex rel. Henderson v Board of Supervisors, 147 NY 1; Matter of Richardson [Stark], 307 NY 269.) IV. The 1992 State Senate plan is constitutional. V. Petitioners’ other claims are without merit. (Matter of Sherrill v O’Brien, 188 NY 185; Matter of Reynolds, 202 NY 430; Ince v Rockefeller, 290 F Supp 878.) VI. If the Senate plan is struck down, the Assembly plan must also fall. (Matter of Orans, 45 Misc 2d 616, 15 NY2d 339; Upham v Seamon, 456 US 37; White v Weiser, 412 US 783; Matter of Sherrill v O’Brien, 188 NY 185; Matter of Dowling, 219 NY 44.) VII. If this Court finds the enactment unconstitutional, the remedy is to provide the Legislature with an opportunity to correct the constitutional deficiencies. (Matter of Burns v Flynn, 155 Misc 742, 245 App Div 799, 268 NY 601; Matter of Tishman v Sprague, 293 NY 42; Matter of Dowling, 219 NY 44; Matter of Sherrill v O’Brien, 188 NY 185; Chapman v Meier, 420 US 1; Reynolds v Sims, 377 US 533; Wise v Lipscomb, 437 US 535; Connor v Finch, 431 US 407; Burns v Richardson, 384 US 73; Bandemer v David, 603 F Supp 1479, 478 US 109.)

      C. Daniel Chill, Elaine M. Reich and Lawrence D. Bernfeld for Saul Weprin, appellant in the first above-entitled proceeding and respondent in the second above-entitled proceeding.
    I. There was no controversy before Justice Saks regarding Assembly districts. Thus, the court below has issued an impermissible advisory opinion concerning Assembly district lines. (Brasher v United States Guar. Co., 1 NY2d 584; New York

      Pub. Interest Research Group v Carey, 42 NY2d 527; Matter of Richardson, 247 NY 401.) II. The bill contains a severability clause and hence the unconstitutionality of the Senate lines does not, ipso facto, invalidate the Assembly lines. (People ex rel. Henderson v Board of Supervisors, 147 NY 1; People ex rel. Carter v Rice, 135 NY 473; Matter of Sherrill v O'Brien, 188 NY 185; People ex rel. Alpha Portland Cement Co. v Knapp, 230 NY 48; Matter of Dowling, 219 NY 44; Matter of Fay, 291 NY 198; WMCA, Inc. v Lomenzo, 377 US 633; Reynolds v Sims, 377 US 533; Thornburg v Gingles, 478 US 30; United Jewish Orgs. v Carey, 430 US 144.) III. Any master appointed by the court below would, as a matter of law, be limited to consideration of the Assembly plan passed by the Legislature. (Reynolds v Sims, 377 US 533; Connor v Finch, 431 US 407; Chapman v Meier, 420 US 1; White v Weiser, 412 US 783; Maryland Comm, v Tawes, 377 US 656; Wise v Lipscomb, 437 US 535; Upham v Seamon, 456 US 37; Burton v Hobbie, 543 F Supp 235, 459 US 961.)

      Stanley Kalmon Schlein for Martin Wolpoff and others, respondents in the first above-entitled proceeding.
    I. The New York State Constitution requires a finding that the Senate plan is unconstitutional. (Matter of Sherrill v O'Brien, 188 NY 185; Mahan v Howell, 410 US 315.) II. New York State constitutional requirements must be met and such requirements only give way to the minimal extent required by Federal supremacy. (Reynolds v Sims, 377 US 533; Matter of Orans, 15 NY2d 339; Matter of Schneider v Rockefeller, 31 NY2d 420; Mahan v Howell, 410 US 315; Gaffney v Cummings, 412 US 735; White v Regester, 412 US 755; Flateau v Anderson, 537 F Supp 257.) III. The Senate plan cannot be defended on the basis of "one man one vote” requirements. (Gaffney v Cummings, 412 US 735; White v Regester, 412 US 755; Mahan v Howell, 410 US 315; Brown v Thompson, 462 US 835.) IV. The current Senate plan cannot be defended on the basis of voting rights requirements. V. The Senate plan and its defenders are attempting to mislead the courts and the public. (Bay Ridge Community Council v Carey, 66 NY2d 657; United Jewish Orgs. v Carey, 430 US 144.) VI. Respondent Cuomo has effectively confessed judgment, undoing the validity of his acts. VII. Appellant’s rejoinders in the proceedings below were entirely inapposite. VIII. Appellant can draw no comfort from the district lines of the past decade. IX. The decision should be affirmed because it is based on factual findings which are not subject to review at this level. (Matter of Mercorella v Benza, 37 NY2d 792. X. Appellants are not entitled to an automatic stay and any stay already in effect ought be lifted forthwith, in the interests of justice.

      Robert Abrams, Attorney-General (Richard Rifkin, Jerry Boone, Joel Graber and Dennis Safran of counsel), for Mario M. Cuomo and others, respondents in the first and second above-entitled proceedings.
    I. The Court has subject matter jurisdiction of these direct appeals pursuant to CPLR 5601 (b) (2). (Matter of Orans, 45 Misc 2d 616, 15 NY2d 339, appeal dismissed sub nom. Rockefeller v Orans, 383 US 10.) II. The Assembly lines should not have been stricken. (Matter of Orans, 15 NY2d 339; Upham v Seamon, 456 US 37; White v Weiser, 412 US 783; Reynolds v Sims, 377 US 533.) III. This Court should exercise its jurisdiction to review and determine the constitutionality of the Senate’s lines. (Baker v Carr, 369 US 186; People ex rel. Carter v Rice, 135 NY 473; Matter of Sherrill v O’Brien, 188 NY 185; Matter of Dowling, 219 NY 44; Reynolds v Sims, 377 US 533; WMCA, Inc. v Lomenzo, 377 US 633; Matter of Orans, 17 NY2d 601; Matter of Schneider v Rockefeller, 31 NY2d 420; Wise v Lipscomb, 437 US 535.)

      George F. Carpinello for Manfred Ohrenstein and another, respondents in the first and second above-entitled proceedings.
    I. Petitioners have made a prima facie showing that the 1992 Senate reapportionment plan violates article III, §4 of the New York State Constitution. II. Requiring the Legislature to honor article III, §4 to the extent practicable is the only means the people have to limit partisan gerrymandering. (Matter of Sherrill v O’Brien, 188 NY 185; Matter of Smith v Board of Supervisors, 148 NY 187; Matter of Dowling, 219 NY 44; Matter of Richardson [Stark], 307 NY 269; WMCA, Inc. v Lomenzo, 377 US 633; Reynolds v Sims, 377 US 533; Matter of Orans, 15 NY2d 339; Glinski v Lomenzo, 16 NY2d 27; Matter of Schneider v Rockefeller, 31 NY2d 420; Bay Ridge Community Council v Carey, 103 AD2d 280, 66 NY2d 657.) III. Defendant Marino’s defenses to the 1992 plan have been demonstrated to be factually without merit. (Mahan v Howell, 410 US 315; Brown v Thompson, 462 US 835.)

      Theodore S. Steingut, Jerome Tarnoff, Peter J. Kiernan, Allison M. Walsh and L. Banks Tarver for Reeves Dixon and others, respondents in the second above-entitled proceeding.
    I. The 1992 Senate plan violates State constitutional apportionment provisions concerning integrity of county lines, contiguity, compactness and gerrymandering. (Matter of Sherrill v O’Brien, 188 NY 185; Matter of Orans, 15 NY2d 339; Reynolds v Sims, 377 US 533; WMCA, Inc. v Lomenzo, 377 US 633; Matter of Schneider v Rockefeller, 31 NY2d 420; Bay Ridge Community Council v Carey, 115 Misc 2d 433, 103 AD2d 280; Davis v Bandemer, 478 US 109; Matter of Dowling, 219 NY 44.) II. The State constitutional apportionment provisions are controlling, absent unavoidable conflict with Federal law. (Reynolds v Sims, 377 US 533; Matter of Schneider v Rockefeller, 31 NY2d 420; Matter of Orans, 15 NY2d 339; WMCA, Inc. v Lomenzo, 377 US 633; Mahan v Howell, 410 US 315; White v Regester, 412 US 755; Gaffney v Cummings, 412 US 735.) III. The 1992 Senate plan’s violations of State constitutional law are not unavoidably necessary to comply with Federal law. (Martin v Edwards Labs., 60 NY2d 417; Property Clerk v Scricca, 140 Misc 2d 433; Jeffers v Clinton, 730 F Supp 196; Rybicki v State Bd. of Elections, 574 F Supp 1082; Gunn v Chickasaw County, 705 F Supp 315; United Jewish Orgs. v Wilson, 510 F2d 512, affd on other grounds sub nom. United Jewish Orgs. v Carey, 430 US 144; Mirrione v Anderson, 717 F2d 743, 465 US 1036.)
   OPINION OF THE COURT

Chief Judge Wachtler.

On March 9, 1992, the New York State Legislature voted to adopt a redistricting plan for the Senate and the Assembly (Senate Bill S 7280). On May 4, 1992, the Governor signed the plan, as approved and later amended, into law (L 1992, ohs 76, 77, 78). Within days, two separate challenges to the redistricting plan were mounted in State court, pursuant to article III, § 5 of the State Constitution and section 4221 of McKinney’s Unconsolidated Laws of NY (L 1911, ch 773, § 1). The first of these, Wolpoff v Cuomo, was commenced by order to show cause filed in Supreme Court, Bronx County, on or about May 8, 1992. Petitioners, four residents and registered voters of Bronx County, claimed that the plan for redistricting the Senate violated article III, § 4 of the State Constitution. Petitioners alleged that the Senate redistricting plan unconstitutionally fragments Bronx County into six separate Senate districts, only two of which are contained wholly within Bronx County, despite the fact that by virtue of population, Bronx County could support four wholly self-contained Senate districts.

The second action, Dixon v Cuomo, was commenced in Supreme Court, New York County, by order to show cause filed on or about May 18, 1992. Petitioners, nine registered voters residing in proposed Senate districts throughout the State, similarly alleged violations of article III, § 4 of the State Constitution. In their petition, they contended that the Senate redistricting plan "is a rank partisan and personal-interest gerrymander” that unnecessarily fragments counties throughout the State and creates districts that are neither compact nor contiguous.

In Wolpoff, the Senate Majority Leader, a named party, had the case removed to Federal court pursuant to 28 USC § 1443 (2). The United States District Court, Southern District of New York, however, sent the case back to State court (Wolpoff v Cuomo, 792 F Supp 964). Appeal of this remand order to the United States Court of Appeals for the Second Circuit is set for the week of July 13,1992. A temporary stay of the remand order expired on June 9, and oral argument was heard on the petition in Supreme Court, Bronx County, on June 12. That afternoon, the State court struck down the Senate redistricting plan as violative of the State Constitution in that it "excessively, gratuitously and without supervening need dictated by federal law, disregards the integrity of county boundaries in the creation of Senatorial districts.” The court struck down the Assembly plan as well, based on the requirement in article III, § 5 that the Senate and the Assembly be redistricted by the same law.

Meanwhile, the Majority Leader, who was not a named party in Dixon v Cuomo, moved to intervene in that case and his request was granted, but was conditioned upon his agreement not to seek removal of the case to Federal court. On June 15, Supreme Court, New York County, having considered the arguments in Dixon v Cuomo, similarly declared the redistricting plan unconstitutional.

The Majority Leader appealed pursuant to CPLR 5601 (b) (2). In addition, the Assembly Speaker has filed a direct appeal challenging the decision in Wolpoff to invalidate the Assembly plan along with the Senate plan, even though the Assembly plan had not been challenged.

In the interim, a three-Judge Federal court issued its Per Curiam opinion, acknowledging its "independent obligation” in such matters, but also declaring that it was "fully cognizant of the primacy of the state legislature and state judiclary” in redistricting (Fund for Accurate & Informed Representation v Weprin, US Dist Ct, ND NY, June 19, 1992).

We begin our analysis by turning to the constitutional provision implicated by this litigation. Article III, §4 of the State Constitution states that "each senate district shall contain as nearly as may be an equal number of inhabitants, excluding aliens, and be in as compact form as practicable, and * * * shall at all times consist of contiguous territory, and no county shall be divided in the formation of a senate district except to make two or more senate districts wholly in such county.”

In Matter of Orans (15 NY2d 339), we considered the continued vitality of article III, §4 in light of the United States Supreme Court decisions in Reynolds v Sims (377 US 533) and related cases, in which the Court had held that both houses of a State Legislature, by virtue of the Equal Protection Clause of the Fourteenth Amendment, must be apportioned substantially on an equal population basis. We recognized in that case that redistricting plans could no longer be based solely upon county lines without running afoul of Reynolds v Sims, and that "the integrity of all the counties in these respects cannot be complete” (Matter of Orans, supra, at 351). We stated at that time, however, that "the historic and traditional significance of counties in the districting process should be continued where and as far as possible” (id., at 352).

Redistricting plans must also comply with the requirements of the Federal Voting Rights Act (42 USC § 1973 et seq.). 42 USC § 1973 (b) specifically provides that a voting rights violation occurs if "based on the totality of circumstances, it is shown that the political processes leading to nomination or election in the State * * * are not equally open to participation by members of a [protected] class of citizens * * * in that its members have less opportunity than other members of the electorate to participate in the political process and to elect representatives of their choice.” It should be noted that the Senate redistricting plan at issue in this case was reviewed for compliance with the Voting Rights Act by the United States Department of Justice and was subsequently approved.

The issue before us on these appeals is not whether the Senate redistricting plan technically violates the express language of the State Constitution. No one disputes that such a technical violation has occurred, and in Matter of Orans, we recognized that such violations were inevitable if the Legislaturc was to comply with Federal constitutional requirements. Indeed, each of the four alternative plans submitted by the petitioners technically violates the State Constitution as well. Rather, we examine the balance struck by the Legislature in its effort to harmonize competing Federal and State requirements. The test is whether the Legislature has "unduly departed” from the State Constitution’s requirements regarding contiguity, compactness and integrity of counties (Matter of Schneider v Rockefeller, 31 NY2d 420, 429) in its compliance with Federal mandates. "[I]t is not our function to determine whether a plan can be worked out that is superior to that set up by [the Legislature]. Our duty is, rather, to determine whether the legislative plan substantially complies with the Federal and State Constitutions” (id., at 427). A strong presumption of constitutionality attaches to the redistricting plan and we will upset the balance struck by the Legislature and declare the plan unconstitutional " 'only when it can be shown beyond reasonable doubt that it conflicts with the fundamental law, and that until every reasonable mode of reconciliation of the statute with the Constitution has been resorted to, and reconciliation has been found impossible’ ” (Matter of Fay, 291 NY 198, 207).

This is no simple endeavor. We first address petitioners’ concerns regarding the integrity of counties. An examination of the redistricting plan reveals the following: 28 Senate districts out of 61 cross county lines; 11 minor counties and 12 major counties are divided. For purposes of the current plan, a minor county has fewer than 294,925 citizens, which is the figure obtained by dividing the State’s citizen population (17,990,455) by the number of Senate seats (61). Further, and apparently for the first time in State history, there are four pairs of bi-county districts. Thus, two separate Senate districts cross the county line between Nassau County and Suffolk County, another two districts cross between Bronx County and New York County, another two between Bronx County and Westchester County and another two between Orange County and Ulster County. We note that the plan challenged here is not markedly different from the plan upheld in Schneider, (supra). In Schneider, 26 out of 60 Senate districts crossed county lines, splitting 9 minor counties and 10 major counties.

The Majority Leader has marshaled a considerable amount of statistical and demographic data to support his contention that these districts were drawn in a "good faith effort” (Matter of Schneider v Rockefeller, supra, at 428) to comply with Reynolds v Sims and the Voting Rights Act and not for partisan political reasons, as petitioners argue. In support of his argument that the Legislature’s motives were benign, he points to the fact that for purposes of the United States Supreme Court equal population mandates, the Senate plan has a maximum population deviation of 4.29% from the ideal, which is well below the 16.4% deviation held acceptable by the United States Supreme Court in Mahan v Howell (410 US 315).

Petitioners, by contrast, have submitted four alternative plans, all of which have higher population deviations, but all of which divide fewer counties. In addition, none of the proffered alternative plans create pairs of bi-county districts, as does the current plan. Petitioners contend that the Legislature could have drafted a plan that had a higher, but still acceptable, population deviation and thereby done less damage to the integrity of county lines.

We are not here to determine whether the Legislature complied with the Federal Voting Rights Act. The Justice Department has already determined that the plan meets Federal requirements in that regard. Nor is it our role to assess the equal population deviations contained in the plans before us and determine which plan best balances Federal equal population and State constitutional directives. We are here to decide whether in complying with Federal mandates, the Legislature unduly undermined article III, § 4 of the State Constitution. That an alternative plan might have been devised that conflicted less with article III, § 4 but did greater violence to the equal representation principle is no basis for rejecting the Senate plan. Further, we cannot focus solely on the challenged districts and ignore the fact that a redistricting plan must form an integrated whole.

Balancing the myriad requirements imposed by both the State and the Federal Constitution is a function entrusted to the Legislature. It is not the role of this, or indeed any, court to second-guess the determinations of the Legislature, the elective representatives of the people, in this regard. We are hesitant to substitute our own determination for that of the Legislature even if we would have struck a slightly different balance on our own. Having considered the competing demographic and statistical data submitted by all of the parties in these cases, we find that the petitioners have not overcome the presumption of constitutionality that attaches to the redistricting plan.

Notwithstanding the technical deficiencies of the Senate redistricting plan, we find that respondent has put forth more than enough evidence to support his argument that any such violation was minimized and that the district lines were drawn as they were in order to comply with Federal statutory and constitutional requirements. The Senate plan indeed compromises the integrity of 23 counties, as petitioners have noted. But respondent has countered petitioners’ allegations with a detailed defense of the proposed plan that is grounded in a complex analysis of population trends and voting patterns, and the way in which both must be accommodated in order to comply with Federal requirements. Although we are troubled by the number of divided counties in the new plan and by the four bi-county pairings, it is not appropriate for us to substitute our evaluation of the relevant statistical data for that of the Legislature. We are satisfied that in balancing State and Federal requirements, the respondent has complied with the State Constitution as far as practicable, and we cannot conclude on this record that the Legislature acted in bad faith in approving this redistricting plan. Having made that determination, our review is ended (Matter of Schneider v Rockefeller, supra, at 428-429).

We have considered the petitioners’ compactness and contiguity claims, and we find them to be without merit. Accordingly, in each case, the judgment of Supreme Court should be reversed, without costs, the petition dismissed, and judgment granted declaring chapters 76, 77 and 78 of the Laws of 1992 constitutional.

Titone, J.

(dissenting). The issue here is, quite simply, the degree to which our State constitutional antigerrymandering provisions still have vitality in light of the evolving body of Federal law that both demands proportional representation (see, e.g., Mahan v Howell, 410 US 315; Reynolds v Sims, 377 US 533) and prohibits State apportionment plans that dilute minority voting strength (42 USC § 1973 [a], [b]; see, Thorn-burg v Gingles, 478 US 30). The majority has held that in this case the former must give way to the values reflected by the latter. Since I conclude that it is possible under these facts to reconcile the requirements of Federal law with those of article III, § 4 of our State Constitution without completely eviscerating the latter, I dissent.

Article III, §4 of the State Constitution requires, among other things, that Senate district lines be drawn so that "no county shall be divided * * * except to make two or more [S]enate districts wholly [within the] county.” It has long been recognized that absolute adherence to this constitutional command is impossible in light of modern Federal equal-populotian mandates and the existence of several counties whose populations are insufficient to support even a single senatorial district. Accordingly, this Court has held that the Constitution is satisfied when "the Legislature has made a good-faith effort to comply with * * * the equal-population principle * * * and has not unduly departed from our State constitutional command that the integrity of counties be preserved” (Matter of Schneider v Rockefeller, 31 NY2d 420, 428-429 [emphasis supplied]).

The standard for judicial review in this context is thus one akin to the notion of reasonableness. Under Schneider, what appears to be an unconditional constitutional directive may be satisfied as long as any departures therefrom are fairly justifiable in view of the other legal and practical constraints to which the redistricting process is subject. Hence, while the strict county-integrity rule has been eased by precedent, the Legislature is not free to disregard it simply because it can point to other, legally sanctioned goals as the motivating force or benign motive behind its final product. And, contrary to the majority’s suggestion, the Legislature is not the sole arbiter of whether an appropriate balance has been struck between the strictures of that rule and the sometimes competing values of population equality and enhancement of minority voting strength. As important and deserving as those values unquestionably are, the Legislature is duty-bound to accommodate them within our own constitutional framework, and the courts have both the right and the obligation to ensure that the demands of the State Constitution are, to the extent practicable, respected (Matter of Sherrill v O’Brien, 188 NY 185, 203-204; see Matter of Schneider v Rockefeller, supra, at 427 ["(o)ur duty is * * * to determine whether the legislative plan substantially complies with the * * * State Constitution”]). Viewed against these principles, the redistricting plan at issue here cannot be upheld.

The plan petitioners have challenged contains 28 out of a total of 61 Senate districts that cross county lines other than to create two or more districts wholly within the divided counties. A total of 11 minor and 12 major counties have been divided. Populous Kings and New York Counties are each divided by no less than three districts. Bronx County, which has sufficient population to encompass four whole Senate districts, is instead given only two wholly intra-county districts and is then divided by four additional cross-county districts. Moreover, the plan contains four bi-county districts, i.e., pairs of districts where both contain parts of the same two counties, a phenomenon which, according to petitioners, is unprecedented. Thus, it cannot be disputed that the challenged plan represents a drastic departure from the constitutional goal of respecting the integrity of county lines.

Contrary to the majority’s analysis this derogation of the constitutional rule cannot be justified on the basis of the competing commands of the Federal equal-population requirement and the Voting Rights Act. As revealed by petitioners’ submissions, at least four alternative plans exist that satisfy all of the requirements of Federal law while dividing fewer counties and containing no bi-county districts. These plans establish that the Legislature’s county-dividing choices were not dictated by practical necessity.

Respondents’ efforts to combat the inferences to be drawn from the existence of these less divisive alternative plans are unavailing. First, relying on language in Matter of Schneider v Rockefeller (supra, at 427), respondents contend that the existence of alternative plans is not sufficient to overcome the presumption of constitutionality that ordinarily cloaks legislation and is, in fact, not even a proper subject for judicial consideration. The argument, however, misconstrues the Schneider analysis, which merely concluded that "it is not [the court’s] function to determine whether a plan can be worked out that is superior to that set up by [the challenged plan]” (id., at 427). Here, the alternative plans were not submitted as alternative or superior plans, but rather as a means of disproving respondents’ contention that the Legislature’s wholesale disregard for county integrity was compelled by the need to comply with Federal equal protection principles. Viewed in that context, the alternative plans provide a legitimate and, indeed, highly persuasive argument for holding the enacted plan unconstitutional.

Respondents next contend that the alternative plans petitioners submitted are an unsatisfactory ground for invalidating the enacted plan because although all four of them satisfy Federal requirements, they each contain average population deviations that are higher than the over-all percentage deviatian contemplated by the enacted plan. In Reynolds v Sims (supra, at 577, 579), the Supreme Court set down the basic principle that local legislators should be elected from districts that are "as nearly of equal population as is practicable,” but also stated that some "deviations” "based on legitimate considerations incident to the effectuation of * * * rational state policy” are permissible. On the basis of Reynolds and its progeny, this Court held in Matter of Schneider v Rockefeller (supra, at 428) that the Legislature is entitled to draw districts that cross county lines in order to minimize deviations from the one-person-one-vote principle and that "the choice of maximum population equality [is] a [valid] guiding principle.” Respondents invoke the latter pronouncement in support of their contention that the Legislature was entitled to adopt a plan that was more divisive than the alternatives because they were acting to advance the goal of minimizing population deviations. The argument is, at best, misguided.

Since Schneider was decided, the United States Supreme Court has held that a "rational state policy of respecting the boundaries of political subdivisions” is a valid ground for departing somewhat from the strict one-person-one-vote rule and that a "16-odd percent maximum deviation” was within "tolerable limits” (Mahan v Howell, 410 US 315, 328-329, supra). Mahan thus establishes that compliance with Federal law may be achieved even though the redistricting plan does not purport to minimize population deviations, as long as some other satisfactory State value, including preserving the integrity of local political subdivisions, was the motivating reason (accord, Brown v Thomson, 462 US 835; White v Regester, 412 US 755; Gaffney v Cummings, 412 US 735). Additionally, Mahan refutes any argument respondents might make that they had to ignore county borders to the extent they did in order to comply with Federal law.

Furthermore, inasmuch as Schneider predates Mahan, that case can no longer be regarded as controlling to the extent that it suggests judicial tolerance for redistricting plans that freely divide counties in order to maximize population equality. Now that Mahan has established that Federal law does not require State Legislatures to maximize equality without regard to other local concerns, the Court’s view of what constitutes an "undue” incursion on the county-integrity principle must necessarily change. In the final analysis, the guiding principle continues to be the prescriptions contained in the State Constitution, and those prescriptions must be obeyed except to the extent that they are directly in conflict with the dictates of Federal law.

Finally, respondents’ reliance on the Federal Voting Rights Act to justify the Legislature’s departure from article III, § 4’s requirements is unpersuasive. While the Legislature was unquestionably required to guard against an apportionment plan that could dilute the voting strength of minority voters, respondents have not shown in specific terms how that goal necessitated the number and extent of county divisions that were adopted here.

In short, because the plan the Legislature adopted departs dramatically from State constitutional mandates and was not necessitated by Federal law, petitioners have made a prima facie showing that the Senate redistricting plan "unduly departed from our State constitutional command that the integrity of counties be preserved” (Matter of Schneider v Rockefeller, supra, at 428-429). Further, that constitutional command is not merely an outdated relic of another time that may be relegated to a secondary status or even disregarded entirely in light of modern Federal principles. Article III, § 4 was designed specifically to prevent "the possibility of unfair division of the State into * * * districts] so as to result in party or individual advantage” (Matter of Sherrill v O’Brien, supra, at 203; see, 3 Lincoln, Constitutional History of New York, at 135, 204, 218). That concern is as valid today as it was just before the turn of this century, when the Constitution of 1894 containing the present provision’s predecessor was adopted (see, McKinney’s Cons Laws of NY, Book 2, NY Const, art III, § 4, Historical Note, at 40). Indeed, even a brief review of the challenged plan’s treatment of Bronx County makes clear that the practice of gerrymandering is far from a dead letter.

With a population of 1,203,789, Bronx County is entitled to four wholly contained Senate districts. If the Legislature had drawn four whole Senate districts wholly enclosed within the County’s borders, the percentage deviation from a perfect one-person-one-vote ratio would be only 2%, a figure well within the "tolerable limits” contemplated in Mahan v Howell (supra). Furthermore, the ethnic make-up of the Bronx readily lends itself to district formation that would advance the values to be promoted by the Voting Rights Act. With a population that is 43% Hispanic, 31% African-American and 26% white, Bronx County could accommodate two wholly contained districts that are nearly 85% combined minority with a majority of Hispanics, one district that is nearly 85% combined minority with a majority of African-Americans and one district that would contain most of the County’s non-minority population. The fact that the Legislature chose to criss-cross the County’s borders repeatedly, giving it only two intra-county Senate districts and dividing the remainder of its population among four inter-county Senate districts belies any serious claim that the present redistricting plan was motivated solely by a legislative desire to comply with Federal mandates.

I am particularly concerned that the tolerance the majority has today expressed for a plan that all but disregards the integrity of county borders will be read by many as a signal that our State constitutional provisions no longer represent serious constraints on the critically important redistricting process. Certainly, although the majority has made passing reference to " 'the historic and traditional significance of counties in the districting process’ ” (majority opn, at 77, quoting Matter of Orans, 15 NY2d 339, 352, supra), there is little in its analysis or result that suggests any real commitment to that principle. Inasmuch as I deem this constitutionally prescribed principle to be important to the integrity of our redistricting system and inasmuch as the principle could have been accommodated within a Federally satisfactory plan, I am compelled to dissent from the Court’s decision to uphold the plan the Legislature enacted and vote instead to affirm the judgments below.

Judges Simons, Hancock, Jr., and Bellacosa concur with Chief Judge Wachtler; Judge Titone dissents and votes to affirm in a separate opinion; Judge Kaye taking no part In each case: Judgment reversed, etc.

      . Respondents’ reliance on Bay Ridge Community Council v Carey (103 AD2d 280, affd 66 NY2d 657) as a post-Mahan decision that supports their position is misplaced, since Bay Ridge was concerned principally with Assembly districts, as to which there is no effective constitutional rule requiring respect for county lines (see, 103 AD2d, at 285, citing Matter of Orans, 15 NY2d 339, 351).

      . Inasmuch as the Senate plan and the Assembly plan were enacted as part of the same law, the farmer’s constitutional infirmity operates to invalidate the latter as well (see, Matter of Orans, 15 NY2d 339, supra).


author: Titone, J.

text:
    The People of the State of New York, Respondent, v Hughval Anthony McIntosh, Appellant.
    Argued June 4,1992;
    decided July 1, 1992

      POINTS OF COUNSEL

      Joseph A. Gentile for appellant. The filing of the CPL 450.50 statement by the District Attorney precludes the litigation of the indictment until the People obtain a reversal of the suppression order on appeal.

      (Matter of State of New York v King, 36 NY2d 59; Matter of Forte v Supreme Ct., 48 NY2d 179; People v Green, 131 Misc 2d 641; People v Kates, 53 NY2d 591; Matter of Daniel C, 99 AD2d 35; Pok Rye Kim v Mars Cup Co., 102 AD2d 812; People v O’Doherty, 70 NY2d 479.)

      Denis Dillon, District Attorney (John F. McGlynn and Peter A. Weinstein of counsel), for respondent.
    Further prosecution of defendant was not barred where the People withdrew their appeal from an adverse suppression ruling with court permission prior to any determination of the appeal. (Matter of Forte v Supreme Ct., 48 NY2d 179; People v McIntosh, 173 AD2d 490; People v Kates, 53 NY2d 591; Mapp v Ohio, 367 US 643, 368 US 871; Matter of State of New York v King, 36 NY2d 59; People v Spitaleri, 9 NY2d 168; Mackay v Lewis, 73 NY 382.)
   OPINION OF THE COURT

Titone, J.

This appeal concerns the ongoing effect, if any, that a CPL 450.50 (1) statement has after an appeal taken by the People pursuant to CPL 450.20 (8) has been withdrawn with the permission of the appellate court.

Following the trial court’s decision to suppress certain evidence that the People had intended to introduce at defendant’s trial, the People filed a notice of appeal along with the required CPL 450.50 (1) statement, which asserted that the suppression order "rendered the sum of proof available to the People * * * either legally insufficient or so weak in its entirety that any reasonable probability of obtaining a conviction * * * has been effectively destroyed” (see, CPL 450.20 [8]). Approximately six weeks later, however, the People moved for leave to withdraw their appeal, asserting in an affidavit that "the matter has been further reviewed and it has been determined that although the People’s case has been considerably weakened by the suppression order, a trial of defendant is the most appropriate procedural avenue.” The People’s motion for leave to withdraw the appeal was granted by order of the Appellate Division dated October 16, 1989, and the appeal was, in fact, withdrawn.

After the appeal’s withdrawal, defendant moved in the trial court for dismissal of the indictment. Relying on CPL 450.50 (2) and this Court’s decision in Matter of Forte v Supreme Ct. (48 NY2d 179), defendant argued that the People’s CPL 450.50 (1) statement was binding on them and that further prosecution of the indictment was now foreclosed. The trial court adopted defendant’s argument and dismissed the indictment. The Appellate Division, however, reversed and reinstated the indictment. Citing some of the language used in Matter of Forte v Supreme Ct. (supra, at 188) and People v Kates (53 NY2d 591, 596-597), the Court concluded that CPL 450.50 (2) does not operate to bar further prosecution of an indictment unless and until the underlying People’s appeal actually culminates in an affirmance. We agree with the Appellate Division’s conclusion, but inasmuch as neither Forte nor Kates resolves the issue presented here, we reach that conclusion by a somewhat different route.

CPL 450.20 (8) authorizes the People to take an appeal from a trial court order suppressing evidence, provided that they file a CPL 450.50 (1) statement to the effect that the order to be appealed has rendered their case either "insufficient as a matter of law” or "so weak in its entirety that any reasonable possibility of prosecuting * * * has been effectively destroyed.” The purpose of these interlocking provisions is to limit appeals by the People from suppression orders to cases in which the order is so devastating to the People’s case that, as a practical matter, it ends the prosecution (see, Bellacosa, Practice Commentary, McKinney’s Cons Laws of NY, Book 11A, CPL 450.50, at 568-569). Under CPL 450.50 (2), "[t]he taking of an appeal * * * pursuant to [CPL 450.20 (8)] * * * constitutes a bar to the prosecution of the accusatory instrument * * * unless and until [the] suppression order is reversed upon appeal and vacated.”

Relying on the underscored language, defendant argues that it is the act of "taking” the appeal that operates as a bar to further prosecution and that, accordingly, the Appellate Division was in error when it held that the statutory bar is inoperative unless and until the suppression order is upheld on appeal. This argument has much merit in the abstract, but it does not advance defendant’s position in this case. An appeal that has been "withdrawn” with the permission of the court is a nullity. Consequently, a withdrawn appeal is not an appeal that has been "taken” within the meaning of CPL 450.50 (2) and the bar to further prosecution contemplated by that statute is not applicable. Further, if the appellate court has authorized the withdrawal of an appeal, the accompanying CPL 450.50 (1) statement is necessarily withdrawn along with it and, in consequence, it is of no further legal significance.

We note that the appellate courts remain free to deny permission to withdraw an appeal, particularly where they perceive some form of prosecutorial bad faith or a pattern of misuse of the withdrawal option. We further note that because a withdrawn appeal by the People is a nullity, it cannot serve as the basis for an exclusion from the time within which the People must be ready for trial pursuant to CPL 30.30 (see, CPL 30.30 [4] [a] [excluding "a reasonable period of delay resulting from other proceedings concerning the defendant, including * * * appeals”]). Thus, as the Appellate Division held, the People’s time to become ready will be deemed to have continued to run notwithstanding their CPL 450.20 (8) appeal if, in fact, that appeal is withdrawn before it is determined.

In this case, the People’s appeal was withdrawn with the permission of the Appellate Division, which evidently perceived no bad faith or pattern of abuse. When the appeal was withdrawn, the CPL 450.50 (1) statement was concomitantly withdrawn and posed no bar to further prosecution on the indictment.

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

Chief Judge Wachtler and Judges Simons, Kaye, Hancock, Jr., and Bellacosa concur.

Order affirmed.