author: G.B. Smith, J.

text:
    [ 844 NE2d 1142, 811 NYS2d 620]
    Mark J. Boss et al., on Behalf of Themselves and Others Similarly Situated, Appellants, v American Express Financial Advisors, Inc., et al., Respondents.
    Argued January 10, 2006;
    decided February 9, 2006

      POINTS OF COUNSEL

      Paduano & Weintraub LLP, New York City (Leonard Weintraub and Willard Knox of counsel), and Law Offices of Jon E. Drucker, Beverly Hills, California (Jon E. Drucker of counsel), for appellants.
    I. The court below erred by not applying the public policy exception to enforcement of the forum selection clause. (National Union Fire Ins. Co. of Pittsburgh, Pa. v Williams, 223 AD2d 395; The Bremen v Zapata Off-Shore Co., 407 US 1; City of New York v Pullman Inc., 477 F Supp 438; Central Natl.-Gottesman, Inc. v M.V. “GERTRUDE OLDENDORFF”, 204 F Supp 2d 675; Jockey Intl., Inc. v M/V “LEVERKUSEN EXPRESS”, 217 F Supp 2d 447; Hartford Fire Ins. Co. v Novocargo USA Inc., 156 F Supp 2d 372; Koko Contr. v Continental Envtl. Asbestos Removal Corp., 272 AD2d 585.) II. The court below erred in declining to distinguish between a permissive and mandatory forum selection clause. (Fleet Capital Leasing/ Global Vendor Fin. v Angiuli Motors, Inc., 15 AD3d 535; Di Ruocco v Flamingo Beach Hotel & Casino, 163 AD2d 270; Koko Contr. v Continental Envtl. Asbestos Removal Corp., 272 AD2d 585; Hirschman v National Textbook Co., 184 AD2d 494; Micro Balanced Prods. Corp. v Hlavin Indus., 238 AD2d 284; Brooke Group v JCH Syndicate 488, 87 NY2d 530; Bell Constructors v Evergreen Caissons, 236 AD2d 859; National Union Fire Ins. Co. of Pittsburgh, Pa. v Williams, 223 AD2d 395; City of New York v Pullman Inc., 477 F Supp 438; Hartford Fire Ins. Co. v Novocargo USA Inc., 156 F Supp 2d 372.)

      Faegre & Benson, Minneapolis, Minnesota (Daniel C. Gerhan and Holly M. Robbins of counsel), and Stroock & Stroock & Lavan LLP, New York City, for respondents.
    I. New York’s public policy favors enforcement of forum selection clauses. (Brooke Group v JCH Syndicate 488, 87 NY2d 530; British W. Indies Guar. Trust Co. v Banque Internationale A Luxembourg, 172 AD2d 234; Koob v IDS Fin. Servs., 213 AD2d 26; The Bremen v Zapata Off-Shore Co., 407 US 1; Carnival Cruise Lines, Inc. v Shute, 499 US 585; Northwestern Natl. Ins. Co. v Donovan, 916 F2d 372; D.O.T. Tiedown & Lifting Equip. v Wright, 272 AD2d 290; Personius v Butters, 249 AD2d 831; Bell Constructors v Evergreen Caissons, 236 AD2d 859; Matter of Fidelity & Deposit Co. of Md. v Altman, 209 AD2d 195.) II. The forum selection clause is mandatory. (Karl Koch Erecting Co., Inc. v New York

      Convention Ctr. Dev. Corp., 656 F Supp 464, 838 F2d 656; Babcock & Wilcox Co. v Control Components, 161 Misc 2d 636; Roby v Corporation of Lloyd’s, 996 F2d 1353; Micro Balanced Prods. Corp. v Hlavin Indus., 238 AD2d 284; Koob v IDS Fin. Servs., 213 AD2d 26; Water Energizers, Ltd. v Water Energizers, Inc., 788 F Supp 208; Cambridge Nutrition A.G. v Fotheringham, 840 F Supp 299; Frietsch v Refco, Inc., 56 F3d 825; Koko Contr. v Continental Envtl. Asbestos Removal Corp., 272 AD2d 585; Hirschman v National Textbook Co., 184 AD2d 494.) III. The forum selection clause does not violate New York public policy. (Koko Contr. v Continental Envtl. Asbestos Removal Corp., 272 AD2d 585; Finucane v Interior Constr. Corp., 264 AD2d 618; Loucks v Standard Oil Co. of N.Y., 224 NY 99; Cooney v Osgood Mach., 81 NY2d 66; Central Natl.-Gottesman, Inc. v M.V. “GERTRUDE OLDENDORFF”, 204 F Supp 2d 675; Street, Sound Around Elees., Inc. v M/V Royal Container, 30 F Supp 2d 661; John J. Kassner & Co. v City of New York, 46 NY2d 544; H.P.S. Capitol v Mobil Oil Corp., 186 AD2d 98; The Bremen v Zapata Off-Shore Co., 407 US 1; Red Bull Assoc. v Best W. IntL., Inc., 686 F Supp 447, 862 F2d 963.)
   OPINION OF THE COURT

G.B. Smith, J.

The issue here is whether a forum selection clause requiring that any action be brought in Minnesota courts should be enforced. We agree with the Appellate Division that the forum selection clause is valid and affirm its order dismissing the action.

Facts

The three plaintiffs in this action, all of whom resided in the Syracuse, New York area, sue on behalf of themselves and the putative class action members who are similarly situated (see CPLR 901). At issue is whether the “expense allowance” paid by each advisor for the maintenance of office space and overhead expenses was a violation of the laws of New York State and requires that the matter be heard in New York State courts.

The plaintiffs were all first-year financial advisors at the time that they signed their contracts with IDS Life Insurance Co. (IDS). Plaintiffs earned $2,000 per month and were required to pay $900 per month for expense allowances. These allowances covered all overhead expenses such as building rent and maintenance, office support staff, and office supplies, among other expenses.

In December 2002, plaintiffs filed suit in Supreme Court, New York County alleging a violation of Labor Law § 193 and 12 NYCRR 195.1. American Express Financial Advisors, Inc. (AEFA) and IDS filed joint motions to dismiss based, in part, upon inconvenient forum, a defense founded on documentary evidence and a failure to state a cause of action (CPLR 327, 3211 [a] [1], [7]). Supreme Court granted the motion, stating:

“The Agreement’s forum selection language not only affirms Minnesota jurisdiction, it includes a waiver of any contrary privileges. No alternative is permitted.
“There are no allegations of fraud or overreaching here; there is no evidence plaintiffs will be denied their day in court in Minnesota.”

Plaintiffs moved to reargue and vacate the judgment, asserting that the statute of limitations had expired in Minnesota and plaintiffs would not have their day in court as was contemplated in the October 9, 2003 opinion by the court. Supreme Court granted the motion to reargue in order to address the argument that the Minnesota statute of limitations had run and determined that the “statute of limitations” is not the “sort of grave difficulty and inconvenience” that should lead to the application of New York law (see Matter of Fidelity & Deposit Co. of Md. v Altman, 209 AD2d 195 [1st Dept 1994]). Thus, Supreme Court denied plaintiffs’ motion to vacate the earlier decision.

The Appellate Division affirmed, determining:

“With respect to the forum-selection clause, plaintiffs specifically contracted to litigate their claim in Minnesota. Thus, they have not been deprived of a forum. Rather, they are time-barred from proceeding in the agreed-upon forum. The fact that New York provides a longer statute of limitations does not avail plaintiffs where they specifically agreed to proceed under Minnesota law.” (15 AD3d 306, 308 [2005].)

Discussion

Plaintiffs argue first that the forum selection clause is permissive but not mandatory. It reads as follows:

“This Agreement is a Minnesota contract, governed by Minnesota law. All of the payments you make to IDS Life are payable in Hennepin County, Minnesota. You expressly waive any privileges contrary to this provision. You agree to the jurisdiction of [the] State of Minnesota courts for determining any controversy in connection with this Agreement.”

The contractual language here provides unambiguously that any disputes are to be decided in the courts of Minnesota and that Minnesota law should govern. The parties thus waived any privilege to have their claims heard elsewhere.

Plaintiffs also argue that the wage deductions were in contravention of Labor Law § 193 (l), § 198-c, and 12 NYCRR 195.1, and unreasonable, unjust and contrary to the public policy concerns of New York. Plaintiffs argue that New York State law forbids deductions of more than 10% from an employee’s wages (see 12 NYCRR 195.1). As a result of these provisions of New York law, plaintiffs argue that defendants should not be able to enforce the forum selection clause.

Plaintiffs argument, however, is misdirected. The issue they raise is really one of choice of law, not choice of forum; it is the choice of law clause that, according to plaintiffs, may not be enforced. They say, in substance, that, since plaintiffs worked in New York, New York law must govern the deductions from their wages, even though the contract contains a Minnesota choice of law clause.

We express no opinion on the merits of plaintiffs’ argument. It could and should have been made to a court in Minnesota— the forum the parties chose by contract. If New York’s interest in applying its own law to this transaction is as powerful as plaintiffs contend, we cannot assume that Minnesota courts would ignore it, any more than we would ignore the interests or policies of the State of Minnesota where they were implicated. In short, objections to a choice of law clause are not a warrant for failure to enforce a choice of forum clause.

“Forum selection clauses are enforced because they provide certainty and predictability in the resolution of disputes” (see Brooke Group v JCH Syndicate 488, 87 NY2d 530, 534 [1996]). The Supreme Court noted that all of the proceedings regarding the contract and the employment training took place in Minnesota. Further, defendants, incorporated in Delaware, had their principal places of business in Minnesota. All paychecks were generated from the Minnesota office. There does not appear to be a reason why IDS or AEFA would contemplate coming into New York for litigation. Here it is clear from the setup of the agreement that plaintiffs’ reasonable expectations were that all litigation would take place in Minnesota, not New York.

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

Chief Judge Kaye and Judges Ciparick, Rosenblatt, Graffeo, Read and R.S. Smith concur.

Order affirmed, with costs.

      . “[Labor Law] § 193. Deductions from wages
      “1. No employer shall make any deduction from the wages of an employee, except deductions which:
      “a. are made in accordance with the provisions of any law or any rule or regulation issued by any governmental agency; or “b. are expressly authorized in writing by the employee and are for the benefit of the employee; provided that such authorization is kept on file on the employer’s premises. Such authorized deductions shall be limited to payments for insurance premiums, pension or health and welfare benefits, contributions to charitable organizations, payments for United States bonds, payments for dues or assessments to a labor organization, and similar payments for the benefit of the employee.”

      . “[Labor Law] § 198-c. Benefits or wage supplements
      “1. In addition to any other penalty or punishment otherwise prescribed by law, any employer who is party to an agreement to pay or provide benefits or wage supplements to employees or to a third party or fund for the benefit of employees and who fails, neglects or refuses to pay the amount or amounts necessary to provide such benefits or furnish such supplements within thirty days after such payments are required to be made, shall be guilty of a misdemeanor, and upon conviction shall be punished as provided in section one hundred ninety-eight-a of the article. Where such employer is a corporation, the president, secretary, treasurer or officers exercising corresponding functions shall each be guilty of a misdemeanor.
      “2. As used in this section, the term ‘benefits or wage supplements’ includes, but is not limited to, reimbursement for expenses; health, welfare and retirement benefits; and vacation, separation or holiday pay.”

      . “Section 193, subdivision 1 (b), of the New York State Labor Law permits an employer to make deductions from an employee’s wages for certain enumerated items and also for ‘similar payments for the benefit of the employee’. Permitted deductions for all such non-enumerated items shall not exceed, in the aggregate, 10 percent of the gross wages due the employee for a payroll period.”


source: Caselaw Access Project

author: Chief Judge Kaye. G.B. Smith, J. (concurring in result).

license: Public Domain

text:
    [ 844 NE2d 1145, 811 NYS2d 623]
    The People of the State of New York, Respondent, v Sandro Lopez, Appellant. The People of the State of New York, Respondent, v Yolanda Billingslea, Appellant. The People of the State of New York, Respondent, v Winston Nicholson, Appellant.
    Argued January 12, 2006;
    decided February 16, 2006

      POINTS OF COUNSEL

      Center for Appellate Litigation, New York City (David J. Klem and Robert S. Dean of counsel), for appellant in the first above-entitled action.
    The intermediate appellate courts retain a residuum of authority sua sponte, and in an extraordinary case, review the excessiveness of a sentence despite a valid waiver of the right to appeal. (People v Delgado, 80 NY2d 780; People v Thompson, 60 NY2d 513; People v Pollenz, 67 NY2d 264; Waldo v Schmidt, 200 NY 199; People v Bourne, 139 AD2d 210; People v Coleman, 30 NY2d 582; People v Zuckerman, 5 NY2d 401; People v Speiser, 277 NY 342; People v Stevens, 91 NY2d 270; People v Farrell, 85 NY2d 60.)

      Robert T. Johnson, District Attorney, Bronx (Jonathan Zucker and Joseph N Ferdenzi of counsel), for respondent in the first above-entitled action.
    Defendant’s valid waiver of his right to appeal foreclosed his ability to raise an excessive sentence claim and the Court appropriately declined to review that claim in the interest of justice. (People v Seaberg, 74 NY2d 1; People v Callahan, 80 NY2d 273; People v Hidalgo, 91 NY2d 733; People v Blakley, 34 NY2d 311; People v Campbell, 97 NY2d 532; People v Francabandera, 33 NY2d 429; People v Armlin, 37 NY2d 167; People v Lococo, 92 NY2d 825; People v Allen, 82 NY2d 761; People v Calvi, 89 NY2d 868.)

      Lynn W.L. Fahey, New York City, for appellant in the second above-entitled action.
    I. Appellant’s waiver of her right to appeal was not knowing, intelligent, and voluntary, since the court told her the right to appeal existed only if she went to trial, and was automatically waived by pleading guilty. (Johnson v Zerbst, 304 US 458; People v Callahan, 80 NY2d 273; People v Seaberg,
      74 NY2d 1; Barker v Wingo, 407 US 514; People v Harris, 61 NY2d 9; People v Thomas, 53 NY2d 338; Carnley v Cochran, 369 US 506; People v Muniz, 91 NY2d 570; People v Williams, 36 NY2d 829; People v Calvi, 89 NY2d 868.) II. The parties lack the power to deprive the Appellate Division of its interest of justice jurisdiction to modify a sentence as excessive. (People v Thompson, 60 NY2d 513; People v Delgado, 80 NY2d 780; People v Hidalgo, 91 NY2d 733; People v Pride, 3 NY2d 545; People v Bleakley, 69 NY2d 490; People v Bourne, 139 AD2d 210; People v Miles, 173 App Div 179; People v Spagnolia, 260 App Div 551; People v Pollenz, 67 NY2d 264; People v Zuckerman, 5 NY2d 401.)

      Charles J. Hynes, District Attorney, Brooklyn (Joyce Slevin and Leonard Joblove of counsel), for respondent in the second above-entitled action.
    I. Defendant’s claim that her waiver of the right to appeal was invalid is not preserved for this Court’s review. In any event, the waiver was knowing, intelligent, and voluntary. (People v Robinson, 36 NY2d 224; People v Lopez, 71 NY2d 662; People v Epps, 255 AD2d 840; People v Carmona, 192 AD2d 446; People v Conte, 186 AD2d 579; People v Nixon, 21 NY2d 338, 393 US 1067; People v Toxey, 86 NY2d 725; People v Johnson, 82 NY2d 683; People v Claudio, 64 NY2d 858; People v Pascóle, 48 NY2d 997.) II. Defendant’s waiver of her right to appeal foreclosed appellate review of her excessive sentence claim by the Appellate Division. (People v Pollenz, 67 NY2d 264; People v Thompson, 60 NY2d 513; People v Callahan, 80 NY2d 273; People v Muniz, 91 NY2d 570; People v Seaberg, 74 NY2d 1; People v Bourne, 139 AD2d 210; People v Burk, 181 AD2d 74; People v Discala, 45 NY2d 38; People v Thompson, 60 NY2d 513; People v Howe, 56 NY2d 622.)

      Center for Appellate Litigation, New York City (Robert S. Dean of counsel), for appellant in the third above-entitled action.
    I. The waiver of appellant’s right to appeal cannot be considered knowing, intelligent, and voluntary when it was presented to him as something that happened automatically merely by virtue of the fact that he was pleading guilty. (People v Seaberg, 74 NY2d 1; People v Williams, 36 NY2d 829; People v Callahan, 80 NY2d 273; People v Moissett, 76 NY2d 909; People v Bray, 154 AD2d 692; Johnson v Zerbst, 304 US 458; People v Pollenz, 67 NY2d 264; People v Hidalgo, 91 NY2d 733; People v Muniz, 91 NY2d 570; People v Thompson, 60 NY2d 513.) II. The intermediate appellate courts retain a residuum of authority, in extraordinary cases, to review the excessiveness of a sentence despite a valid waiver of the right to appeal. (People v Delgado, 80 NY2d 780; People v Thompson, 60 NY2d 513; People v Pollenz, 67 NY2d 264; Waldo v Schmidt, 200 NY 199; People v Bourne, 139 AD2d 210; People v Miles, 173 App Div 179; People v Coleman, 30 NY2d 582; People v Zuckerman, 5 NY2d 401; People v Stevens, 91 NY2d 270; People v Farrell, 85 NY2d 60.)

      Robert T Johnson, District Attorney, Bronx (Jennifer Marinaccio and Joseph N. Ferdenzi of counsel), for respondent in the third above-entitled action.
    I. Defendant knowingly, intelligently, and voluntarily waived his right to appeal. (People v Seaberg, 74 NY2d 1; People v Moissett, 76 NY2d 909; People v Hidalgo, 91 NY2d 733; People v Moyett, 22 AD3d 114; People v Pollenz, 67 NY2d 264.) II. Defendant’s valid waiver of his right to appeal, part of a bargained-for plea agreement, forecloses him from seeking review of the agreed-upon sentence as harsh and excessive in the interest of justice. (People v Callahan, 80 NY2d 273; People Seaberg, 74 NY2d 1; People v Pollenz, 67 NY2d 264; People v,Miles, 61 NY2d 635; People v Discala, 45 NY2d 38; People v Blakley, 34 NY2d 311; People v Campbell, 97 NY2d 532; People v Francabandera, 33 NY2d 429; People v Armlin, 37 NY2d 167; People v Allen, 82 NY2d 761.)

      Legal Aid Society of New York, Criminal Appeals Bureau, New York City (Steven Banks and Laura R. Johnson of counsel), amicus curiae in the third above-entitled action.
    Given the increasingly prevalent prosecutorial and/or judicial insistence upon pro forma, nonnegotiable appeal waivers as the “price” of a guilty plea resolution, the perfunctory waiver obtained in the case before the Court should be deemed unenforceable and this Court should hold, for policy as well as statutory reasons, that the Appellate Division departments retain interest-of-justice jurisdiction to review unjustly harsh sentences despite a waiver of appeal. (People v Seaberg, 74 NY2d 1; People v DeSimone, 80 NY2d 273; People v Holman, 89 NY2d 876; People v Moyett, 22 AD3d 114.)

      Richard A. Brown, District Attorney, Kew Gardens (Gary S. Fidel and John M. Castellano of counsel), amicus curiae in the third above-entitled action.
    The plea court properly ensured defendant’s knowing waiver of his right to appeal, and the Appellate Division properly declined to address the excessive sentence issue based on the waiver. (People v Seaberg, 74 NY2d 1; People v Callahan, 80 NY2d 273; People v Moissett, 76 NY2d 909; People v Allen, 82 NY2d 761; People v Hidalgo, 91 NY2d 733; People v Muniz, 91 NY2d 570; People v Avery, 85 NY2d 503; People v Outley, 80 NY2d 702; People v Vargas, 88 NY2d 363; People v Harris, 98 NY2d 452.)
   OPINION OF THE COURT

Chief Judge Kaye.

Can a criminal defendant who has validly waived the right to appeal nonetheless ask the Appellate Division to exercise its interest-of-justice jurisdiction to reduce a sentence? We answer that question in the negative, though in so doing we underscore the critical nature of a court’s colloquy with a defendant explaining the right relinquished by an appeal waiver.

People v Lopez

Following arrest and indictment for possession and sale of a controlled substance in or near school grounds, defendant Lopez pleaded guilty to a reduced charge. In exchange for this plea, the court promised to impose a sentence of imprisonment of 21/2 to 5 years. At the time of the plea, defendant waived his right to appeal on the record, both verbally and in writing. Despite this waiver, on January 14, 2004, defendant, acting pro se, filed a timely notice of appeal, noting only that he would appeal the “conviction and/or sentence.” After appointment by the Appellate Division, appellate counsel argued that the Court should reduce defendant’s sentence in the interest of justice despite his waiver of the right to appeal.

The Appellate Division affirmed with respect to defendant’s sentence, holding that “defendant’s valid waiver of his right to appeal encompassed his excessive sentence claim and thus forecloses interest of justice review. In any event, were we to find that defendant did not validly waive his right to appeal, we would perceive no basis for reducing the sentence” (16 AD3d 258, 258 [1st Dept 2005] [citation omitted]). On defendant’s appeal of the excessive sentence issue, we now affirm the Appellate Division’s conclusion.

People v Billingslea

Defendant Billingslea, after suffering a psychotic episode, repeatedly stabbed both her best friend and her seven-year-old daughter, killing the child. Indicted for three counts of murder in the second degree and one count of attempted murder in the second degree—along with lesser crimes—defendant pleaded guilty to manslaughter in the first degree in satisfaction of all charges and was sentenced to the agreed-upon prison term of 15 years.

During the plea allocution, the court asked defendant a series of questions concerning facts surrounding the homicide and whether she understood that by pleading guilty she was giving up the rights attendant to a criminal trial. After defendant responded “Yes,” the court then said to her, “And last, if you went to trial and were convicted, you would have what is known as the right of appeal. That means that a group of judges would review everything done in this case to make sure your rights have been protected, but when you plead guilty you waive your right of appeal.” Defendant again replied “Yes” when asked if she understood.

After defendant filed an appeal requesting a reduction of her sentence in the interest of justice, the Appellate Division affirmed her conviction and sentence stating, “The record demonstrates that the defendant knowingly, intelligently, and voluntarily waived her right to appeal, which included any challenge to her sentence, which was imposed pursuant to a negotiated plea agreement” (16 AD3d 516, 516 [2d Dept 2005]). Concluding that defendant’s waiver was not adequately informed, we now reverse and remit to the Appellate Division to consider defendant’s excessive sentence claim.

People v Nicholson

Defendant Nicholson was charged with attempted murder in the second degree as well as five related charges arising out of a 1999 knife fight with a rival gang member. In exchange for a promised prison sentence of eight years, defendant pleaded guilty. As part of his plea colloquy, and following an explanation of the trial rights forfeited by virtue of a guilty plea, the court said to defendant, “You also understand you’re giving up your right to appeal, that is, to take to a higher court than this one any of the legal issues connected with this case? You understand that?” Defendant answered “Yes.” One month later, prior to sentencing, the court reiterated, “[defendant is waiving his right to appeal in this matter.” Defendant raised no objection to that statement. Both the court and the court clerk noted in the record that defendant waived his right to appeal. Like defendant Billingslea, Nicholson did not execute a written appeal waiver.

On his appeal to the Appellate Division, defendant argued that the appeal waiver, as explained to him, was invalid and that, even if the waiver was valid, the Appellate Division maintained its interest-of-justice authority to review what he believed was an excessive sentence. The Appellate Division concluded that the “valid waiver of [defendant’s] right to appeal encompassed his present claim that his agreed-upon sentence is excessive and forecloses interest of justice review of that claim. In any event, were we to find that review was not precluded, we would perceive no basis for reducing the sentence” (15 AD3d 237, 237-238 [1st Dept 2005] [citations omitted]). We agree that the waiver was valid and therefore affirm.

I

A defendant’s valid waiver of the right to appeal includes waiver of the right to invoke the Appellate Division’s interest-of-justice jurisdiction to reduce the sentence.

In People v Seaberg (74 NY2d 1, 10 [1989]) this Court recognized the enforceability of guilty pleas conditioned on a defendant’s waiver of the right to appeal. While certain claims remain outside the ambit of a valid appeal waiver—for example, legality of a sentence (see People v Callahan, 80 NY2d 273, 280 [1992]), challenge to a defendant’s competency (see Seaberg, 74 NY2d at 9) and a constitutional speedy trial claim (see id.; see also People v Campbell, 97 NY2d 532, 535 [2002])—generally, an appeal waiver will encompass any issue that does not involve a right of constitutional dimension going to “the very heart of the process” (People v Hansen, 95 NY2d 227, 230 [2000]). Indeed, an appeal waiver made as a condition of a plea arrangement facilitates the desirable objective of prompt, effective resolution of criminal litigation.

By waiving the right to appeal in connection with a negotiated plea and sentence, a defendant agrees to end the proceedings entirely at the time of sentencing and to accept as reasonable the sentence imposed. While the Appellate Division may be divested of its unique interest-of-justice jurisdiction only by constitutional amendment (see People v Pollenz, 67 NY2d 264, 267-268 [1986]), a defendant is free to relinquish the right to invoke that authority and indeed does so by validly waiving the right to appeal.

A defendant may not subsequently eviscerate that bargain by asking an appellate court to reduce the sentence in the interest of justice—realistically an issue that as a practical matter is brought to an appellate court’s attention only when raised by defendants. The important goals of fairness and finality in criminal matters are accomplished only insofar as the parties are confident that the “ ‘carefully orchestrated bargain’ ” of an agreed-upon sentence will not be disturbed as a discretionary matter (Seaberg, 74 NY2d at 10, quoting People v Prescott, 66 NY2d 216, 220 [1985]).

We therefore conclude that when a defendant enters into a guilty plea that includes a valid waiver of the right to appeal, that waiver includes any challenge to the severity of the sentence. By pleading guilty and waiving the right to appeal, a defendant has forgone review of the terms of the plea, including harshness or excessiveness of the sentence.

II

Because only a few reviewable issues survive a valid appeal waiver, it is all the more important for trial courts to ensure that defendants understand what they are surrendering when they waive the right to appeal. Giving up the right to appeal is not a perfunctory step.

A waiver of the right to appeal is effective only so long as the record demonstrates that it was made knowingly, intelligently and voluntarily (see People v Calvi, 89 NY2d 868, 871 [1996]). And though a trial court need not engage in any particular litany when apprising a defendant pleading guilty of the individual rights abandoned, it must make certain that a defendant’s understanding of the terms and conditions of a plea agreement is evident on the face of the record (People v Callahan, 80 NY2d at 280).

When a trial court characterizes an appeal as one of the many rights automatically extinguished upon entry of a guilty plea, a reviewing court cannot be certain that the defendant comprehended the nature of the waiver of appellate rights. The record must establish that the defendant understood that the right to appeal is separate and distinct from those rights automatically forfeited upon a plea of guilty—the right to remain silent, the right to confront one’s accusers and the right to a jury trial, for example.

Forfeiture of certain claims occurs by operation of law as a consequence of a guilty plea, with respect to issues that do not survive the plea. Waiver, on the other hand, occurs when a defendant intentionally and voluntarily relinquishes or abandons a known right that would otherwise survive a guilty plea (People v Hansen, 95 NY2d at 230 n 1). When a trial court inaccurately employs the language of forfeiture in a situation of waiver, it has mischaracterized the nature of the right a defendant was being asked to cede.

In People v Billingslea we conclude that the record does not demonstrate that defendant understood she was relinquishing a known right and that her waiver was thus invalid. During the colloquy, the trial court explained to defendant that “when you plead guilty you waive your right of appeal.” This misleading statement, when accompanied by nothing other than defendant’s one-word response to the question whether she understood the conditions of her plea, is not sufficient to guarantee that defendant understood the valued right she was relinquishing. Because her appeal waiver was invalid, defendant is thus entitled to review of whether her sentence was excessive.

In People v Nicholson, on the other hand, the trial court engaged in a fuller colloquy, describing the nature of the right being waived without lumping that right into the panoply of trial rights automatically forfeited upon pleading guilty and eliciting agreements of understanding from the defendant on multiple occasions. A better practice might have been to explain to defendant that though he ordinarily retains the right to an appeal even after pleading guilty, in this case he was being offered a particular plea by the prosecution on the condition that he give up that right. It would be even better to secure a written waiver including such explanation (as in Lopez). The record is, however, sufficient to satisfy this Court that defendant knowingly and intelligently waived his right to appeal.

Accordingly, the orders in People v Lopez and People v Nicholson should be affirmed, and the order in People v Billingslea should be reversed and the case remitted to the Appellate Division for consideration of the excessive sentencing issue.

G.B. Smith, J. (concurring in result).

I concur in the Court’s conclusion that the orders in People v Lopez and People v Nicholson should be affirmed, and that the order in People v Billingslea should be reversed and the case remitted so that the Appellate Division can hear defendant Billingslea’s excessive sentence claim. I write separately because I disagree with the Court’s holding that when a defendant enters into a negotiated guilty plea that includes, as a condition to the plea, a valid waiver of defendant’s right to appeal, “that waiver includes any challenge to the severity of the sentence” (majority op at 256) and thereby prevents a defendant from asking the Appellate Division to exercise its interest-of-justice jurisdiction to review and reduce a legal, but unduly harsh or severe sentence. The Court’s holding does not recognize the importance of the following facts: (1) the Appellate Division’s interest-of-justice jurisdiction to reduce a sentence is derived from the New York State Constitution; (2) this jurisdiction can only be curtailed by constitutional amendment; and (3) the issue of sentence reduction in the interest of justice can, as a practical matter, only be raised by defendants. Thus, by concluding that a defendant who enters a negotiated plea with a valid waiver of appeal is barred from invoking the Appellate Division’s interest-of-justice jurisdiction to review and reduce legal sentences that are unduly harsh, severe or excessive, this Court has fashioned a rule under which a defendant can, through a valid waiver of appeal, and the prosecution can, by agreeing to a plea only if defendant waives the right to appeal, divest the Appellate Division of its power to exercise interest-of-justice jurisdiction to review and reduce sentences. Such a conclusion is in direct contravention of article VI, § 4 (k) of the New York State Constitution.

Facts

In the cases at bar, each defendant entered a guilty plea. As part of their respective guilty pleas, defendants Lopez and Nicholson validly waived the right to appeal, i.e., the waiver of the right was made knowingly, intelligently and voluntarily. In the case of defendant Billingslea, however, the plea-taking court mistakenly ruled that the waiver of the right to appeal was automatic when it stated that “when you plead guilty you waive your right of appeal.” Moreover, the record did not establish that defendant Billingslea waived the right to appeal. Accordingly, the guilty plea of defendant Billingslea did not include a knowing, intelligent and voluntary (i.e., valid) waiver of the right to appeal. Nonetheless, in all three cases, the Appellate Division found that each guilty plea included a valid waiver of the right to appeal and that the Appellate Division’s interest-of-justice jurisdiction to review and reduce sentences was foreclosed. Further, in both People v Lopez and People v Nicholson, the Appellate Division perceived no basis for reducing the respective sentences of the defendants.

This Court now rules that a criminal defendant who has validly waived the right to appeal cannot ask the Appellate Division to exercise its interest-of-justice jurisdiction to reduce a sentence. Applying this rule to People v Lopez and People v Nicholson, the Court affirmed the judgments and sentences imposed against defendants Lopez and Nicholson. However, because defendant Billingslea did not validly waive the right to appeal, the above-stated rule is inapplicable to People v Billings-lea and the Court reverses the Appellate Division and remits the case for consideration of the excessive sentence issue.

Discussion

Under article VI, §§ 1 and 2 of the 1894 New York State Constitution, the Appellate Division of the Supreme Court of New York was created. The purpose of the Appellate Division was to exercise appellate jurisdiction over: (1) the Trial and Special Terms of the Supreme Court of New York; and (2) any lower courts established by the Legislature (see Waldo v Schmidt, 200 NY 199, 202 [1910]). Put differently, the Appellate Division was vested with “all the jurisdiction previously exercised by the General Term [of the Supreme Court]” (People v Pollenz, 67 NY2d 264, 268 [1986]).

Applicable to criminal appeals only, the Appellate Division’s interest-of-justice jurisdiction to reduce a sentence which it finds unduly harsh, severe or excessive has long been recognized in this state (see People v Thompson, 60 NY2d 513, 520 [1983]). This sentence-review/reduction jurisdiction “was originally exercised as an inherent power” (Thompson, 60 NY2d at 520, citing People v Miles, 173 App Div 179, 183-184 [3d Dept 1916]). The Miles court said that: (1) Supreme Court’s power to hand down sentences was inherently subject to Appellate Division review; and (2) “any determination of a trial judge or justice which is unjust in its relation to the crime of which the defendant stands convicted is within the power of the [Appellate Division of the] Supreme Court to correct” (Miles, 173 App Div at 185). Further, this interest-of-justice jurisdiction was expressly codified in section 543 of the old Code of Criminal Procedure (see Thompson, 60 NY2d at 520). With the adoption of article VI, § 4 (k) of the New York State Constitution, the Appellate Division’s power to review and reduce sentences was deemed “constitutionalized.”

Article VI, § 4 (k) of the New York State Constitution provides as follows:

“The appellate divisions of the supreme court shall have all the jurisdiction possessed by them on the effective date of this article and such additional jurisdiction as may be prescribed by law, provided, however, that the right to appeal to the appellate divisions from a judgment or order which does not finally determine an action or special proceeding may be limited or conditioned by law.”

In other words, article VI, § 4 (k) granted the Appellate Divisions all the jurisdiction possessed by them by statute as of September 1, 1962 (e.g., the power to review and reduce criminal sentences pursuant to Code of Criminal Procedure § 543). The provision further allows for the expansion of Appellate Division jurisdiction pursuant to: (1) constitutional amendment made after September 1, 1962; and (2) legislative enactments made after September 1, 1962 (e.g., CPL 470.15, 470.20) (Pollenz, 67 NY2d at 268). The Legislature may expand Appellate Division jurisdiction; however, with regard to appeals from final orders, the Legislature may not contract or place conditions on Appellate Division interest-of-justice jurisdiction (Pollenz, 67 NY2d at 268). The only way that the Appellate Division may be divested of this power to review and reduce sentences is through constitutional amendment (id.).

The Court contends that “[a] defendant’s valid waiver of the right to appeal includes waiver of the right to invoke the Appellate Division’s interest-of-justice jurisdiction to reduce the sentence” (majority op at 255). This position, in effect, precludes the Appellate Division from exercising its interest-of-justice jurisdiction.

In People v Seaberg (74 NY2d 1, 5 [1989]), this Court held that “the right to appeal may be waived as a condition of a sentence or plea bargain.” In support of this holding, the Court stated:

“The right to appeal a validly imposed sentence does not . . . implicate society’s interest in the integrity of criminal process, however, and to the extent that it does, that interest is protected by the procedural and substantive requirements imposed on the Trial Judge before the defendant may be sentenced ....
“Whatever benefits review may provide, they are not sufficiently compelling to warrant permitting a defendant to repudiate an agreement of an individualized sentence knowingly and voluntarily accepted. . . .
“[S]uch waivers do not interfere with the interest of justice jurisdiction of the Appellate Division (see, People v Bourne, 139 AD2d 210, lv denied 72 NY2d 955). The analogy is to People v Pollenz (supra) which involved a legislative attempt to limit the Appellate Division’s jurisdiction. A defendant’s decision to waive appeal does not interfere with the court’s jurisdiction, however; it is simply a decision not to invoke the court’s review power. By pleading guilty a defendant forecloses the appellate court from reviewing the merits of the plea bargain in the interest of justice and there is nothing inherently wrong in a defendant similarly electing to foreclose review of a negotiated sentence” (Seaberg, 74 NY2d at 9-10 [citations omitted]).

The Court further concluded:

“[T]he public interest concerns underlying plea bargains generally are served by enforcing waivers of the right to appeal. Indeed, such waivers advance that interest, for the State’s legitimate interest in finality extends to the sentence itself and to holding defendants to bargains they have made. . . . [Moreover], the negotiating process serves little purpose if the terms of ‘a carefully orchestrated bargain’ can subsequently be challenged. . . . The validity of the waiver is supported by the interests supporting plea bargains generally. Accordingly, we find no public policy precluding defendants from waiving their rights to appeal as a condition of the plea and sentence bargains” (id. at 10 [citation omitted]).

People v Seaberg, and the Court’s opinion herein, vigorously stress the importance of holding defendant to the plea and sentence bargain he or she made with the People in order to accomplish the goals of fairness and finality. Seaberg also recognizes the importance of the trial judge’s role in ensuring the reasonableness of the bargain struck and the sentence imposed. Moreover, the Seaberg court states that appeal waivers do not affect the Appellate Division’s interest-of-justice jurisdiction and suggests that a defendant may foreclose or prevent the Appellate Division from exercising this jurisdiction.

It must be noted that neither the need to hold a defendant to a bargain nor the trial judge’s role to ensure a reasonable plea and sentence forecloses the exercise of the Appellate Division’s interest-of-justice jurisdiction to review and reduce sentences. As noted above, the Appellate Division’s long-standing power to review and reduce criminal sentences in the interest of justice was first an inherent power which subsequently became constitutionalized. For the Appellate Division to exercise the power, a defendant must claim that his or her sentence was unduly harsh, severe or excessive. If, pursuant to a plea and sentence bargain, a defendant is barred from invoking the Appellate Division’s interest-of-justice power to review and reduce sentences, this is a divestiture of the Appellate Division’s power with regard to that defendant and a violation of article VI, § 4 (k) of the New York State Constitution.

Certainly, it is within the public’s best interest to hold parties to the promises they have made and to have courts that fairly and expeditiously resolve criminal matters. However, in the case at bar, the importance of holding a defendant to a bargain, and all that flows from adherence to that bargain, must be weighed against: (1) the Appellate Division’s long-standing and constitutionalized interest-of-justice power to review and reduce sentences; and (2) the possibility that an unduly harsh, severe or excessive sentence will be imposed despite bargaining and the efforts of the trial or plea-taking judge to ensure a reasonable plea and sentence. Put another way, where a defendant enters a plea and sentence bargain that happens to include an unjust (i.e., unduly harsh, severe or excessive) sentence, the Appellate Division, through the exercise of its unique interest-of-justice sentence review/reduction power, should be able to rectify the problem and render a just result. The fact of the matter is that New York State’s laws are rooted in justice and where justice is not done, despite the existing law, courts must act to achieve it. New York State does not have an interest in preserving an unduly harsh, severe or excessive sentence just for the sake of holding a defendant to the bargain. Such a result does not achieve justice. It incorrectly places greater importance on adhering to form regarding the disposition of a case, rather than the merits regarding the actual sentence imposed.

Conclusion

The foregoing discussion regarding the Appellate Division’s power to review and reduce legal, but unduly harsh, severe or excessive sentences in the interest of justice, including the historical review of the power (i.e., this inherent power was first codified in the old Code of Criminal Procedure and then specifically provided for in the New York State Constitution), makes clear that the Appellate Division may always exercise this power regardless of whether a sentence is imposed after the rendering of a jury verdict or after a plea and sentence bargain, even one including a valid waiver of the right to appeal. Accordingly, the rule that the Court should apply in deciding these cases is as follows: where a defendant who enters a plea and sentence bargain validly waives the right to appeal, that defendant may invoke the Appellate Division’s interest-of-justice jurisdiction to review and reduce a legal, but unduly harsh, severe of excessive sentence; however, the Appellate Division may or may not, within its discretion, reach defendant’s excessive sentence claim (see e.g., People v Allen, 82 NY2d 761 [1993]; People v Bourne, 139 AD2d 210 [1st Dept 1988]).

Judges Cipabick, Rosenblatt, Graffeo, Read and R.S. Smith concur with Chief Judge Kaye; Judge G.B. Smith concurs in result in a separate opinion.

In People v Lopez and People v Nicholson: Order affirmed.

In People v Billingslea: Order reversed and case remitted to the Appellate Division, Second Department, for consideration of the excessive sentencing issue.

       We emphasize that only the right to appeal harsh or excessive sentence is at issue in these cases. There is, moreover, no question of plea withdrawal.

      . The only interest-of-justice power at issue here is the power of the Appellate Division to review and reduce a legal, but unduly harsh, severe or excessive sentence.

      . In 1925, article VI, § 2 was amended and the Appellate Division was vested with “such original or appellate jurisdiction as is now or may hereafter be prescribed by law” (see also Pollenz, 67 NY2d at 268). Regarding the 1925 amendment to article VI, § 2, this Court stated that it: (1) was “ ‘influenced by a desire to preserve the jurisdiction of the Appellate Divisions as broadly as it was then constituted’ (9 New York Constitutional Convention of 1938, Problems Relating to Judicial Administration and Organization, at 97 [Poletti ed])”; and (2) “was regarded as prohibiting the Legislature from reducing the jurisdiction of the Appellate Division in any way (1957 Report of Temporary Commission on the Courts, 1957 McKinney’s Session Laws of NY, at 1576)” (id.).

      . This constitutional provision “was intended to render inapplicable the general rule that the right to appellate review is purely statutory” (Pollenz, 67 NY2d at 269).

      . The effective date of article VI, § 4 (k) was September 1, 1962 (see, NY Const, art VI, § 37). “On [September 1, 1962], the Appellate Division was obliged to entertain all appeals from final judgments in criminal cases, including those rendered upon guilty pleas imposing negotiated sentences” (Pollenz, 67 NY2d at 268 [citations omitted]).

      . Although the Code of Criminal Procedure was replaced when the Legislature adopted the current Criminal Procedure Law which became effective in 1971, the interest-of-justice power to review and reduce sentences codified in section 543 of the Code of Criminal Procedure was provided for, without substantive change, in the new CPL (see CPL 470.15 [6] [b]; 470.20 [6]; see also Thompson, 60 NY2d at 520).

        Under CPL 470.15 (6) (b), the Appellate Division may reverse or modify a sentence on appeal from a conviction where the Court concludes that the “sentence, though legal, was unduly harsh or severe” (CPL 470.15 [6] [b]). The Appellate Division may, in its discretion and without deference to the sentencing court, exercise this sentence-review power if the interest of justice warrants (id.-, see People v Delgado, 80 NY2d 780, 783 [1992]). “Upon modifying a judgment or reversing a sentence as a matter of discretion in the interest of justice upon the ground that the sentence is unduly harsh or severe, the court must itself impose some legally authorized lesser sentence” (CPL 470.20 [6]).

      . Similarly, the court’s colloquy regarding a defendant’s appeal waiver is immaterial in the face of this Appellate Division power.

      . Because this Appellate Division power derives from the State’s Constitution and can only be limited by constitutional amendment (see Pollenz, 67 NY2d at 268), the suggestion made in Seaberg that a defendant can foreclose (i.e., prevent) the Appellate Division from exercising this power is incorrect.

      . As noted in Seaberg, “the final and prompt conclusion of litigation is an important goal of public policy in criminal as well as civil litigation, provided always that the settlement is fair, free from oppressiveness, and sensitive to the interests of both the accused and the People” (Seaberg, 74 NY2d at 8).


text:
    [844 NE2d 1155, 811 NYS2d 633]
    Albert Stephenson et al., Appellants, v Hotel Employees and Restaurant Employees Union Local 100 of the AFL-CIO et al., Respondents.
    Argued January 3, 2006;
    decided February 16, 2006

      POINTS OF COUNSEL

      Kramer & Dunleavy LLP, New York City (Denise M. Dunleavy and Lenore Kramer of counsel), and Pollack Pollack Isaac & De Cicco (Brian J. Isaac of counsel) for appellants.
    The Appellate Division’s decision shows that the majority engaged in improper issue determination and issue resolution to reverse the trial court and a duly constituted jury verdict and dismiss a case that presented multiple material questions of fact; the decision violated black letter precedent from the appellate courts, especially in an age discrimination case, where the frequently subtle intentions and actions of defendants require careful holistic scrutiny of the evidence, and inferences can be sufficient to establish discriminatory intent. (300 Gramatan Ave. Assoc, v State Div. of Human Rights, 45 NY2d 176; Matter of Holland v Edwards, 307 NY 38; State Div. of Human Rights v Kilian Mfg. Corp., 35 NY2d 201; NLRB v Express Publishing Co., 312 US 426; St. Mary’s Honor Center v Hicks, 509 US 502; McDonnell Douglas Corp. v Green, 411 US 792; Texas Dept of Community Affairs v Burdine, 450 US 248; Postal Service Bd. of Governors v Aikens, 460 US 711; National Org. for Women v State Div. of Human Rights, 34 NY2d 416; Matter of Pace Coll, v Commission on Human Rights of City of NY., 38 NY2d 28.)

      Pryor Cashman Sherman & Flynn LLP, New York City (Milton Mollen, Vincent F. Pitta, Joseph J. Lynett and Jane Lauer Barker of counsel), for respondents.
    Defendants are entitled to judgment as a matter of law because plaintiffs utterly failed to prove that the reason that they were discharged—the union’s undisputed receipt of information linking them to organized crime—was a pretext for age discrimination. (Cohen v Hallmark Cards, 45 NY2d 493; Silverstein v Harmonie Club of City of N.Y., 173 AD2d 378; Ferrante v American Lung Assn., 90 NY2d 623; Reeves v Sanderson Plumbing Products, Inc., 530 US 133; Hazen Paper Co. v Biggins, 507 US 604; McDonnell Douglas Corp. v Green, 411 US 792; St. Mary’s Honor Center v Hicks, 509 US 502; Forrest v Jewish Guild for the Blind, 3 NY3d 295; Loschiavo v Port Auth. of N.Y. & N. J., 58 NY2d 1040; Price Waterhouse v Hopkins, 490 US 228.)
   OPINION OF THE COURT

G.B. Smith, J.

The issue in this age discrimination case is whether the Appellate Division erred in setting aside a jury verdict and dismissing the complaint. The defendants presented valid reasons for termination other than age discrimination and plaintiffs failed to prove that those reasons were pretextual. Accordingly, the evidence was sufficient to support the determination, and the order of the Appellate Division should be affirmed.

Facts

In 1983, plaintiff Albert Stephenson began working in the restaurant industry and subsequently worked as a union organizer and business agent. On June 11, 1992, at the age of 63, he was terminated by the defendants Local 100 and Hotel Employees and Restaurant Employees International Union (HEREIU). On June 17, 1985, plaintiff Leroy Hodge was hired as a union organizer for the Hotel Employees Union Local 100 and later became a business agent. On June 11, 1992, Hodge was terminated at the age of 55 by the defendants.

In 1992 and 1993, Local 100 was under investigation by the FBI and the United States Attorney for the Southern District of New York for numerous civil violations, including bribery and kickbacks to organized crime families and their associates. On October 22, 1992, the United States Attorney’s office in the Southern District of New York filed a civil complaint against Local 100 for RICO violations alleging corruption in the union and the infiltration of the union by organized crime. On October 23, 1992, Local 100 entered into a consent decree with the federal government allowing HEREIU to take over the affairs of Local 100 in trust, authorizing a continuing investigation of the union’s affairs and removing certain union employees.

In 1995, almost three years after their termination, plaintiffs Stephenson and Hodge filed separate complaints in Supreme Court, New York County against the union for unlawful termination of employment based upon age discrimination. In July 2002, the two actions were consolidated and a jury trial took place in October 2002. The jury rendered verdicts in favor of plaintiffs and awarded Hodge $539,205 in past damages and $127,556 in future damages. Stephenson was awarded $572,853 for past damages and $14,097 for future damages over a 0.2-year period.

Supreme Court denied defendants’ CPLR 4404 (a) motion to set aside the verdict and denied plaintiffs’ cross motion for damages as a result of emotional distress. The Appellate Division reversed the Supreme Court and granted defendants’ CPLR 4404 (a) motion. The Appellate Division stated:

“Beyond proving that the Trustee had a legitimate and nondiscriminatory reason for discharging plaintiffs, defendants presented powerful evidence— also uncontroverted by plaintiffs—that this reason was no pretext for acts of discrimination. Specifically, defendants showed that, at or about the same time plaintiffs were terminated, the Trustee terminated at least three much younger business agents of Local 100—all under the age of 40—who had also been implicated in the corruption. Meanwhile, the Trustee retained at least two employees over the age of 50 who had not been so implicated. Plaintiffs did not offer evidence controverting any of these facts, nor did plaintiffs offer evidence that they were replaced by younger employees or that any younger employees accused of corruption received more favorable treatment than plaintiffs had been afforded.
“In sum, defendants proved, through uncontradicted evidence, both (1) that the Trustee had a legitimate, nondiscriminatory reason for dismissing plaintiffs, and (2) that age discrimination was not the real reason for the dismissals.” (14 AD3d 325, 329-330 [2005].)

Plaintiffs argue that they were hired for their skills and abilities and that they always did their jobs well. Plaintiff Hodge alleges that Frank Gerace, a supervisor at Local 100, responsible for the dáy-to-day activities of the local, made numerous derogatory comments against him regarding his age and constantly said that he wanted to get rid of the old people and put in young blood. Hodge testified that he was unable to find work in the restaurant industry after his termination.

Stephenson testified to similar facts. He was hired in 1983 at the age of 54 as a union organizer and continued in that capacity until his termination in 1992. He claims to have organized “hundreds of shops,” some of which had 400 employees. He claims that he was hired because he knew five languages and could communicate with the workers and help in organizing new employees. A union representative, Sergio Fermeglia, testified for the plaintiffs and specifically stated that Stephenson did an excellent job organizing the workers.

Stephenson claims that, in 1991, about a year before he was terminated, one union official, Frank Gerace, told him:

“You knew you’re going to be fired. We told you. You’re 64. We don’t need people like your age anymore. We need now young blood to do a better job there. They want to get—to get good salary. With the money I pay you, I could pay two employees to work. Besides that, we need young blood, young face. You should now know, it’s about time you should look for [a] job. Did you look for [a] job, Albert?”

Thus Stephenson, like Hodge, attributed biased remarks to Ger-ace, but Gerace was fired before Stephenson and there is no evidence that he participated in the decision to terminate the plaintiffs. Stephenson, however, also testified that when he was fired, the union Trustee, Vincent Sirabella, told him that he was being fired because the union needed new blood.

Defendants maintain that plaintiffs were fired for cause, not because of age discrimination. Defendants argue that plaintiffs were “bag men” for the mob as part of a scheme to defraud and steal from Local 100. According to defendants, plaintiffs collected money and deposited it into their own bank accounts for the purpose of paying off the mob. As a result of the investigation by the United States Attorney’s office, plaintiffs were fired and replaced by new employees. Defendants argue that plaintiffs were fired as a result of their illicit activities rather than because of their ages. Defendants argue that plaintiffs were not qualified, as evidenced by the federal probe into their union activities that resulted in a recommendation by the investigators that they be terminated. Defendants also rely on the report by Assistant United States Attorney Little, though the most damning parts of the report were, erroneously in defendants’ view, excluded from evidence at trial.

The standards for recovery under section 296 of the Executive Law are similar to the federal standards under title VII of the Civil Rights Act of 1964 (42 USC § 2000e et seq.; see Ferrante v American Lung Assn., 90 NY2d 623, 629 [1997]; see also Forrest v Jewish Guild for the Blind, 3 NY3d 295 [2004]). A three part analysis is required to determine whether plaintiffs have met their burden to establish a discrimination claim under Executive Law (Human Rights Law) § 296. First, plaintiffs must demonstrate by a preponderance of the evidence a prima facie case of discrimination (Ferrante, supra; see also Texas Dept. of Community Affairs v Burdine, 450 US 248, 252-253 [1981]).

“To support a prima facie case of age discrimination under the Human Rights Law, plaintiff must demonstrate (1) that he is a member of the class protected by the statute; (2) that he was actively or constructively discharged; (3) that he was qualified to hold the position from which he was terminated; and (4) that the discharge occurred under circumstances giving rise to an inference of age discrimination” (see Ferrante, 90 NY2d at 629).

Second, the burden then shifts to the defendant to rebut plaintiffs’ prima facie case of discrimination with a legitimate reason for the firing (see Ferrante, supra; St. Mary’s Honor Center v Hicks, 509 US 502, 506-507 [1993]).

“The burden that shifts to the defendant ... is to rebut the presumption of discrimination by producing evidence that the plaintiff was rejected, or someone else was preferred, for a legitimate, nondiscriminatory reason. The defendant need not persuade the court that it was actually motivated by the proffered reasons. It is sufficient if the defendant’s evidence raises a genuine issue of fact as to whether it discriminated against the plaintiff’ (Burdine, 450 US 248, 254 [1981], supra [citation omitted]).

Third, the plaintiffs must show by a preponderance of the evidence that defendant’s reasons are pretextual (see Ferrante, supra; McDonnell Douglas Corp. v Green, 411 US 792, 802-806 [1973]). Moreover, the burden of persuasion of the ultimate issue of discrimination always remains with the plaintiffs (see Hicks, 509 US 502, 511 [1993], supra; Reeves v Sanderson Plumbing Products, Inc., 530 US 133, 143 [2000]; Burdine, 450 US 248, 253 [1981], supra).

In the case at bar, plaintiffs were ages 55 and 63 at the time of termination and thus were members of the class protected by Human Rights Law § 296. Both Hodge and Stephenson were actively discharged from employment. There was evidence presented by plaintiffs that they were both qualified for the jobs of organizer and business agent. Plaintiffs argued that they were replaced or the intention was to replace them with younger workers. While plaintiffs were not replaced with young people (Aldo Lupano, Noel Rodriguez and David Segarra were not far from plaintiffs’ ages), there was enough evidence presented at trial to establish a prima facie case that defendants intended to replace plaintiffs with younger employees.

Defendants, however, met their burden of proving that there were legitimate reasons for terminating plaintiffs. The strongest evidence that plaintiffs may have been involved in civil violations of the RICO statute comes from Kish, the vice-president of Kroll Associates, an investigating company, that recommended that they be fired after receiving information from an FBI informant that Hodge and Stephenson were involved in the corruption of the union which included accepting bribes and preventing organizing at organized crime controlled restaurants. After the nondiscriminatory reasons were given and the burden shifted to them, plaintiffs did not prove that the reasons given were pretextual. Plaintiffs in their rebuttal case recalled Hodge and Stephenson. Both denied the allegations of corruption.

The Appellate Division did not impermissibly substitute its version of the facts for those of the trial court. Viewing the evidence in the light most favorable to the plaintiffs, there is no valid line of reasoning and permissible inferences that could have lead rational jurors to the conclusion they reached (Cohen v Hallmark Cards, 45 NY2d 493 [1978]), the evidence was legally insufficient to support the jury’s verdict and, thus, the CPLR 4404 (a) motion was properly granted to the defendants.

Accordingly, the order of the Appellate Division should be affirmed, with costs. The certified question should not be answered upon the ground that it is unnecessary.

Chief Judge Kaye and Judges Ciparick, Rosenblatt, Graffeo and R.S. Smith concur; Judge Read taking no part.

Order affirmed, etc.

      . Racketeer Influenced and Corrupt Organizations Act (18 USC § 1964).

      . “Unlawful discriminatory practices
      “1. It shall be an unlawful discriminatory practice: . . .
      “(c) For a labor organization, because of the age, race, creed, color, national origin, sexual orientation, military status, sex, disability, predisposing genetic characteristics, or marital status of any individual, to exclude or to expel from its membership such individual or to discriminate in any way against any of its members or against any employer or any individual employed by an employer.” (Executive Law § 296 [1] [c].)


author:
Read, J.
      R.S. Smith, J. (dissenting).

text:
    [ 844 NE2d 766, 811 NYS2d 312]
    In the Matter of Alan J. Brisson, Respondent, v County of Onondaga, Appellant, et al., Respondent. Workers’ Compensation Board, Respondent.
    Argued January 5, 2006;
    decided February 16, 2006

      POINTS OF COUNSEL

      Wolff, Goodrich & Goldman, LLP, Syracuse (George R. Wolff of counsel), for appellant. I.
    When the claimant, Alan Brisson, settled his third-party action, Onondaga County had no existing workers’ compensation lien. (Layman v County of Rockland, 162 AD2d 814; Vinson v Berkowitz, 83 AD2d 531; Matter of Fellner v Country Wide Ins., 95 AD2d 106.) II. There is no rule, based upon statute or decisional law, requiring a workers’ compensation insurer or self-insured employer to reserve its offset rights, when consenting to the settlement of a claimant’s third-party settlement, if there is no waiver or compromise of an existing workers’ compensation lien. (Matter of Hilton v Truss Sys., 82 AD2d 711, 56 NY2d 877; Matter of Robinette v Meyer Sign Co., 43 AD2d 458; Matter of Millward v Meyer Sign Co., 28 AD2d 1027, 23 NY2d 966; Matter of Angrisano v United Progress, 114 AD2d 536, 67 NY2d 607.) III. The County of Onondaga, in granting consent to the settlement of the third-party action, implicitly reserved its offset rights by requesting the amount of the net proceeds passing to the claimant. IV The Workers’ Compensation Board and the Appellate Division, in the case at bar, failed to follow their own precedent. (Matter of Whitcomb v Xerox Corp., 246 AD2d 947; Matter of Parmelee v International Paper Co., 157 AD2d 878; Matter of Miller v Arrow Carriers Corp., 130 AD2d 279; Matter of Hilton v Truss Sys., 82 AD2d 711, 56 NY2d 877.) V Failure of the Workers’ Compensation Board and the Appellate Division to follow or distinguish their own precedent causes uncertainty and creates unnecessary litigation in workers’ compensation claims. (Matter of Charles A. Field Delivery Serv. [Roberts], 66 NY2d 516; Matter of Martin [Troy Publ. Co.—Roberts], 70 NY2d 679.)

      Eliot Spitzer, Attorney General, Albany (Jennifer Grace Miller, Caitlin J. Halligan and Daniel Smirlock of counsel), for Workers’ Compensation Board, respondent.
    A self-insured employer or workers’ compensation carrier must unambiguously preserve its offset rights at the time of settlement, even in the absence of an existing lien. (Matter of Whitcomb v Xerox Corp., 246 AD2d 947; Matter of Angrisano v United Progress, 114 AD2d 536, 67 NY2d 607; Matter of Hilton v Truss Sys., 82 AD2d 711, 56 NY2d 877; Matter of Robinette v Meyer Sign Co., 43 AD2d 458; Matter of Johnson v Buffalo & Erie County Private Indus. Council, 84 NY2d 13; Singh v Ross, 12 AD3d 498; Matter of Parmelee v International Paper Co., 157 AD2d 878.)
   OPINION OF THE COURT

Read, J.

We hold that a self-insured employer or workers’ compensation carrier must preserve its right to any offset expressly and unambiguously when consenting to settlement of a third-party action, regardless of whether there is an existing lien against the claimant’s recovery. We further conclude that substantial evidence supports the Workers’ Compensation Board’s finding that the self-insured employer in this case did not do so.

I.

On November 4, 1998, claimant Alan J. Brisson, who worked in Onondaga County’s Department of Transportation, was injured when struck from behind by a van while he was picking up a “Men Working” sign from the shoulder of a road. Claimant sought workers’ compensation benefits and, in July 2000, a Workers’ Compensation Law Judge (WCLJ) issued a decision concluding that he had suffered a compensable injury to his lower back, and made awards for his periods of disability.

Claimant also filed a third-party action against the driver and owner of the van. When asked by claimant’s attorney to consent to settlement of this third-party action for $50,000, RMSCO, Inc., the third-party administrator for claimant’s self-insured employer, Onondaga County, responded on August 17, 2001 as follows: “On behalf of [the County], consent is given to the third party settlement of $50,000.00. We are assuming that this is the policy limit. We need to know the net third party proceeds.” Claimant’s attorney on August 20, 2001 wrote RM-SCO that

“I am in receipt of your letter granting this firm consent to settle [claimant’s] third party claim. It is our understanding that, based on the dollar amount of [claimant’s] third party settlement, you have no lien as well as no right to a [payment] holiday. If you have a different understanding, please contact this office within five business days or we will proceed with this third party settlement based on our understanding.”

In an undated letter, RMSCO replied that

“[t]his letter is in response to yours of 08/20/2001.
“You indicate that you believed we have no right to a [payment] holiday. This is not entirely correct. Once lost wages and medical exceed basic economic loss, then we can take credit against net third party proceeds. For example, once lost wages are paid on or after 11/04/2001, we can take credit against net third party proceeds.”

The third-party action was, in fact, settled for $50,000 on September 24, 2001. After payment of taxable costs, disbursements and attorneys’ fees, claimant netted $32,958.73.

On October 5, 2001, RMSCO sent claimant a “Notice that Payment of Compensation has been Stopped or Modified.” The notice stated that claimant’s benefits would cease on the three-year anniversary of the accident, November 4, 2001, and would not resume for 168.2 weeks, or until January 24, 2005, so as to offset net settlement proceeds.

Claimant protested the suspension of his benefit payments at a hearing before a WCLJ on January 24, 2002. Another WCLJ concluded in a decision issued on July 10, 2002 that the County was, in fact, not entitled to offset claimant’s future workers’ compensation payments. While the County had indisputably consented to the settlement, “[t]here was no specific reservation [of the County’s] right to claim credit [for the settlement].” The WCLJ relied upon Matter of Hilton v Truss Sys. (82 AD2d 711 [3d Dept 1981], affd for reasons stated below 56 NY2d 877 [1982]) for the proposition that “an employer must unambiguously preserve its offset rights against future benefits, or such rights will be deemed waived.”

On August 9, 2002, the County asked the Board to review the WCLJ’s decision, disputing the WCLJ’s reading of Hilton and arguing that “[b]ecause, in consenting to the settlement . . . , the self-insured employer neither waived nor compromised a workers’ compensation lien, there was no requirement that the self-insured employer expressly reserve its offset rights.” Alternatively, the County contended that the correspondence between RMSCO and claimant’s attorney, in fact, reserved its offset rights.

In its decision issued on November 18, 2002, the Board rejected the County’s arguments, and agreed with the WCLJ that a self-insured employer must “unambiguously preserve its offset rights” when consenting to settlement “or such rights will be deemed waived.” The Board further concurred with the WCLJ that

“the self-insured employer failed to unambiguously reserve its rights to an off set [sic] against future awards when it consented to the third party settlement. To preserve its rights in this case, the self insured employer’s first correspondence on this issue should have contained a clear statement of its reservation of this right or the second correspondence should have withdrawn the consent, issued in the first, pending the resolution of the issue raised in the claimant’s attorney’s correspondence.”

Accordingly, the County was “not entitled to any offset of workers’ compensation benefits against the third party settlement paid to the claimant.”

Upon the County’s appeal, the Appellate Division affirmed, turning down the County’s argument that Hilton mandates only that carriers with existing hens must preserve the right to offset future benefit payments plainly and unambiguously. The Appellate Division also observed that “whether the employer adequately preserved its right to a future offset in a particular case is a factual issue for the Board, and [its] decision will be upheld if supported by substantial evidence,” which the Court found in this case (12 AD3d 976, 977-978 [3d Dept 2004]). We granted the County permission to appeal, and now affirm.

II.

Under Workers’ Compensation Law § 29 (1), a claimant may pursue a legal action against a third party for damages arising out of the accident underlying the workers’ compensation claim, but the self-insured employer or carrier has a lien on any recovery to the extent of compensation and medical expenses already disbursed. Workers’ Compensation Law § 29 (4) gives the employer or carrier a corollary right to offset a claimant’s future compensation benefits with the proceeds of any recovery. Subdivision (1-a) of section 29, however, precludes a hen under Workers’ Compensation Law § 29 (1) for benefits paid in lieu of first-party benefits which another insurer would have otherwise been obligated to pay under New York’s No-Fault Law, and correspondingly limits the credit or offset provision in Workers’ Compensation Law § 29 (4) (see Matter of Fellner v Country Wide Ins., 95 AD2d 106 [3d Dept 1983]). The term “[flirst party benefits” refers to “basic economic loss,” or up to $50,000 per person consisting of certain medical and other reasonable and necessary expenses as well as lost earnings for three years from the date of the accident (Insurance Law § 5102 [a], [b]; see Matter of Johnson v Buffalo & Erie County Private Indus. Council, 84 NY2d 13 [1994]). Finally, a claimant who compromises a third-party action for an amount less than the compensation benefits paid or payable under the Workers’ Compensation Law must first obtain the written consent of the entity liable to pay the benefits, or an order on notice from the court within three months of its approval of the settlement (Workers’ Compensation Law § 29 [5]).

Here, claimant’s third-party action settled a little over one month before the three-year anniversary of the automobile accident in which he suffered his compensable injury. By operation of Workers’ Compensation Law § 29 (1-a), therefore, there was no existing lien under Workers’ Compensation Law § 29 (1) and the County could not yet enforce a payment holiday under Workers’ Compensation Law § 29 (4) because the benefits paid to claimant up to the point of settlement were all in lieu of first-party benefits. According to the County, the absence of an existing lien that might have been compromised or waived takes this case entirely outside Hilton, thereby relieving it of any obligation to reserve future offset rights explicitly when it consented to the settlement pursuant to Workers’ Compensation Law § 29 (5).

In Hilton, a worker injured his spine when he fell from a train and was rendered paraplegic. As part of settlement negotiations in a third-party action, the workers’ compensation carrier agreed to waive its then existing lien of approximately $70,000. At issue was whether or not the carrier had waived not only the lien, but also its right to offset the net proceeds of claimant’s third-party recovery against his future compensation benefits. The Appellate Division held that if a carrier or employer desires to preserve its offset rights when consenting to a settlement, “it is obliged to plainly and unambiguously so state. Doing so has the salutary effect of affording a claimant the opportunity to examine a proposed settlement from a proper perspective, for it enables him to weigh this offer against a potential loss of future compensation benefits” (Hilton, 82 AD2d at 712 [citation omitted]). We affirmed for these reasons.

In the County’s reading, however, Hilton hinges entirely on the existence of a lien because a carrier cannot dispel the inference that its waiver induced settlement absent an explicit reservation of future offset rights. The Board and the Appellate Division did not read Hilton so narrowly, and neither do we.

As the Appellate Division noted, claimants are unable to assess the ramifications of a settlement unless they know the status of the employer’s or carrier’s claims against settlement proceeds. Moreover, regardless of lien status “a carrier or self-insured employer and claimant are deemed to be involved in . . . settlement negotiations, [and] ambiguities [will] be resolved against the carrier” (Brisson, 12 AD3d at 977 [citation and internal quotation marks omitted]). Further, Workers’ Compensation Law § 29 (5) does not distinguish between those instances where an employer or carrier has both an existing lien and prospective offset rights at the time of settlement and those cases, such as this one, where the employer or carrier possesses only the latter. In either circumstance, failure to secure the employer’s or carrier’s consent results in forfeiture of the claimant’s future compensation benefits (see Johnson, 84 NY2d at 19). Correspondingly, unless an employer or carrier unambiguously and expressly reserves a lien or the right to offset when giving consent, the lien or offset is waived.

Finally, whether an employer adequately preserved its right to a future offset is a factual issue for the Board (Matter of Whitcomb v Xerox Corp., 246 AD2d 947 [3d Dept 1998]). A finding of fact made by the Board “is considered conclusive on the courts if supported by substantial evidence” (Matter of Gates v McBride Transp., 60 NY2d 670, 671 [1983] [citation omitted]). Where such evidence exists, the Board’s decision may not be disturbed (Matter of Pfeffer v Parkside Caterers, 42 NY2d 59, 60 [1977]).

In this case, claimant’s attorney informed the County that he did not believe that the County had either a lien or a right to a payment holiday. In response, the County merely stated that claimant’s attorney was “not entirely correct”: the County did not withdraw its consent to the settlement; the County did not explicitly reserve its right to an offset as required by Hilton. Thus, substantial evidence supports the Board’s factual determination.

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

R.S. Smith, J. (dissenting).

I join, with some misgivings, in the Court’s main holding, that a compensation carrier or employer that consents to settlement of a third-party claim must expressly reserve its offset rights or lose them, even where it has no existing lien. I have misgivings because it is not completely clear to me where this requirement is to be found in the statute. I join nevertheless, because the Court establishes a clear, easy-to-follów rule in an area where clarity is much to be desired; workers’ compensation claimants who settle third-party claims should never be left in doubt about how much of the settlement will go to them and how much to the compensation carrier.

But I cannot join the majority’s application of the rule to this case. Surely the employer’s reservation of its offset rights here was clear as day. The words “we can take credit against net third party proceeds” are as unambiguous a statement as can be imagined that the employer retained its offset right, and the employer’s letter to claimant’s counsel said those words twice.

Chief Judge Kaye and Judges G.B. Smith, Ciparick, Rosenblatt and Graffeo concur with Judge Read; Judge R.S. Smith dissents and votes to reverse in a separate opinion.

Order affirmed, with costs.