author: Jones, J.

text:
    [928 NE2d 383, 902 NYS2d 1]
    In the Matter of Lorraine C. Brady, Respondent, v The Williams Capital Group, L.P., Appellant, and American Arbitration Association, Inc., Respondent.
    Argued February 10, 2010;
    decided March 25, 2010

      POINTS OF COUNSEL

      Schiff Hardin LLP, New York City (Marc L. Silverman and M. Eleanor Ignacio of counsel), for appellant.
    I. The Appellate Division majority erred by severing the cost-sharing provision instead of invalidating the agreement. (Szigyarto v Szigyarto, 64 NY2d 275; Puderbaugh v State Empls. Fed. Credit Union, 276 AD2d 992; Recovery Consultants v ShihHsieh, 141 AD2d 272; Misicki v Caradonna, 12 NY3d 511; Matter of Wilson, 50 NY2d 59; Volt Information Sciences, Inc. v Board of Trustees of Leland Stanford Junior Univ., 489 US 468; Shankle v B-G Maintenance Mgt. of Colo., Inc., 163 F3d 1230; Matter of Schreiber v K-Sea Transp. Corp., 9 NY3d 331;
      Mazera v Varsity Ford Mgt. Servs., LLC, 565 F3d 997; Phillips v Associates Home Equity Servs., Inc., 179 F Supp 2d 840.) II. The Appellate Division majority erred when it determined that the cost-sharing provision of the agreement violated public policy because Lorraine Brady failed to demonstrate that the cost-sharing provision prohibits her from vindicating her statutory rights. (Green Tree Financial Corp.Ala. v Randolph, 531 US 79; Bradford v Rockwell Semiconductor Sys., Inc., 238 F3d 549; Howard v Anderson, 36 F Supp 2d 183; Rollins, Inc. v Foster, 991 F Supp 1426; Matter of Schreiber v K-Sea Transp. Corp., 9 NY3d 331; Arakawa v Japan Network Group, 56 F Supp 2d 349; James v McDonald’s Corp., 417 F3d 672; Knolls Coop. Section No. 2 v Evans Dev. Corp., 169 AD2d 690; Hooters of Am., Inc. v Phillips, 173 F3d 933; Rosenberg v Merrill Lynch, Pierce, Fenner & Smith, Inc., 170 F3d 1.)

      Law Offices of William H. Roth, New York City (William H. Roth of counsel), for respondent.
    I. Lorraine Brady properly raised the argument that public policy prohibited the imposition of arbitrator’s fees at the trial court and preserved that issue for appellate review. (Gilmer v Interstate/Johnson Lane Corp., 500 US 20; 805 Third Ave. Co. v M.W. Realty Assoc., 58 NY2d 447; Alvord & Swift v Muller Constr. Co., 46 NY2d 276; Szigyarto v Szigyarto, 64 NY2d 275; Puderbaugh v State Empls. Fed. Credit Union, 276 AD2d 992; Recovery Consultants v Shih-Hsieh, 141 AD2d 272; Misicki v Caradonna, 12 NY3d 511.) II. Public policy is violated when an employee is compelled to pay $21,150 in order to adjudicate a claim of employment discrimination. (Circuit City Stores, Inc. v Adams, 532 US 105; Credit Suisse First Boston Corp. v Pitofsky, 4 NY3d 149; Matter of Schreiber v K-Sea Transp. Corp., 9 NY3d 331; Green Tree Financial Corp.-Ala. v Randolph, 531 US 79; Matter of Teleserve Sys. [MCI Telecom. Corp.], 230 AD2d 585; Shankle v B-G Maintenance Mgt. of Colo., Inc., 163 F3d 1230; Spinetti v Service Corp. Intl., 324 F3d 212; Howard v Anderson, 36 F Supp 2d 183; Cole v Burns Intl. Sec. Servs., 105 F3d 1465; Bradford v Rockwell Semiconductor Sys., Inc., 238 F3d 549.) III. A party cannot be relieved of its obligation to comply with the rules of an adjudicatory body it has selected. (Kashner Davidson Sec. Corp. v Mscisz, 531 F3d 68; Matter of Warner Bros. Records [PPX Enters.], 7 AD3d 330; Ling Ling Yung v County of Nassau, 77 NY2d 568.)
   OPINION OF THE COURT

Jones, J.

At issue is whether petitioner met her burden of demonstrating that an arbitration agreement’s provision for the equal sharing of arbitration fees and costs precluded petitioner from pursuing her statutory rights in the arbitral forum. Because neither lower court made a finding regarding petitioner’s financial ability, we remit this matter to Supreme Court for a hearing to determine, in light of the standard we enunciate today, whether petitioner was financially able to share equally in the arbitration fees and costs.

On January 19, 1999, respondent The Williams Capital Group, L.P. (Williams), an investment bank and broker-dealer of debt and equity securities, hired petitioner to sell fixed income securities. As a representative of respondent Williams, petitioner was required to execute a Uniform Application for Securities Industry Registration or Transfer (Form U-4) in order to become registered with the National Association of Securities Dealers (NASD). Accordingly, petitioner, a “registered” salesperson of fixed income securities, was subject to NASD rules. Under NASD rule 10201 (b), for example, “[a] claim alleging employment discrimination, including a sexual harassment claim, in violation of a statute is not required to be arbitrated. Such a claim may be arbitrated only if the parties have agreed to arbitrate it, either before or after the dispute arose.”

In 2000, respondent Williams promulgated an employee manual that all of its employees, including petitioner, were required to sign and abide by as a condition of continued employment. Incorporated within the employment manual was a “MUTUAL AGREEMENT TO ARBITRATE CLAIMS” (Arbitration Agreement or Agreement) under which respondent Williams and each of its employees agreed (1) that all disputes were to be arbitrated (so that the parties would enjoy “the benefits of a speedy, impartial dispute-resolution procedure”) and (2) to equally share the fees and costs of the arbitrator. At the time the Arbitration Agreement was entered into, its “equal share” provision was consistent with respondent American Arbitration Association’s (AAA) rules (which provided that parties to an AAA arbitration would share the cost of the arbitrator’s fee). The Agreement includes the following provision:

“The Company and I agree that, except as provided in this Agreement, any arbitration shall be in accordance with the then-current Model Employment Arbitration Procedures of the [AAA] before an arbitrator who is licensed to practice law in the state in which the arbitration is convened (‘the Arbitrator’). The arbitration shall take place in or near the city in which I am or was last employed by the Company” (emphasis added).

On February 28, 2005, respondent Williams terminated petitioner’s employment. During each year in the employ of respondent Williams, petitioner earned $100,000 or more. Specifically, she earned $100,000 in 1999, $137,500 in 2000, $324,000 in 2001, $356,000 in 2002, $405,000 in 2003 and $204,691 in 2004.

Initially, after petitioner’s termination, neither respondent Williams nor petitioner sought to compel arbitration. Petitioner, instead, filed a discrimination complaint with the New York State Division of Human Rights (DHR). For a time, she and respondent Williams conducted discovery in that forum. However, after approximately eight months, and before any decision was rendered by DHR, petitioner voluntarily withdrew her complaint.

On December 22, 2005, petitioner filed a demand for arbitration with respondent AAA, seeking money damages against respondent Williams. Petitioner claimed that respondent Williams terminated her employment based on her race and/or sex in violation of title VII of the Civil Rights Act of 1964, article 15 of the New York State Executive Law and title 8 of the Administrative Code of the City of New York (Civil Rights Law). At the time petitioner filed the demand, the AAA rules, which were amended in 2002, required employers to pay all arbitration expenses and the arbitrator’s compensation (referred to as the AAA’s “employer-pays” rule).

Approximately two weeks later, respondent AAA, by letter, notified the parties of its determination that the dispute arose from an “Employer Promulgated Plan,” and that the arbitration would be conducted consistent with respondent AAA’s National Rules for the Resolution of Employment Disputes (National Rules). For example, under National Rules § 1,

“[t]he parties shall be deemed to have made these rules a part of their arbitration agreement whenever they have provided for arbitration by the [AAA] or under its National Rules for the Resolution of Employment Disputes. If a party establishes that an adverse material inconsistency exists between the arbitration agreement and these rules, the arbitrator shall apply these rules.”

On or about March 30, 2006, respondent AAA, in accordance with its “employer-pays” rule, sent respondent Williams an invoice/statement for $42,300, which represented the entire advance payment for the arbitrator’s compensation. Citing the Arbitration Agreement, respondent Williams refused to pay the entire amount of the arbitrator’s compensation, and demanded that petitioner pay half in accordance with the Arbitration Agreement. Petitioner refused to make any payment.

Subsequently, respondent AAA, citing its rules, advised the parties that petitioner’s position was accurate. After numerous attempts to secure full payment of the arbitrator’s fee from respondent Williams, the AAA cancelled the arbitration on or about October 5, 2006.

By verified petition dated October 2, 2006, petitioner commenced this CPLR article 78 proceeding seeking to compel respondent Williams to pay the arbitrator’s fee or to compel respondent AAA to enter a default judgment against Williams for failing to do so. Supreme Court dismissed the petition in its entirety, holding that the parties’ Arbitration Agreement, rather than the AAA rules, governed. In addition, the court, citing petitioner’s earnings while she was employed by respondent Williams, rejected the argument that requiring petitioner to pay half of the arbitrator’s compensation ($21,150) was prohibitively expensive.

In a 3-2 decision, the Appellate Division reversed and directed respondent Williams to pay the entire arbitration fee “subject later to reallocation of those costs by the arbitrator” (64 AD3d 127, 138 [2009]). Although the majority agreed with Supreme Court that the AAA rules did not supercede the Arbitration Agreement, they held that the “equal share” provision of the Agreement was unenforceable as against public policy. In so holding, the majority found that petitioner met her burden of establishing that the arbitration fees and costs were so high as to discourage her from vindicating her state and federal statutory rights in the arbitral forum. Finally, the majority, noting that the State favors arbitration, concluded it was proper to sever the “equal share” provision rather than void the entire agreement.

According to the dissenting Justices, because petitioner “failed to present any facts bearing on . . . the extent of her financial resources and the extent to which the costs . . . she would incur[—]if the [‘equal share’] provision were enforced[—] would exceed the costs she would incur if she litigated her claims in court,” she was not entitled to a ruling that the “equal share” provision was unenforceable on public policy grounds (id. at 139). Alternatively, the dissenters argued that even if the provision is unenforceable, the proper remedy was to disregard, not modify, the Arbitration Agreement.

Respondent Williams appeals as of right pursuant to CPLR 5601 (a). We now modify the order of the Appellate Division and remit to Supreme Court for a hearing concerning petitioner’s financial ability.

At the outset we agree with the lower courts that the terms of the parties’ Arbitration Agreement, rather than the AAA rules, controlled. In addition, we note (1) “arbitration is a creature of contract, and it has long been the policy of this State to interfere as little as possible with the freedom of consenting parties in structuring their arbitration relationship” (Credit Suisse First Boston Corp. v Pitofsky, 4 NY3d 149, 155 [2005] [citation and internal quotation marks omitted]) and (2) “[t]he court’s role is limited to interpretation and enforcement of the terms agreed to by the parties” (Matter of Salvano v Merrill Lynch, Pierce, Fenner & Smith, 85 NY2d 173, 182 [1995]). Here, the lower courts, in determining the enforceability of the Arbitration Agreement’s fee and cost sharing provision, erred.

Specifically, in passing on the question before this Court, Supreme Court focused on the petitioner’s earnings during her years in respondent Williams’s employ, but did not inquire as to whether petitioner could pay her share of the arbitrator’s fee or whether requiring petitioner to share such costs could preclude her from pursuing her statutory rights in the arbitral forum. The Appellate Division, on the contrary, focused on the fact that petitioner was unemployed for 18 months at the time this article 78 proceeding was commenced and the amount of her share of the arbitration fees and costs under the Agreement.

Although these facts are important, they fail to resolve the question whether petitioner was financially able to share the arbitration costs. Despite their efforts, neither lower court took into account all of the criteria we find relevant in resolving the “financial ability” question. Thus, in reaching their respective conclusions regarding the enforceability of the “equal share” provision, the lower courts erred as a matter of law.

On the other hand, this Court has never previously set forth the appropriate basis to address the issue the lower courts grappled with. We do so now and remit to Supreme Court for a hearing in accordance with this approach. In determining the relevant factors a court must take into account, we find it useful to consider how the federal courts have resolved this query.

In Gilmer v Interstate/Johnson Lane Corp. (500 US 20 [1991]), petitioner sued his former employer for age discrimination. In holding that petitioner’s claim was subject to compulsory arbitration pursuant to an arbitration agreement incorporated in a securities registration application, the United States Supreme Court reasoned: (1) statutory claims can be subject to mandatory arbitration agreements (see 500 US at 35); (2) such agreements are enforceable because the arbitral forum, through which statutory claims can be resolved, provides an adequate alternative to litigation in court (id. at 28); and (3) “[s]o long as the prospective litigant effectively may vindicate [his or her] statutory cause of action in the arbitral forum, the statute will continue to serve both its remedial and deterrent function” (500 US at 28, quoting Mitsubishi Motors Corp. v Soler Chrysler Plymouth, Inc., 473 US 614, 637 [1985]).

Nearly a decade later the Supreme Court decided Green Tree Financial Corp.-Ala. v Randolph (531 US 79 [2000]). In Green Tree, the Supreme Court, applying Gilmer, recognized that “the existence of large arbitration costs could preclude a litigant . . . from effectively vindicating her federal statutory rights in the arbitral forum” (531 US at 90), a result which cuts against the broad public policy in favor of arbitration. Further, the Supreme Court adopted a case-by-case approach by ruling that “where ... a party seeks to invalidate an arbitration agreement on the ground that arbitration would be prohibitively expensive, that party bears the burden of showing the likelihood of incurring [the] costs” that would deter the party from arbitrating the claim (id. at 92). Although the Green Tree Court did not set forth a standard of how detailed a showing the party seeking to invalidate an arbitration agreement must make, the Court held the “risk” of “prohibitive costs is too speculative to justify the invalidation of an arbitration agreement” (id. at 91).

Taking a cue from Gilmer and Green Tree, the United States Court of Appeals for the Fourth Circuit decided Bradford v

Rockwell Semiconductor Sys., Inc. (238 F3d 549 [2001]), a case involving a fee-splitting provision similar to the provision at issue here. In Bradford, the issue was whether a mandatory arbitration agreement’s fee-splitting provision, which required an employee to share the arbitration costs, renders the agreement unenforceable as a matter of law. The Fourth Circuit, consistent with the teachings of Green Tree, answered in the negative, holding that questions as to a fee-splitting provision’s enforceability should be resolved on a case-by-case basis and that the analysis should focus on “the claimant’s ability to pay the arbitration fees and costs, the expected cost differential between arbitration and litigation in court, and whether that cost differential is so substantial as to deter the bringing of claims” (Bradford, 238 F3d at 556).

In adopting the standard New York courts are to apply in resolving the question of a litigant’s financial ability, we are mindful of the strong state policy favoring arbitration agreements and the equally strong policy requiring the invalidation of such agreements when they contain terms that could preclude a litigant from vindicating his/her statutory rights in the arbitral forum. We believe that the case-by-case, fact-specific approach employed by the federal courts (see e.g. Bradford; Morrison v Circuit City Stores, Inc., 317 F3d 646 [6th Cir 2003]; Spinetti v Service Corp. Intl., 324 F3d 212, 218 [3d Cir 2003]), as well as the principles set forth in Gilmer and Green Tree, properly acknowledges and balances these competing policies.

Based on the foregoing, we hold that in this context, the issue of a litigant’s financial ability is to be resolved on a case-by-case basis and that the inquiry should at minimum consider the following questions: (1) whether the litigant can pay the arbitration fees and costs; (2) what is the expected cost differential between arbitration and litigation in court; and (3) whether the cost differential is so substantial as to deter the bringing of claims in the arbitral forum (see Bradford, 238 F3d at 556). Although a full hearing is not required in all situations, there should be a written record of the findings pertaining to a litigant’s financial ability. Finally, we do not see the need to detail the precise documentation a court should request to resolve this issue. Such matters are best left to the court’s discretion.

Because we are remitting this matter for a hearing, we do not decide what the remedy should be if the “equal share” provision is found unenforceable. If that happens, Supreme Court should decide, in the first instance, whether to sever the clause and enforce the rest of the Arbitration Agreement, or to offer petitioner a choice between accepting the “equal share” provision or bringing a lawsuit in court.

Accordingly, the order of the Appellate Division should be modified, without costs, by remitting to Supreme Court for further proceedings in accordance with this opinion and, as so modified, affirmed.

Chief Judge Lippman and Judges Ciparick, Graffeo, Read, Smith and Pigott concur.

Order modified, etc.


source: Caselaw Access Project

author: Read, J.

license: Public Domain

text:
    [928 NE2d 1035, 902 NYS2d 838]
    Dominika Zakrzewska, Respondent, v The New School, Appellant, et al., Defendant.
    Argued March 22, 2010;
    decided May 6, 2010

      POINTS OF COUNSEL

      Ward Norris Heller & Reidy LLP, Rochester (Thomas S. D’Antonio and Meghan M. DiPasquale of counsel), for appellant.
    I. Existing precedent supports application of the Faragher/ Ellerth defense (Faragher v Boca Raton, 524 US 775 [1998]; Burlington Industries, Inc. v Ellerth, 524 US 742 [1998]) to the claims in this case. (Kolpien v Family Dollar Stores of Wis., Inc., 402 F Supp 2d 971; Matter of Winkler v New York State Div. of Human Rights, 59 AD3d 1055, 66 AD3d 1499; Forrest v Jewish Guild for the Blind, 3 NY3d 295; Dunn v Astoria Fed. Sav. & Loan Assn., 51 AD3d 474, 11 NY3d 705; Pace v Ogden Servs. Corp., 257 AD2d 101; Ferraro v Kellwood Co., 440 F3d 96; Randall v Tod-Nik Audiology, 270 AD2d 38; Barnum v New York City Tr. Auth., 62 AD3d 736; Citroner v Progressive Cas. Ins. Co., 208 F Supp 2d 328; Matter of Aurecchione v New York State Div. of Human Rights, 98 NY2d 21.) II. The imposition of strict liability on The New School for Kwang-Wen Pan’s acts is inconsistent with, and unsupported by, New York law. (New York State Club Assn. v City of New York, 69 NY2d 2ll, 487 US 1; Consolidated Edison Co. of N.Y. v Town of Red Hook, 60 NY2d 99; Matter of Levy v City Commn. on Human Rights, 85 NY2d 740; F. T. B. Realty Corp. v Goodman, 300 NY 140; Matter of Kress & Co. v Department of Health, 283 NY 55; Wholesale Laundry Bd. of Trade v City of New York, 17 AD2d 327, 12 NY2d 998; RJC Realty Holding Corp. v Republic Franklin Ins. Co., 2 NY3d 158; Baker v Allen & Arnink Auto Renting Co., 231 NY 8, 543; Jones v Weigand, 134 App Div 644; NX. v Cabrini Med. Ctr., 97 NY2d 247.) III. Even if Faragher/Ellerth (Faragher v Boca Raton, 524 US 775 [1998]; Burlington Industries, Inc. v Ellerth, 524 US 742 [1998]) is held inapplicable, the New York City Human Rights Law must be interpreted consistent with established pre-Faragher/Ellerth law, and plaintiffs claims are equally untenable as a result. (Forrest v Jewish Guild for the Blind, 3 NY3d 295; Feingold v State of New York, 366 F3d 138; Matter of Father Belle Community Ctr. v New York State Div. of Human Rights, 221 AD2d 44.) IV The New York City Human Rights Law does not mandate a strict liability standard for the acts of all supervisory staff. (Faragher v Boca Raton, 524 US 775; Burlington Industries, Inc. v Ellerth, 524 US 742; Meritor Savings Bank, FSB v Vinson, 477 US 57; Ferraro v Kellwood

      Co., 440 F3d 96; Albemarle Paper Co. v Moody, 422 US 405; Matter of Father Belle Community Ctr. v New York State Div. of Human Rights, 221 AD2d 44; Sormani v Orange County Community Coll., 240 AD2d 724.) V. The policy underlying the Human Rights Law actually is impaired by the recognition of strict employer liability on the facts of this case. (Jansen v Packaging Corp. of Am., 123 F3d 490; Faragher v Boca Raton, 524 US 775; Burlington Industries, Inc. v Ellerth, 524 US 742.) VI. The 2005 Restoration Act has no application to this case. (Forrest v Jewish Guild for the Blind, 3 NY3d 295; Faragher v Boca Raton, 524 US 775; Barnum v New York City Tr. Auth., 62 AD3d 736; Williams v New York City Hous. Auth., 61 AD3d 62; Franz v Dregalla, 94 AD2d 963; Matter of Saunders v New York State Div. of Human Rights, 288 AD2d 478; Matter of United States Power Squadrons v State Human Rights Appeal Bd., 59 NY2d 401; Majewski v Broadalbin-Perth Cent. School Dist., 91 NY2d 577; People ex rel. Griffith, Inc. v Loughman, 249 NY 369; Lewellyn v Frick, 268 US 238.) VII. The recent judicial activism from the First Department in this area is irrelevant to this case. (Williams v New York City Hous. Auth., 61 AD3d 62; Faragher v Boca Raton, 524 US 775; Burlington Industries, Inc. v Ellerth, 524 US 742; Bumpus v New York City Tr. Auth., 18 Misc 3d 1131[A], 2008 NY Slip Op 50254[U], 66 AD3d 26; Farrugia v North Shore Univ. Hosp., 13 Misc 3d 740; Misicki v Caradonna, 12 NY3d 511.)

      Giskan Solotaroff Anderson & Stewart LLP, New York City (Jason L. Solotaroff, Darnley D. Stewart and Amanda Masters of counsel), for respondent.
    I. The plain language of the vicarious liability provisions of the City Human Rights Law precludes application of the Faragher/Ellerth defense (Faragher v Boca Raton, 524 US 775 [1998]; Burlington Industries, Inc. v Ellerth, 524 US 742 [1998]). (Matter of DaimlerChrysler Corp. v Spitzer, 7 NY3d 653; Williams v New York City Hous. Auth., 61 AD3d 62; Matter of SIN, Inc. v Department of Fin. of City of N.Y., 71 NY2d 616.) II. The importation of Faragher/Ellerth (Faragher v Boca Raton, 524 US 775 [1998]; Burlington Industries, Inc. v Ellerth, 524 US 742 [1998]) would conflict with and undermine the specific intention of the City Council in enacting the vicarious liability provisions, as reflected in the relevant legislative history, and would impermissibly ignore the overall policy— strikingly distinct from title VII of the Civil Rights Act of 1964— that animated the City Human Rights Law. (Meritor Savings Bank, FSB v Vinson, All US 57.) III. The New School can point to no case applying the vicarious liability provisions of the City

      Human Rights Law that holds that the Faragher/Ellerth defense (Faragher v Boca Raton, 524 US 775 [1998]; Burlington Industries, Inc. v Ellerth, 524 US 742 [1998]) properly applies to City Human Rights Law claims. (Matter of Winkler v New York State Div. of Human Rights, 59 AD3d 1055; Pace v Ogden Servs. Corp., 257 AD2d 101; Dunn v Astoria Fed. Sav. & Loan Assn., 51 AD3d 474; Randall v Tod-Nik Audiology, 270 AD2d 38; Ferraro v Kellwood Co., 440 F3d 96; Citroner v Progressive Cas. Ins. Co., 208 F Supp 2d 328; McGrath v Toys “R” Us, Inc., 3 NY3d 421; Forrest v Jewish Guild for the Blind, 3 NY3d 295; Kolpien v Family Dollar Stores of Wis., Inc., 402 F Supp 2d 971.) IV The Local Civil Rights Restoration Act reaffirms the independent purpose and language of the 1991 amendments to the City Human Rights Law, and specifically and unequivocally rejects the “lockstep” approach to City Human Rights Law interpretation. (McGrath v Toys “R” Us, Inc., 3 NY3d 421; Forrest v Jewish Guild for the Blind, 3 NY3d 295; Loeffler v Staten Is. Univ. Hosp., 582 F3d 268; Faragher v Boca Raton, 524 US 775; Burlington Industries, Inc. v Ellerth, 524 US 742; Barnum v New York City Tr. Auth., 62 AD3d 736; Matter of Gleason [Michael Vee, Ltd.], 96 NY2d 117; Matter of Solkav Solartechnik, G.m.b.H. [Besicorp Group], 91 NY2d 482.) V The City Council was authorized to legislate that employers would be strictly liable for the discriminatory acts of their managers and supervisors. (New York State Club Assn. v City of New York, 69 NY2d 211; Wholesale Laundry Bd. of Trade v City of New York, 17 AD2d 327, 12 NY2d 998; People v Cook, 34 NY2d 100; DJL Rest. Corp. v City of New York, 96 NY2d 91; Consolidated Edison Co. of N.Y. v Town of Red Hook, 60 NY2d 99; F. T. B. Realty Corp. v Goodman, 300 NY 140; Matter of Kress & Co. v Department of Health, 283 NY 55; Krohn v New York City Police Dept., 2 NY3d 329.) VI. This Court should not substitute The New School’s policy judgment for that of the City Council. (Jansen v Packaging Corp. of Am., 123 F3d 490; Campaign for Fiscal Equity, Inc. v State of New York, 8 NY3d 14; Matter of Excellus Health Plan v Serio, 2 NY3d 166; Matter of Heitzenrater [Hooker Chem. Corp.— Catherwood], 19 NY2d 1.) VII. The Court should not rewrite the New York City Human Rights Law to add a distinction between high-level and low-level supervisors.

      Eisenberg & Schnell, LLP, New York City (Herbert Eisenberg and Peter Basso of counsel), for National Employment Lawyers Association/NY Chapter and others, amici curiae.
    I. Importing a doctrine judicially designed as a gap-filler for title VII of the Civil Rights Act of 1964, a statute lacking a vicarious liability provision, into the City Human Rights Law, a statute with a detailed and explicit set of vicarious liability provisions, would violate basic principles of statutory construction. (Faragher v Boca Raton, 524 US 775; Burlington Industries, Inc. v Ellerth, 524 US 742; Matter of Amorosi v South Colonie Ind. Cent. School Dist., 9 NY3d 367; Williams v New York City Hous. Auth., 61 AD3d 62; Matter of SIN, Inc. v Department of Fin. of City of N.Y., 71 NY2d 616; Meritor Savings Bank, FSB v Vinson, 477 US 57; Matter of Totem Taxi v New York State Human Rights Appeal Bd., 65 NY2d 300.) II. No case law supports the proposition that Faragher/Ellerth (Faragher v Boca Raton, 524 US 775 [1998]; Burlington Industries, Inc. v Ellerth, 524 US 742 [1998]) is consistent with the language of Administrative Code of the City of New York § 8-107 (13).

      (Williams v New York City Hous. Auth., 61 AD3d 62.) III.
    The Restoration Act prohibits reliance on cases that assume City Human Rights Law equivalence with state and federal counterparts, fail to consider the language of the City Human Rights Law, or fail to consider the uniquely broad and remedial purposes of the City Human Rights Law. (Faragher v Boca Raton, 524 US 775; Burlington Industries, Inc. v Ellerth, 524 US 742; Williams v New York City Hous. Auth., 61 AD3d 62; Loeffler v Staten Is. Univ. Hosp., 582 F3d 268; McGrath v Toys “R” Us, Inc., 3 NY3d 421; Forrest v Jewish Guild for the Blind, 3 NY3d 295; Ochei v Coler/Goldwater Mem. Hosp., 450 F Supp 2d 275; Matter of Gleason [Michael Vee, Ltd.], 96 NY2d 117.) IV The City Human Rights Law is a valid exercise of local legislative authority. (Faragher v Boca Raton, 524 US 775; Burlington Industries, Inc. v Ellerth, 524 US 742; Levin v Yeshiva Univ., 96 NY2d 484.)

      Bond, Schoeneck & King, PLLC, New York City (Mark N. Reinharz, Louis P. DiLorenzo and Peter A. Jones of counsel), for Memorial Sloan-Kettering Cancer Center and others, amici curiae.
    I. The New York City Human Rights Law does not mandate strict liability for conduct by supervisors. (Matter of Daimler Chrysler Corp. v Spitzer, 1 NY3d 653; Roberts v Tishman Speyer Props., L.P., 13 NY3d 270; Matter of Orens v Novello, 99 NY2d 180; Rangolan v County of Nassau, 96 NY2d 42; People v Schulz, 67 NY2d 144; Matter of Friss v City of Hudson Police Dept., 187 AD2d 94; Kurlander v Incorporated Vil. of Hempstead, 31 Misc 2d 121; Matter of Yolanda D., 88 NY2d 790; Matter of Rodriguez v Perales, 86 NY2d 361; Leader v Maroney, Ponzini & Spencer, 97 NY2d 95.) II. A standard of strict liability is inappropriate for sexual harassment claims. (Burlington Industries, Inc. v El

      lerth, 524 US 742; Faragher v Boca Raton, 524 US 775; Shager v Upjohn Co., 913 F2d 398; Meritor Savings Bank, FSB v Vinson, 477 US 57; Spier v Barker, 35 NY2d 444; A/S Dampskibssetskabet Torm v United States, 64 F Supp 2d 298; Federal Ins. Co. v Sabine Towing & Transp. Co., Inc., 783 F2d 347; Ellerman Lines, Ltd. v The President Harding, 288 F2d 288; Jansen v Packaging Corp. of Am., 123 F3d 490; Barnes v Costle, 561 F2d 983.)
   OPINION OF THE COURT

Read, J.

In her second amended complaint, dated February 12, 2008, Dominika Zakrzewska brought a diversity suit against KwangWen Pan and The New School in the United States District Court for the Southern District of New York, asserting claims for sexual harassment and retaliation under the New York City Human Rights Law (NYCHRL), title 8 of the New York City Administrative Code. The United States Court of Appeals for the Second Circuit has asked us whether

“the affirmative defense to employer liability articulated in Faragher v. City of Boca Raton, 524 U.S. 775 (1998) and Burlington Industries, Inc. v. Ellerth, 524 U.S. 742 (1998) appl[ies] to sexual harassment and retaliation claims under section 8-107 of the New York City Administrative Code” (Zakrzewska v New School, 574 F3d 24, 28 [2d Cir 2009]).

For the reasons that follow, we answer this question in the negative.

I.

Zakrzewska enrolled as a freshman at the School in the fall of 2002, and worked part time at the Print Output Center, located within the School’s Academic Computing Center, beginning in April 2003. She alleges in her second amended complaint that Pan was her “immediate supervisor” at the Output Center; and that he subjected her to sexually harassing e-mails and conduct, beginning in January 2004 and continuing through May 2005, when she complained to School officials. She further claims that from August 2005 through 2006, Pan covertly monitored her Internet usage at work in retaliation for her accusation.

On August 13, 2008, the School moved for summary judgment to dismiss Zakrzewska’s complaint, arguing that it was not vicariously liable for Pan’s alleged sexual harassment, and that Zakrzewska could not establish a prima facie case of retaliation. For purposes of ruling on the motion, the District Court assumed that Zakrzewska had shown that she was sexually harassed by Pan; and mentioned that “there [was] at least some evidence that Pan was a manager or supervisor” (Zakrzewska, 598 F Supp 2d at 434), or, put another way, that “there [was] evidence from which a jury could conclude that Pan was a supervisory or managerial employee” (id. at 437).

The Judge then remarked that federal and state courts usually treat title VII of the Civil Rights Act of 1964 and local anti-discrimination laws as “substantially co-extensive” and therefore examine claims of employer liability for an employee’s unlawful discriminatory acts under “the same analytical lens” (id. at 431). But here, the parties disagreed as to whether title VII’s Faragher-Ellerth defense to sexual harassment liability applied under the NYCHRL; and, if it did, whether the School had satisfied its requirements, or, alternatively, a genuine issue of material fact remained (id. at 432). As explained by the District Court, the Faragher-Ellerth defense provides that

“an employer is not liable under Title VII for sexual harassment committed by a supervisory employee if it sustains the burden of proving that (1) no tangible employment action such as discharge, demotion, or undesirable reassignment was taken as part of the alleged harassment, (2) the employer exercised reasonable care to prevent and correct promptly any sexually harassing behavior, and (3) the plaintiff employee unreasonably failed to take advantage of any preventive or corrective opportunities provided by the employer or to avoid harm otherwise” (id. [internal quotation marks omitted]).

Commenting that Faragher-Ellerth’s role in NYCHRL cases was “not free from doubt,” the Judge elected to consider first whether the School would be entitled to dismissal of the sexual harassment claim under Faragher-Ellerth (id. at 437). After reviewing the record, he concluded that the School was, indeed, “entitled to judgment as a matter of law on the sexual harassment claim, assuming that the Faragher-Ellerth defense applied] to [Zakrzewska’s] NYCHRL claim” (id. at 434). Having resolved this issue in the School’s favor, the Judge next examined whether the NYCHRL, in fact, makes the Faragher-Ellerth defense available to employers sued for sexual harassment.

Section 8-107 (1) (a) of the NYCHRL prohibits discrimination on the basis of gender, and section 8-107 (13) (b) states that

“[a]n employer shall be liable for an unlawful discriminatory practice based upon the conduct of an employee or agent which is in violation of subdivision one or two of this section only where:
“(1) the employee or agent exercised managerial or supervisory responsibility, or
“(2) the employer knew of the employee’s or agent’s discriminatory conduct, and acquiesced in such conduct or failed to take immediate and appropriate corrective action; an employer shall be deemed to have knowledge of an employee’s or agent’s discriminatory conduct where that conduct was known by another employee or agent who exercised managerial or supervisory responsibility; or
“(3) the employer should have known of the employee’s or agent’s discriminatory conduct and failed to exercise reasonable diligence to prevent such discriminatory conduct” (emphasis added).

Based on this text, the District Court concluded that

“the local law on its face appear[ed] to impose vicarious liability on an employer for discriminatory acts of (1) a manager or supervisor, without regard to whether the employer or another of its managers or supervisors knew or should have known of those acts, and (2) a co-worker, provided the employer, or a manager or supervisor, knew of and acquiesced in, or should have known of, the co-worker’s acts, among other circumstances” (Zakrzewska, 598 F Supp 2d at 434 [emphasis added]).

He pointed out, however, that because Faragher-Ellerth’s relevance in NYCHRL cases was “an open question in [the] Circuit,” he was obliged to decide “whether the New York courts would be likely to apply Faragher-Ellerth or to adopt a different interpretation of [section 8-107 (13) (b)]” (id. at 435).

Noting that New York, like most states, emphasizes fidelity to the text when interpreting a statute, the District Court concluded that

“[h]ere, the plain language of Section 8-107, subd. 13 (b), is inconsistent with the defense crafted by the Supreme Court in Faragher and Ellerth. [This provision] creates vicarious liability for the acts of managerial and supervisory employees even where the employer has exercised reasonable care to prevent and correct any discriminatory actions and even where the aggrieved employee unreasonably has failed to take advantage of employer-offered corrective opportunities . . . Given the lack of any substantial reason to believe that the New York Court of Appeals would not apply Section 8-107, subd. 13 (b), as it is written . . . , the Court holds that Faragher-Ellerth does not apply in NYCHRL cases” (id. at 435).

As for Zakrzewska’s retaliation claim, the Judge first decided that there were disputed issues of material fact. Further, since retaliation is an unlawful discriminatory practice under the NYCHRL, he noted that the School would be vicariously liable for any retaliation by Pan by virtue of section 8-107 (13) (b), assuming that Faragher-Ellerth did not apply. The Judge therefore denied the School’s motion for summary judgment dismissing Zakrzewska’s complaint.

The District Court then certified an interlocutory appeal to the Second Circuit pursuant to 28 USC § 1292 (b) because he was of the opinion that Faragher-Ellerth’s applicability under the NYCHRL was “a controlling question of law,” as to which there was “substantial ground for difference of opinion . . . the resolution of which would materially advance the ultimate termination of this litigation” (598 F Supp 2d at 437). The Judge observed that employment discrimination cases figured prominently in the district courts’ dockets, and that “[t]he apparent tendency to press claims under the state and city anti-discrimination laws, either in lieu of or in addition to claims under federal statutes, create[d] a genuine need for resolution of the vicarious liability standards applicable to employers under those statutes” (id.). He therefore asked the circuit whether the Faragher-Ellerth defense applied to sexual harassment and retaliation claims under section 8-107. The Judge remarked that the circuit might “in turn . . . see fit to certify this state law question to the New York Court of Appeals” (id. n 63), which the circuit subsequently did (see Zakrzewska v New School, 574 F3d at 28).

II.

We have “generally interpreted” state and local civil rights statutes “consistently with federal precedent” where the statutes “are substantively and textually similar to their federal counterparts” (McGrath v Toys “R” Us, Inc., 3 NY3d 421, 429 [2004] [emphasis added]). And we have always strived to “resolve federal and state employment discrimination claims consistently” (Matter of Aurecchione v New York State Div. of Human Rights, 98 NY2d 21, 25 [2002]). But we also “construe unambiguous language to give effect to its plain meaning” (Matter of DaimlerChrysler Corp. v Spitzer, 7 NY3d 653, 660 [2006]).

Here, as the District Court correctly concluded, the plain language of the NYCHRL precludes the Faragher-Ellerth defense. In many ways, the NYCHRL parallels state law prohibiting discrimination by employers (compare Administrative Code of City of NY § 8-107 [1] [a], [b] and Executive Law § 296). Unlike state law, though, subdivision (13) of section 8-107 of the NYCHRL creates an interrelated set of provisions to govern an employer’s liability for an employee’s unlawful discriminatory conduct in the workplace. This legislative scheme simply does not match up with the Faragher-Ellerth defense.

First, the NYCHRL imposes liability on the employer in three instances: (1) where the offending employee “exercised managerial or supervisory responsibility” (the circumstance alleged in Zakrzewska’s complaint); (2) where the employer knew of the offending employee’s unlawful discriminatory conduct and acquiesced in it or failed to take “immediate and appropriate corrective action”; and (3) where the employer “should have known” of the offending employee’s unlawful discriminatory conduct yet “failed to exercise reasonable diligence to prevent [it]” (see Administrative Code of City of NY § 8-107 [13] [b] [l]-[3], quoted at 477, supra). Regarding the first two instances, an employer’s antidiscrimination policies and procedures may be considered “in mitigation of the amount of civil penalties or punitive damages” recoverable in a civil action (see Administrative Code of City of NY § 8-107 [13] [e]). As a result, even in cases where mitigation applies, compensatory damages, costs and reasonable attorneys’ fees are still recoverable. Further, an employer’s antidiscrimination policies and procedures—which are at the heart of the Faragher-Ellerth defense—shield against liability, rather than merely diminish otherwise potentially recoverable civil penalties and punitive damages, only where an employer should have known of a non-supervisory employee’s unlawful discriminatory acts (id.).

The New York City Council adopted section 8-107 (13) in 1991 as part of a major overhaul of the NYCHRL. In a side-by-side comparison of then-current law with the proposed new law, the Report of the Council’s Committee on General Welfare describes new section 8-107 (13) as providing for

“[s]trict liability in employment context for acts of managers and supervisors-, also liability in employment context for acts of co-workers where employer knew of act and failed to take prompt and effective remedial action or should have known and had not exercised reasonable diligence to prevent. Employer can mitigate liability for civil penalties and punitive damages by showing affirmative anti-discrimination steps it has taken” (1991 NY City Legis Ann, at 187 [emphases added]).

Thus, section 8-107 (13)’s legislative history is consonant with its unambiguous language.

Next, NYCHRL § 8-107 (13) is not inconsistent with state laws, as the School contends. Article IX, § 2 (c) of the New York Constitution vests local governments with the power to enact only those laws that are not inconsistent with state law; specifically, “every local government shall have power to adopt and amend local laws not inconsistent with the provisions of this constitution or any general law relating to its property, affairs or government,” as well as labor, and the health and well-being of its residents. We have held that a local law is inconsistent “where local laws prohibit what would be permissible under State law, or impose prerequisite additional restrictions on rights under State law, so as to inhibit the operation of the State’s general laws” (Consolidated Edison Co. of N.Y. v Town of Red Hook, 60 NY2d 99, 108 [1983] [citations and internal quotation marks omitted]). A local law may, however, provide a greater penalty than state law (see Wholesale Laundry Bd. of Trade v City of New York, 17 AD2d 327, 329-330 [1962]). Under these definitions of inconsistency, section 8-107 (13) is consistent with Executive Law § 296, the state antidiscrimination statute. Both prohibit discrimination; NYCHRL § 8-107 merely creates a greater penalty for unlawful discrimination.

Further, the School’s argument that section 8-107 (13) does not apply to all managers and supervisors is not supported by the statute’s text. The School also contends that strict liability for discrimination impedes deterrence of workplace discrimination and so thwarts sound public policy. As the District Court pointed out, however, although “[t]he arguments for applying the Faragher-Ellerth test in state and local law cases are not trivial,” ultimately such “considerations relevant to policy judgments [are] properly made by legislatures” (Zakrzewska, 598 F Supp 2d at 435). For the same reason, we may not apply cases under the State Human Rights Law imposing liability only where the employer encourages, condones or approves the unlawful discriminatory acts (see Matter of Totem Taxi v New York State Human Rights Appeal Bd., 65 NY2d 300 [1985]; Matter of State Div. of Human Rights v St. Elizabeth’s Hosp., 66 NY2d 684 [1985]). By the plain language of NYCHRL § 8-107 (13) (b), these are not factors to be considered so long as the offending employee exercised managerial or supervisory control.

Finally, we note that our decision is not inconsistent with our holding in Forrest v Jewish Guild for the Blind (3 NY3d 295 [2004]). There, we made the general statement in a footnote that “the human rights provisions of the New York City Administrative Code mirror the provisions of the [State Human Rights Law] and should therefore be analyzed according to the same standards” (id. at 305 n 3). The plaintiff in Forrest did not argue that NYCHRL § 8-107 (13) imposes strict liability for a supervisor’s unlawful discriminatory acts, and so we had no occasion to consider the point. Since the plaintiff did not establish the elements of a hostile work environment under either state or local law, we did not even reach the question of whether the Faragher-Ellerth defense applies under the State Human Rights Law (id. at 312 n 10).

Accordingly, the certified question should be answered in the negative.

Chief Judge Lippman and Judges Ciparick, Graffeo, Smith, Pigott and Jones concur.

Following certification of a question by the United States Court of Appeals for the Second Circuit and acceptance of the question by this Court pursuant to section 500.27 of the Rules of Practice of the New York State Court of Appeals (22 NYCRR 500.27), and after hearing argument by counsel for the parties and consideration of the briefs and the record submitted, certified question answered in the negative.

       The facts underlying this lawsuit are set out in detail in the opinion of the United States District Court for the Southern District of New York (see Zakrzewska v The New School, 598 F Supp 2d 426 [SD NY 2009]).


author: Graffeo, J.

text:
    [929 NE2d 361, 903 NYS2d 299]
    The People of the State of New York, Respondent, v Terrance Johnson, Appellant.
    Argued March 23, 2010;
    decided May 4, 2010

      POINTS OF COUNSEL

      Legal Aid Bureau of Buffalo, Inc., Buffalo (Timothy P. Murphy, David C. Schopp and Barbara J. Davies of counsel), for appellant.
    Particularly in light of People v Seaberg (74 NY2d 1) and its progeny, the brief waiver allocution, the subsequent change of circumstances in the plea agreement, and appellant’s youth and inexperience in the court system, the purported appeal waiver is invalid to preclude appellant’s challenge to Supreme Court’s denial of youthful offender status and the length of the postrelease supervision term. (People v Callahan, 80 NY2d 273; People v Lopez, 6 NY3d 248; People v Catu, 4 NY3d 242; People v Moissett, 76 NY2d 909; People v Brown, 296 AD2d 860, 98 NY2d 767; People v Selikoff, 35 NY2d 227; People v Muniz, 91 NY2d 570; People v Vega, 49 AD3d 1185; People v Ramos, 152 AD2d 209; People v Coleman, 242 AD2d 939.)

      Frank A. Sedita, III, District Attorney, Buffalo (Shawn P. Hennessy and Donna A. Milling of counsel), for respondent. I.
    Defendant’s waiver of appeal was procured on a knowing, voluntary and intelligent basis. (People v Moissett, 76 NY2d 909; People v Harris, 61 NY2d 9; People v Rodriguez, 50 NY2d 553; People v Adams, 38 NY2d 605; People v White, 32 NY2d 393; People v Nixon, 21 NY2d 338; People v Callahan, 80 NY2d 273; Johnson v Zerbst, 304 US 458; Barker v Wingo, 407 US 514; People v Seaberg, 74 NY2d 1.) II. The waiver of appeal was valid after the trial court changed the sentencing commitment. (People v Maliszewski, 13 NY3d 756; People v Nichols, 21 AD3d 1273; People v Prince, 5 AD3d 1098.)
   OPINION OF THE COURT

Graffeo, J.

In this case, we consider whether defendant’s waiver of his right to appeal became invalid when the court later decided not to honor two aspects of defendant’s plea agreement. Based on the facts before us, we conclude that the court’s modification of those sentencing terms voided defendant’s prior waiver of appeal and required the reallocution of the waiver. Because that did not occur, defendant was entitled to pursue an appeal challenging his sentence.

In October 2006, defendant Terrance Johnson, a 16-year-old student, attacked a female teacher with a wooden board near a school. After striking her several times, defendant took the keys to her car and drove away in the teacher’s vehicle. Defendant was later apprehended and indicted for robbery in the first degree and two counts of robbery in the second degree.

On the day the trial was scheduled to begin, Supreme Court was informed that a plea agreement had been reached between the People and defendant. In furtherance of the negotiated agreement, Supreme Court indicated that in exchange for a guilty plea to first-degree robbery and a waiver of the right to appeal, defendant would be adjudicated as a youthful offender with a maximum prison sentence of 1⅓ to 4 years. During the plea allocution, defendant acknowledged that he was facing up to 25 years in prison without the plea deal and he agreed to waive his right to appeal. The court further warned defendant that the maximum sentence could be imposed if he failed to appear for sentencing, did not cooperate with the probation department or committed another crime. After allocuting that he injured the teacher with a board and stole her car, defendant pleaded guilty to robbery in the first degree.

Before sentencing occurred, Supreme Court reconsidered the terms of the plea agreement and decided that it could not abide by all of the terms because “it would be inappropriate to grant youthful offender status, in light of the seriousness of the crime, the injuries to the victim, and other factors.” The court also noted that the probation department had recommended against youthful offender treatment. The judge offered defendant the option of withdrawing his plea and proceeding to trial, or retaining the guilty plea and receiving a sentence of five years of imprisonment and five years of postrelease supervision, but without adjudication as a youthful offender. Defense counsel advised the court that defendant did not wish to withdraw his plea and the judge thereafter imposed the new agreed-to sentence, which did not include youthful offender status.

Defendant appealed and the Appellate Division affirmed, concluding that defendant’s waiver of his right to appeal remained valid despite the modification of the sentencing component of the plea agreement and that defendant’s waiver encompassed any challenge he might have had regarding the denial of youthful offender treatment and the severity of his sentence (60 AD3d 1396 [4th Dept 2009]). A Judge of this Court granted leave to appeal (12 NY3d 855 [2009]).

Defendant urges that his waiver of appeal was invalidated when Supreme Court lengthened his prison sentence and declined to adjudicate him a youthful offender as this was a significant change in circumstances. The People, in contrast, contend that the court’s inability to adhere to the original agreement did not undermine the waiver because defendant was originally advised that he faced imprisonment for up to 25 years and had been offered the opportunity to withdraw his plea.

A waiver of the right to appeal may be elicited as a condition of a plea bargain (see People v Seaberg, 74 NY2d 1, 5 [1989]), but it must be knowingly, voluntarily and intelligently entered into by the accused (see e.g. People v Callahan, 80 NY2d 273, 280 [1992]). We have repeatedly observed that there is no mandatory litany that must be used in order to obtain a valid waiver of appellate rights (see e.g. People v Moissett, 76 NY2d 909, 910-911 [1990]) and a waiver will be enforceable if the record demonstrates that the defendant “intentionally relinquished] or abandoned] a known right that would otherwise survive a guilty plea” (People v Hansen, 95 NY2d 227, 230 n 1 [2000]). A court therefore “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 Lopez, 6 NY3d 248, 256 [2006]).

Here, the terms and conditions of the plea agreement offered to defendant in return for his waiver of the right to appeal were unequivocal—Supreme Court promised youthful offender adjudication and a maximum sentence of 1⅓ to 4 years in prison. The court’s pronouncement of these terms was unconditional and defendant was not informed that the court intended to further reflect on the appropriateness of the promised disposition (see People v Selikoff, 35 NY2d 227, 238 [1974], cert denied 419 US 1122 [1975]). In other words, when defendant agreed to waive his right to appeal, he had no reason to suspect that he would not be treated as a youthful offender or receive a sentence in excess of the maximum that had been negotiated.

Because the court did not advise defendant that it was reserving approval of the negotiated disposition until it reviewed the presentencing report or other pertinent information, defendant could not have knowingly and intelligently waived his right to appeal the court’s decision not to abide by the original promise of youthful offender treatment and a prison sentence of 1⅓ to 4 years (cf. People v Hidalgo, 91 NY2d 733, 737 [1998] [general unrestricted waiver of appeal entered without a specific sentencing promise precludes a challenge to the imposed sentence as harsh and excessive]). Supreme Court’s subsequent decision to modify the material terms affecting sentencing therefore vitiated defendant’s knowing and intelligent entry of the waiver of appeal. Consequently, once the decision to impose the more severe sentence was announced, it was incumbent on the court to elicit defendant’s continuing consent to waive his right to appeal. However, there was no need for the judge to reallocute defendant on his decision to plead guilty because his choice not to withdraw his plea effectively reaffirmed his knowing and intelligent consent to concede guilt. Since defendant was not asked if he further agreed to waive his right to pursue an appeal regarding the modified terms of his sentence, he is not foreclosed from requesting appellate review of the propriety of the denial of youthful offender treatment or the severity of the imposed sentence. We remit this case to the Appellate Division so that it may consider the merits of those claims.

Accordingly, the order of the Appellate Division should be reversed and the case remitted for consideration of issues raised but not determined on the appeal to that court.

Chief Judge Lippman and Judges Ciparick, Read, Smith, Pigott and Jones concur.

Order reversed, etc.

       We reject defendant’s contention that the colloquy was insufficient to demonstrate a valid waiver.


author: Ciparick, J. Pigott, J. (dissenting).

text:
    [928 NE2d 1041, 902 NYS2d 844]
    The People of the State of New York, Appellant, v Joshua M. Zona, Respondent.
    Argued March 24, 2010;
    decided May 6, 2010

      POINTS OF COUNSEL

      R. Michael Tantillo., District Attorney, Canandaigua, for appellant.
    The trial court properly declined to instruct the jury on the claim of right defense contained in Penal Law § 155.15 (1). (People v Chesler, 50 NY2d 203; People v Green, 5 NY3d 538; People v Reid, 69 NY2d 469; People v Baroody, 59 AD3d 1111; People v Watts, 57 NY2d 299; People v Butts, 72 NY2d 746; People v Mitchell, 82 NY2d 509; People v Chang, 12 Misc 3d 134[A], 2006 NY Slip Op 51190[U]; People v Geppner, 122 AD2d 394; People v Cunningham, 12 AD3d 1131.)

      J Scott Porter, Seneca Falls, for respondent.
    No legal impediment prevents Joshua Zona from raising a claim of right defense and a reasonable view of the evidence supports an inference that Zona acted in good faith. (Mathews v United States, 485 US 58; People v Chesler, 50 NY2d 203; A.J. Temple Marble & Tile v Union Carbide Marble Care, 87 NY2d 574; People v Garson, 6 NY3d 604; People v Green, 5 NY3d 538; People v Ricchiuti, 93 AD2d 842; People v Ace, 51 AD3d 1379, 11 NY3d 733; People v Watts, 57 NY2d 299; People v Torre, 42 NY2d 1036; People v Padgett, 60 NY2d 142.)
   OPINION OF THE COURT

Ciparick, J.

The issue raised by this appeal is whether the evidence presented at trial, viewed in the light most favorable to defendant, supported a good faith claim of right jury instruction. We conclude that defendant was entitled to assert this defense and that County Court erred when it denied defendant’s request to charge.

This case centers around the removal of various items of property from a surplus warehouse used by the Seneca County Sheriff’s Department. In October or November 2005, Under-sheriff James Larson, one of the highest ranking members of the Seneca County Sheriffs Department, instructed defendant, a deputy sheriff, and two other deputies to transfer property stored in the Sampson State Park warehouse to a warehouse located at the old Army Depot in Romulus. Larson supervised and assisted the deputies as they transferred the property using their personal vehicles to the new location. The bulk of the property stored at the Sampson warehouse was described at trial as “old,” “wrecked,” “surplus stuff,” and a “lot of junk.” According to defendant’s later statement to an investigator, Larson “told us that he was taking a canoe home and he told us we could take what we want.” Defendant took five brand new tires, a boat that contained a bullet hole, and a filing cabinet. In addition to the canoe, Larson took some old military lights, and an electric lawn mower for himself. Two of the other sheriffs supervised by Larson took canoes.

In late November or early December 2005, defendant spoke with an employee of Trombley Tire and Auto to inquire whether he could trade in the five tires he removed from the warehouse for a set of four B.F. Goodrich tires that would fit his sport-utility vehicle. The employee referred defendant to the owner of the shop. Defendant negotiated with the owner, traded in the five tires from the warehouse, and received a $375 credit toward the purchase of the B.F. Goodrich tires. Before finalizing the purchase, defendant spoke with one of his colleagues and discussed that he was thinking about buying the B.F. Goodrich tires. Defendant’s colleague wondered how he was able to afford such expensive tires and defendant indicated that Trombley Tire was giving him a good deal because he had solved several bad check cases for the shop.

The day after defendant purchased the B.F. Goodrich tires, Trombley Tire sold four of the five tires it had acquired from defendant to one of its customers. Later that month, investigators with the Seneca County Sheriff’s Department retrieved the fifth tire from Trombley Tire, as it had not yet been sold.

According to defendant’s statement, in January 2006, he spoke with a coworker who “told me that Jim Larson apparently did not have the authority to tell us we could take anything from the warehouse and that it needed to be put back in there.” When defendant learned this, he promptly returned the boat and the filing cabinet to the new storage facility. Defendant then attempted to repurchase the five tires he had previously traded in, but was told that they had already been sold.

On January 24, 2006, defendant went to another tire shop to purchase replacement tires, but was informed by the service manager that the tires defendant desired were no longer in stock. The service manager convinced defendant to purchase five comparable tires—at a cost that exceeded the trade-in value of the tires he removed from the warehouse. The same day defendant purchased these tires he placed them in the new storage facility beneath other objects.

A little over a week later, in the early morning hours of February 3, 2006, a fire broke out at the new storage facility. Defendant was only one of four individuals who had keys to the facility. An investigator with the New York State police interviewed defendant the following day. Defendant fully cooperated with the investigator and explained he had no information pertaining to the fire but admitted that he had removed property from the old warehouse facility. The investigator prepared a typewritten statement, signed by defendant, detailing the information provided to him during the interview. Defendant described the property he removed with Larson’s permission and explained that he had returned it to the new storage facility once he learned that Larson did not have the authority to dispose of the property.

Two other investigators also interviewed defendant. According to one of these investigators, defendant orally told him that Larson did not directly state, but only implied, that the other deputies could take property from the old warehouse for themselves.

Following this lengthy investigation, a grand jury indicted defendant for one count of petit larceny (Penal Law § 155.25). Prior to trial, he requested a dismissal of the indictment. Defendant argued that he honestly believed that he could take the property and that the People’s failure to properly instruct the grand jury on the good faith claim of right defense unfairly prejudiced him (see Penal Law § 155.15 [1]). County Court reviewed the grand jury minutes and denied defendant’s motion (18 Misc 3d 1117CA], 2008 NY Slip Op 50107DJ]). The court held that the claim of right defense was inapplicable because defendant could not assert that he had at any time owned or possessed the property procured from the storage facility. The case proceeded to trial and defendant, both at the conclusion of the People’s case and at the charge conference, requested that County Court instruct the jury on the claim of right defense. County Court denied the requests.

The jury found defendant guilty of petit larceny and he appealed. At the Appellate Division, defendant argued for both a reversal of the conviction and a dismissal of the indictment. A divided Appellate Division reversed defendant’s conviction and ordered a new trial, concluding that there was a reasonable view of the evidence that would allow a jury to find that defendant had a good faith claim of right to the property he removed from the warehouse (60 AD3d 1279 [4th Dept 2009]). The dissenting justices, on the other hand, held that no reasonable view of the evidence supported this defense (id. at 1281-1282). The court did not address defendant’s argument concerning the sufficiency of the legal instructions given to the grand jury. A Judge of this Court granted the People leave to appeal (12 NY3d 922 [2009]) and we now affirm.

Our analysis begins with Penal Law § 155.15 (1), which provides “[i]n any prosecution for larceny committed by trespassory taking or embezzlement, it is an affirmative defense that the property was appropriated under a claim of right made in good faith.” However, in evaluating the constitutionality of this statute, we have held that a good faith claim of right is properly a defense—not an affirmative defense—and thus, “the people have the burden of disproving such defense beyond a reasonable doubt” (Penal Law § 25.00 [1]; see People v Green, 5 NY3d 538, 542 [2005], citing People v Chester, 50 NY2d 203, 209-210 [1980]).

In determining whether to instruct a jury on a claimed defense, the court must view the evidence adduced at trial in the light most favorable to the defendant (see People u Butts, 72 NY2d 746, 750 [1988]; People v Steele, 26 NY2d 526, 529 [1970]; see also Mathews v United States, 485 US 58, 63 [1988] [“a defendant is entitled to an instruction as to any recognized defense for which there exists evidence sufficient for a reasonable jury to find in his favor”]). A failure to do so constitutes reversible error (see People v Watts, 57 NY2d 299, 301 [1982]). Of course, it is fundamental that a “jury may accept portions of the defense and prosecution evidence or either of them” (People v Asan, 22 NY2d 526, 530 [1968]). “Therefore, inconsistency in claimed defenses or even between a defendant’s testimony and a defense ‘should not deprive [the] defendant of the requested charge’ if the charge would otherwise be warranted by the evidence” (Butts, 72 NY2d at 750, quoting People v Padgett, 60 NY2d 142, 146 [1983]).

Applying these principles, we find that there was evidence in the record to support defendant’s good faith claim of right defense. We note that defendant’s statement, if credited, establishes that Larson, one of the highest ranking officials in the Seneca County Sheriffs Department, gave defendant and his colleagues permission to take whatever property they wanted. Indeed, it also indicates that two of his colleagues also relied on Larson’s representation and took property, and that Larson procured several items of property for himself as well. Moreover, the evidence demonstrates that the sheriffs used their personal vehicles to move the property and that most of the property stored at this surplus warehouse was described as junk, old, and wrecked.

Furthermore, we reject the People’s argument that there are no circumstances in which a public servant, such as defendant, could have a good faith belief that he was entitled to keep public property. It may be that a public servant could have no reasonable basis for such a belief, but subjective good faith, not reasonableness, is the test. Thus, on this record, we hold that a trier of fact could find that defendant had a good faith belief that Larson had the authority to dispose of the property stored in the surplus warehouse and that defendant could retain some of that property for his personal use.

Likewise, we reject the notion that a defendant must establish that he previously owned or possessed the property at issue in order to assert the claim of right defense. We note that there is nothing in the statutory language in Penal Law § 155.15 (1) that requires us to interpret this defense so narrowly. Rather, the defense merely requires a good faith belief “that the property was appropriated under a claim of right” (Penal Law § 155.15 [1]). Lower court decisions reflect our interpretation of this defense. For example, in People v Ricchiuti (93 AD2d 842 [2d Dept 1983]), the defendant, an employee of a cosmetics company, was indicted for grand larceny for allegedly stealing large quantities of merchandise from his employer (see id. at 842). At trial, defendant did not attempt to establish his ownership in the company’s merchandise, but rather offered evidence that his employer authorized him to distribute unlimited quantities of the merchandise to various charities, vendors, and friends of the company (see id. at 842-843). The Appellate Division determined that the evidence supported a claim of right defense and reversed the judgment of conviction because Supreme Court did not instruct the jury accordingly (see id. at 844; see also People v Ace, 51 AD3d 1379, 1380 [4th Dept 2008] [conviction overturned where “a reasonable view of the evidence that would enable a jury to find that defendant took the rails under a claim of right” was established after defendant’s employer instructed him to take the employer-owned rails to a scrap yard]).

Furthermore, the People argue that there is no reasonable view of the evidence to support the claim of right defense because defendant concealed from his colleague the fact that he procured tires from the surplus warehouse and was planning to trade them in to reduce the cost of the B.F. Goodrich tires. The People also argue that defendant could not have had a good faith belief that he was entitled to keep the tires because, upon being told he had to return the property, he attempted to hide the replacement tires he purchased to avoid detection, evincing consciousness of guilt. This interpretation of the facts does not preclude defendant from interposing the claim of right defense, as these arguments can only be evaluated by a jury. Indeed, defendant may not have wanted his colleague to know that he received permission from Larson to take the tires for a variety of reasons. Moreover, the fact that defendant may have surreptitiously attempted to replace the tires after he learned that he, Larson, and other deputies were being investigated does not necessarily mean that he did not possess a good faith belief in his claim of right at the time he removed the property from the surplus warehouse.

Finally, the People contend that the testimony that defendant orally told one of the investigators that Larson only implied that the deputies could take whatever property they wanted negated defendant’s written statement that Larson unequivocally gave them permission to do so. Of course, the People are entitled to highlight the inconsistencies in the evidence to support their arguments to a jury. An inconsistency in the evidence only raises issues of fact, however, and does not relieve a trial judge’s obligation to instruct the jury on a defense if the charge would otherwise be supported by the evidence (see Butts, 72 NY2d at 750). Here, there is evidence in the record to support defendant’s requested charge. Accordingly, the jury should have had the opportunity to consider this defense during its deliberations.

In sum, we conclude that the evidence, viewed in the light most favorable to defendant, entitled defendant to assert a good faith claim of right defense at trial. Since County Court erred in failing to instruct the jury on this defense, defendant was deprived of a fair trial. Accordingly, the order of the Appellate Division reversing the judgment of conviction and ordering a new trial should be affirmed.

Pigott, J. (dissenting).

I respectfully dissent because in my view no reasonable view of the evidence, even in the light most favorable to defendant, supports the defense that he took five brand new tires from a police warehouse, believing in good faith that he had the right to take them.

This case arose out of an investigation of the Seneca County Sheriffs Department, including Undersheriff James Larson, defendant Deputy Sheriff Joshua Zona, and other deputies, in connection with the removal of items from a warehouse used by the Sheriffs Department, at the Seneca Army Depot in Romulus. In the early morning of February 3, 2006, the warehouse was destroyed in a suspected arson. Because defendant was one of only four people who had access to the warehouse, he was interviewed by the New York State Police.

Defendant had no information about the fire, but he admitted that he had taken five car tires, a boat, and a filing cabinet from the warehouse. According to defendant’s statements to investigators, Undersheriff Larson took items for his personal use, and “somewhat implied” that defendant and two other deputy sheriffs could take what they wanted. Defendant stated that he traded the five tires in at Trombley Tire and Auto, receiving a credit of $375, which he used towards the purchase of tires for his pickup truck. Once he learned there was an investigation, he went out and bought similar tires and snuck them into the warehouse to cover up his actions.

Defendant was charged with and, following a jury trial, convicted of petit larceny. He now argues that his trial was unfair because County Court declined to instruct the jury on a claim of right defense.

Under Penal Law § 155.15 (1), in a prosecution for larceny committed by trespassory taking or embezzlement, an available defense is “that the property was appropriated under a claim of right made in good faith.” The question before the Court in this case is whether a reasonable view of the trial evidence, viewed in the light most favorable to defendant, supports defendant’s claim that he had a good faith belief in his legal right to take another’s property.

The majority finds it reasonable to conclude from the evidence that defendant had an honest, if unreasonable, belief that Larson had the authority to permit him to take the property stored in the Sheriffs Department warehouse for his personal use. I believe that such an inference would be irrational, given the strong evidence that defendant was aware that his actions were illegal.

In particular, I find it striking that, in the course of a casual conversation with one of his colleagues about the new tires he had bought, defendant lied, concocting the story that he had solved bad check cases for the tire shop. If defendant had honestly believed that Larson was in a position to authorize the taking of the tires, defendant would not have kept this to himself and constructed a lie to conceal his actions.

Moreover, defendant continued to lie about his actions and try to conceal them. He bought five tires, similar to the ones he had taken from the warehouse and traded in, from a Goodyear tire store. There, defendant lied to the service manager, saying that he needed the five tires for off-road use on a sport-utility vehicle. Defendant then placed the tires in the warehouse, covering them to make it appear that they had been there for some time. There is no reasonable inference to be drawn from this action other than that defendant was conscious of his guilt. Someone who honestly believed that he had been given permission to take the tires by one with authority would not have gone to such absurd lengths—including the expense of buying five tires—to cover up his actions.

The jury also heard evidence that defendant had a crisis of conscience in regard to the taking of the tires, debating “should I take ’em, shouldn’t I take them,” before deciding to take the items. This inner debate cannot be reconciled with an honest belief that one has been given permission to take items by one with authority to do so.

It is true that the test here is not the reasonableness of defendant’s belief that he had a right to take the tires, but its subjective good faith, i.e. whether the belief was honest or a pretense. But to attribute to defendant the state of mind necessary for a claim of right defense is to do more than to ascribe to him a single unreasonable belief; it is to assume that he was completely lacking in any kind of worldly wisdom or judgment.

The majority rejects the proposition that a defendant, in order to assert the claim of right defense, must establish that he previously owned or possessed the property at issue—which the majority takes to be the theory relied upon by County Court. But that was not the ruling of the court. Rather the court correctly rejected a claim of right defense because defendant failed to establish a legitimate claim to one.

Professor LaFave sets out the scope of the claim of right defense cogently in his treatise on substantive criminal law. “One may take the property of another honestly but mistakenly believing (1) that it is his own property, or (2) that it is no one’s property, or (3) (though he knows it is another’s property) that the owner has given him permission to take it as he did” (3 LaFave, Substantive Criminal Law § 19.5 [a], at 88 [2d ed 2003]). The Appellate Division cases cited by the majority (People v Ricchiuti, 93 AD2d 842 [2d Dept 1983]; People v Ace, 51 AD3d 1379 [4th Dept 2008]) are consistent with this analysis. Thus a defendant, in order to assert the claim of right defense, must claim either that he previously owned the property at issue, or that he was unaware that it belonged to another, or that its owner permitted him to take it. Defendant’s claim that an undersheriff—clearly not the owner of county surplus property— permitted his actions does not accord with this analysis.

It is well-established that “when no reasonable view of the evidence would support a finding of [a] tendered defense, the court is under no obligation to submit the question to the jury” (People v Watts, 57 NY2d 299, 301 [1982]). Consequently, County Court’s denial of defendant’s request to charge a claim of right defense should be upheld. I would reverse the order of the Appellate Division and reinstate defendant’s conviction.

Chief Judge Lippman and Judges Read, Smith and Jones concur with Judge Ciparick; Judge Pigott dissents and votes to reverse in a separate opinion in which Judge Graffeo concurs.

Order affirmed.

      . Although defendant moved for the dismissal of the indictment below, he did not cross-appeal here. The propriety of the grand jury proceeding is thus not before us and the focus of our analysis is limited to whether defendant was entitled to assert the claim of right defense at trial.

      . Although County Court relied upon this theory in its decision to deny defendant’s request to charge, the People have not adopted this argument.

       A Sheriffs Department investigator testified at defendant’s trial that the property in the warehouse included not only “junk” but also “quality property” such as beds, desks, chairs, boats, and wrecked police cars that the officers would use for parts to repair damaged police vehicles.