source: Caselaw Access Project

author: Fahey, J.

license: Public Domain

text:
    [79 NE3d 461, 57 NYS3d 69]
    For the People Theatres of N.Y., Inc., Doing Business as Fair Theatre, Plaintiff, and JGJ Merchandise Corp., Doing Business as Vishans Video, Also Known as Mixed Emotions, Respondent, v City of New York et al., Appellants. Ten’s Cabaret, Inc., Formerly Known as Stringfellow’s of New York, Ltd., et al., Respondents, v City of New York et al., Appellants.
    Argued April 27, 2017;
    decided June 6, 2017

      POINTS OF COUNSEL

      Zachary W. Carter, Corporation Counsel, New York City {Ingrid R. Gustafson, Richard Dearing and Elizabeth S. Natrella of counsel), for appellants.

      Fahringer & Dubno, New York City {Erica T. Dubno of counsel), for JGJ Merchandise Corp., respondent.

      Zane and Rudofsky, New York City (.Edward S. Rudofsky of counsel), and Mehler & Buscemi, New York City (Martin P. Mehler of counsel), for Ten’s Cabaret, Inc. and another, respondents.

      Howard E. Greenberg, Esq., P.C., Smithtown (Howard E. Greenberg of counsel), and Jennifer M. Kinsley, Chase College of Law, Northern Kentucky University, Highland Heights, Kentucky, for First Amendment Lawyers Association, amicus curiae.
   OPINION OF THE COURT

Fahey, J.

Through a long, complicated, and confusing history, the litigants have struggled over the application of zoning regulations as they apply to New York City’s adult entertainment industry. We hold that the City has met its burden of demonstrating that the establishments affected by its 2001 zoning amendments retained a predominant focus on sexually explicit materials or activities. It follows, under our 2005 decision in this case, that the amendments do not violate plaintiffs’ First Amendment rights.

I.

In 1994, the New York City Department of City Planning (DCP) completed a study of sexually focused businesses, namely “adult video and bookstores, adult live or movie theaters, and topless or nude bars,” and identified significant negative secondary impacts, including increased crime, diminished property values, reduced shopping and commercial activity, and a perceived decline in residents’ quality of life. After public hearings, the City’s Planning Commission issued a report, adopting the findings and conclusions of the study and noting that the businesses with adverse secondary impacts had “a predominant, on-going focus on sexually explicit materials or activities.”

The next year, after further public hearings, the New York City Council added zoning regulations barring adult establishments from residential zones and most commercial and manufacturing zones, and mandating that, where permitted, adult businesses had to be at least 500 feet from houses of worship, schools, day care centers, and other adult businesses.

The 1995 zoning ordinance defined an “adult establishment” as a commercial establishment a “substantial portion” of which was “an adult book store, adult eating or drinking establishment, adult theater, or other adult commercial establishment, or any combination thereof.” In turn, an “adult book store” (a term meant to embrace stores selling or renting sexually explicit video material, as well as books and magazines) was defined as having a “substantial portion” of its “stock-in-trade” in, among other things, printed matter or video representations depicting “specified sexual activities” or “specified anatomical areas,” as defined in the regulations. An “adult eating or drinking establishment” was defined as an eating or drinking establishment that excludes minors and “regularly features” live performances or films emphasizing “specified sexual activities” or “specified anatomical areas,” or where the employees regularly expose “specified anatomical areas” to patrons as part of their employment.

Certain adult establishments, including Stringfellow’s of New York, Ltd. (the predecessor in interest of plaintiff Ten’s Cabaret, Inc.), challenged the 1995 ordinance, as violating their rights of free speech protected by the First Amendment of the Federal Constitution and article I, § 8 of the State Constitution. This Court held that the ordinance was content-neutral because it was not “purposefully directed at controlling the content of the message conveyed through adult businesses,” but instead “was aimed at the negative secondary effects caused by adult uses, a legitimate governmental purpose” (Stringfellow’s of N.Y. v City of New York, 91 NY2d 382, 397, 399 [1998]). We further ruled that the ordinance was not broader than necessary, since it “protected] only those communities and community institutions that are most vulnerable to . . . adverse impacts” {id. at 400), and that reasonable alternative avenues of communication were assured, because the zoning “allow [ed] adult businesses to remain in districts that permit a wide mix of commercial, retail, entertainment and manufacturing uses” and, in almost every instance, were “within a 10-minute walk from a subway line or a major bus route” (id. at 403). The 1995 ordinance was “not constitutionally objectionable” (id. at 406) under the standards of Renton v Playtime Theatres, Inc. (475 US 41 [1986]) and Matter of Town of Islip v Caviglia (73 NY2d 544 [1989]). Although we did not use the term “intermediate scrutiny” in Stringfellow’s, it is clear that we applied this standard insofar as we determined whether the ordinance was narrowly tailored to serve a substantial governmental interest and allowed for reasonable alternative channels of communication.

Meanwhile, the City’s Department of Buildings and its Planning Commission, in an effort to give clarity to the concept of an establishment’s “substantial portion,” determined in a 1998 Operations Policy and Procedure Notice that any commercial establishment with at least 40% of its customer-accessible floor/ cellar area or stock-in-trade used for adult purposes qualified as an adult establishment. Thus emerged the so-called 60/40 test, which was applied to identify adult bookstores and adult eating or drinking establishments alike.

As the City began to enforce the 1995 ordinance, it concluded that adult establishments were achieving technical compliance with the 60/40 test, but without altering their predominant focus on sexually explicit activities or materials. As the City saw it, the 60/40 businesses were engaged in a “sham.” In one case, the City sought to shut down a store that complied with the test, insofar as just 24% of its stock consisted of adult videos, but where the nonadult videos were offered only for sale, not for rent, did not sell profitably, had been supplemented very modestly, and were located in a back room. This Court ruled in City of New York v Les Hommes (94 NY2d 267 [1999]) that the zoning resolutions must be enforced as written, without considering such factors as whether the nonadult stock was unprofitable or located in a remote part of the premises.

DCP then applied to the Planning Commission for amendments to the ordinance. The Planning Commission held further public hearings and issued a report endorsing the proposed amendments. In 2001, the City Council approved significant changes to the zoning regulations, greatly reducing the significance of the 60/40 test.

With respect to “adult eating or drinking establishments,” the 2001 amendments removed “substantial portion” from the definition, providing instead that a venue is covered if it regularly features live performances characterized by an emphasis on certain “specified anatomical areas” or “specified sexual activities” in any portion of the establishment, regardless of whether it limits those performances to less than 40% of its floor area. In other words, a club featuring topless or nude dancers qualifies as an “adult eating or drinking establishment” no matter the proportion of its space devoted to adult entertainment.

With regard to adult bookstores, the 2001 amendments formally kept the 60/40 test, with the added provision that if a store passes the test, but meets at least one of eight criteria, then the store’s nonadult material will not be considered stock-in-trade for the purpose of the “substantial portion” analysis. For example, if a store has peep booths, i.e. enclosures “where adult movies or live performances are available for viewing by customers,” then it qualifies as an adult bookstore, no matter how many nonadult video discs and magazines it stocks.

The 2001 amendments are the subject of the actions that we now consider, for the second time, today.

II.

In 2002, plaintiffs For the People Theatres of N.Y., Inc., which showed adult films, and JGJ Merchandise Corp., an adult video store also known as Vishans Video and as Mixed Emotions, brought an action against the City, its Mayor, the Director of City Planning, and the Commissioner of Buildings (collectively, the City). Both companies had reconfigured their establishments prior to the 2001 amendments to comply with the 60/40 test. Plaintiffs sought a judgment declaring the definitions of “adult theater” and “adult bookstore” in the 2001 amendments to be facially unconstitutional, as a violation of free speech. They argued principally that the City failed to support the amended regulations with a study aimed at the specific secondary effects of the class of 60/40 businesses. At the same time, plaintiffs Ten’s Cabaret, Inc., Pussycat Lounge, Inc., and two other topless clubs, which have since closed, commenced a similar action challenging the definition of “adult eating or drinking establishment” in the 2001 amendments. The actions were ultimately consolidated.

Ten’s Cabaret moved for summary judgment, all plaintiffs moved for a preliminary injunction against enforcement, and the City cross-moved for summary judgment. Plaintiffs argued that the City, in seeking to amend the 1995 ordinance, had improperly relied on the 1994 DCP study that led to the original zoning regulations, and had failed to generate any new empirical data regarding the purported adverse secondary effects of 60/40 establishments, even though the entities were, according to plaintiffs, very different from the businesses reviewed in the DCP study. For the People Theatres of N.Y. and JGJ Merchandise submitted affidavits and reports of two experts, an economist and a criminologist, who opined that 60/40 bookstores and theaters do not negatively affect property values or have adverse consequences in the form of increased criminal complaints. The remaining plaintiffs produced a 2001 NYPD report listing only one topless club in Manhattan with violations and similar documents suggesting that nightclubs other than adult establishments were perceived by the police as more problematic at the time. For its part, the City contended that a new study was not necessary because the City Council had rationally found that the 60/40 clubs and stores retained a predominant, ongoing focus on sexually explicit entertainment, which had already been determined to give rise to negative secondary effects.

In 2003, Supreme Court denied the City’s cross motions for summary judgment, granted plaintiffs’ motions for summary judgment, declared the 2001 amendments unconstitutional, and enjoined their enforcement (see 1 Mise 3d 394, 397 [Sup Ct, NY County 2003]; 1 Mise 3d 399, 407 [Sup Ct, NY County 2003]). Supreme Court held that defendants were “constitutionally required to provide evidence showing that the 60/40s did not remedy the secondary effects” (1 Mise 3d at 408-409).

The Appellate Division reversed Supreme Court’s judgments, denied plaintiffs’ motions, granted the City’s motions, vacated the injunction, declared the 2001 amendments constitutional, and dismissed the complaints (see 20 AD3d 1 [1st Dept 2005]). The Appellate Division reasoned that a new “secondary impacts” study was not required because the sexual character of the businesses had not changed when they became 60/40 businesses, and plaintiffs had failed to furnish evidence that would shift the evidentiary burden back to the City (see id. at 21).

III.

In 2005, this Court modified the Appellate Division’s order, by denying the City’s motions for summary judgment, and remitted the matter for further proceedings (see 6 NY3d 63 [2005]).

We applied the United States Supreme Court’s burden-shifting framework established in Los Angeles v Alameda Books, Inc. (535 US 425 [2002]), which set out what a municipality must prove in order to sustain a zoning ordinance that regulates adult businesses in the face of a First Amendment challenge.

Briefly, in Alameda Books, the Supreme Court set out a three-part burden-shifting framework for determining the constitutionality of zoning that regulates adult establishments. First, a “municipality’s evidence must fairly support the municipality’s rationale for its ordinance” (id. at 438). Second, the municipality prevails “[i]f plaintiffs fail to cast direct doubt on this rationale, either by demonstrating that the municipality’s evidence does not support its rationale or by furnishing evidence that disputes the municipality’s factual findings” (id. at 438-439). Third, “[i]f plaintiffs succeed in casting doubt on a municipality’s rationale in either manner, the burden shifts back to the municipality to supplement the record with evidence renewing support for a theory that justifies its ordinance” (id. at 439).

In our 2005 decision, this Court interpreted Alameda Books to mean that, with respect to the first stage, “a municipality’s burden to prove that it has a substantial interest in regulating a particular adult activity is not a very heavy one” (6 NY3d at 80). We explained that

“the reasonable discretion accorded most local legislative actions extends to adult use zoning. A local government implementing zoning that affects adult businesses must have a legislative record that establishes a substantial governmental interest in the subject matter of the regulation to justify restrictions on protected speech; however, the local government retains discretion to make its findings from studies or other supportive information before it, and to draw reasonable conclusions about which regulatory techniques will be most beneficial in addressing the findings” (id. at 81).

We noted, however, that, under Alameda Books, if plaintiffs demonstrate that the municipality’s evidence does not support its rationale or provide evidence disputing the municipality’s factual findings, then “the burden shifts back to the municipality to supplement the record” (id. at 79-80, quoting Alameda Books, 535 US at 439).

First, we held that the City had satisfied its initial burden to justify a rationale for the 2001 amendments.

“Here, the City cites the 1994 DCP Study, . . . and its subsequent enforcement experiences to demonstrate that while many adult businesses may comply with the 1995 Ordinance, at least technically, their essential character remains unchanged. It is this essential character — as adult bookstores or adult video stores or strip clubs or topless clubs — that creates negative secondary effects” (6 NY3d at 81).

We parted from the Appellate Division at the second stage of Alameda Books, holding that plaintiffs had furnished evidence disputing the City’s factual findings, shifting the burden back to the City to supplement the record with evidence renewing support for its rationale.

Significantly, however, we stated that the City is “not required ... to relitigate the secondary effects of adult uses, or to produce empirical studies connecting 60/40 businesses to adverse secondary effects” (id. at 83), and that the sole remaining question of fact is “whether 60/40 businesses are so transformed in character that they no longer resemble the kinds of adult uses found ... to create negative secondary effects” (id. at 83-84). The limited scope of the remand was explained by our observation that “[t]he City justified the 2001 Amendments as a measure to eradicate the potential for sham compliance with the 1995 Ordinance, and thus to reduce negative secondary effects to the extent originally envisaged” (id. at 83).

We gave the following specific guidance to the lower courts regarding our remand:

“we anticipate that the City will produce evidence relating to the purportedly sham character of self-identified 60/40 book and video stores, theaters and eating and drinking establishments or other commercial establishments located in the city. This does not mean that the City has to perform a formal study or a statistical analysis, or to establish that it has looked at a representative sample of 60/40 businesses in the city. If the trier of fact determines, after review of this evidence, that the City has fairly supported its position on sham compliance — i.e., despite formal compliance with the 60/40 formula, these businesses display a predominant, ongoing focus on sexually explicit materials or activities, and thus their essential nature has not changed— the City will have satisfied its burden to justify strengthening the 1995 Ordinance by enacting the 2001 Amendments, and will be entitled to judgment in its favor. If not, plaintiffs will prevail on their claim that the 2001 Amendments are insufficiently narrow and therefore violate their free speech rights” (id. at 84 [emphases added]).

IV.

Following discovery, the City presented evidence in two bench trials, concerning the characteristics of some 14 adult bookstores and 10 adult eating and drinking establishments (as defined by the 2001 amendments), which identified themselves as compliant with the 60/40 test. Managers or owners testified about efforts to reconfigure premises in accordance with that rule, while Office of Special Enforcement inspectors described the adult establishments, contrasting them with two nonadult video stores. Photographs of the adult establishments, pages from the topless clubs’ websites that included images promoting the attributes of individual dancers, and video recordings of the adult bookstores were entered into evidence.

The trial court upheld the amended zoning regulations in 2010, as to both the adult bookstores and the adult eating or drinking establishments, and entered judgments in favor of the City (see 27 Misc 3d 1079 [Sup Ct, NY County 2010]). Supreme Court emphasized that under the standard imposed by our 2005 decision “the City’s burden was a light’ one” and that the City had “provided substantial evidence” as to the “dominant, ongoing focus” of the bookstores and topless clubs on sexually explicit materials and activities (id. at 1089).

In 2011, the Appellate Division reversed, vacated the findings of constitutionality, and remanded (see 84 AD3d 48 [1st Dept 2011]). The Appellate Division ruled that the trial court had failed to specify “the criteria by which it determined that the plaintiffs’ essential nature was similar or dissimilar to the sexually explicit adult uses” underlying the 1995 zoning ordinance and had “failed to state the particular facts on which it based its judgment” (id. at 59).

The Appellate Division also concluded that Ten’s Cabaret and Pussycat Lounge had brought an “inartfully pleaded” as-applied challenge, and that the trial court had failed to set out findings of fact pertinent to that claim (id. at 64-65). Notably, however, no as-applied challenge had been before this Court in 2005 when we remanded.

The Appellate Division instructed the trial court on remand to use various characteristics of adult establishments identified in DCP’s 1994 study to determine whether the 60/40 businesses retained a predominant focus on sexually explicit materials or activities.

“For example, the presence of large signs advertising adult content may indicate a predominant focus on promoting sexually explicit materials. The same is true of a significant emphasis on the promotion of materials exhibiting ‘specified sexual activities’ or ‘specified anatomical areas,’ as evidenced by a large quantity of peep booths featuring adult films. Other indicators of a predominant focus on sexually explicit materials might be the exclusion of minors from the premises on the basis of age or difficulties in accessing nonadult materials” (id. at 61-62 [footnotes omitted]).

The Appellate Division stated that “the City’s evidence is subject to intermediate scrutiny” (id. at 59 n 6), and instructed that the trial court should hold the City to a more “heightened standard” (id. at 63) than it had in 2010. At the same time, however, the Appellate Division mentioned that “ ‘very little evidence is required’ to uphold the constitutionality of the 2001 Amendments” (id. at 62, quoting Alameda Books, 535 US at 451 [Kennedy, J., concurring]), and signaled that if the trial court found that most 60/40 establishments had any one of the characteristics of adult establishments identified in the 1994 study, then the City would have “more than enough evidence to justify the City’s 2001 ordinances” (84 AD3d at 62 n 12; see also 131 AD3d 279, 289 [1st Dept 2015]).

V.

On remand, the City relied upon the prior record.

In 2012, the trial court struck down the 2001 zoning regulations as to adult eating and drinking establishments and adult bookstores as an unconstitutional violation of the First Amendment, enjoining the City from enforcing them (see 38 Misc 3d 663 [Sup Ct, NY County 2012]).

The trial court’s findings of fact regarding the adult eating and drinking establishments were as follows.

Ten’s Cabaret had divided itself into two clubs, with separate entrances and operating hours: a gentlemen’s club featuring topless dancing and a nonadult entertainment facility named “Room Service,” consisting of private suites used for celebrity events. Similarly, Pussycat Lounge had a nonadult section in the form of a concert venue named “Catbar,” with its own website, which frequently had more clientele than the topless club did. Another adult eating and drinking establishment, Vixen, offered both adult and nonadult entertainment, although its website emphasized the former. VIP Club offered topless dancing on its first floor and sushi dining on the second floor; dancers offered individual “lap dances” to patrons in private rooms on both floors. Lace and Lace II had topless clubs on their first floors, and a nonadult lounge and a sports bar on their respective second floors. Private Eyes, which advertised itself on awnings as a “[S]ports Cabaret and Gentlemen’s Club,” comprised an adult entertainment portion featuring topless dancers and lap dances and a nonadult bar with bikini dancing. The same was true of Bare Elegance, which described itself on exterior signage as a “Gentlemen’s Club and Lounge” with “Live Beautiful Models.” HQ offered topless dancing on the ground floor and dining facilities for patrons on the second floor. At Wiggles, topless dancing and lap dances were on offer, and the nonadult section provided patrons with a coat check, pool table, and seating.

With respect to the adult bookstores, the trial court made the following findings.

Plaintiff JGJ Merchandise promoted both adult and non-adult items in its exterior signage and featured a window display of general interest magazines. Love Shack (Queens) promoted its nonadult products above a single reference to viewing booths, with the same size of lettering for both and no lighted or neon signage of the booths. Exquisite DVD had divided its nonadult merchandise according to category, making specific nonadult items easier to find. The nonadult material was located in the front of the store. At Blue Door Video (Brooklyn), the nonadult materials were in the front of the store, and customers in the nonadult section outnumbered customers in the adult section, but the adult section was visible from the nonadult section. At Blue Door Video (Manhattan), there were 24 peep booths. Both Blue Door Video stores sold condoms, sex aids, and/or sex toys in their nonadult sections. Love Shack (Bronx) sold adult novelties, sex aids, and condoms in the nonadult section, in the front, which afforded customers a view of the adult section, featuring eight peep booths. Gotham City (8th Avenue) kept its nonadult videos in the front of the store. Video Xcitement sold sex toys and sex aids in its nonadult section, in the front of the store. Show World no longer featured peep booths with live models or nude theater performances, but rather promoted comedy club performances and off-off-Broadway productions, advertised in city magazines. Its marquee did not mention adult performances. At Thunder Lingerie, a neon sign in the front entrance advertised peep shows and customers were able to see from the nonadult section to the adult section. The front of Amsterdam Video was devoted to nonadult materials and there were no peep booths in that store.

The trial court found that the nonadult sections of the adult bookstores were “almost always located in the front . . . with the adult section in the back, so that a patron can visit the front and never go to the back of the store” (38 Mise 3d at 674-675). The trial court also observed that almost none of the adult establishments displayed “garish neon lighted signs” or “hard-core sexual images or language,” and that “the nonadult signage is as prominent as the adult signage” (id. at 675).

Based on these findings, the trial court concluded that plaintiffs “no longer operate in an atmosphere placing more dominance of sexual matters over nonsexual ones. Accordingly, there is no need for the 2001 amendments. On their face, therefore, they are a violation of free speech provisions of the US and State Constitutions” (id. at 675). The trial court accordingly enjoined the City from enforcing the 2001 amendments.

Supreme Court noted that it was applying a different standard in 2012 than in 2010, because the Appellate Division had

“stated that the test was not one of rational basis and substantial evidence, but the higher test of intermediate scrutiny. Reviewing all of the Appellate Division directions caused this court to look more deeply into the factual findings and the standards by which to make its judgment. The burden on the City, then, is greater than previously understood” {id. at 673-674).

Having ruled the 2001 amendments facially unconstitutional, the trial court did not reach the topless clubs’ as-applied challenge identified by the Appellate Division {see id. at 674).

A divided Appellate Division affirmed Supreme Court’s judgment in 2015 {see 131 AD3d 279 [1st Dept 2015]). The Court applied the criteria it had suggested in 2011 for determining whether the 60/40 businesses retained a predominant focus on sexually explicit materials:

“(1) the presence of large signs advertising adult content, (2) significant emphasis on the promotion of materials exhibiting ‘specified sexual activities’ or ‘specified anatomical areas,’ as evidenced by a large quantity of peep booths featuring adult films, (3) the exclusion of minors from the premises on the basis of age, and (4) difficulties in accessing nonadult materials” {id. at 289 [internal quotation marks omitted]).

First, the Appellate Division considered the adult bookstores. With respect to signage, the Appellate Division affirmed the trial court’s findings that the signs advertising adult content were not large, graphic, or garish, and that the nonadult signage was as prominent as the adult signage {see id. at 290). As to the prohibition of minors, the Appellate Division found that this was not a significant factor, with six of the 13 adult bookstores permitting minors {see id. at 291). With respect to ease of access to nonadult materials, the Appellate Division affirmed the trial court’s finding that most of the stores kept the nonadult materials in the front of the stores, making them easy to find {see id.).

However, as to emphasis on promoting sexually explicit materials, the Appellate Division found that the adult book stores “all place [d] a significant emphasis on the promotion of such materials, based on promotional signage, window and interior displays and layouts promoting sexually focused adult materials and activities,” and that the record evidence established that all but one of the stores had peep booths, with an average of about 17 booths per store (id.). The Appellate Division noted that “[t]his evidence supports the City’s argument that the stores are predominantly sexually focused” (id.).

Nonetheless, the Appellate Division concluded that because “three of the four factors tend not to support the City’s position, . . . the City has not met its burden with respect to the adult video and book stores” (id.).

The Appellate Division then turned to the adult eating and drinking establishments. As to signage, the Appellate Division noted that there was no record evidence of the size or quality of the signs advertising “gentlemen’s clubs” and the like (see id. at 293). With regard to prohibition of minors, the Appellate Division found that this was again not a significant factor “since minors are presumably excluded because alcohol is served at the premises, not because of a focus on adult material” (id. at 293 n 11). As to ease in accessing the nonadult section, the Appellate Division found “no evidence in the record that these configurations make the nonadult sections difficult to access” (id. at 293).

On the other hand, the Appellate Division found that the evidence adduced by the City “shows that topless dancing takes place at all times daily for approximately 16 to 18 hours a day and that lap dances are provided in both public and private areas of the club” (id. at 292). The Appellate Division concluded that “the 60/40 clubs regularly feature topless dancing and lap dancing in a substantial portion of their overall space. This, coupled with the evidence regarding some of the clubs’ website and newspaper advertisements, . . . indicates a predominant sexual focus in most of the clubs” (id. at 292-293).

Again, however, the Appellate Division concluded that because three of the four factors did not support the City’s position, the City has not carried its burden, suggesting that “satisfaction of one of the factors is not sufficient to meet the City’s burden” (id. at 293).

Two Justices dissented. The dissenters believed that the City had “sustained its burden as to sham compliance by demonstrating that by and large the essential character of the 60/40 businesses has not changed, even if their physical structure has” (id. at 295 [Andrias, J., dissenting]).

The dissenting Justices gave the following reasoning.

“Substantial evidence demonstrates that, notwithstanding the present availability of additional amenities or certain nonadult uses of their space, the adult eating and drinking establishments used for illustrative purposes retained a predominant sexual focus. These establishments typically feature topless dancing by multiple dancers on a daily basis for approximately 16 to 18 hours a day . . . with lap dancing provided in both the adult and the non-adult areas. . . .
“The adult book stores and video stores also retained a predominant focus on sexual materials or activities. The evidence of promotion, based on signage, displays in some front windows and throughout the stores, and layout, combined with the evidence of the presence of large numbers of peep booths and the evidence of the sale of adult sex toys in the nonadult sections of the stores, demonstrates that most of the stores . . . emphasized the promotion of sexual materials over non-adult materials” (id. at 300-302 [Andrias, J., dissenting] [footnote omitted]).

The dissenters focused on the majority’s use of an improper legal standard.

“The majority’s mechanical and mathematical approach, under which the predominant sexual focus in the 60/40 businesses’ activities is quantitatively outweighed by signage, policies towards minors, and layouts, is inadequate under the dictates of the Court of Appeals and this Court, and elevates the City’s burden of proof. In identifying certain factors relevant in assessing the character of the adult establishments, this Court did not call for a mechanical application by which each factor is to be weighted equally and tallied to arrive at a quantitative conclusion” (id. at 302 [Andrias, J., dissenting] [emphasis added]).

The City appealed. Because the two-Justice dissent was on a question or questions of law in appellants’ favor, we have jurisdiction over this appeal under CPLR 5601 (a).

VI.

It is the City’s burden to show that the adult businesses retained a predominant, ongoing focus on sexually explicit materials or activities. As described above, Alameda Books sets out a three-part burden-shifting framework for determining the constitutionality of adult use zoning, which we followed in our 2005 decision. The analytical issue that remains at this point in the litigation concerns the burden of proof that the City must sustain in order to prevail at the third stage, after the burden has shifted back to the City to supplement the record. This narrow issue is distinct from, but related to, the question of the overall level of constitutional scrutiny.

As we have noted, we apply intermediate scrutiny in the adult use zoning context. In String fellow’s (91 NY2d 382), in keeping with federal precedent (see Renton, 475 US at 50), we properly applied intermediate scrutiny to the question whether the City’s purpose justified the original zoning ordinance, considering whether the ordinance was narrowly tailored to the City’s purpose or else broader than necessary, and whether reasonable alternative avenues of communication were assured. We briefly reiterated in our 2005 decision that the intermediate scrutiny standard was applicable (see 6 NY3d at 81).

The relation between the level of scrutiny and the burden of proof to be met by the City may be explained as follows. Intermediate scrutiny is a level of judicial review that applies to the overall determination as to whether a government’s purpose justifies a law, i.e., here whether the zoning regulation is narrowly tailored to serve a substantial governmental interest and allows for reasonable alternative avenues of communication (see Renton, 475 US at 47, citing Clark v Community for Creative Non-Violence, 468 US 288, 293 [1984]; Members of City Council of Los Angeles v Taxpayers for Vincent, 466 US 789, 807 [1984]; Heffron v International Soc. for Krishna Consciousness, Inc., 452 US 640, 647-648 [1981]). A court conducting an intermediate scrutiny test (as with any level of scrutiny) must reach legal determinations, as to the balancing of interests, but the court must also assess the government’s factual or predictive judgments (see e.g. District of Columbia v Heller, 554 US 570 [2008]; Turner Broadcasting System, Inc. v FCC, 520 US 180 [1997]). For example, we had to determine in String fellow’s whether the 1995 ordinance was indeed aimed at combating negative secondary effects. Whether adult establishments create negative secondary effects is such a factual matter. So is whether the adult establishments retain an ongoing predominant focus on sexually explicit activities and materials. The question, then, is what burden of proof the government must bear in such matters when the overall test is intermediate scrutiny.

The United States Supreme Court has instructed that in First Amendment cases applying intermediate scrutiny, a court’s task, when reviewing a legislature’s factual or predictive judgments, is “to assure that, in formulating its judgments, [the legislature] has drawn reasonable inferences based on substantial evidence” (Turner Broadcasting System, Inc., 520 US at 195; see e.g. Abilene Retail No. 30, Inc. v Board of Commrs. of Dickinson County, Kansas, 492 F3d 1164, 1174 [10th Cir 2007], cert denied 552 US 1296 [2008]). Indeed, the Supreme Court has remarked that “substantiality is to be measured in this context by a standard more deferential than we accord to judgments of an administrative agency” because a legislature is best equipped “to amass and evaluate the vast amounts of data bearing upon legislative questions” (Turner Broadcasting System, 520 US at 195 [internal quotation marks omitted and emphasis added]). Municipalities have unique knowledge of local problems and suitable solutions. For these reasons, we hold that the same deferential standard is applicable under our state constitutional law to a municipality’s factual or predictive judgments in the adult use zoning context.

Our 2005 decision in this litigation applied the appropriate standards. In discussing whether the City had met its initial burden at the first stage of Alameda Books, this Court noted that “a municipality’s burden to prove that it has a substantial interest in regulating a particular adult activity is not a very heavy one” (6 NY3d at 80) and we quoted Justice Kennedy’s concurrence in Alameda Books, which stated that “very little evidence is required” because generally “courts should not be in the business of second-guessing fact-bound empirical assessments of city planners” (id. [emphasis omitted], quoting Al-ameda Books, 535 US at 451 [Kennedy, J., concurring]). We ruled that given this modest evidentiary burden, the City had satisfied' its initial “burden to justify a secondary-effects rationale for the City’s 2001 Amendments” (6 NY3d at 81-82).

Then, in setting out what the City would have to show at the third Alameda Books stage, we clearly implied that the same evidentiary burden would apply. In particular, we required evidence that “fairly support [s]” the conclusion that there is an ongoing focus on the sexually explicit {id. at 84). The “fairly support” language was drawn from Alameda Books, which stated that, at the first stage of the three-part framework, a municipality, seeking to show a relation between speech and a government interest, “may rely on any evidence that is reasonably believed to be relevant” (Alameda Books, 535 US at 438 [internal quotation marks omitted]), but cannot “get away with shoddy data or reasoning,” and must adduce evidence that “fairly support [s] the municipality’s rationale for its ordinance” {id.). We further emphasized the modest burden placed upon the City at the third stage by noting that the City need not “perform a formal study or a statistical analysis, or . . . establish that it has looked at a representative sample of 60/40 businesses in the city” (6 NY3d at 84).

Our intent in 2005 was that the City, in demonstrating an ongoing focus on the sexually explicit, must meet the same ev-identiary burden at the third Alameda Books stage that it had to meet at the first stage.

VII.

For these reasons, the Appellate Division, in the decision on appeal, erred in stating that the City’s modest evidentiary burden related only to the first stage of Alameda Books (see 131 AD3d at 289). The guidance delivered by the Appellate Division to the trial court during this litigation confused the ultimate standard of review or constitutional scrutiny to be applied with the evidentiary burden borne by the City. The Appellate Division noted in 2011 that “the City’s evidence is subject to intermediate scrutiny” (84 AD3d at 59 n 6), and instructed the trial court to “assess the City’s evidence in light of this somewhat heightened standard” (id. at 63). Supreme Court interpreted this to mean “that the test was not one of rational basis and substantial evidence, but the higher test of intermediate scrutiny” (38 Misc 3d at 673-674).

The lower courts’ discussions and applications of intermediate scrutiny misconstrued the standard. There is no conflict between intermediate scrutiny and application of a modest burden of proof akin to substantial evidence. The trial court’s 2010 assessment of the City’s evidentiary burden as “a ‘light’ one” (27 Misc 3d at 1089) was in fact correct, and it erred in 2012 when it eschewed any standard such as substantial evidence and held the City to a higher burden of proof (see 38 Misc 3d at 673-674). Properly understood, the trial court’s task was to decide whether the City had relevant evidence reasonably adequate to support its conclusion that the adult establishments retained a predominant, ongoing focus on sexually explicit activities or materials.

The Appellate Division in the decision on appeal exacerbated its earlier misguidance to the trial court by applying a rigidly mechanical approach to the determination of whether a predominant focus on sexually explicit entertainment remained. This too was error. As the dissent observed, the majority’s four-prong checklist, with each factor weighing equally, placed subsidiary considerations such as signage on equal footing with the touchstone issue of emphasis on the promotion of sexually explicit activities or materials. Moreover, the Appellate Division counted factors that gave no support either to the City’s conclusion or to plaintiffs’ position (such as exclusion of minors by the topless clubs or lack of a uniform practice on exclusion of minors by the adult bookstores) as if they affirmatively counted against the City.

In addition, the Appellate Division’s approach lost sight of the fact that the issue was whether there was sham compliance. A bookstore could very well engage in such a sham by removing large signs, allowing minors to enter, and ensuring that nonadult materials are accessible, and yet retain a focus on sexual materials. A store that stocks nonadult magazines in the front of the store but contains and prominently advertises peep booths is no less sexual in its fundamental focus just because the peep booths are in the back and the copies of Time magazine in the front. The same is true of the adult eating and drinking establishments. A topless club is no less an adult establishment if it has small signs and the adjoining comedy club, seating area, or bikini bar is easy to access.

Additionally, since the City bore only a modest burden of proof akin to substantial evidence, it was error for the Appellate Division to assume that “satisfaction of one of the factors” alone could not be “sufficient to meet the City’s burden” (131 AD3d at 293).

VIII.

Viewed in the proper light, the evidence and the factual findings of the lower courts support only one conclusion: that the City met its burden of showing continued focus on sexually explicit activities and materials by the adult bookstores and adult eating and drinking establishments.

The Appellate Division found that all but one of the adult bookstores had peep booths for viewing adult films, with an average of about 17 booths per store. Peep booths, by design, obviously promote sexual activities. The Appellate Division further found that all the bookstores used signage, displays, and layouts to promote sexually focused adult materials and activities. In addition, as the trial court found, many of the adult bookstores sold sex toys, adult novelties, and the like in the nonadult sections of the stores. This evidence showed that most of the adult bookstores predominantly emphasized the promotion of sexual materials and activities.

Contrary to the Appellate Division, this substantial evidence is in no way negated by the fact that the signs promoting the peep booths were “not graphic” or the fact that “there is no evidence that any of the stores have adult signs that are larger than those of nearby nonadult businesses, or even that the signs advertising adult content are large” (131 AD3d at 290). The very existence of signs advertising peep booths indicates a continued sexual focus, regardless of their size. We cannot accept the idea that there is something uniquely sexual about “XXX” signs, as opposed to other signs advertising “Peep Booths.” Whether signs are garish has little bearing on whether a business retains a sexual focus.

In short, the evidence credited by the Appellate Division supports one conclusion alone: that the adult bookstores continue to have a predominant focus on sexually explicit materials and activities.

As to the adult eating and drinking establishments, the Appellate Division found that, in all the clubs, “topless dancing takes place at all times daily for approximately 16 to 18 hours a day” and also that lap dances, a quintessentially sexual activity, were offered by dancers “in both public and private areas of the club” (id. at 292). This evidence, without more, adequately supported the conclusion that the topless clubs retained a predominant sexual focus.

Ten’s Cabaret and Pussycat Lounge argue that the City has offered no evidence of the character of the topless clubs before the 60/40 formula came into effect and has not met its burden of showing a lack of transformation in the clubs’ character. However, this Court’s 2005 decision ordered the trial court to decide whether plaintiffs were predominantly sexual in focus at the time of trial, and this task did not require the City to adduce evidence as to their character in the past.

In short, once the standard is clarified, it is evident as a matter of law that the City met its burden of showing that the adult establishments continued to have a predominant focus on sexually explicit materials and activities. It follows that the 2001 amendments are facially constitutional.

IX.

In the alternative, Ten’s Cabaret and Pussycat Lounge contend that the 2001 amendments, as applied to them, are unconstitutional. In essence, the two companies argue that regardless of whether some of the other topless clubs inspected by the City continued to focus on sexual activities, they did not, insofar as they became hybrid entities, including independent nonadult clubs serving different clientele adjacent to the adult entertainment. As the City points out, however, the as-applied challenge was not raised on the prior appeal (see 6 NY3d 63) and is not now reviewable (see New York Tel. Co. v Supervisor of Town of Oyster Bay, 35 AD3d 417, 418 [2d Dept 2006]; Katz v City of New York, 231 AD2d 448, 448 [1st Dept 1996]; see also Martin v City of Cohoes, 37 NY2d 162, 165-166 [1975]).

Accordingly, the order of the Appellate Division should be reversed, without costs, and judgment granted in favor of the City of New York in accordance with this opinion.

Judges Rivera, Stein, Garcia and Wilson concur; Chief Judge DiFiore taking no part.

Order reversed, without costs, and judgment granted in favor of the City of New York in accordance with the opinion herein.

      . In Alameda Books, the plurality, assuming without deciding that a Los Angeles adult use zoning ordinance was content-neutral (see Alameda Books, 535 US at 441), set out the three-part framework. Justice Kennedy, concurring in the judgment on the narrowest grounds, expressed the view that zoning restrictions on adult businesses are in reality “content based, and we should call them so” (id. at 448 [Kennedy, J., concurring]), but nevertheless reasoned that “[a] zoning restriction that is designed to decrease secondary effects and not speech should be subject to intermediate rather than strict scrutiny” (id. at 448 [Kennedy, J., concurring]), and agreed with the plurality’s framework, including what Justice Kennedy called the requirement of “very little evidence” by the municipality (id. at 450-451 [Kennedy, J., concurring]).

      . The trial court ruled in favor of the adult theater, For the People Theatres of N.Y., Inc. (see 27 Misc 3d at 1089), and the City did not appeal this part of the judgment.

      . We have considered plaintiffs’ remaining arguments, and conclude that they lack merit. We decline to accept the invitation of plaintiffs and amicus First Amendment Lawyers Association to reconsider our 2005 decision in this case. We note, however, that there is no inconsistency between that opinion and Justice Kennedy’s analysis of the relation between speech and secondary effects in his Alameda Books concurrence (see Alameda Books, 535 US at 449-450 [Kennedy, J., concurring]; see also Ben’s Bar, Inc. v Village of Somerset, 316 F3d 702, 721-722 [7th Cir 2003]).


text:
    [79 NE3d 495, 57 NYS3d 103]
    The People of the State of New York, Respondent, v Lawrence P. Frumusa, Appellant.
    Argued May 3, 2017;
    decided June 8, 2017

      POINTS OF COUNSEL

      Timothy P. Donaher, Public Defender, Rochester (Drew R. DuBrin of counsel), for appellant.

      Sandra Doorley, District Attorney, Rochester {Kelly C. Wol-ford and Robert J. Shoemaker of counsel), for respondent.
   OPINION OF THE COURT

Fahey, J.

For over one hundred years, this Court has applied and refined its holding in People v Molineux (168 NY 264 [1901]). Here, we are presented with a more fundamental question concerning how to identify such propensity evidence in the first instance. We are asked to determine whether the trial court abused its discretion as a matter of law by admitting into evidence a contempt order issued in a civil action involving the same funds defendant was criminally charged with stealing. We conclude that the contempt order did not constitute Mo-lineux evidence. We further conclude that the trial court did not abuse its discretion as a matter of law at the pretrial hearing in concluding that the evidence was admissible because it was relevant to defendant’s larcenous intent and its probative value was not substantially outweighed by the danger of undue prejudice to defendant.

I.

In 2006, defendant entered into a joint business venture with Marianela Hernandez to construct and operate a hotel. Defendant and Hernandez formed Webster Hospitality Development LLC (WHD) for that purpose. Hernandez initially invested $1 million in exchange for a 25% ownership share in WHD. Defendant had a 75% ownership share and acted as WHD’s managing member, with authority to obtain financing, manage the hotel’s accounting, and pay creditors.

The hotel opened in 2007, and despite a steady flow of customers, the hotel quickly encountered financial problems. Hernandez became suspicious of defendant’s business practices after she learned of liens placed on the property by unpaid construction contractors. Sometime in 2008, Hernandez discovered that some of the hotel’s proceeds were being transferred into accounts defendant held for his other separate businesses. She consulted attorneys and commenced a civil action against defendant in New York Supreme Court in early 2009. Defendant was indicted on the criminal charge of grand larceny in the second degree in September 2010. The People alleged that defendant stole approximately $300,000 from WHD between December 2008 and June 2009 by diverting credit card proceeds from the hotel to accounts that he held for his other businesses.

Several orders entered by Supreme Court in the civil action were admitted into evidence during the criminal trial without objection by defendant. In February 2009, Supreme Court appointed a receiver to take control of WHD and prohibited both defendant and Hernandez from transferring, encumbering, or otherwise disposing of WHD’s assets, and from taking any action whatsoever on behalf of WHD. The receiver, Timothy Foster, was authorized to oversee all WHD operations, hire a management company to continue operation of the hotel, and manage all bank accounts and accounting for WHD. Defendant and Hernandez were ordered to pay over to Foster any WHD assets currently in their possession and were further enjoined from collecting any money on behalf of WHD.

In June 2009, Hernandez and Foster learned that defendant had opened bank accounts in the names of his other businesses at PNC Bank and had been transferring credit card proceeds from the hotel into those bank accounts. Motion practice in the civil action followed, and in October 2009, Supreme Court issued the contempt order at issue.

That contempt order held three of defendant’s other businesses in contempt for failing to obey a July 2009 order of the court directing defendant’s businesses to turn over all WHD funds deposited into the PNC accounts. The contempt order stated that defendant’s businesses had “willfully and deliberately failed to obey the terms” of the earlier order “in that they have converted $249,196.28 of WHD’s monies and refused to comply with the express directions in the [earlier order] to pay over to WHD all monies received by each of them.” In addition, the contempt order stated that the conduct of defendant’s businesses “was calculated to and actually did defeat, impair, impede and prejudice the rights and remedies of WHD.” Defendant’s businesses were allowed to purge themselves of the contempt by paying a fine and returning the funds to WHD. Hernandez and Foster testified at trial that neither defendant nor his businesses ever returned those funds to WHD.

Before defendant’s criminal trial began, the People sought permission to introduce the contempt order as Molineux evidence. The People anticipated that defendant would contend at trial that he did not act with larcenous intent when he took the funds from WHD, and the People argued that because defendant was the majority owner of WHD, his intent could not be easily inferred from his actions. The People contended that the contempt order was relevant to defendant’s intent in that he failed to return to WHD the funds that his businesses were ordered to turn over. Defendant opposed the motion, arguing that the jury might afford undue weight to the contempt order and that the burden of proof was “completely different” in a civil case. For those reasons, defendant asserted that the prejudice to defendant would outweigh any probative value of the contempt order. The court granted the People’s Molineux application.

During the criminal trial, defendant did not dispute that he transferred WHD funds to the PNC accounts in violation of court orders prohibiting him from doing so. He contended, however, that he did not act with larcenous intent because when he took the funds, he merely intended as the managing member of WHD to ensure the continued operation of the business and the payment of its creditors, and his actions were the result of his concerns regarding the competence of Foster as receiver.

The People presented evidence that defendant opened the accounts at PNC Bank before a receiver was appointed in the civil action, and defendant began transferring credit card proceeds to those accounts two days after Foster was first appointed receiver. Foster testified that defendant never informed him of the existence of those accounts, despite a lengthy meeting the two had in late February 2009. By March of 2009, the PNC accounts were accessible only by defendant. Furthermore, defendant gave an interview to a local business newspaper in August 2009, in which he admitted that certain credit card proceeds paid to the hotel were being transferred to an account he referred to as “mine,” and that Foster did not know about that account because he never asked about it. According to the People’s evidence, between January and June of 2009, defendant transferred approximately $299,500 of WHD’s credit card revenue into the PNC accounts. The jury found defendant guilty as charged.

On appeal, a divided Appellate Division affirmed the judgment. The Court held that the contempt order was properly admitted as relevant to defendant’s intent and that the probative value of the order outweighed its potential prejudice (see People v Frumusa, 134 AD3d 1503, 1504 [4th Dept 2015]). The two dissenting Justices concluded that the contempt order was not Molineux evidence, but even if it was, its probative value did not outweigh its prejudicial effect, inasmuch as the contempt order constituted “a judicial finding of defendant’s larcenous intent” (id. at 1507 [Centra and Lindley, JJ., dissenting]). One of the dissenting Justices granted defendant leave to appeal to this Court (27 NY3d 971 [2016]). We now affirm.

II.

Initially, we conclude that the contempt order was not Molineux evidence. “[T]he familiar Molineux rule states that evidence of a defendant’s uncharged crimes or prior misconduct is not admissible if it cannot logically be connected to some specific material issue in the case, and tends only to demonstrate the defendant’s propensity to commit the crime charged” (People v Cass, 18 NY3d 553, 559 [2012] [emphasis added]). Molineux evidence is presumptively inadmissible unless it is relevant to some material issue in the case and the trial court determines in its discretion that the probative value of the evidence outweighs the risk of undue prejudice to the defendant (see id. at 560; People v Alvino, 71 NY2d 233, 242 [1987]).

The Molineux rule “ ‘is based on policy and not on logic’ ” (People v Arafet, 13 NY3d 460, 465 [2009], quoting People v Allweiss, 48 NY2d 40, 46 [1979]). “It may be logical to conclude from a defendant’s prior crimes that he is inclined to act criminally, but such evidence ‘is excluded for policy reasons because it may induce the jury to base a finding of guilt on collateral matters or to convict a defendant because of his past’ ” (Arafet, 13 NY3d at 465, quoting Alvino, 71 NY2d at 241).

“Molineux analysis is limited to the introduction of a prior uncharged crime or a prior bad act” (People v Brewer, 28 NY3d 271, 276 [2016]). Although we have extended the Molineux rule to allow for admissibility of subsequent crimes or bad acts under certain circumstances (see generally People v Ingram, 71 NY2d 474, 480-481 [1988]), the common thread in all Molineux cases is that the evidence sought to be admitted concerns a separate crime or bad act committed by the defendant. This becomes clear when one considers the reason for the rule: “When we limit Molineux or other propensity evidence, we do so for policy reasons, due to fear of the jury’s human tendency to more readily believe in the guilt of an accused person when it is known or suspected that he has previously committed a similar crime” (Brewer, 28 NY3d at 276 [internal quotation marks omitted]). In other words, the courts limit the admission of Molineux evidence because of the danger that the jury might conclude that if the defendant did it once, he or she likely did it again.

Where, as here, the evidence at issue is relevant to the very same crime for which the defendant is on trial, there is no danger that the jury will draw an improper inference of propensity because no separate crime or bad act committed by the defendant has been placed before the jury. The People were not, for example, seeking to introduce evidence that defendant had previously embezzled money from a separate business several years before. Rather, the contempt order stated that defendant’s businesses had failed to return to WHD the very same funds that defendant was on trial for stealing from WHD. It therefore would be impossible for the jury to conclude from the contempt order that defendant had a “propensity” to steal or otherwise commit crime.

“That the People classified it as Molineux evidence, and the trial court considered it on that basis, does not prevent us from concluding it was not,” because the parties’ arguments below regarding the probative value of the contempt order and its prejudicial effect “would remain the same” (Brewer, 28 NY3d at 276 n 1). Nor do we seek “to discourage the People from bringing a challenging or problematic evidentiary issue to the attention of the court and defendant before trial” (id.).

III.

Under general evidentiary principles, “ ‘all relevant evidence is admissible unless its admission violates some exclusionary rule’ ” (People v Harris, 26 NY3d 1, 5 [2015], quoting People v Scarola, 71 NY2d 769, 777 [1988]). Here, as explained, the contempt order is not Molineux evidence and therefore its admission does not violate that exclusionary rule.

We agree with the People that portions of the contempt order were relevant to defendant’s intent in committing grand larceny in the second degree. The People were required to prove that defendant acted with intent to “deprive” WHD of its property (see Penal Law § 155.05 [1]).

“To ‘deprive’ another of property means (a) to withhold it or cause it to be withheld from him permanently or for so extended a period or under such circumstances that the major portion of its economic value or benefit is lost to him, or (b) to dispose of the property in such manner or under such circumstances as to render it unlikely that an owner will recover such property” (Penal Law § 155.00 [3]).

The People were therefore required to prove that when defendant transferred the funds, he was without legal authority to do so, and that he did so not to benefit WHD, as he claimed, but rather with the intent to deprive WHD of those funds permanently.

The Appellate Division correctly concluded that the contempt order was relevant to prove defendant’s larcenous intent because “it showed that defendant’s conduct did not merely constitute poor financial management but, rather, that defendant, through his businesses, intended to deprive WHD of the diverted money permanently” (Frumusa, 134 AD3d at 1504). The fact that defendant’s businesses failed to return the funds to WHD after they were ordered by Supreme Court to do so makes it less likely that defendant took the funds to benefit WHD, and more likely that he took them with the intent to permanently deprive WHD of the money.

Defendant contends that the contempt order did not affirmatively disprove his theory that he acted with the intent to assure the continued viability of the business. That is true, but defendant’s argument misapprehends the nature of relevant evidence. “Evidence is relevant if it has any tendency in reason to prove the existence of any material fact, i.e., it makes determination of the action more probable or less probable than it would be without the evidence” (Scarola, 71 NY2d at 777). The fact that the contempt order, standing alone, would not prove defendant’s larcenous intent beyond a reasonable doubt does not mean that it was irrelevant. Again, the continued retention of WHD’s funds by defendant’s businesses, in defiance of a court order to return those funds, is relevant to whether defendant took the money with intent to permanently deprive WHD because it makes it more likely that this was defendant’s intent in committing the taking.

Defendant relatedly contends that his intent could not be inferred from the fact that he failed to return the money to WHD because other evidence presented at trial — namely, his personal bankruptcy and the fact that his other businesses were suffering financially — suggested that he was unable to return the funds at the time the contempt order was issued. That argument goes to the weight and not the admissibility of the contempt order. Defendant was free to argue during trial that the jury should draw a different inference from the contempt order, i.e., that his businesses were simply unable to comply when ordered to return the funds to WHD, than the inference of intent for which the People argued.

IV.

Relevant evidence “may still be excluded in- the exercise of the trial court’s discretion if its probative value is substantially outweighed by the potential for prejudice” (Harris, 26 NY3d at 5 [internal quotation marks omitted]; see Scarola, 71 NY2d at 777; People v Davis, 43 NY2d 17, 27 [1977], cert denied 435 US 998 [1978], cert denied sub nom. New York v James, 438 US 914 [1978]). We review the trial court’s exercise of its discretion in this balancing analysis for an abuse of discretion as a matter of law (see Brewer, 28 NY3d at 277).

“Plainly, almost all relevant, probative evidence the People seek to admit in a trial against a defendant will be, in a sense, prejudicial. The People generally wish to admit evidence supporting the theory that a defendant is guilty of the crime for which he is charged. Evidence which helps establish a defendant’s guilt always can be considered evidence that ‘prejudices’ him or her. But the probative value of a piece of evidence is not automatically outweighed by prejudice merely because the evidence is compelling” (Brewer, 28 NY3d at 277).

Rather, the court must weigh the probative value of the evidence against the danger of unfair or undue prejudice to the defendant (see Scarola, 71 NY2d at 777; Davis, 43 NY2d at 27).

It was not unduly prejudicial to defendant that the contempt order stated that defendant’s businesses had funds belonging to WHD and that the businesses failed to return those funds to WHD. The contempt order was not entered against defendant himself and, as noted, defendant conceded at trial that he took the money from WHD and transferred it to accounts in the names of his other businesses without legal authority to do so. Furthermore, as explained above, it was relevant to defendant’s larcenous intent that his businesses failed to return the funds to WHD after being ordered to do so.

Granted, the contempt order was not without the potential to unduly prejudice defendant. As defense counsel noted in opposition to the People’s Molineux application, there are different burdens of proof in civil and criminal cases. The contempt order also stated that the actions of defendant’s businesses were “calculated to and actually did defeat, impair, impede and prejudice the rights and remedies of WHD.” The dissenting Justices at the Appellate Division concluded that this might be viewed by the jury as constituting a “judicial finding of defendant’s larcenous intent,” and that a limiting instruction should have been given to minimize any potential prejudice to defendant (Frumusa, 134 AD3d at 1507 [Centra and Lindley, JJ., dissenting]). Defendant never requested a limiting instruction, however, and we therefore cannot address that issue. We reiterate, however, that a limiting instruction generally may be used to minimize any potential undue prejudice from the admission of evidence, even outside the Molineux context (see generally Harris, 26 NY3d at 5).

Defendant further contends that certain remarks by the prosecutor during summation were improper and contravened the prosecutor’s assertions to the court during the pretrial hearing that the contempt order would be introduced to support intent rather than to suggest that the jury should ratify the judge’s findings in the contempt order. We cannot address that contention, however, because defendant failed to object to those remarks. Instead, our review is limited to the court’s ruling at the time of the pretrial hearing regarding the admissibility of the contempt order.

For the foregoing reasons, we cannot conclude on this record that the probative value of the contempt order was so substantially outweighed by the danger of undue prejudice to defendant that the trial court abused its discretion as a matter of law by admitting it into evidence.

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

Chief Judge DiFiore and Judges Rivera, Stein, Garcia and Wilson concur.

Order affirmed.


author: Per Curiam.

text:
    [79 NE3d 1113, 57 NYS3d 450]
    In the Matter of Gerald E. Loehr et al., Respondents, v Administrative Board of the Courts of the State of New York, Appellant.
    Argued March 21, 2017;
    decided May 4, 2017

      POINTS OF COUNSEL

      John W. McConnell, New York State Office of Court Administration, New York City (Lee Alan Adlerstein and John J. Sullivan of counsel), for appellant.

      Wilson Elser Moskowitz Edelman & Dicker LLP, White Plains (Robert A. Spolzino and Eliza M. Scheibel of counsel), for respondents.
   OPINION OF THE COURT

Per Curiam.

Plaintiffs are three retired Supreme Court Justices certified for further service on that bench. Prior to their certification, the Chief Administrative Judge signed an administrative notice declaring that the policy of the Administrative Board of the Courts of the State of New York henceforth would be that “no judge . . . certificated for service as a Justice of the Supreme Court pursuant to Judiciary Law § 115 may receive, concurrent with receipt of a salary for such service, a retirement allowance for prior judicial service within the Unified Court System” (Administrative Order of Chief Admin Judge of Cts AO/240/13). Plaintiffs seek a declaration that the policy is illegal and unconstitutional. Because the Board enjoys nearly unfettered discretion in determining whether to certify a retired Justice, and because its decision here was not contrary to any law or constitutional mandate raised by plaintiffs, we now reverse the Appellate Division and reinstate the judgment of Supreme Court.

I.

Justice Gerald Loehr served first as a Judge of the West-chester County Court, and in 2012 was elected to a 14-year term as a Supreme Court Justice, to commence on January 1, 2013. On December 31, 2012, Justice Loehr retired, began receiving retirement benefits, and simultaneously drew the salary to which he was entitled as a Supreme Court Justice. In anticipation of turning 70 on May 19, 2013, Justice Loehr applied to the Administrative Board for certification pursuant to Judiciary Law § 115. Without that certification, he would have been prohibited from serving as a Supreme Court Justice after December 31, 2013.

Justice J. Emmett Murphy served as a full-time judge from 1980 to 2011. He became a Judge of the Westchester County Court in 1991, and was elected to Supreme Court in 1996. In 2010, Justice Murphy was reelected as a Supreme Court Justice with a term commencing on January 1, 2011. On December 31, 2010, Justice Murphy retired, and began receiving retirement benefits thereafter. Justice Murphy turned 70 on March 12, 2011, and in that same month applied to the Administrative Board for his first certificate pursuant to Judiciary Law § 115. Without that certification, he would have been prohibited from serving as a Supreme Court Justice after December 31, 2011. Because judges may be certified only for a two-year term, Justice Murphy applied to be recertified in 2013.

Justice William Miller joined the Unified Court System in 1983 when he was appointed, after service in the Kings County District Attorney’s office, to the Criminal Court of the City of New York. In 2012, he was elected to Supreme Court for a 14-year term commencing January 1, 2013. Prior to taking that office, and on the advice of the pension director for the Office of Court Administration, Justice Miller applied for and was granted retirement benefits. Because he would reach age 70 in 2013, Justice Miller also applied to the Administrative Board to be certified to perform the duties and draw the salary of a Supreme Court Justice for the two years commencing January 1, 2014. Without that certification, he would have been prohibited from service as a Supreme Court Justice after December 31, 2013.

While plaintiffs’ applications were pending, the Board released the administrative order at issue, giving notice that it would no longer certify applicants who would, on reappointment, choose to receive both a retirement allowance for prior judicial service and their salary as a certified justice. The Board’s order was grounded in its belief that judges who simultaneously drew both a full judicial salary and a full pension (colloquially called “double-dipping”) adversely affected both the public’s impression of the court system and the court system’s negotiations with the other branches over crucial budgetary and personnel matters. A subsequent memorandum from the Office of the Chief Administrative Judge clarified that retired Justices otherwise approved for certification would be certified only if they deferred receipt of their New York State pensions until their judicial service ended.

Plaintiffs commenced this hybrid CPLR article 78 proceeding and declaratory judgment action seeking an order declaring the Board’s policy illegal and unconstitutional, directing the Board to certify them, and awarding money damages, plus attorney’s fees and litigation expenses incidental to the relief. Supreme Court dismissed the petition for failure to state a claim and declared the Board’s policy to be neither illegal nor unconstitutional. Plaintiffs appealed to the Appellate Division, which reversed, granted the petition, and declared that the Board’s administrative order violated the New York Constitution, the Judiciary Law, and the Retirement and Social Security Law (130 AD3d 89 [3d Dept 2015]). The Board then filed a notice of appeal as of right to this Court under CPLR 5601 (b) (1).

II.

We start with the basic proposition that New York’s public policy strongly disfavors the receipt of state pensions by persons also receiving state salaries. Section 150 of the Civil Service Law establishes New York’s general public policy against the simultaneous receipt of a state pension and a state salary:

“Except as otherwise provided by sections one hundred one, two hundred eleven, and two hundred twelve of the retirement and social security law ... if any person subsequent to his or her retirement from the civil service of the state . . . shall accept any office, position or employment in the civil service of the state ... to which any salary or emolument is attached . . . any pension or annuity awarded or allotted to him or her upon retirement, and payable by the state ... or out of any fund established by or pursuant to law, shall be suspended during such service or employment and while such person is receiving any salary or emolument therefor except reimbursement for traveling expenses.”

Indeed, as we explained in Matter of Baker v Regan, the “Legislature has for [nearly] a . . . century evinced a strong public policy in favor of the suspension of retirement benefits of a person who after retiring accepts an office in the civil service of the State” (68 NY2d 335, 341 [1986]). Moreover, we emphasized that “[although exceptions have been made to this general proscription, it is clear that such exceptions were enacted for limited purposes and were not meant to abrogate or dilute the long-standing and overriding State policy to prohibit the receipt of retirement benefits and salary at the same time” (id.).

That “overriding State policy” is repeatedly restated in the Retirement and Social Security Law. Section 101 (a) provides:

“If a retired member, receiving a retirement allowance for other than physical disability, returns to active public service, except as otherwise provided in this section or section two hundred eleven or two hundred twelve of this chapter, and is eligible for membership in the retirement system, he thereupon shall become a member and his retirement allowance shall cease.”

Section 101 (b) (1) further provides, as to temporary state employees: “The payment of any retirement allowance ... on account of retirement for other than physical disability shall be suspended as provided herein, during the time that the beneficiary thereof is in receipt of other compensation paid from direct or indirect state or municipal taxes.”

Section 101 (c) (1) expresses that same public policy specifically as regards certified Supreme Court Justices, stating:

“In the event that a judge or justice shall . . .
“[h]ave retired and is receiving a retirement allowance from this retirement system, or another retirement system of which he [or she] was a member, and . . .
“[b]e certified for service as a justice of the supreme court pursuant to section one hundred fourteen or one hundred fifteen of the judiciary law, his [or her] retirement allowance shall cease” (emphasis supplied).

Section 211 of the Retirement and Social Security Law expresses the same general prohibition, but provides exemptions allowing retirees to collect their full pensions and at least a partial salary in two basic situations: (a) when the retiree’s total income, including her retirement allowance and salary, is not more than $500 above the greater of (1) her annual unadjusted retirement allowance or (2) the salary on which her retirement allowance is based or her final salary, whichever is greater; or (b) the position in which she is employed is not a position in the service of a former employer. Section 211 (3) also provides a catchall in case its limits are violated: “If a retired person employed under this section earns in such employment in any calendar year an amount in excess of the maximum earnings allowed under subdivision one of this section, his [or her] retirement allowance and supplemental retirement payments shall be suspended until the total amount so suspended equals the amount of such excess.”

III.

Keeping m mind New York’s general public policy concerning the simultaneous receipt of a state pension and a state salary, we consider the action of the Board.

The New York Constitution requires various judges, including Supreme Court Justices and Court of Appeals Judges, to “retire on the last day of December in the year in which he or she reaches the age of seventy” (NY Const, art VI, § 25 [b]). The sole exception to that mandate is that a retired Court of Appeals Judge or Supreme Court Justice may, for no more than six years thereafter, perform the duties of a Supreme Court Justice if certified “in the manner provided by law that the services of such . . . justice are necessary to expedite the business of the court and that he or she is mentally and physically able and competent to perform the full duties of such office” (id.). The legislature has vested the Board — composed of the Chief Judge and the four Presiding Justices of the Appellate Division — with the power to determine whether those two criteria are met and, if so, whether to certify former Justices for service (Judiciary Law § 115). Under the Judiciary Law, “[a] retired justice so certified shall for all purposes, . . . including powers, duties, salary, status and rights, be a justice of the supreme court” (Judiciary Law § 115 [3]).

The Board enjoys “the very broadest authority for the exercise of responsible judgment” and “very nearly unfettered discretion in determining whether to grant applications of former Judges for certification” (Matter of Marro v Bartlett, 46 NY2d 674, 681-682 [1979]). Provided it complies with the two criteria set forth in the Constitution, and absent proof that its determination violates statutory prescriptions or promotes a constitutionally impermissible purpose, the Board’s authority is not subject to judicial review (id. at 679).

In the case before us, we are asked to determine whether the Board exercised its discretion within the framework provided by the Constitution. As in Marro (id. at 680), the mental and physical abilities of the Justices are not at issue. Rather, the issue presented is whether the Board’s policy is rationally related to whether certification is “necessary to expedite the business of the court.” We hold that it is.

Whether the services of a particular Justice are “necessary to expedite the business of the court” encompasses much more than a mechanical inquiry into the size of the courts’ docket divided by the number of Justices. Viewed in isolation, the services of an additional mentally and physically able Justice will always expedite the business of the courts. Were the inquiry merely mechanical, the Board would need no broad, largely unreviewable discretion. But the impact of any certification, as the Constitution’s use of the word “necessary” implies, must be determined with the costs — including non-monetary costs — of that certification in mind. The Constitution and the Judiciary Law entrusted this determination to “the integrity and collective wisdom of a carefully selected, high level certifying authority endowed with peculiar experience and expertise” (Marro, 46 NY2d at 682), rather than to functionaries responsible for the court’s docket or budget, for precisely that reason.

Here, the Board concluded that the net effect of certifying pensioners — taking into account their potential future contributions as certified Justices — would be detrimental to the creation of new judgeships and thereby hamper rather than expedite the business of the courts. The Board also calculated that the cost of certifying pensioners included not only the narrow matter of annual pay, but also the impact of “double-dipping” on the courts’ public prestige and other private negotiations. On that appropriate basis, it decided that the services of plaintiffs and other retired Justices, as well as retired Judges of the Court of Appeals, who would not agree to defer their pensions would, on balance, detrimentally impact the court system and were not necessary to expedite its business.

The facts here differ from those in Marro insofar as the Board chose to announce a prospective rule rather than issue, as plaintiffs concede it could have, inscrutable applicant-by-applicant determinations. However, we see no reason to curtail the Board’s power because it opted to reveal and explain its rationale in the interest of providing those aspiring to certification with the opportunity to make an informed choice. Marro excused the Board from promulgating its certification criteria (id. at 681), but did not bar or discourage it from doing so.

IV.

The Board’s determination that certifying retired Supreme Court Justices would not expedite the business of the courts did not violate any statutes or promote an unconstitutional purpose. Plaintiffs’ reliance on section 212 in support of their claim that the Board has exceeded its authority is misplaced.

Section 212 provides:

“any retired person may continue as retired and, without loss, suspension or diminution of his or her retirement allowance, earn in a position or positions in public service in any calendar year an amount not exceeding the amount set forth in the table in subdivision two of this section . . . However, there shall be no earning limitations under the provisions of this section on or after the calendar year in which any retired person attains age sixty-five” (Retirement and Social Security Law § 212 [1]).

Plaintiffs interpret section 212 to allow all pensioners over the age of 65 — including certified Justices — the option of receiving an undiminished pension alongside a full salary. Even under that interpretation, the Board did not act in contravention of that section.

As an initial matter, our holding in Marro is clear that a former Justice has no right to be certified at all. Because the certification process inaugurates a new designation to judicial office after a complete break from service (rather than permitting a Justice to continue in a position from which he was retired by constitutional mandate), Justices have no right to certification upon which the Board’s determination could impinge (46 NY2d at 682). That is, former Justices have no right to new employment via certification and, therefore, they have no right to receive the salary associated with that position and simultaneously draw a retirement allowance. Plaintiffs’ decision to opt into section 212 of the Retirement and Social Security Law — which applies to retirees of all ages throughout New York State and was not intended to disturb a constitutional scheme narrowly tailored to retired Justices between the ages of 70 and 76 — did nothing to upset that holding or to create a new entitlement.

Section 212 is one of the limited exceptions discussed in Baker. That exception, which the legislature enacted to benefit “low income pensioners” (Bill Jacket, L 1964, ch 803), provides retired persons the option of drawing, and their prospective public employers the option of providing, a limited amount of earnings in excess of the already-provided pension. “May,” however, is a “term of enablement but not of entitlement” (Marro, 46 NY2d at 680). The choice of verb and the elective nature of the section 212 scheme defeat plaintiffs’ suggestion that Retirement and Social Security Law § 212 reduces the Board’s broad discretion to act in the best interest of the courts and instead requires it to certify otherwise-qualified former Justices who opt into that section’s provisions.

Plaintiffs’ remaining arguments, that the Board’s policy violates Judiciary Law § 115 (3) by creating two classes of Justices and impairs plaintiffs’ pension benefits in violation of article V, § 7 of the New York Constitution, fail. Because former Justices have no right to certification or to receive a pension alongside a full salary and are, under the Board’s policy, able to choose to continue as a retired Justice with a full pension or, if they prefer, to suspend their pension and seek certification, the Board’s order runs afoul of neither Judiciary Law § 115 (3) nor article V, § 7. Plaintiffs’ final argument, that the order constitutes an administrative policy for general application and so could not have been issued by the Chief Administrative Judge absent prior approval of this Court under article VI, § 28 (c) of our Constitution and Judiciary Law § 211 (1) (a), was not preserved for our review.

Accordingly, the order of the Appellate Division should be reversed, without costs, and the judgment of Supreme Court reinstated.

Judges Rivera, Stein, Fahey, Garcia and Wilson concur; Chief Judge DiFiore taking no part.

Order reversed, without costs, and judgment of Supreme Court, Albany County, reinstated.

      . The New York Constitution refers to “certificated” judges (art VI, § 25 [b]). Subsequent statutes refer to “certified” judges (Judiciary Law § 115; Retirement and Social Security Law § 101 [c]). We follow those statutes’ usage without meaning to distinguish the two terms.

      . It is undisputed that plaintiffs would have been certified but for the policy announced in the administrative order. With the Board’s agreement, they have continued to serve as Supreme Court Justices and receive both their full salaries and pensions during the pendency of this lawsuit.

      . The parties briefly discuss section 101 (c), which by its terms “shall be controlling notwithstanding any other provision of this chapter” (Retirement and Social Security Law § 101 [c] [3]). However, no party has asked us to determine whether section 101 (c) and/or section 211 take precedence over section 212, and absent any developed argument regarding the interpretation and reconciliation of those sections, we consider section 101 (c) only as part of the legislative expression of the public policy of the State concerning simultaneous receipt of state retirement benefits and a state salary.

      . By way of example, section 211⅛ first exemption would cover a person who retired from a high-paying position and is subsequently reemployed in a lower-paying position by the same employer, allowing such a person to earn a combination of pension and (lower-paying) salary up to a maximum of the salary paid to persons in the employee’s former (higher-paying) position. Its second exemption covers retirees who are subsequently employed by a new employer (e.g., a retired police detective who is subsequently hired as a school security officer).

      . Because the Board argues, and we agree, that its decision was an appropriate application of the two constitutional requirements, we do not decide here whether those requirements establish sufficient conditions for certification or only a necessary floor above which the Board may choose to add additional requirements.

      . We express no view on the Appellate Division’s footnoted statement that “section 101 has been effectively superceded by Retirement and Social Security Law § 212” (130 AD3d at 92 n 1). That issue was not raised by the parties either here or in the Appellate Division.

      . Matter of Donner v New York City Employees’ Retirement Sys. (33 NY2d 413 [1974]), on which plaintiffs rely, is inapposite. Here, unlike in Donner, there is a constitutional bar to employment after age 70, after which the Constitution and Judiciary Law § 115 vest the Board with extremely broad discretion to evaluate the expedition of the courts’ business in deciding whether to certify judges.