103 A.D.2d 11 | N.Y. App. Div. | 1984
OPINION OF THE COURT
Petitioner Farmland Dairies (Farmland) is a closely held New Jersey dairy manufacturing corporation which holds
In May, 1981, the department gave notice to petitioners that a hearing would be held to consider whether (1) Farmland’s New York license should be revoked because of its antitrust violations in New Jersey and the participation of one of its officers in that activity, and (2) whether Fair Lawn’s extension application should be denied for the same reasons, plus certain alleged violations of conditions attached to a prior extension of Fair Lawn’s license to Westchester County and the effect the further extension Fair Lawn was seeking would have on competition in the Nassau/Suffolk market. An evidentiary hearing was held in which a certified copy of Farmland’s New Jersey conviction was received in evidence and testimony was given on the
The principal and dispositive issue on review is whether it was proper for the commissioner to rely on Farmland’s New Jersey antitrust conviction in denying Fair Lawn’s extension application in the face of the recital in the judgment of conviction, made pursuant to New Jersey’s rule 3:9-2, that the court granted defendant’s motion that the guilty plea “shall not be evidential in any civil proceeding”. Clearly, under New York statutory and decisional law, Farmland’s plea and conviction could be used as evidence. Subdivision (f) of section 258-c of the Agriculture and Markets Law specifically authorizes the commissioner to deny a license extending an existing business when, after a hearing, he is satisfied by a preponderance of the evidence that “the milk dealer has been a party to a combination to fix prices, contrary to law”. Farmland’s conviction of conspiracy to rig bids was at least prima facie evidence of the relevant underlying fact that it had engaged in price-fixing with others (Schindler v Royal Ins. Co., 258 NY 310). Indeed, although he did not do so, the commissioner could have applied the doctrine of collateral estoppel to the conviction and precluded Farmland from contesting the underlying facts (S. T. Grand, Inc. v City of New York, 32 NY2d 300). As an admission, Farmland’s guilty plea was also probative evidence of its criminal
Petitioners contend, however, that, under principles of full faith and credit (US Const, art IV, § 1; US Code, tit 28, § 1738), the commissioner was prevented from using Farmland’s plea and conviction as evidence.
We think petitioners read the full faith and credit clause, both in its constitutional and statutory forms, too broadly. To begin with, we deal here with a New Jersey criminal judgment, traditionally excluded from the application of
Even more importantly, the duty of a State to give “effect” to a sister State’s judgment, in the sense of an absolute constitutional mandate, has a far more limited scope than petitioners’ thesis here would imply. The mandate, in the rigorous form advocated here by petitioners, does not apply to all effects of the judgment, but only to the res judicata and collateral estoppel effects of the judgment. This reflects the underlying purpose of the full faith and credit clause to prevent basic conflict among the judicial systems of the States by prohibiting a party from going to another jurisdiction and relitigating the merits of a dispute previously resolved by a valid State court judgment (see Reese & Johnson, The Scope of Full Faith and Credit to Judgments, 49 Col L Rev 153, 172). As stated in Riley v New York Trust Co. (315 US 343, 349, supra), “By the Constitutional provision for full faith and credit, the local doctrines of res judicata, speaking generally, become a part of national jurisprudence”. More recently, the Supreme Court has stated, “Full faith and credit thus generally requires every State to give to a judgment at least the res judicata effect which the judgment would be accorded in the State which rendered it” (Durfee v Duke, 375 US 106, 109). The principle has been extended to require that collateral estoppel (issue preclusion) effect also be given to the prior judgment (Winters v Lavine, 574 F2d 46, 54; United States v Silliman, 167 F2d 607, 620-621, cert den 335 US 825).
Moreover, the underlying basis for the restriction on the use in evidence of the conviction in New Jersey is New Jersey’s rule 3:9-2 and not the judgment itself. The rule, by its terms, contemplates a separate order restricting evidentiary use; the fact that Farmland was successful in having the restrictive order incorporated into the judgment is, therefore, irrelevant for purposes of full faith and credit analysis. Whether contained in a separate order or in the judgment, the restriction on use as evidence is wholly dependent upon the rule for its validity. Thus, the issue here comes down to one of choice of law, i.e., whether New Jersey’s rule barring evidentiary use of a conviction under the circumstances should control over New York’s common-law rule that the conviction is admissible to prove the underlying facts of the charge. To be sure, the purposes of the framers of the Constitution to avoid potential conflict among State legal systems introduces a full faith and credit dimension to the resolution of the conflict between the rules of the two States presented here (see Allstate Ins. Co. v Hague, 449 US 302; Nevada v Hall, 440 US 410; Alaska Packers Assoc. v Commission, 294 US 532; see, also, Martin, Constitutional Limitations on Choice of Law, 61 Cornell L Rev 185). However, full faith and credit has never been applied with the same rigor to choice of law questions as when enforcement of a valid sister State judgment between the same parties is at issue (see Alaska
Measured by the foregoing test, even if a substantive rule of law were involved, New York would be amply justified to decline to apply the limitation imposed by New Jersey rule 3:9-2. The matter being litigated here is, after all, one directly affecting the New York dairy industry, heavily regulated because of its importance to the health of both New York’s citizenry and the State’s economy. New York certainly has the primary interest as to whether, in view of petitioners’ anticompetitive behavior, they should be permitted to expand their privilege of participating in that industry in this State. New York’s interest is clearly superior to any conceivable interest of New Jersey in the instant litigation, i.e., the remotely possible impact that not giving extraterritorial effect to rule 3:9-2 might have on impeding that State’s expeditious disposition of criminal cases.
The case for New York’s freedom to apply its own law is even stronger when the choice of law issue here is properly viewed as involving competing rules of evidence on the admissibility of Farmland’s guilty plea and conviction. As to the admissibility of evidence, the law of the forum State almost invariably controls (see Restatement, Conflict of Laws 2d, §§ 138, 139). And this represents New York’s position with respect to the use in its courts of evidence of an out-of-State criminal conviction (Able Cycle Engines v Allstate Ins. Co., 84 AD2d 140, 146-147, mot for lv to app den 57 NY2d 607).
Accordingly, full faith and credit did not prevent the commissioner from receiving in evidence and considering Farmland’s guilty plea and conviction on the merits. Since
Main, J. P., Mikoll, Yesawich, Jr., and Harvey, JJ., concur.
Determination confirmed, and petition dismissed, with costs.
Petitioners have commenced a separate Federal civil rights action against the commissioner in the United States District Court for the Eastern District of New York in which they have challenged the determination herein on various constitutional grounds other than full faith and credit. That action has been stayed pending the conclusion of the instant CPLR article 78 proceeding. Consequently, this court is not called upon to consider any of petitioners’ constitutional challenges to the determination other than that based upon full faith and credit.