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The Court of Appeals today opens its last session before the summer break with a key pre-emption case, one that requires the judges to decide whether federal law pre-empts a state sexual harassment action against the American Stock Exchange. Bantum v. American Stock Exchange, 107, involves a broker who claims she was harassed by a competitor on the AMEX trading floor. The court granted leave after the Appellate Division, 2nd Department, reversed the trial court and held that U.S. Securities and Exchange Commission regulations preempted the plaintiff’s claims under New York state and city human rights laws. Records show that Dawn Bantum, the first black woman to work as a broker on the floor of the American Stock Exchange, accused a competing broker, Lawrence Polatchek, of sexually harassing her between March and October 2000. Under its federally mandated self-policing policy, AMEX fined Polatchek $100,000, suspended him for four months and ordered him to undergo sexual harassment counseling at his own expense. But Bantum sought civil damages in an action filed in state Supreme Court. Her suit, lodged in September 2002, named Polatchek and his firm, Height Partners Inc. It also named AMEX, its staff attorney, Eric Brown, and a vice president, Richard Chase. The Appellate Division, 2nd Department, held that the Securities and Exchange Act and other regulations preempted all the claims against AMEX, Brown and Chase. Bantum is appealing to the Court of Appeals, with the support of Attorney General Eliot Spitzer. In an amicus curiae brief submitted to the court by Assistant Solicitor General Gregory Klass, the Department of Law urges reversal of a 2nd Department’s decision that, it claims, “misapplies the federal preemption doctrine and improperly restricts the application of New York’s anti-discrimination laws.” Anthony Carabba Jr. of Carabba & Lock in Manhattan will argue for Bantum that Congress could not have intended to pre-empt state and city laws guaranteeing the civil rights of New Yorkers. Carabba contends nothing in the civil rights law conflicts with federal securities law, and therefore pre-emption should not apply. Peter A. Walker of Seyfarth Shaw Fairweather & Geraldson in Manhattan represents AMEX and Brown. James L. Fischer of London Fischer in Manhattan will appear for Chase. The defendants claim the sole remedy is federal and that Congress, in pre-empting state laws, sought to encourage self-regulation of the securities industry. They argue that applications of New York state and city laws would undermine the federal legislation.

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