ALBANY, N.Y. – The state’s top court ruled yesterday that Toys “R” Us must pay the legal fees for three transsexuals who won a “moral victory” in their discrimination lawsuit against the retail giant.

The three customers charged they were verbally harassed and threatened with baseball bats at a Brooklyn store during two shopping excursions there in December 2000.

A jury in June 2002 found the plaintiffs were harassed but awarded them only $1 each in damages. Donna Mc-Grath, Tanya Jinks, and Tara Lopez had each sought $300,000 in damages.

Later that year, lawyers for the three were awarded $193,551 by a federal court judge. The Wayne, N.J.-based retail toy giant appealed.

A federal appeals court asked New York’s Court of Appeals, the state’s top tribunal, to determine if New York law permitted fees in cases where only nominal damages had been awarded.

In a 5-2 ruling yesterday, the court said the fees were justified because the case served “a significant public purpose” by clarifying the rights of transsexuals to be protected from discrimination.

The U.S. Supreme Court has held that absent the “significant public purpose” standard being met, legal fees are not justified in cases where only nominal damages are awarded.

The exact amount of legal fees to be awarded is still subject to federal court review.

Writing for the majority, Judge Victoria Graffeo said “given the uncertain state of the law at the time this action was commenced … many (New York) City residents might have been unaware at the time of verdict that discrimination against transsexuals was prohibited.”

But Judge Susan Read, writing the state court’s minority opinion, noted that a court ruling six years earlier had established that transsexuals were protected under New York City’s anti-discrimination law.

“The present litigation cannot be viewed as groundbreaking when the pioneering legal precedent has already been this firmly established,” Ms. Read wrote.

In the wake of the jury’s 2002 verdict, lawyer Thomas Shanahan said the decision that the Toys “R” Us employees violated city civil rights codes was “a moral victory for the transsexual community.”

But one of Mr. Shanahan’s clients, Ms. McGrath, said she was disappointed with jurors’ decision to award each plaintiff only $1.

“They don’t understand us,” Ms. Mc-Grath said at the time. “They can’t walk in our shoes.”

There was no immediate comment yesterday from Mr. Shanahan or from Toys “R” Us lawyer Nicholas Goodman.