Around 8 a.m. on the morning of April 7, 2003, Sarah Kunstler, daughter of legendary civil rights lawyer Bill Kunstler, joined a small protest in Manhattan against the fledgling Iraq war.

"I was in law school at Columbia at the time," Sarah Kunstler recalled Tuesday. "I had my knapsack and books with me, and I thought the demonstration was early enough so I'd be able to get to class on time."

She thought wrong.

Kunstler hadn't counted on the ironfisted crowd-control tactics the NYPD had begun to adopt, tactics the department would later employ in even more shocking mass arrests at the Republican convention in 2004.

That day in 2003, Kunstler started walking in a picket line outside the offices of The Carlyle Group, a major war contractor.

"After about half an hour we were surrounded by cops in riot gear," she said. "I'd never seen that kind of response. There were more of them than there were of us."

Police immediately cordoned off the street and allowed no one to enter or leave. Then, without any announcement, they started arresting all the protesters on trumped-up charges.

This according to dozens of witnesses and the NYPD's videotape of events that day, all of which came to light as part of a 2004 federal civil rights suit that the Bloomberg administration finally agreed to settle Tuesday for $2million.

The case is called Kunstler et al. v. New York City.

It should serve as a wakeup call to police departments across the country, especially those in Denver and St. Paul that are preparing to confront new anti-war protests at the Democratic and Republican conventions.

The lesson is simple: In the United States of America, you don't arrest people simply because they assemble to protest government policy.

You can do that in China or Pakistan or some other authoritarian state, but here we have something called the Constitution.

Kunstler and 51 others sued the city for false arrest and civil rights violations. She spent 12 hours in jail on charges of disorderly conduct, then refused an offer of an ACD - adjournment contemplating dismissal.

At the time of her arrest, Kunstler had just completed producing a documentary film, "Scenes from the Drug War."

Her film is about Tulia, Tex., a tiny town that became infamous a decade ago for the wrongful drug convictions of dozens of black men through a sting organized by a corrupt cop.

Now Kunstler was facing her own false charges right here in Michael Bloomberg's New York.

Her mother, Margie Ratner, represented her in the case and won a quick acquittal.

Kunstler and 51 others then sued the city with the help of the Center for Constitutional Rights and the law firm of Emery Celli Brinkerhoff & Abady.

"The city went to great lengths, almost in a punitive measure to fight these plaintiffs," said Sarah Netburn, one of the lawyers in the civil case.

Unfortunately for the city, the NYPD videotape of the scene that day left no doubt that most of those arrested were law-abiding, and that police never gave anyone an order or chance to disperse.

Susan Halatyn, of the city's Law Department, said the city agreed to the $2 million settlement "rather than incur additional costs with a lengthy trial." It did so "without any admission of liability," Halatyn said.

Next month will mark 13 years since Bill Kunstler died. Judging by his daughter, the filmmaker and newly minted defense lawyer, the Kunstler spirit lives on.

"I hear the police in Denver and St. Paul have the NYPD advising them," she said. "I hope they learn from what happened to us."