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, SENATOR JOHN L. SAMPSON, and SENATOR PEDRO ESPADA, JR., Petitioners, -against-
OFFICE OF THE INSPECTOR GENERAL OF THE STATE OF NEW YORK and JOSEPH FISCH, in his capacity as Inspector General of the State of New York, Respondents. --------------------------------------------------------------------X
Index No: 103789/10
MEMORANDUM OF LAW IN OPPOSITION TO THE NEW YORK STATE SENATE AND SENATORS SAMPSON AND ESPADA’S MOTION TO QUASH
Joseph Fisch New York State Inspector General 61 Broadway, Suite 2100 New York, NY 10006 Of Counsel Nelson R. Sheingold, Chief Counsel Philip Foglia, Special Deputy Inspector General
Table of Contents STATEMENT OF FACTS ................................................................................................. 2 ARGUMENT.................................................................................................................... 11 Point I. The Speech or Debate Clause is Inapplicable to the Senate and the Senators’ Actions in the Process of Selecting the VLT Operator at Aqueduct. ........................... 12 Point II. Senators Sampson and Espada Cannot Demonstrate That Their Testimony and Materials in Their Possession Are Utterly Irrelevant to a Legitimate Inquiry of the Inspector General. ................................................................................................... 24 CONCLUSION................................................................................................................. 29
PRELIMINARY STATEMENT The New York State Inspector General submits this memorandum in opposition to the motion brought by the New York State Senate and Senators John L. Sampson and Pedro Espada, Jr. to quash subpoenas served upon them by the Office of the State Inspector General on March 9, 2010 in connection with the Inspector General’s investigation of the selection of an entity to operate the Video Lottery Terminal (VLT) facility at Aqueduct racetrack. (Thompson Aff. ¶¶ 3-5, Exs. A-C). In addition to testimony, the subpoenas to the individual senators seek:
materials regarding the solicitation for proposals, memoranda of understanding, responses and supplemental responses; documentation, in any format, regarding evaluation of proposals submitted by any entities or individuals; e-mails, internal memoranda, or any other records or documentation related to proposals to operate a video lottery terminal facility at Aqueduct racetrack; calendar notations, telephone logs, or any other records documenting meetings or communications regarding proposals to operate a video lottery terminal facility at Aqueduct racetrack; and lists of any campaign contributions received from individuals or principals of any entities or groups associated with any entities submitting proposals to operate a video lottery terminal facility at Aqueduct racetrack.
In their motion, the Senate and individual Senators do not separately address each of the Inspector General’s demands; rather, petitioners broadly claim that they are wholly immune from providing any materials or evidence in their possession relevant to the Inspector General’s investigation. Distilled to its essence, the Senate and individual Senators maintain, solely based upon their official status, that they are exempt from
providing relevant and material evidence to the Inspector General. The Senate and Senators’ claims are based upon a fundamental misunderstanding of the scope of legislative immunity conferred upon them by the Speech or Debate Clause of the New York State Constitution. This misapprehension of the scope of that immunity is intertwined with and compounded by a misunderstanding of the factual and legal prerequisites for issuance of an investigative subpoena by a public body such as the Office of the Inspector General. Under the appropriate application of the Speech or Debate Clause and the actual standard for assessing the validity of administrative subpoenas, the senators, as any other citizen of New York State possessing information relevant to a legitimate and proper investigation, must comply with lawfully issued subpoenas.
STATEMENT OF FACTS Background The history surrounding the establishment of a video lottery terminal (VLT) facility at Aqueduct is long and tortured. Since 1955, the New York State Legislature has awarded to the New York Racing Association (NYRA) the exclusive franchise to conduct racing and pari-mutuel betting at Belmont Park, Aqueduct, and Saratoga racetracks. These franchise rights include authorization for the granting of a license to operate VLTs at Aqueduct Racetrack. 1 In 2003, NYRA reached an agreement with the MGM-Mirage
In its ruling that VLTs are “lotteries” permitted under the state constitution, the Court of Appeals explained: “The video lottery is played using video lottery terminals, which are each connected to a central system through the use of ‘site controllers’-computers that connect several VLTs both to each other and to
group to install 4,500 VLTs at Aqueduct. Subsequent delays, including those caused by NYRA’s ultimately dismissed indictment, led to the abandonment of the project by MGM-Mirage in 2007. NYRA’s franchise was scheduled to expire on December 31, 2007, unless further extended by the legislature. On February 28, 2007, Governor Eliot Spitzer formed the Franchise Review Panel to solicit and review new bids for the management of the thoroughbred racetracks and associated VLTs, and four bidding entities sought to obtain the franchise. In early 2008, NYRA, then in bankruptcy, reiterated its claim of ownership of the land upon which the three thoroughbred racetracks had been built, thus raising an enormous obstacle and creating a potentially lengthy delay of the to-be-awarded franchise. In February 2008, an agreement was reached with the State wherein NYRA would surrender its claim of title to the three racetracks, vesting clear ownership to New York State, in exchange for receipt of a new 25-year racing franchise plus a $105 million advance from the State to allow NYRA to remove itself from bankruptcy. This $105 million was to be repaid from revenue derived from the VLTs that were previously authorized for Aqueduct. The settlement awarded NYRA the rights to operate thoroughbred horseracing at Belmont Park, Aqueduct and Saratoga, with the intention that the State would grant a separate franchise to operate VLTs at Aqueduct.
the central system. In the most common form of video lottery gaming, participants at individual VLTs play against each other by purchasing electronic instant tickets from a finite pool. In order to play, individuals place cash or other currency into the VLT to purchase an electronic instant ticket. The player then determines the ‘game identifier’ and the price of the electronic ticket to be purchased. The VLT receives the next ticket from the site controller and displays the predetermined outcome-win or loss. If the player wins, the VLT will print an ‘electronically encoded instrument’ which can be used to play additional video lottery games or can be redeemed for value.” Dalton v. Pataki, 5 N.Y.3d 243, 265 (2005).
The Enactment of Chapter 18 of the Laws of 2008 (Tax Law § 1612(e)) and the 2008 Selection of Delaware North On February 19, 2008, Governor Spitzer signed into law Chapter 18 of the Laws of 2008 which, among other things, pertained to the selection of a VLT operator at Aqueduct. Codified in relevant part in Tax Law § 1612(e), the statute provides: “The video lottery gaming operator selected to operate a video lottery terminal facility at Aqueduct will be subject to a memorandum of understanding between the governor, temporary president of the senate and the speaker of the assembly.” 2 On October 10, 2008, Governor David A. Paterson announced the selection of Delaware North to operate the Aqueduct gaming venue. Delaware North originally pledged the State $370 million by March 31, 2009, the end of the State’s fiscal year. The State and Delaware North never reached a final agreement and, in the midst of the recession, Delaware North became unable to meet the upcoming March 31 deadline. Unable to reach an agreement regarding a time frame for payment, on March 10, 2009, Governor Paterson rejected Delaware North’s proposal, opting instead to restart the bidding process. 3 On April 16, 2009, pursuant to Tax Law § 1612(e), a new solicitation and proposed memorandum of understanding were made available to potential operators. (Foglia Aff. ¶ 8, Exs. A & B). In relevant part, the solicitation provides that the vendor chosen to operate the VLTs at Aqueduct will be
At the time of enactment, these three office holders were Governor Spitzer, Assembly Speaker Sheldon Silver and Temporary President Joseph Bruno. At the time of the selection of AEG, only Speaker Silver still retained his role. 3 See “State ends deal with Delaware North for casino,” Buffalo News, March 11, 2009; “Deal for video slots at NY Aqueduct falls through,” Assoc. Press, March 11, 2009.
“selected” by “the Governor and the Legislative leaders” and that “the Executive and Legislative parties . . . making a selection” will review any proposed changes to the ultimate finalized memorandum of understanding with the vendor. Further, the solicitation states that “[t]he State may arrange private presentations by certain (or all) potential Vendors with representatives of the Executive Branch and the Legislature, and State agencies as soon as practicable after submission of these proposals.” (Id. ¶ 9, Exs. A & B). The solicitation further states that the state Division of the Lottery (Lottery) will conduct a “pre-qualification review of all potential Vendors” in order to determine if Lottery’s standards, contained in regulations promulgated under its statutory authority, for issuing a lottery license are met, and that this review “will concentrate on the skills, experience and financial resources each entity proposes to employ at the Aqueduct VLT facility, as well as the reputation of each entity and individual for honesty and integrity.” (Id. ¶ 10). Lottery’s role notwithstanding, the solicitation specified: “The Vendor selected will be chosen by the unanimous agreement of the Governor, Senate Majority leader 4 and Speaker of the Assembly [who] will enter into the MOU [memorandum of understanding] promptly thereafter.” (Id. ¶ 11). Contemporaneous with the publication of this solicitation, a proposed memorandum of understanding (MOU) was made available to potential vendors. In accordance with the solicitation, the MOU provides for three state officials, the
Notably, the solicitation requires the agreement of the Senate Majority Leader, currently Senator Espada, in opposition to Tax Law § 1612(e) which requires the agreement of the Temporary Speaker, currently Senator Smith. As discussed below, despite his undeniable involvement in the process, Senator Sampson was afforded no official role in the process either by statute or the terms of the solicitation or the MOU.
Governor, the Assembly Speaker, and the Temporary President of the Senate to select the operator effective upon their signatures on the finalized MOU. (Id. ¶ 12) The Selection of Aqueduct Entertainment Group (AEG) On January 29, 2010, Governor Paterson announced that “he and Legislative Leaders have selected Aqueduct Entertainment Group (AEG) to operate the video lottery terminals at Aqueduct Racetrack.” 5 This selection prompted immediate public outcry regarding the legitimacy of the selection process. Initially, amongst other claims, numerous news reports in the New York Daily News, the New York Post and the New York Times detailed the selection of Aqueduct Entertainment Group (AEG), chosen by Governor Paterson, Speaker Sheldon Silver and Senator John Sampson despite offering an upfront licensing fee that was $100 million less than other bidders. (Id. ¶ 21). It was further alleged that AEG was supported by influential senators who had caused the Governor to “flip-flop” on his choice. (Id. ¶¶ 22-24). It further became known that Governor Paterson had met with Reverend Floyd H. Flake, a prominent member of the AEG group, three days after the AEG announcement, purportedly to discuss Flake’s endorsement of a candidate for Governor in the 2010 election. 6 (Id. ¶ 25). Newspaper accounts accused the Governor of acquiescing to agree to select AEG in order to garner Flake’s support. 7 (Id. ¶ 26). Allegations later surfaced, buttressed by documents publically released by the Governor, that AEG had altered its bid after all other bidders had submitted their final offers. 8 (Id. ¶ 27).
See Statement of Governor David A. Paterson (1/29/10) available at http://www.state.ny.us/governor/press/press_01291002.html 6 “After Aqueduct Deal, Governor and Pastor Talk Politics,” The New York Times, Feb. 3, 2010. 7 See “Bad Smells at Aqueduct,” New York Daily News, Feb. 4, 2010; “Wake Up, New York,” New York Post, Feb. 7, 2010; “Why So Secret, Mr. Paterson?” Albany Times Union, Feb. 7, 2010. 8 “Feds galloping into probe of controversial Aqueduct racino deal,” N.Y. Daily News, Feb. 18, 2010.
As reflected in the release of relevant documents posted on the Governor’s website, 9 a host of executive agencies within the Inspector General’s jurisdiction participated in the evaluation process including the Division of the Lottery, the Office of General Services, the Division of the Budget, the Racing and Wagering Board and the Empire State Development Corporation. (Id. ¶¶ 13-18). Pursuant to Executive Law Article 4-A, the Inspector General is statutorily charged with the authority to “receive and investigate complaints from any source, or upon his or her own initiative, concerning allegations of corruption, fraud, criminal activity, conflicts of interest or abuse in any covered agency, ” and to “review and examine periodically the policies and procedures of covered agencies with regard to the prevention and detection of corruption, fraud, criminal activity, conflicts of interest or abuse.” Executive Law § 53(1), (5). The Governor, Lottery, the Office of General Services, the Division of the Budget (DOB), the Racing and Wagering Board and the Empire State Development Corporation, and their employees and officials clearly are under the jurisdiction of the Inspector General. In February 2010, in the wake of the aforementioned reports of possible improprieties in the process of choosing a vendor to operate a VLT facility at Aqueduct racetrack, actuated by the public call to review the procedure resulting in the selection of AEG and to ensure its validity and the absence of abuse in the process, the New York State Inspector General commenced an investigation of the executive officials and agencies involved in the process of evaluating and selecting the VLT franchisee for Aqueduct racetrack. (Id. ¶ 28). Additionally, shortly thereafter, by letter dated February 11, 2010, New York State Assembly Speaker Silver requested that the Inspector General
commence an investigation of the process by which the Lottery and other executive agencies analyzed the bidders for the Aqueduct racetrack: Serious questions have been raised regarding the selection process for an operator of the video lottery terminal (VLT) facility at the Aqueduct Racetrack. Accordingly, I am respectfully requesting that the Office of the State Inspector General take the following actions: 1. Conduct a review of the process and procedures used by the NYS Division of the Lottery and other relevant state agencies involved in the evaluation of bids and in the making of recommendations for the selection of such operator, and determine which bidders were recommended pursuant to such process. 2. Determine whether the Division of the Lottery and relevant state agencies followed all applicable statutory provisions such as those governing the procurement of revenue contracts under the State Finance Law and the procurement of a VLT operator and the development of real estate at Aqueduct in accordance with section 1612 of the Tax Law. 3. Inquire how the Division of the Lottery will assure that the conditions I conveyed to the Governor on January 29, and restated in my February 3rd letter to him, are met.
(Id. ¶ 29). The Inspector General proceeded to seek materials relevant to the investigation. Pursuant to Executive Law § 54(4), the Inspector General demanded materials in the possession of agencies within his jurisdiction germane to the matter under review. (Id. ¶ 30). These agencies have fully complied with the Inspector General’s demands and have fully cooperated in the investigation. (Id. ¶¶ 32). The Inspector General further sought materials from Governor Paterson and his staff, and the Governor and his staff have cooperated with the investigation and have been supplying requested materials. (Id. ¶¶ 30, 33). The Inspector General has also received materials as a result of compliance with
subpoenas served on bidding entities and their various associates including lobbyists and public relations professionals. (Id. ¶ 34). By letters dated February 17, 2010, the Inspector General requested documents pertinent to the VLT selection process from Senator Sampson, Senator Smith and Assembly Speaker Silver. (Id. ¶ 31). Speaker Silver has fully cooperated with the Inspector General’s investigation and the Assembly has voluntarily provided documentation relevant to the Inspector General’s inquiry. (Id. ¶ 35). The Speaker and Assembly staff have also voluntarily provided sworn testimony about their involvement in the process. (Id. ¶ 36). The Inspector General did not have to issue any subpoenas to secure this evidence from the Speaker or the Assembly. (Id.) In contrast to the cooperation of the aforementioned executive officials, private entities, Speaker Silver, and the Assembly, the Senate and Senators Sampson and Espada have bluntly refused to assist in the Inspector General’s inquiry. (Id. ¶ 37). Consistent with Tax Law § 1612(e)’s requirement of agreement among the three state leaders and the MOU which calls for the signature of Senator Sampson, the Inspector General’s investigation thus far has confirmed that members of the Senate and senatorial staff were closely involved with members of the executive branch in the process of evaluating and selecting a VLT vendor at Aqueduct. (Id. ¶ 41). The April 2009 solicitation advises that the selection of the VLT operator will be made by the Governor and “legislative leaders.” Currently, as a product of the so-called “coup” in the State Senate, Senator Smith remains Temporary President, while Senator Espada serves as “ Majority Leader,” and Senator Sampson holds the title “Senate Majority Conference Leader.” (Id. ¶ 42). Given this disjointed, fractured state of the Senate leadership, as
well as other evidence indicating that they possess relevant information, the Inspector General’s subpoenas were served on all three titular heads of that body for information germane to the investigation. (Id. ¶ 43). Additionally, although Senator Smith is the current Temporary President of the Senate who under Tax Law § 1612(e) is the sole representative of the Senate authorized to enter into the MOU, public documents and other evidence reveals that Senator Sampson was significantly involved for the majority of the bidding process, and the ostensible final decision maker for the Senate in the process. (Id. ¶ 44). Moreover, as discussed above, contrary the terms of Tax Law § 1612(e), Senate Majority Leader Espada’s agreement to the selection was required by the solicitation which lead to the selection of AEG. Furthermore, numerous emails obtained by the Inspector General from the Governor’s counsel’s office, DOB and Lottery evince direct communications regarding the award with Senate staffers Christopher Higgins and Bradley Fischer. These emails included all submissions from the bidders, analyses by DOB, analyses by Lottery including but not limited to bidders’ ability to be licensed. (Id. ¶ 45). Senate staff, including Christopher Higgins and Bradley Fischer, also attended meetings with the executive agencies and the Governor’s office, which included presentations of the respective agencies’ analyses and presentations by the bidders. (Id. ¶ 46). Similarly, materials obtained from lobbyists and other entities associated with the contending bidders indicate extensive contact with Senate and Assembly staff. (Id. ¶ 47). Moreover, the Inspector General’s investigation thus far has revealed that representatives of bidders personally met with or were advised to further meet with Senator Sampson, various other
senators, Counsel to the Majority Shelley Mayer, and other senate staff, regarding their proposals for the VLT franchise at Aqueduct racetrack. (Id. ¶ 48). Shortly after the Inspector General sent the above-mentioned letters to the senators seeking their voluntary corporation, Counsel to the Majority Shelley Mayer informed this affiant that the Senate would cooperate fully but quickly withdrew this offer of cooperation and indicated that the Senate would not voluntarily comply with the Inspector General’s requests and would be represented by outside, privately retained counsel.. (Id. ¶ 38). On or about March 9, 2010, the Inspector General served subpoenas on Senators Sampson and Espada and the New York State Senate. Senator Smith was served a subpoena on or about March 12, 2010, but is represented by separate counsel and is not a party to this petition. (Id. ¶ 39). On March 23, 2010, Senators Sampson and Espada and the Senate commenced the instant proceeding by Order to Show Cause to quash the Inspector General’s subpoenas. Notably, petitioner’s motion papers include two documents, each is which is designated an “Affirmation”, but neither of which complies with CPLR Rule 2106, which requires petitioners’ counsel to affirm the truth of their contents under the penalties of perjury. Thus to the extent that the motion to quash is based upon the existence of facts (e.g., the nature of allegedly immunized activity), the petition has placed no sworn allegations of fact before the court.
ARGUMENT Introduction Although the Senate and individual senators frame their motion papers to raise three claims, an analysis of these arguments reveals that their conclusory claims regarding the propriety of the Inspector General’s subpoenas are dependent upon their
assertion of legislative immunity under the New York State Constitution. This claim of legislative immunity is misplaced and represents an effort to stretch the well-established parameters of an immunity related to the passage of legislation to cover actions pertaining to the securing of a lucrative state contract by a private vendor. The Senate and Senators’ claims are undermined by long-established precedent and the actual rulings of the cases upon which they superficially rely.
Point I. The Speech or Debate Clause is Inapplicable to the Senate and the Senators’ Actions in the Process of Selecting the VLT Operator at Aqueduct.
In their motion, the Senate and Senators Sampson and Espada claim that their activities related to the selection of a VLT operator at Aqueduct are absolutely immune from scrutiny under the Speech or Debate Clause of the New York State Constitution. The Senators’ attempt to shield their conduct from any review by invoking the Speech or Debate Clause is based upon a fundamental misunderstanding of the parameters of that protection. The “Speech or Debate Clause,” Article III, § 11 of the New York State Constitution, provides: “For any speech or debate in either house of the legislature, the members shall not be questioned in any other place.” This state constitutional provision is nearly verbatim to the like-provision of the United States Constitution, Art. I, § 6, 10 and the New York Court of Appeals has analyzed these state and federal constitutional
Art. I § 6 of the United States Constitution provides: “The Senators and Representatives shall receive a Compensation for their Services, to be ascertained by Law, and paid out of the Treasury of the United States. They shall in all Cases, except Treason, Felony and Breach of the Peace, be privileged from Arrest during their Attendance at the Session of their respective Houses, and in going to and returning from the same; and for any Speech or Debate in either House, they shall not be questioned in any other Place” (emphasis added).
clauses as co-extensive. People v. Ohrenstein, 77 N.Y.2d 38, 53-54 (1990); Maron v. Silver, _ N.Y.2d _ , 2010 WL 605279 (2010). Contrary to Senators Sampson and Espada’s bald claims, neither the state nor federal Speech or Debate clauses have ever been held to categorically shield individual legislators from public scrutiny of their official actions. Indeed, to the contrary, the Senators’ bloated interpretation of the Speech or Debate Clause has been expressly rejected by the United States Supreme Court, the New York Court of Appeals and virtually every other court that has examined the effect of this provision. Under this precedent, it is well-settled that the scope of the immunity conferred by the Speech or Debate Clause is limited to actions undertaken within the “sphere of legitimate legislative activity” related to the passage of legislation. Tenney v. Brandhove, 341 U.S. 367, 376 (1951); see also U. S. v. Brewster, 408 U.S. 501, 515-16 (1972) (“In no case has this Court [the United States Supreme Court] ever treated the Clause as protecting all conduct relating to the legislative process. In every case thus far before this Court, the Speech or Debate Clause has been limited to an act which was clearly a part of the legislative process-the due functioning of the process.”); Chastain v. Sundquist, 833 F.2d 311, 314 (D.C. Cir. 1987) (“The Speech or Debate Clause protects all lawmaking activities undertaken in the House and Senate, but affords no constitutional immunity beyond its carefully defined scope.”). 11 Pointedly, although the United States Supreme Court has highlighted the critical importance of the clause when appropriately asserted in insulating the legislature from
As early as 1880, the Supreme Court highlighted that the Speech or Debate Clause only attaches to “things generally done in a session of the House by one of its members in relation to business before it.” Kilbourn v. Thompson, 103 U.S. 168, 204 (1880).
encroachment from the other branches of government regarding the process of enacting legislation, the Supreme Court has noted that “[t]he history of the privilege is by no means free from grave abuses by legislators” and has cautioned that an overly-broad reading of the clause would transform legislators into “super-citizens” immune even from criminal responsibility for actions taken in the course of their official business. Brewster, 408 U.S. at 516-17. Therefore, “[l]egislatures may not . . . acquire power by an unwarranted extension of privilege . . . [The United States Supreme Court] has not hesitated to sustain the rights of private individuals when it found Congress was acting outside its legislative role.” Tenney, 341 U.S. at 376. Simply stated, “the shield [of the Speech or Debate Clause] does not extend beyond what is necessary to preserve the integrity of the legislative process.” Brewster, 408 U.S. at 517; see also United States v. Gravel, 408 U.S. 606, 616 (1972) (“It thus protects Members against prosecutions that directly impinge upon or threaten the legislative process.”). In this regard, petitioners’ instant, summary claim of immunity resemble the argument directly rejected by the United States Supreme Court: “We would not think it sound or wise, simply out of an abundance of caution to doubly insure legislative independence, to extend the privilege beyond its intended scope, its literal language, and its history, to include all things in any way related to the legislative process. Given such a sweeping reading, we have no doubt that there are few activities in which a legislator engages that he would be unable somehow to ‘relate’ to the legislative process.” Brewster, 408 U.S. at 516. Accordingly, “[t]he only reasonable reading of the Clause, consistent with its history and purpose, is that it does not prohibit inquiry into activities that are casually or incidentally related to legislative affairs but not a part of the legislative process itself.”
Id. at 528. In order to guard against the fear of abuse of the “shield” of the Speech or Debate Clause, the United States Supreme Court has held that “[c]laims under the Clause going beyond what is needed to protect legislative independence are to be closely scrutinized.” Hutchinson v. Proxmire, 443 U.S. 111, 127 (1979). This analysis requires examination of whether the acts were “essential to the deliberations of the senate” or part of the “deliberative process” of the legislature. Id. at 130. The United States Supreme Court and New York Court of Appeals have recognized that individual legislators engage in many tasks beyond the legislative sphere and when legislators stray from acts related to pending legislation, they shed the protection of the Speech or Debate Clause: It is well known, of course, that Members of the Congress engage in many activities other than the purely legislative activities protected by the Speech or Debate Clause. These include a wide range of legitimate ‘errands’ performed for constituents, the making of appointments with Government agencies, assistance in securing Government contracts, preparing so-called ‘news letters' to constituents, news releases, and speeches delivered outside the Congress. The range of these related activities has grown over the years. They are performed in part because they have come to be expected by constituents, and because they are a means of developing continuing support for future elections. Although these are entirely legitimate activities, they are political in nature rather than legislative, in the sense that term has been used by the Court in prior cases. But it has never been seriously contended that these political matters, however appropriate, have the protection afforded by the Speech or Debate Clause.
U. S. v. Brewster, 408 U.S. 501, 512 (1972) (emphasis added); see also People v. Ohrenstein, 77 N.Y.2d at 53-55; People v. Norman, 6 Misc. 3d 317 (Sup. Ct. Kings Co. 2004), aff’d 20 A.D.3d 125 (2d Dep’t 2005). Critical to the instant matter, the Supreme Court has definitively found “that only acts generally done in the course of the process of enacting legislation [are] protected.”
Brewster, 408 U.S. at 514; see also Eastland v. United States Servicemen’s Fund, 421 U.S. 491, 503 (1975) (“In determining whether particular activities other than literal speech or debate fall within the ‘legitimate legislative sphere’ we look to see whether the activities took place ‘in a session of the House by one of its members in relation to the business before it.’”). The courts have further clearly stated that in order to be in furtherance of a “legitimate legislative purpose,” actual legislation must be pending or contemplated before the legislature: “A promise to deliver a speech, to vote, or to solicit other votes at some future date is not ‘speech or debate,’ [nor is] a promise to introduce a bill ... a legislative act.” United States v. Helstoski, 442 U.S. 477, 490 (1979); see also U. S. v. Williams, 644 F.2d 950, 952 (2d Cir. 1981) (“The district court correctly ruled, however, that Speech or Debate Clause protection does not extend to discussions of this sort, which involve only the possible future performance of legislative functions.”). Concomitantly, “[w]hile the Speech or Debate Clause recognizes speech, voting, and other legislative acts as exempt from liability that might otherwise attach, it does not privilege either Senator or aide to violate an otherwise valid criminal law in preparing for or implementing legislative acts.” Gravel, supra at 626 (emphasis added). Despite the overly-broad arguments contained in his motion papers, Senator Espada is acutely aware of the limitations of the Speech or Debate Clause, as the New York Court of Appeals articulated these very same limits in litigation involving him. Rivera v. Espada, 98 N.Y.2d 422, 428-29 (2002). The core of the Inspector General’s investigation is the conduct of various executive branch officials, competing vendors and others who interacted with the Senate
in the selection process. Notably, a legislator’s efforts to influence the executive branch have been expressly held to be non-legislative and thus subject to review: But the Clause has not been extended beyond the legislative sphere. That Senators generally perform certain acts in their official capacity as Senators does not necessarily make all such acts legislative in nature. Members of Congress are constantly in touch with the Executive Branch of the Government and with administrative agencies-they may cajole, and exhort with respect to the administration of a federal statute-but such conduct, though generally done, is not protected legislative activity. United States v. Johnson decided at least this much. No argument is made, nor do we think that it could be successfully contended, that the Speech or Debate Clause reaches conduct, such as was involved in the attempt to influence the Department of Justice, that is in no wise related to the due functioning of the legislative process. * * * Legislative acts are not all-encompassing. The heart of the Clause is speech or debate in either House. Insofar as the Clause is construed to reach other matters, they must be an integral part of the deliberative and communicative processes by which Members participate in committee and House proceedings with respect to the consideration and passage or rejection of proposed legislation or with respect to other matters which the Constitution places within the jurisdiction of either House . . . the courts have extended the privilege to matters beyond pure speech or debate in either House, but only when necessary to prevent indirect impairment of such deliberations.
Gravel v. U. S., 408 U.S. 606, 624-25 (1972) (internal citations and quotation omitted). As Senator Espada has recently explained in relation to this lawsuit, the acts under review stem from a “public procurement.” 12 Under the aforementioned precepts, “the function of awarding of bids is essentially an administrative or executive function” not entitled to the protection of the Speech or Debate Clause. Kamplain v. Curry County Bd. of Com’rs, 159 F.3d 1248, 1252-53 (10th Cir. 1998) (and cases cited therein). Indeed, it is well-settled that such determinations, which do not set broad public policy applicable to all citizens but rather amount to ad hoc determinations or business choices, are
administrative and not legislative. See Three Rivers Cablevision, Inc. v. Pittsburgh, 502 F. Supp. 1118 (W.D.Pa.1980); Cinevision v. City of Burbank, 745 F.2d 560, 580 (9th Cir.1984); Franklin Building Corp. v. City of Ocean City, 946 F. Supp. 1161, 1170-72 (D.N.J. 1996); O'Brien v. City of Greers Ferry, 873 F.2d 1115, 1119 (8th Cir. 1989); 13 Teleprompter of Erie, Inc. v. City of Erie, 537 F. Supp. 6, 12 (W.D.Pa. 1981); Hershell Gill Consulting Engineers, Inc. v. Miami-Dade County, 333 F. Supp. 2d 1305 (S.D.Fla. 2004); Sunland Pub. Co. v. City of Jackson, 234 F. Supp. 2d 626 (S.D. Miss. 1999). Specifically, such actions related to racetracks and the selection of lottery operators in New York State, including operators of video lottery terminals, have historically been recognized as an executive function. See, e.g., L. 1967, c. 278; L. 1973, c. 346; L. 1976, c. 92; L. 2001, c. 383. Based upon this ample precedent, the Senate’s conclusory, unsupported declaration that “[t]he selection process of the VLT vendor was unequivocally a legislative act, by any interpretation,” [Thompson Aff. ¶ 28] is astonishing as it contradicts the actual interpretation of the numerous courts that have reviewed analogous matters. Furthermore, this assertion contradicts the very substance of the decisions upon which the Senate rudimentarily relies. Understandably, the only legislation mentioned in petitioners’ motion papers is Tax Law § 1612. This section was enacted on February 19, 2008, when then-Governor Spitzer signed into law Chapter 18 of the laws of 2008. The matter under review by the Inspector General, the selection of a VLT operator at Aqueduct, did not occur until nearly two years after the passage of this legislation. Moreover, under the clear terms of Tax Law § 1612(e) and the resultant solicitation and
“3 Senators Are Subpoenaed on Aqueduct Casino Deal,” New York Times March 23, 2010.
proposed memorandum of understanding proffered by the Governor and legislative leaders, the selection of the VLT vendor was to be fully effectuated upon the signature of the Governor and individual legislative leaders; no further legislative action was contemplated, much less actually engaged in. The dubious nature of petitioners’ claim that the Senators’ actions in the process of selecting an operator were “legislative” as covered by the Speech or Debate Clause is revealed by their distortion and mischaracterization of the terms of Tax Law § 1612(e). Initially, in counsel’s affirmation, the Senate states that: “The selection procedure was governed by New York Tax Law § 1612 which provides that ‘[t]he video lottery gaming operator selected to operate a video lottery terminal facility at Aqueduct will be [selected by] the governor, temporary president of the senate and the speaker of the assembly” (brackets in original). Counsel then affirms that: “Pursuant to Section 1612 [of the Tax Law], the NYS Senate and its members were specifically charged with an obligation to make a legislative decision as to the operator of the VLT facility.” (Thompson Aff. ¶¶ 7, 29, 30). This depiction of the terms of Tax Law § 1612 fundamentally and significantly distorts the contents of that provision. In actuality, § 1612(e) states: “The video lottery gaming operator selected to operate a video lottery terminal facility at Aqueduct will be subject to a memorandum of understanding between the governor, temporary president of the senate and the speaker of the assembly” (emphasis added). Therefore, directly contrary to petitioners’ mischaracterization and expurgation, pursuant to the statute, the Senate as a whole was allotted no role in the choice of the operator of
“Normally, a legislative act is a formulation of policy governing future conduct for all or a class of the
the VLT facility; rather, the statutory power to agree to the selection of an operator was granted to one individual member of the Senate: the Temporary President. Moreover, this choice is not subject to submission before any legislative body or subject to enacting legislation; rather, it is to be fully and finally effectuated by the Temporary President’s entry into a MOU with the Governor and the Speaker. The Senate’s skewed portrayal of the clear terms of the statute, solicitation, and memorandum of understanding unwittingly reveals another fatal flaw in its claims that the senators’ acts were supposedly “legislative.” The New York State Constitution vests the authority to regulate lotteries in the state to the legislature as a whole. Article 1 § 9 of the State Constitution provides that “no lottery or the sale of lottery tickets, pool-selling, book-making, or any other kind of gambling, except lotteries operated by the state and the sale of lottery tickets in connection therewith as may be authorized and prescribed by the legislature, the net proceeds of which shall be applied exclusively to or in aid or support of education in this state as the legislature may prescribe, and except pari-mutuel betting on horse races as may be prescribed by the legislature and from which the state shall derive a reasonable revenue for the support of government, shall hereafter be authorized or allowed within this state; and the legislature shall pass appropriate laws to prevent offenses against any of the provisions of this section” (emphasis added). Similar to the United States Constitution, Article 3, § 14 of the New York State Constitution requires that all legislation must be approved by a majority of both houses (“ . . . nor shall any bill be passed or become a law, except by the assent of a majority of the members elected to each branch of the legislature . . .”). However, the Aqueduct VLT statute, on its face and as interpreted by the solicitation and MOU, vests
the selection of the operator in the individual hands of the Speaker and Temporary President (along with the Governor) and no subsequent vote on the selection of the operator by the entire legislature is contemplated or required. Under the clear terms of the aforementioned provision of the New York State Constitution, the legislature cannot delegate its legislative powers to individual members such as the Speaker and Temporary President. New York Public Interest Research Group, Inc. v. Carey, 86 Misc. 2d 329, 332 (Sup. Ct. Albany Co.), aff’d 55 A.D.2d 575 (3d Dep’t 1976) (“From these principles it follows that the Constitutional function of legislating which belongs exclusively to the Legislature cannot be delegated even to its own committees or committee chairmen.”); See also Bowsher v. Synar, 478 U.S. 714, 737 (1986) (Stevens, J. concur) (“In short, Congress may not exercise its fundamental power to formulate national policy by delegating that power to one of its two Houses, to a legislative committee, or to an individual agent of the Congress such as the Speaker of the House of Representatives, the Sergeant at Arms of the Senate, or the Director of the Congressional Budget Office.”). The New York Court of Appeals has held that if the legislature appoints some of its individual members to perform such executive tasks, these individual legislators have assumed a second non-legislative role which, if of sufficient duration and import, may amount to a separate public “office.” People v. Tremaine, 252 N.Y. 27 (1929). Therefore, the Senate cannot comfortably claim that its Temporary President’s authority to unilaterally enter into an MOU and the antecedent process is somehow “legislative” without creating accompanying constitutional concerns about the constitutionality of the entire scheme for selecting a VLT operator. 14
Indeed, to the extent there is a separation of powers issue present, it does not flow from the Inspector General’s examination but from this creative “three men in a room” format for choosing a VLT operator
The basis of Senators Sampson and Espada’s individual claims that they are immune from review under the Speech or Debate Clause is even more puzzling. Under the specific terms of § 1612(e), only one individual member of the Senate was granted authority to enter into the MOU: the Temporary President, who was for all times relevant, Senator Malcolm Smith. Despite this clear statutory language, it is undisputed that Senator Sampson was intimately involved in the selection process and that other individual senators were engaged to varying degrees, including Senator Espada who is named as a party who must agree to the selection according to the solicitation notwithstanding the language of Tax Law § 1612(e) which requires only the Temporary President’s agreement. Therefore, not only was Senator Sampson’s and these other members’ involvement not “legislative,” it was not even recognized by the relevant statute, which afforded neither Senator Sampson nor any other Senator any formal role in the selection. As quoted above, the United States Supreme Court has unambiguously held that a legislator’s “assistance in securing Government contracts” is not a legislative function protected by the Speech or Debate Clause. Brewster, 408 U.S. at 512. Simply stated, under this statutory scheme, where no immunity attaches to actions taken by the Temporary President in exercising a statutory administrative function in selecting an operator, no derivative immunity can inure to the extra-statutory, gratuitous activities which may have been undertaken by others in the Senate related to the process.
and the attendant co-mingling of executive and legislative actors in a traditionally administrative function. See People v. Tremaine, 252 N.Y. 27 (1929); Springer v. Government of Philippine Islands, 277 U.S. 189, 201-02 (1928); see also I.N.S. v. Chadha, 462 U.S. 919 (1983); Bowsher v. Synar, 478 U.S. 714 (1986); Metropolitan Washington Airports Authority v. Citizens for Abatement of Aircraft Noise, Inc., 501 U.S. 252 (1991); State ex rel. West Virginia Citizens Action Group v. West Virginia, 213 W.Va. 255 (2003) (summarizing cases); Greer v. State of Georgia, 233 Ga. 667 (1975); Alexander v. State of Miss. ex rel. Allain, 441 So.2d 1329 (Miss. 1983); State of N.C. ex rel. Wallace v. Bone, 304 N.C. 591 (1982); In re Advisory Opinion to the Governor, 732 A.2d 55 (R.I. 1999); c.f. State v. A.L.I.V.E. Voluntary, 606 P.2d 769 (Alaska 1980).
Although raised in the context of an Inspector General investigation, the pernicious consequences of adopting the Senate’s novel extension of the Speech or Debate Clause cannot be ignored. It must be noted that, if deemed applicable, the Speech or Debate Clause would not merely inhibit the Inspector General’s investigation. Rather, once applicable, this clause would extend a grant of absolute immunity to “legislative actions” and thus would necessarily result in immunizing any individual legislators and their staff for any activities related to the selection of a VLT operator, thus precluding or impairing not only any administrative review of their actions, but potential criminal prosecution stemming from these activities. People v. Ohrenstein, 77 N.Y.2d 38. Moreover, if the senators and their staff members’ activities in this regard are deemed “legislative acts,” the same immunity would also inure to the executive officials involved. It is well-settled that “Speech or Debate” immunity “is applicable to government officials in the executive branch when engaged in legislative activities,” therefore the executive branch officials (the Governor and agency officials) who contemporaneously engaged in these same endeavors would likewise be shielded from liability and review. Humane Society of New York v. City of New York, 188 Misc. 2d 735, 738 (Sup. Ct. New York Co. 2001); Bogan v. Scott-Harris, 523 U.S. 44, 55 (“We [the United States Supreme Court] have recognized that officials outside the legislative branch are entitled to legislative immunity when they perform legislative functions.”). The Speech or Debate Clause simply was not designed to immunize legislators engaging in such administrative functions as choosing a bidder to be awarded a state procurement contract, and the Senate’s invocation of these protections is perilous and unsupported in the law. 15
Based upon these concerns about the effect of such a finding, the United States Supreme Court has “been quite sparing in its recognition of claims to absolute official immunity.” Forrester v. White, 484 U.S. 219,
Point II. Senators Sampson and Espada Cannot Demonstrate That Their Testimony and Materials in Their Possession Are Utterly Irrelevant to a Legitimate Inquiry of the Inspector General. Divested of their misplaced claim to immunity under the Speech or Debate Clause, the Senate and individual senators’ remaining claims regarding the propriety of the Inspector General’s subpoenas are unavailing. It is well-settled that in deciding a motion to quash an administrative subpoena, the entity issuing the subpoena is entitled to great deference. “An application to quash a subpoena should be granted only where the futility of the process to uncover anything legitimate is inevitable or obvious . . . or where the information sought is utterly irrelevant to any proper inquiry.” Anheuser Busch, Inc. v. Abrams, 71 N.Y.2d 327, 332 (1988) (quoting Matter of La Belle Creole Intl., S.A. v. Attorney General of State of N.Y., 10 N.Y.2d 192, 196 (1961)) (internal quotations and citations omitted); see also Goldin v. Greenberg, 49 N.Y.2d 566, 572 (1980); General Electric v. Rabin, 184 A.D.2d 391, 392 (1st Dep’t 1992). Where there is “authority, relevancy, and some basis for inquisitorial action” (Matter of A’Hearn v. Committee on Unlawful Practice of Law of N.Y. County Lawyers’ Assn., 23 N.Y.2d 916, 918 (1969)), the issuing agency is “required only to demonstrate [its] authority to investigate and issue subpoenas, the factual basis underlying this investigation and the relevance of the documents being sought.” Somers v. Waters, 1 A.D.3d 829, 830 (3d Dep’t 2003) (citations omitted).
Moreover, the issuing agency “is not required to show probable cause or to disclose the scope of the investigation.” Pharmaceutical Society of State of N.Y. v. Abrams, 132 A.D.2d 129, 133 (3d Dep’t 1987) (citing Matter of Hynes v. Moskowitz, 44 N.Y.2d 383 (1978)). Under this deferential standard, the Inspector General “enjoys a presumption that he is acting in good faith and must only establish that the materials sought are reasonably related to the subject matter under investigation and to the public purpose to be achieved” (Abrams v. Thompson, 150 A.D.2d 679, 680 (2d Dep’t 1989)) and “need only make a preliminary showing that the information sought is reasonably related to a proper subject of inquiry.” Matter of Nicholson v. State Comm’n. on Jud. Conduct, 50 N.Y.2d 597, 611 (1980). When examining whether a factual predicate exists supporting an investigation and the issuance of subpoenas, “so long as the [Inspector General], in good faith, is investigating the conduct of a [covered entity or official], the [Office of the Inspector General] is acting within the scope of its authority and a subpoena issued pursuant thereto is not subject to challenge. A witness called before the [Inspector General] may not go beyond this inquiry to avoid compliance by attacking the specific allegations upon which the investigation is based.” Nicholson, 50 N.Y.2d at 611. Under this standard, unsurprisingly, petitioners do not and cannot contest that the Inspector General is pursuing a legitimate and lawful investigation permitting the issuance of subpoenas. Pursuant to Executive Law Article 4-A, the Inspector General is granted broad authority to “receive and investigate complaints from any source, or upon his or her own initiative, concerning allegations of corruption, fraud, criminal activity, conflicts of
interest or abuse in any covered agency.” Executive Law § 53(1). The Inspector General is further vested with the duty to “review and examine periodically the policies and procedures of covered agencies with regard to the prevention and detection of corruption, fraud, criminal activity, conflicts of interest or abuse.” Executive Law § 53(5). “Covered agencies” are defined as “all executive branch agencies, departments, divisions, officers, boards and commissions, public authorities (other than multi-state or multi-national authorities), and public benefit corporations, the heads of which are appointed by the governor and which do not have their own inspector general by statute.” Under this grant of authority, the Inspector General clearly possesses jurisdiction to examine the actions of the Governor, the Division of the Lottery, the Division of the Budget, the Office of General Services and any other covered agencies involved in the selection process. By omission, petitioners appear to concede that the Inspector General possesses an adequate factual predicate justifying the investigation of the process of the selection of AEG. The Senate and the individual senators further explicitly concede that the Inspector General possesses the statutory authority to issue subpoenas to entities and individuals possessing information relevant to a lawful inquiry who are not directly themselves within the Inspector General’s jurisdiction. (Thompson Aff. ¶ 15). This concession is necessary as it is beyond cavil that evidence can be gathered by means of subpoena from such third parties. See, e.g., Hogan v. Cuomo, 67 A.D.3d 1144, 888 N.Y.S.2d 665, 668 n. 2 (3d Dep’t 2009). 16 Indeed, the Inspector General’s enabling statute codifies the Inspector General’s authority to garner evidence from non-covered
See also Crowley Foods, Inc. v. Lefkowitz, 75 A.D.2d 940 (3d Dep’t 1980); Long Island Moving & Storage Ass’n v. Lefkowitz, 24 A.D. 2d 452 (2d Dep’t 1965); Westchester County Pharmaceutical Soc., Inc. v. Abrams, 138 A.D.2d 721 (2d Dep’t 1988).
entities by providing separate mechanisms for the Inspector General to obtain records from covered and non-covered agencies. Executive Law § 54. 17 Therefore, the only relevant inquiry before this Court is whether “the futility of the process to uncover anything legitimate is inevitable or obvious . . . or [if the] information sought is utterly irrelevant to any proper inquiry.” Anheuser Busch, Inc. v. Abrams, 71 N.Y.2d 327, 332. In rendering this determination, “the burden of establishing that the requested documents and records are utterly irrelevant is on the person being subpoenaed.” Gertz v. Richards, 233 A.D.2d 366 (2d Dep’t 1996); Abrams v. Thruway Food Market & Shopping Center, Inc., 147 A.D.2d 143, 148 (2d Dep’t 1989); Dairymen’s League Cooperative Assoc., Inc. v. Murtagh, 274 A.D. 591 (1st Dep’t 1948). The Senate and individual senators have woefully failed to meet their burden of demonstrating that the Inspector General’s subpoenas seek information that is “utterly irrelevant” to this investigation and that inquiry of them would be “futile.” Beyond stating a portion of the applicable standard (tellingly devoid of reference or mention of the widely-cited “utterly irrelevant” test), nowhere in their motion papers do petitioners deny that they possess such relevant information or that this material is germane to the Inspector General’s inquiry. In fact, such a claim would strain credulity as the Senate and its staff were undeniably involved in the process, actually interacted with executive officials, vendors, lobbyists and bidders, and obviously could shed light upon the actions that preceded the contingent selection of AEG.
In fact, in appropriate instances administrative investigatory subpoenas may be issued on entities a priori to determine whether the recipient falls with the issuing entities statutory ambit. Miller v. Waters, 1 A.D.3d 829 (3d Dep’t 2003).
Petitioners’ confusion regarding the applicable legal standard is evinced by their extensive reliance on Alouette Fashions v. Consolidated Edison, 119 A.D.2d 481 (1st Dep’t 1986). Alouette, in pertinent part, involved a ruling that City Comptroller lacked statutory authority to support the commencement of an inquiry surrounding a negligence claim against the city. Here, petitioners do not and cannot credibly maintain that the Inspector General lacks jurisdiction to investigate the VLT operator selection process, which substantially involved various covered agencies and officials. 18 Therefore, stripped of their inappropriate resort to the Speech or Debate Clause, and bereft of any claim in law or reason that they lack reasonably relevant information, petitioners raise no factual or legal arguments to overcome the deferential standard afforded in reviewing the Inspector General’s subpoenas. Consequently, these subpoenas must be enforced.
Petitioner’s further extensive reliance on Matter of Temporary State Commission v. Bergman, 80 Misc. 2d 448 (Sup. Ct. New York Co. 1975) is equally misplaced. To the extent relevant or persuasive, the court in Bergman merely found that in that matter the factual predicate was insufficient.
For the foregoing reasons, respondent respectfully requests that the Court deny petitioners’ motion to quash the Inspector General’s subpoenas, compel compliance with such forthwith, together with such other and further relief this Court deems just and proper.
Dated: March 29, 2010 New York, New York Joseph Fisch New York State Inspector General
________________ Nelson R. Sheingold Chief Counsel 61 Broadway, Suite 2100 New York, NY 10006 (212) 635-3150
___________________ Philip Foglia Special Deputy Inspector General 61 Broadway, Suite 2100 New York, NY 10006 (212) 635-3150