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Transcript of Aqueduct Memorandum of Law
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SUPREME COURT OF THE STATE OF NEW YORKCOUNTY OF NEW YORK: PART _______--------------------------------------------------------------------XNEW YORK STATE SENATE,SENATOR JOHN L. SAMPSON, and
SENATOR PEDRO ESPADA, JR.,
Petitioners,-against-
OFFICE OF THE INSPECTOR GENERAL OF Index No: 103789/10THE STATE OF NEW YORK and JOSEPHFISCH, in his capacity as Inspector General ofthe State of New York,
Respondents.--------------------------------------------------------------------X
MEMORANDUM OF LAW IN OPPOSITION TO THE NEW YORK STATE
SENATE AND SENATORS SAMPSON AND ESPADAS MOTION TO QUASH
Joseph FischNew York State Inspector General61 Broadway, Suite 2100New York, NY 10006
Of Counsel
Nelson R. Sheingold, Chief CounselPhilip Foglia, Special Deputy Inspector General
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Table of Contents
STATEMENT OF FACTS ................................................................................................. 2
ARGUMENT.................................................................................................................... 11
Point I. The Speech or Debate Clause is Inapplicable to the Senate and the SenatorsActions in the Process of Selecting the VLT Operator at Aqueduct. ........................... 12
Point II. Senators Sampson and Espada Cannot Demonstrate That Their Testimonyand Materials in Their Possession Are Utterly Irrelevant to a Legitimate Inquiry ofthe Inspector General. ................................................................................................... 24
CONCLUSION................................................................................................................. 29
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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 Generals
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:
1. materials regarding the solicitation for proposals, memoranda ofunderstanding, responses and supplemental responses;
2. documentation, in any format, regarding evaluation of proposalssubmitted by any entities or individuals;
3. e-mails, internal memoranda, or any other records ordocumentation related to proposals to operate a video lotteryterminal facility at Aqueduct racetrack;
4. calendar notations, telephone logs, or any other recordsdocumenting meetings or communications regarding proposals tooperate a video lottery terminal facility at Aqueduct racetrack; and
5. lists of any campaign contributions received from individuals orprincipals of any entities or groups associated with any entitiessubmitting proposals to operate a video lottery terminal facility atAqueduct racetrack.
In their motion, the Senate and individual Senators do not separately address each
of the Inspector Generals demands; rather, petitioners broadly claim that they are wholly
immune from providing any materials or evidence in their possession relevant to the
Inspector Generals investigation. Distilled to its essence, the Senate and individual
Senators maintain, solely based upon their official status, that they are exempt from
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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
1 In its ruling that VLTs are lotteries permitted under the state constitution, the Court of Appealsexplained: The video lottery is played using video lottery terminals, which are each connected to a centralsystem through the use of site controllers-computers that connect several VLTs both to each other and to
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group to install 4,500 VLTs at Aqueduct. Subsequent delays, including those caused by
NYRAs ultimately dismissed indictment, led to the abandonment of the project by
MGM-Mirage in 2007. NYRAs 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 playagainst each other by purchasing electronic instant tickets from a finite pool. In order to play, individualsplace cash or other currency into the VLT to purchase an electronic instant ticket. The player thendetermines the game identifier and the price of the electronic ticket to be purchased. The VLT receivesthe next ticket from the site controller and displays the predetermined outcome-win or loss. If the playerwins, the VLT will print an electronically encoded instrument which can be used to play additional videolottery games or can be redeemed for value. Dalton v. Pataki, 5 N.Y.3d 243, 265 (2005).
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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 States 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 Norths 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
2 At the time of enactment, these three office holders were Governor Spitzer, Assembly Speaker SheldonSilver and Temporary President Joseph Bruno. At the time of the selection of AEG, only Speaker Silverstill retained his role.3 See State ends deal with Delaware North for casino,Buffalo News, March 11, 2009; Deal for videoslots at NY Aqueduct falls through,Assoc. Press, March 11, 2009.
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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
Lotterys 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). Lotterys role notwithstanding, the solicitation specified: The Vendor
selected will be chosen by the unanimous agreement of the Governor, Senate Majority
leader4
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
4 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, currentlySenator Smith. As discussed below, despite his undeniable involvement in the process, Senator Sampsonwas afforded no official role in the process either by statute or the terms of the solicitation or the MOU.
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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 Flakes
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
Flakes 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).
5 See Statement of Governor David A. Paterson (1/29/10) available athttp://www.state.ny.us/governor/press/press_01291002.html6 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 YorkPost, 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.
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As reflected in the release of relevant documents posted on the Governors
website,9
a host of executive agencies within the Inspector Generals 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
9 http://www.ny.gov/governor/press/aqueduct_vlt_bid_documents.html
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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 AqueductRacetrack. Accordingly, I am respectfully requesting that the Office of theState Inspector General take the following actions:
1. Conduct a review of the process and procedures used by the NYSDivision of the Lottery and other relevant state agencies involved in theevaluation of bids and in the making of recommendations for the selectionof such operator, and determine which bidders were recommendedpursuant to such process.
2. Determine whether the Division of the Lottery and relevant state
agencies followed all applicable statutory provisions such as thosegoverning the procurement of revenue contracts under the State FinanceLaw and the procurement of a VLT operator and the development of realestate at Aqueduct in accordance with section 1612 of the Tax Law.
3. Inquire how the Division of the Lottery will assure that the conditions Iconveyed to the Governor on January 29, and restated in my February 3rdletter 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 Generals 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
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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 Generals investigation and the Assembly has voluntarily provided
documentation relevant to the Inspector Generals 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 Generals 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 Generals 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
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well as other evidence indicating that they possess relevant information, the Inspector
Generals 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 Espadas 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
Governors counsels 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 Governors 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 Generals investigation thus far has revealed that representatives of bidders
personally met with or were advised to further meet with Senator Sampson, various other
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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 Generals 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 Generals subpoenas. Notably, petitioners 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 Generals subpoenas are dependent upon their
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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
10 Art. I 6 of the United States Constitution provides: The Senators and Representatives shall receive aCompensation for their Services, to be ascertained by Law, and paid out of the Treasury of the UnitedStates. They shall in all Cases, except Treason, Felony and Breach of the Peace, be privileged from Arrestduring their Attendance at the Session of their respective Houses, and in going to and returning from thesame; and for any Speech or Debate in either House, they shall not be questioned in any other Place(emphasis added).
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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 Espadas 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
11As 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).
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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-citizensimmune 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.
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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 manyactivities other than the purely legislative activities protected by theSpeech or Debate Clause. These include a wide range of legitimateerrands performed for constituents, the making of appointments withGovernment agencies, assistance in securing Government contracts,preparing so-called news letters' to constituents, news releases, andspeeches delivered outside the Congress. The range of these relatedactivities has grown over the years. They are performed in part becausethey have come to be expected by constituents, and because they are ameans of developing continuing support for future elections. Althoughthese are entirely legitimate activities, they are political in nature ratherthan legislative, in the sense that term has been used by the Court in priorcases. But it has never been seriously contended that these politicalmatters, however appropriate, have the protection afforded by the Speechor 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), affd 20 A.D.3d 125 (2d Dept 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.
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Brewster, 408 U.S. at 514; see also Eastland v. United States Servicemens 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 Generals investigation is the conduct of various
executive branch officials, competing vendors and others who interacted with the Senate
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in the selection process. Notably, a legislators 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 asSenators does not necessarily make all such acts legislative in nature.Members of Congress are constantly in touch with the Executive Branchof the Government and with administrative agencies-they may cajole, andexhort with respect to the administration of a federal statute-but suchconduct, though generally done, is not protected legislative activity.United States v. Johnson decided at least this much. No argument ismade, nor do we think that it could be successfully contended, that theSpeech or Debate Clause reaches conduct, such as was involved in theattempt to influence the Department of Justice, that is in no wise related tothe due functioning of the legislative process.
* * *Legislative acts are not all-encompassing. The heart of the Clause isspeech or debate in either House. Insofar as the Clause is construed toreach other matters, they must be an integral part of the deliberative andcommunicative processes by which Members participate in committee andHouse proceedings with respect to the consideration and passage orrejection of proposed legislation or with respect to other matters which theConstitution places within the jurisdiction of either House . . . the courtshave extended the privilege to matters beyond pure speech or debate ineither House, but only when necessary to prevent indirect impairment ofsuch 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 Comrs, 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
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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 Senates 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
12 3 Senators Are Subpoenaed on Aqueduct Casino Deal,New York Times March 23, 2010.
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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 counsels 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 understandingbetween 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
13 Normally, a legislative act is a formulation of policy governing future conduct for all or a class of the
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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 Presidents
entry into a MOU with the Governor and the Speaker.
The Senates 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
citizenry.
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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.), affd 55 A.D.2d 575
(3d Dept 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 Presidents 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
14 Indeed, to the extent there is a separation of powers issue present, it does not flow from the InspectorGenerals examination but from this creative three men in a room format for choosing a VLT operator
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The basis of Senators Sampson and Espadas 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
Presidents agreement. Therefore, not only was Senator Sampsons 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 legislators 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 reAdvisory Opinion to the Governor, 732 A.2d 55 (R.I. 1999); c.f. State v. A.L.I.V.E. Voluntary, 606 P.2d769 (Alaska 1980).
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Although raised in the context of an Inspector General investigation, the
pernicious consequences of adopting the Senates 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 Generals 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
Senates invocation of these protections is perilous and unsupported in the law.15
15 Based upon these concerns about the effect of such a finding, the United States Supreme Court has beenquite sparing in its recognition of claims to absolute official immunity. Forrester v. White, 484 U.S. 219,
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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 Generals 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 Dept 1992). Where there is authority, relevancy, and some basis for
inquisitorial action (Matter of AHearn 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 Dept 2003) (citations omitted).
225 (1988).
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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 Dept 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 Dept 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 Commn. 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
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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 Generals 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 Dept 2009).16 Indeed, the Inspector Generals enabling
statute codifies the Inspector Generals authority to garner evidence from non-covered
16 See also Crowley Foods, Inc. v. Lefkowitz, 75 A.D.2d 940 (3d Dept 1980); Long Island Moving &Storage Assn v. Lefkowitz, 24 A.D. 2d 452 (2d Dept 1965); Westchester County Pharmaceutical Soc.,Inc. v. Abrams, 138 A.D.2d 721 (2d Dept 1988).
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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 Dept 1996); Abrams
v. Thruway Food Market & Shopping Center, Inc., 147 A.D.2d 143, 148 (2d Dept
1989); Dairymens League Cooperative Assoc., Inc. v. Murtagh, 274 A.D. 591 (1st Dept
1948).
The Senate and individual senators have woefully failed to meet their burden of
demonstrating that the Inspector Generals 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 Generals 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.
17In fact, in appropriate instances administrative investigatory subpoenas may be issued on entities a priorito determine whether the recipient falls with the issuing entities statutory ambit. Miller v. Waters, 1A.D.3d 829 (3d Dept 2003).
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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
Dept 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 Generals subpoenas. Consequently, these subpoenas
must be enforced.
18 Petitioners 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 courtin Bergman merely found that in that matter the factual predicate was insufficient.
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CONCLUSION
For the foregoing reasons, respondent respectfully requests that the Court deny
petitioners motion to quash the Inspector Generals 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 FischNew York State Inspector General
________________
Nelson R. SheingoldChief Counsel
61 Broadway, Suite 2100New York, NY 10006(212) 635-3150
___________________
Philip Foglia
Special Deputy Inspector General61 Broadway, Suite 2100New York, NY 10006(212) 635-3150