Big Apple Concrete Corp. v. Abrams

• Decision Date: 30 October 1984
• Citation: 103 A.D.2d 609,481 N.Y.S.2d 335
• Court: New York Supreme Court — Appellate Division
• Parties: , 1984-2 Trade Cases P 66,269 BIG APPLE CONCRETE CORP., Donald A. Hopper, Esq., Bandler & Kass, Thomas Cartelli, Esq., De Matteis Organizations, Inc., Leon D. De Matteis Construction Corp., I.I.J. Enterprises, Inc., Vigliarolo Bros., Inc., Transit-Mix Concrete Corp., Marine Pollution Service, Inc., individually and d/b/a Certified Concrete Co., Certified Concrete Co., Inc., Aggregate Industries, Inc., Edward J. Halloran and S & A Concrete Co., Inc., Petitioners-Respondents, v. Robert ABRAMS, The Attorney General of the State of New York, Respondent-Appellant.

Page 335

481 N.Y.S.2d 335

103 A.D.2d 609, 1984-2 Trade Cases P 66,269

BIG APPLE CONCRETE CORP., Donald A. Hopper, Esq., Bandler &amp Kass, Thomas Cartelli, Esq., De Matteis Organizations, Inc. Leon D. De Matteis Construction Corp., I.I.J. Enterprises Inc., Vigliarolo Bros., Inc., Transit-Mix Concrete Corp. Marine Pollution Service, Inc., individually and d/b/a Certified Concrete Co., Certified Concrete Co., Inc., Aggregate Industries, Inc., Edward J. Halloran and S & A Concrete Co., Inc., Petitioners-Respondents, v. Robert ABRAMS, The Attorney General of the State of New York, Respondent-Appellant.

Supreme Court, Appellate Division, First Department.

Oct. 30, 1984.

Bandler & Kass, New York City, petitioners, pro se and for S & A concrete.

Thomas Cartelli, New York City, petitioner pro se.

Gerald B. Lefcourt, New York City, for petitioner Marine Pollution.

Obermaier, Morvillo & Abramowitz, New York City, for petitioner I.I.J. Enterprises.

Benjamin Brafman, P.C., New York City, for petitioner Vigliarolo Bros.

Ellen J. Schneider, New York City, of counsel (Richard Gabriele, New York City, with her on brief; Robert Abrams, Atty. Gen., and Lloyd Constantine, New York City, attorneys), for respondent-appellant.

Frederick P. Hafetz, New York City, of counsel (Goldman & Hafetz, New York City, attorneys), Donald A. Hopper, New York City, for petitioner, pro se, for petitioners Transit-Mix, Certified, Aggregate and Halloran.

Richard Berne, New York City, for petitioner Big Apple.

Before MURPHY, P.J., and ROSS, CARRO, MILONAS and ALEXANDER, JJ.

MILONAS, Justice.

The instant matter concerns petitioner's challenge to a series of subpoenas issued by the Attorney General of the State of New York in connection with an investigation into whether certain firms and individuals associated with the ready-mix concrete industry in New York City have committed violations of the Donnelly Antitrust Act. (Gen.Bus.Law 340 et seq.) Special Term quashed several demands contained in the subpoenas on the grounds that the subpoenas were overbroad or that the materials sought were privileged from disclosure. This court disagrees.

According to the Attorney General, despite the fact that raw materials used for the manufacture of ready-mix concrete are less costly in New York than in other sections of the country, the prices charged in New York City are the highest in the nation, and it is, therefore, the purpose of the investigation to determine if these prices are the product of unlawful, anticompetitive agreements or arrangements. In that regard, a major focus of the probe is the apparently systematic consolidation of all of the ready-mix production facilities in Manhattan into the control of a single person, Edward J. Halloran, which was accomplished through a number of corporate acquisitions from 1974 to 1981.

The Attorney General, in furtherance of his inquiry, served subpoenas upon ten corporations, three individuals and a partnership between September 16th and October 28th of 1982. The corporate recipients of these subpoenas were required to produce certain categories of documents and to furnish answers to interrogatories, while only documents were demanded from the individuals and partnership. The parties served subsequently moved to quash the subpoenas on a variety of grounds, and the appeal before us arises out of four unresolved areas of dispute.

Petitioners' first objection relates to the following instruction which was contained in each subpoena for the production of documents:

c. If any document described below is withheld from production on the ground that all or some part of the contents of such document is privileged and need not be disclosed, include in the written statement filed with the Attorney General a section entitled "Documents Withheld Under Claim of Privilege" and there (1) identify each such document, (2) state its general subject matter, (3) state in detail the basis for each claim of privilege made with respect to it, (4) state whether a similarly-based claim of privilege has previously been made with respect to it in connection with any action or investigation, (5) if the answer to (4) is yes, state what disposition was made of each such claim, and (6) if only part of its contents is claimed to be privileged, state the full text of the non-privileged part or, in lieu thereof, prepare and produce a copy of it from which the part claimed to be privileged has been redacted.

Special Term concluded that the Attorney General's questionnaire is improper in its present form since "a record custodian may not be compelled to reveal either the nature or the type of information to which he asserts a privilege from disclosure" (United States v. O'Henry's Film Works, 598 F.2d 313) and that such statements, like the acts of production, may be deemed testimonial admissions to which the same privileges attach (Matter of Vanderbilt 57 N.Y.2d 66, 453 N.Y.S.2d 662, 439 N.E.2d 378; Fisher v. United States, 425 U.S. 391, 96 S.Ct. 1569, 48 L.Ed.2d 39). It is the Attorney General's position that the information being sought was requested in order to evaluate the validity of the various claims of privilege under which the documents might be withheld and, as such, constituted a necessary and proper subject of inquiry. Petitioners, without specifically responding to respondent's contention, assert that the issue has now become moot in view of their acknowledged intention to provide the Attorney General with the written statement in Document Instruction C. However, notwithstanding any possible change in circumstances, an appeal will not be considered moot where it meets the following three criteria: "(1) a likelihood of repetition, either between the parties or among other members of the public; (2) a phenomenon typically evading review; and (3) a showing of significant or important questions not previously passed on, i.e., substantial and novel issues." (Matter of Hearst Corp. v. Clyne, 50 N.Y.2d 707, at 714-715, 431 N.Y.S.2d 400, 409 N.E.2d 876.) Applying this standard, the matter is not only not moot, but it directly affects the fundamental rights and interests of the parties. Compliance with Document Instruction C would depend almost entirely on petitioners' good faith rather than on any enforceable legal mandate. Moreover, in view of Special Term's ruling on this issue, the Attorney General would, in effect, have little legal recourse should respondent be dissatisfied with the sufficiency of petitioners' answers.

Of the fourteen subpoenas involved herein, ten were directed to corporations and one to a partnership. The law is clear that these organizations have no Fifth Amendment privilege to assert and must thus designate a suitable representative to make responses. (Bellis v. United States, 417 U.S. 85, 94 S.Ct. 2179, 40 L.Ed.2d 678; United States v. White, 322 U.S. 694, 64 S.Ct. 1248, 88 L.Ed. 1542.) While the organizational recipients of the subpoenas might be able to withhold relevant materials under other claims of privilege, such as attorney-client or work product, they may not do so on Fifth Amendment grounds. At Special Term, petitioners contended that the individuals who will have to answer on behalf of the corporation have Fifth Amendment rights, and the corporation's response to the subpoena might violate these rights. Yet, this argument has been repeatedly rejected. The Fifth Amendment privilege is personal and may not be vicariously asserted by organizations on behalf of their employees, officers or members. (Couch v. United States, 409 U.S. 322, 93 S.Ct. 611, 34 L.Ed.2d 548; United States v. Kordel, 397 U.S. 1, 90 S.Ct. 763, 25 L.Ed.2d 1; Matter of Bleakley v. Schlesinger, 294 N.Y. 312, 62 N.E.2d 85). To permit a corporate representative to claim personal privilege in such a manner would create an immunity for the corporation which is not authorized either by statute or in the Constitution. (See Matter of Bleakley v. Schlesinger, supra, 294 N.Y. at 317, 62 N.E.2d 85.) As to the individual petitioners, a party who claims a privilege has the burden of demonstrating his right to withhold the documents or information being sought. (Priest v. Hennessy, 51 N.Y.2d 62, 431 N.Y.S.2d 511, 409 N.E.2d 983; Koump v. Smith, 25 N.Y.2d 287, 303 N.Y.S.2d 858, 250 N.E.2d 857.)...