Broadway Stages, Ltd. v. N.Y.S. Joint Comm'n on Pub. Ethics

• Decision Date: 08 July 2020
• Docket Number: 907941-19
• Citation: 68 Misc.3d 838,128 N.Y.S.3d 454
• Parties: BROADWAY STAGES, LTD., Petitioner, v. NEW YORK STATE JOINT COMMISSION ON PUBLIC ETHICS, Respondent.
• Court: New York Supreme Court

68 Misc.3d 838
128 N.Y.S.3d 454

BROADWAY STAGES, LTD., Petitioner,
v.
NEW YORK STATE JOINT COMMISSION ON PUBLIC ETHICS, Respondent.

907941-19

Supreme Court, Albany County, New York.

Decided on July 8, 2020

128 N.Y.S.3d 455

Joshua L. Seifert, Esq., Attorney for Petitioner, 175 Varick Street, New York, New York 10014

Letitia James, Attorney General, Attorney for Respondent, (Christopher J. Hummel, of counsel), The Capitol, Albany, New York 12224

Richard M. Platkin, J.

68 Misc.3d 839

Petitioner Broadway Stages, Ltd. commenced this special proceeding, seeking: (1) a declaration that 19 NYCRR part 934 is null and void as being beyond the statutory delegation of authority granted to respondent New York State Joint Commission

128 N.Y.S.3d 456

on Public Ethics ("JCOPE" or "Commission") and (2) an order quashing a non-judicial subpoena duces tecum issued by JCOPE to petitioner in connection with an investigation of alleged violations of Legislative Law article 1-A ("Lobbying Act"). JCOPE opposes the petition and cross-moves pursuant to CPLR 2308 (b) for an order compelling petitioner to comply with the subpoena.

BACKGROUND

Broadway Stages is a domestic corporation that owns multiple sound-stage locations and production facilities in the City of New York, which it rents for film, television, music and commercial photography (see NYSCEF Doc No. 1 ["Petition"], ¶ 7). JCOPE is a state agency established pursuant to the Public Integrity Reform Act of 2011 to ensure compliance with New York's ethics and lobbying laws (see id. , ¶ 8; see also Executive Law § 94 [1] ).

From 2014 through 2016, Broadway Stages filed documents with JCOPE pursuant to the Lobbying Act indicating that it was a client of the lobbying firm James Capalino and Associates ("Capalino") (see NYSCEF Doc No. 14 ["Logue Aff."], ¶ 3). These filings identified petitioner's president, Gina Argento, as the individual responsible for the disclosures (see id. ).

In 2015, JCOPE commenced an investigation into Campaign for One New York, Inc. ("Campaign"), a not-for-profit corporation, for failing to register and report as a lobbyist (see id. , ¶ 4; see also Legislative Law § 1-e [a] [1] ). According to JCOPE, "the Campaign was formed in 2013 following the election of the Mayor of the City of New York, Bill de Blasio, to advocate for policies for the City in close coordination with the Mayor" (Logue Aff., ¶ 5).

During the course of its investigation, JCOPE learned that Broadway Stages had donated $25,000 to the Campaign in

68 Misc.3d 840

2014 and that its president, Argento, separately donated $25,000 in 2014 and another $10,000 in 2015 (see id. , ¶ 7). JCOPE also learned that Argento may have been solicited directly by Mayor de Blasio or his representatives to contribute to the Campaign (see id. , ¶ 13) and that Argento sought, and may have had, meetings with the Mayor (see id. , ¶ 14). JCOPE attempted to meet with Argento in April 2016, but she declined to be interviewed (see id. , ¶¶ 8-9).

In June 2016, JCOPE notified Capalino of alleged violations of the Lobbying Act's gift prohibition and that the agency was considering commencing an investigation (see id. , ¶ 10). In that connection, JCOPE sought to subpoena certain documents from Broadway Stages (see id. , ¶¶ 12, 16, 18).

In March 2018, JCOPE and Capalino entered into a settlement agreement in which Capalino acknowledged contributing $10,000 to the Campaign in 2015 and organizing $10,000 contributions to the Campaign from each of the firm's lobbying clients (see id. , ¶ 19). JCOPE obtained information that Broadway Stages was one such lobbying client (see id. , ¶ 20).

JCOPE wrote on May 1, 2018 to advise Broadway Stages of its intention to investigate potential violations of the Lobbying Act, including (i) noncompliance with registration and disclosure requirements related to Argento's activities and (ii) prohibited gifts to public officials (see id. , ¶ 21; see also Legislative Law §§ 1-e, 1-h, 1-j, 1-m ).

On May 22, 2018, JCOPE voted to commence an investigation of Broadway Stages (see Logue Aff., ¶ 22). The agency served a subpoena on Broadway Stages on August 13, 2019 for records relating to potential violations of the Lobbying Act (see id. , ¶ 20; see also

128 N.Y.S.3d 457

NYSCEF Doc Nos. 15-16).¹ On August 19, 2019, JCOPE served an amended subpoena ("Subpoena") (see Logue Aff., ¶ 25; see also NYSCEF Doc Nos. 17-18).

Broadway Stages did not respond to the Subpoena (see Logue Aff., ¶ 27). On October 16, 2019, petitioner's counsel informed JCOPE that Broadway Stages would be challenging the Subpoena in court (see id. , ¶ 28). This special proceeding ensued.

68 Misc.3d 841

DISCUSSION

A. Legal Framework

The Lobbying Act provides that "no [lobbyist or client of a lobbyist] shall offer or give a gift to any public official ... unless under the circumstances it is not reasonable to infer that the gift was intended to influence such public official" ( Legislative Law § 1-m ). A "gift" is defined as "anything of more than nominal value given to a public official in any form, including but not limited to money, service, loan, travel, lodging, meals, refreshments, entertainment, discount, forbearance, or promise, having monetary value" (id. § 1-c [j] ).

Public Officers Law § 73 (5) restricts the receipt of gifts by state officers and employees.² Under the statute, a state official shall not solicit, accept or receive a gift, as defined in Legislative Law § 1-c, from any person prohibited by Legislative Law § 1-m from delivering the gift, unless it would be unreasonable to infer that the gift was given to influence the official ( Public Officers Law § 73 [5] [b] ). This restriction extends to indirect gifts made to a third party, including a charitable organization, at the official's designation or recommendation or on his or her behalf (see id. § 73 [5] [c] ).

Relying on its statutory authority to "[p]romulgate rules concerning restrictions on ... limitations on the receipt of gifts" ( Executive Law § 94 [17] [a] ) and to "[a]dopt [and] amend ... rules and regulations to govern [its] procedures" ( id. § 94 [9] [c] ), JCOPE promulgated certain regulations, including the ones at issue herein (see 19 NYCRR part 933 and 934). The regulations first were published in the State Register on August 14, 2013 and became effective on June 18, 2014. Part 933 applies to state officials subject to the Public Officers Law, and part 934 ("Part 934") applies to lobbyists and lobbying clients subject to the Lobbying Act.

Part 934 prohibits lobbyists and lobbying clients from giving a gift to a public official unless (1) it is not reasonable to infer that the gift was intended to influence the public official, (2) the gift could not reasonably be expected to influence the public official in the performance of his or her official duties, and (3) it is not reasonable to infer that the gift was given as a reward for any official action (see 19 NYCRR 934.3 ).

68 Misc.3d 842

As is relevant here, the Part 934 regulations prohibit a lobbyist or client from making an indirect gift to a public official. More specifically, 19 NYCRR 934.3 (e) (2) provides that a lobbyist or client cannot give a gift to a third party, including a charitable organization, at the designation or recommendation of a public official, or on the official's behalf, if the gift could not be given directly to the public official.

Finally, Executive Law § 94 empowers the Commission to investigate violations of the Lobbying Act. In furtherance of this investigatory power, JCOPE is authorized

128 N.Y.S.3d 458

to "subpoena witnesses, compel their attendance and require the production of any books or records which it may deem relevant or material" ( Executive Law § 94 [17] [c] ).

B. The Parties' Contentions

Broadway Stages argues that the Subpoena must be quashed for three principal reasons: (1) Part 934 improperly expands the prohibition on "gifts" established in the Lobbying Act by prohibiting indirect gifts; (2) the Lobbying Act does not authorize JCOPE to regulate the granting of gifts by private actors; and (3) the Commission is not authorized to investigate conduct that would only constitute a violation of its regulations and not the Lobbying Act (see Petition, ¶¶ 3-5; NYSCEF Doc No. 3 ["MOL"] at pp. 1-2). Petitioner also seeks a judgment declaring that the challenged portions of 19 NYCRR part 934 are ultra vires .

JCOPE responds that its interpretation of the Lobbying Act's gift ban as encompassing indirect gifts is reasonable, rational and consistent with the legislative history of New York's ethics laws. "Thus, irrespective of whether the Commission lawfully adopted the Regulations, which merely provides notice of JCOPE's...