Oncor Communications, Inc. v. State

• Decision Date: 20 April 1995
• Citation: 165 Misc.2d 262,626 N.Y.S.2d 369
• Court: New York Supreme Court
• Parties: ONCOR COMMUNICATIONS, INC., Petitioner, v. STATE of New York, G. Oliver Koppell, in his capacity as the Attorney General of the State of New York, and American Telephone & Telegraph Company, Respondents.

Page 369

626 N.Y.S.2d 369

165 Misc.2d 262

ONCOR COMMUNICATIONS, INC., Petitioner, v. STATE of New York, G. Oliver Koppell, in his capacity as the Attorney General of the State of New York, and American Telephone & Telegraph Company Respondents.

Supreme Court, Albany County.

April 20, 1995.

Couch, White, Brenner, Howard & Feigenbaum, Albany, for petitioner.

Dennis C. Vacco, Atty. Gen., Samuel A. Cherniak, Asst. Atty. Gen., Albany, for respondent State of New York.

Robert J. Aurigema, New York City, for respondent AT & T.

GEORGE B. CERESIA, Jr., Justice.

In 1993 and 1994, respondent Attorney-General received numerous complaints from consumers and public bodies concerning allegedly unauthorized substitutions of petitioner Oncor Communications, Inc. (Oncor) as the primary long distance carrier and operator service provider on certain telephone lines. ¹ As a result, the Attorney-General undertook an investigation of Oncor's business practices, and on June 22, 1994, issued an office subpoena duces tecum to Oncor's competitor, respondent American Telephone & Telegraph Company (AT & T). Oncor thereafter brought this proceeding, moving pursuant to CPLR § 2304 for an order quashing the subpoena. The Attorney-General opposes. ²

The law in New York is settled. "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, 331-32, 525 N.Y.S.2d 816, 520 N.E.2d 535 [1988] [citations and internal quotation marks omitted]. Although the burden is on the issuer of a non-judicial office subpoena to establish a factual basis showing the relevancy of the items sought, (Congregation B'Nai Jonah v. Kuriansky, 172 A.D.2d 35, 37, 576 N.Y.S.2d 934 [3rd Dep't 1991] [quoting Virag v. Hynes, 54 N.Y.2d 437, 442, 446 N.Y.S.2d 196, 430 N.E.2d 1249 (1981) ], "the Attorney-General enjoys a presumption that he is acting in good faith * * * and must show only that the materials sought bear a reasonable relation to the subject matter under investigation and to the public purpose to be achieved," (Anheuser-Busch, supra at 332, 525 N.Y.S.2d 816, 520 N.E.2d 535 [citations and internal quotation marks omitted]. Concisely, the Attorney-General's "obligation is to show his authority, the relevancy of the items sought, and some factual basis for the inquisitorial action," (Pharmaceutical Soc'y v. Abrams, 132 A.D.2d 129, 133, 522 N.Y.S.2d 298 [3rd Dep't 1987].

The Attorney-General's subpoena requires AT & T to produce two categories of documents:

1. a copy of all documents received by AT & T from January 1, 1993 to date indicating that a telephone line in New York State has had its primary interexchange carrier ("PIC") changed to Oncor Communications, Inc., ("ONCOR") without authorization by the subscriber to that line;

2. a copy of all documents received by AT & T from January 1, 1993 to date from subscribers to telephone lines in New York State requesting a PIC change from Oncor to AT & T.

Oncor plainly has no standing to challenge production of documents in the second category. That material is limited to documents received by AT & T from subscribers. Nor may Oncor attempt to quash the subpoena with respect to those documents in the first category that are not its property nor otherwise subject to a valid claim of privilege. A subpoena may be challenged "by the person to whom it is directed or by a person whose property rights or privileges may be violated," (Matter of Selesnick, 115 Misc.2d 993, 995, 454 N.Y.S.2d 656 [Sup.Ct., Westchester County, 1982]. The mere fact that one is a target of investigation or that the information sought may prove adverse confers no special right or privilege to afford standing, (See id.). ³

However, petitioner has standing to challenge the subpoena insofar as it commands AT & T to produce documents in its possession actually belonging to Oncor. As to these documents, Oncor may and does contest the subpoena on the ground that federal law has preempted state jurisdiction of the matter being investigated, as well as on grounds the subpoena is overbroad and lacks a factual basis. ⁴

Specifically, Oncor contends the Attorney-General's authority to investigate its business practices has been foreclosed by the Federal Communications Act of 1934 (47 U.S.C. § 151 et seq.) and the Federal Communications Commission's (FCC) allegedly pervasive regulation of pre-subscription practices of interexchange carriers. This argument misses the mark. It may be that the Communications Act has supplanted state regulation of interexchange carriers with respect to claims based on state law, (See Nordlicht v. New York Tel. Co., 799 F.2d 859 [2nd Cir.1986], cert. denied, 479 U.S. 1055, 107 S.Ct. 929, 93 L.Ed.2d 981 [1987]; Ivy Broadcasting Co. v. American Tel. & Tel. Co., 391 F.2d 486 [2nd Cir.1968], although this conclusion is by no means inevitable, (See generally American Inmate Phone Sys., Inc. v. US Sprint Communications Co., 787 F.Supp. 852 [N.D.Illinois 1992] [reviewing caselaw]. But even where state law has been deemed preempted by the Communications Act, it has been held--for claims sounding in tort or contract--that federal common law may supply the rule of decision for determining the duties and liabilities of interexchange carriers, (Nordlicht, supra at 862, 864; Ivy, supra at 491), and that state courts enjoy concurrent jurisdiction over these federal common law claims, (Nordlicht, supra at 865).

In this case, the Attorney-General issued his subpoena relying principally on the authority of Executive Law § 63(12), a statute generally empowering the Attorney-General to take action against persons engaged in fraudulent or illegal business practices. ⁵ The remedial purpose of this section is not limited solely to the injunction of repeated fraudulent or illegal acts as defined under state law. The statute itself expressly provides that the Attorney-General may seek an award of "restitution and damages", and by its terms applies to the "carrying on of any fraudulent or illegal act or conduct". Thus, it long has been recognized the statute affords the Attorney-General broad authority to enforce federal as well as state law, unless state action in the area of federal concern has been precluded utterly or federal courts have exclusive jurisdiction of the matter. (See People v. Anderson, 137 A.D.2d 259, 267-68, 529 N.Y.S.2d 917 [4th Dep't 1988] [also noting that State has obligation to enforce federal law under Supremacy Clause]; State v. Scottish-American Ass'n, 52 A.D.2d 528, 381 N.Y.S.2d 671 [1st Dep't 1976]; People v. Calogero Corp., 47 A.D.2d 741, 741-42, 365 N.Y.S.2d 548 [1st Dep't 1975]; See also Executive Law § 63(12); Givens, Supp. Practice Commentaries, McKinney's Cons. Laws of N.Y., Book 18, Executive Law § 63[12], 1995 Pocket Part, at 7-14.)

Oncor points to no provision of the Communications Act that expressly, or even implicitly, prohibits state enforcement of federal common law claims concerning the pre-subscription practices of interexchange carriers. Nor has it shown that any specific policy or regulation of the FCC would be offended by such enforcement. Even assuming the FCC's policy of 'equal access' might be impaired if the Attorney-General were permitted to assert violations of state law as a basis for proceeding in this matter, it does not follow the same could be said concerning violations of federal law. Indeed, Oncor must concede that a private right of action may be premised on a breach of federal common law even in an area that is regulated comprehensively, if the statutory scheme does not speak directly to the particular issues involved, (See Nordlicht, supra at 862 [quoting Ivy, supra at 491]; see also County of Oneida v. Oneida Indian Nation, 470 U.S. 226, 236-37, 105 S.Ct. 1245, 1252-53, 84 L.Ed.2d 169 [1985]. Presumably, this right of action would include the right to proceed on behalf of similarly situated individuals as a class representative or private attorney-general. The Court discerns no reason in law or logic why the people's Attorney-General should have less authority. Section 63(12) empowers the Attorney-General to investigate repeated fraudulent or illegal acts even if the illegality flows from violations of federal common law, and the supreme court properly may hear such claims. That enforcement ultimately might be preempted--thus making the investigation futile--is neither inevitable nor obvious, (See Anheuser-Busch, supra ). The Court concludes the Attorney-General has demonstrated sufficient authority under section 63(12) to issue the challenged subpoena.

The Court also concludes the Attorney-General has shown a factual basis for inquisitorial action. As the Appellate Division has stated, "[A]ll that is required is that the scope of the subpoena and the basis for its issuance be more than isolated or rare complaints by disgruntled persons," (In re CHANGE-New York, Inc. v. New York State Bd. of Elections, 201 A.D.2d 245, 247, 615 N.Y.S.2d 481 [3rd Dep't 1994]. According to the affidavit of the Assistant Attorney-General, as of August 29, 1994, the Department of Law had received complaints from consumers almost every day "[f]or more than a year", many particularly identifying "Oncor as the unexpected biller of high charges for calling card or collect calls from pay telephones." In addition, the Department had received specific complaints from the New York State Metropolitan...