| Matter of Hogan v Cuomo |
| 2009 NY Slip Op 08105 [67 AD3d 1144] |
| November 12, 2009 |
| Appellate Division, Third Department |
| In the Matter of John B. Hogan, Appellant, v Andrew M. Cuomo,as Attorney General of the State of New York, Respondent. |
—[*1] Andrew M. Cuomo, Attorney General, Albany (Denise A. Hartman of counsel), forrespondent.
Kane, J. Appeals from two orders of the Supreme Court (Connolly, J.), entered September19, 2008 and December 24, 2008 in Albany County, which denied petitioner's applications toquash a subpoena duces tecum and a subpoena ad testificandum issued by respondent.
Petitioner is receiving public pension benefits for his service as an attorney for multipleschool districts between 1967 and 2000. During that time, he also maintained a private lawpractice. Respondent served petitioner with a subpoena duces tecum, pursuant to Executive Law§ 63 (12) and State Finance Law § 190, demanding production of petitioner'sdocuments including billing records, tax statements, and information concerning salary,compensation and pension benefits related to his services for school districts.[FN1]Petitioner moved to quash the subpoena as outside respondent's authority, unsupported by afactual basis and overly broad (see[*2]CPLR 2304).Additionally, respondent served petitioner with a subpoena ad testificandum, which petitioneralso moved to quash. Petitioner appeals from Supreme Court's denial of his motions to quashboth subpoenas.
"An application to quash a subpoena should be granted [o]nly where the futility of theprocess to uncover anything legitimate is inevitable or obvious or where the information soughtis utterly irrelevant to any proper inquiry" (Anheuser-Busch, Inc. v Abrams, 71 NY2d327, 331-332 [1988] [internal quotation marks and citations omitted]; see Matter of Abbruzzese v New YorkTemporary State Commn. on Lobbying, 43 AD3d 518, 519 [2007]). The personchallenging a subpoena bears the burden of demonstrating a lack of authority, relevancy orfactual basis for its issuance (see Matter of Dairymen's League Coop. Assn., Inc. vMurtagh, 274 App Div 591, 595 [1948], affd 299 NY 634 [1949]).
Respondent has the authority to investigate potential fraud or illegality concerning thereceipt of public pension benefits. Executive Law § 63 (12) expressly authorizesrespondent to issue subpoenas in the course of an investigation into "repeated fraudulent orillegal acts." State Finance Law § 190 authorizes respondent to investigate possibleviolations of the False Claims Act, which could include the presentation of a fraudulent claim forpublic pension benefits (see State Finance Law § 189 [1] [a]; § 190 [1]; 13NYCRR 400.2 [a]). Petitioner contends that the False Claims Act is inapplicable because it wasenacted after petitioner began receiving pension benefits, it may not be applied retroactively andthe statute of limitations has run (see State Finance Law § 192). As petitioner'scontinuing receipt of benefits could constitute a continuing fraud, the False Claims Act mayapply and the statute of limitations may not have run. We need not definitively decide theseissues or whether the False Claims Act applies retroactively; at this pre-action stage, we merelyconclude that respondent possesses authority, pursuant to Executive Law § 63 (12) andState Finance Law § 190, to investigate and issue subpoenas related to potential fraud orillegality in obtaining public pension benefits.
As for relevance, respondent benefits from a presumption that he is acting in good faith and,thus, need only show that the documents he seeks bear some reasonable relationship to thesubject matter of a legitimate investigation (see Anheuser-Busch, Inc. v Abrams, 71NY2d at 332; Matter of La Belle Creole Intl., S.A. v Attorney-General of State of N.Y.,10 NY2d 192, 196 [1961]; Carlisle v Bennett, 268 NY 212, 217-218 [1935]). Thesubpoenas here, as limited by respondent's withdrawal of certain requests, sought informationthat could clarify petitioner's status as either an employee or independent contractor of the schooldistricts. This information was relevant to respondent's investigation into petitioner's receipt ofpublic pension benefits. Although the request for documents dating from 1967 to the present iscertainly broad, it was not overly broad or unduly burdensome considering the scope of theinvestigation covering petitioner's approved pension credits dating back to 1967.
Respondent had more than an adequate basis to issue the subpoenas here. The informationforming the factual basis need not be sufficient to establish fraud or illegality, or even provideprobable cause, as long as the futility of the process is not inevitable or obvious (see Myersonv Lentini Bros. Moving & Stor. Co., 33 NY2d 250, 256-257 [1973]; Matter of Edge HoHolding Corp., 256 NY 374, 381-382 [1931]; Matter of American Dental Coop. vAttorney-General of State of N.Y., 127 AD2d 274, 280 [1987]). A preliminary investigationprovided respondent with a legal and factual basis to suspect that petitioner worked as anindependent contractor—thus was not eligible for public pension benefits—ratherthan as an employee of the numerous school districts (see e.g. Matter of Young vMcCall, 253 AD2d 997, [*3]997-998 [1998]; Matter ofMancuso v Regan, 190 AD2d 948, 948-949 [1993]; Matter of Brosnahan v New YorkState Employees' Retirement Sys., 174 AD2d 954, 954-955 [1991], lv denied 78NY2d 858 [1991]; Matter of Barbiero v New York State Employees' Retirement Sys., 92AD2d 1078, 1078-1079 [1983]). The retirement system's records disclosed that petitioner waslisted as an employee of as many as six school districts at the same time, while also operating aprivate law office. In the year after he retired as a public employee, petitioner continuedsupplying the same services to one school district, but as an independent contractor. Records alsoindicate that petitioner, as counsel, encouraged school districts to name him as an employeereceiving a salary rather than paying a retainer to his law firm. In some instances, several schooldistricts created an elaborate alliance to funnel money for legal services to one member districtwhich then listed petitioner as an employee of that one district. Considering this and otherinformation available to respondent, a legitimate factual basis exists for him to conduct hisinvestigation and issue subpoenas to determine whether petitioner was properly classified as anemployee entitled to pension benefits and, if not, whether he engaged in illegal or fraudulentconduct to secure such benefits (see Anheuser-Busch, Inc. v Abrams, 71 NY2d at 332[where legality of underlying conduct is arguable, respondent's power to investigate possibleviolations must be sustained]).[FN2]
Because there was "authority, relevancy, and some basis for inquisitorial action," SupremeCourt properly denied petitioner's motions to quash the subpoenas (Matter of A'Hearn vCommittee on Unlawful Practice of Law of N.Y. County Lawyers' Assn., 23 NY2d 916, 918[1969], cert denied 395 US 959 [1969]; Matter of Roemer v Cuomo, 67 AD3d1169 [2009] [decided herewith]).
Rose, J.P., Stein, McCarthy and Garry, JJ., concur. Ordered that the orders are affirmed,without costs.
Footnote 1: Although the subpoena initiallysought similar documents and information related to petitioner's private law practice, respondentwithdrew those requests.
Footnote 2: Petitioner argues thatrespondent should be investigating the school districts rather than petitioner, because onlyemployers can designate individuals as employees for pension purposes. This argument isunavailing. If the subjects of respondent's investigation—suspected of illegal or fraudulentconduct—were the school districts, respondent could still issue subpoenas for petitioner'srecords as part of that investigation.