Opinion
115054/2010.
Decided March 17, 2011.
Jim Walden, Esq., for FTA and Krohe, Gibson, Dunn Crutcher LLP, New York, NY, Charles E. Clayman, Esq., for Sevintuna, Clayman Rosenberg, New York, NY, Susan Hoffinger, Esq. for Atre, Hoffinger Stern Ross, LLP, New York, NY, for petitioners.
Gerald P. Conroy, Dep. Commissioner, Richard J. Condon, Spec. Commissioner of Investigation for the New York City, School District, New York, NY, for respondents.
By notice of petition dated November 19, 2010, petitioners move pursuant to CPLR 2304 for an order quashing three non-judicial subpoenas issued to petitioners Tamer Sevintuna (Sevintuna), Jonathan Krohe (Krohe), and Swaroop Atre (Atre), and an order preventing respondents from asking questions that are prohibited by law.
By notice of cross-motion dated January 14, 2011, respondents cross-move pursuant to CPLR 2308(b) for an order compelling compliance with the subpoenas. For the reasons that follow, the petition to quash the subpoenas is granted, and respondents' motion to compel is denied.
I. FACTS
Future Technology Associates, LLC (FTA) is a limited liability company located in Brooklyn, New York. A self-described minority-owned business which employs many minority workers, some of whom are "technically gifted programmers" under the United States H1-B visa program (Petitioners' Memorandum of Law, at 4), it has, since 2005, provided computer consulting services, specifically "ongoing financial planning systems programming and services" for the New York City Department of Education (DOE). Krohe and Sevintuna are both owners of FTA, and Atre is an FTA employee. Krohe also owns Mera Consulting LLC (Mera), a limited liability company that was FTA's corporate affiliate and provided internal accounting related to some work performed by FTA for the DOE. (Reply Memorandum of Law dated Jan. 21, 2011 [Reply Memo.]).
The FTA work site is located at a DOE facility. (Affidavit of Jonathan Krohe in Support of Order to Show Cause, dated Nov. 17, 2010 [Krohe Affid.], ¶ 2). Presently, FTA has a three-year, $43.2 million contract with DOE. (Affirmation of Gerald P. Conroy, Esq., in Opposition to Petition for Order to Quash Three Subpoenas Ad Testificandum and in Support of Cross-Motion to Compel Compliance, dated Jan. 14, 2011 [Conroy Aff.]).
In July 2009, three articles appeared in the New York Daily News about FTA, its employees, and the amount of money that DOE was paying FTA for its services. Petitioners describe these articles as "erroneous" and "xenophobic," and suggestive of "something untoward about our use of foreign workers employed under H1-B visas for programming services." ( Id. ¶ 6).
Soon thereafter, respondent Special Commissioner of Investigation for the New York City School District (SCI) opened an investigation concerning DOE and its contract with FTA. SCI is a part of respondent the Department of Investigation of the City of New York (DOI), and is mandated to "investigate allegations of corruption, conflicts of interest, unethical conduct or other misconduct occurring within the New York City School District. . . ." (Conroy Aff., ¶ 1).
FTA provided SCI with voluminous documentation and expressed its intent to cooperate with the investigation. (Affirmation of Jim Walden in Support of Motion to Quash, dated Nov. 18, 2010 [Walden Nov. 2010 Aff.], ¶ 7).
Representatives of SCI appeared at the FTA work site on several occasions from November 2009 to November 2010. In November 2009, they came with a subpoena duces tecum. Thereafter, petitioners retained present counsel. In April 2010, respondents sought to interview witnesses at the work site and serve subpoenas in connection with the investigation. That same month, counsel for petitioners twice met with SCI in an effort to cooperate and provide information, and unsuccessfully sought from it information concerning the basis for the investigation. (Walden Nov. 2010 Aff.). In June 2010, SCI representatives allegedly began asking two FTA consultants questions which petitioners describe as "disruptive" and in full view of the DOE staff. (Krohe Affid. ¶ 8).
SCI again appeared at the FTA work site in September 2010, and allegedly spoke to two FTA consultants without counsel, although the consultants allegedly asked that they be contacted through counsel only (Krohe Affid., ¶ 10), and on October 18, 2010, they interviewed an FTA employee with counsel present. He was asked about an employee of a company called Krono Biligisayar (Krono), and whether the employee was a Turkish national. Apparently, the employee had worked at the FTA work site in Brooklyn, but now works remotely from Turkey. SCI also fruitlessly asked the FTA employee whether he knew if the "Krono employee's immigration status was the reason why he worked from Turkey." (Conroy Aff., ¶ 34).
Three days later, on October 21, 2010, SCI interviewed another FTA employee with counsel present, asking if the employee was in the United States on a work visa and if FTA was obliged to certify his status with immigration authorities, and on October 27, 2010, they spoke to two additional FTA employees without counsel present. During the final visit, on November 8, 2010, an FTA consultant was interviewed by SCI and asked about his H1-B Visa and whether he had information about "inaccurate representations about his employment status." ( Id., ¶ 36).
SCI served Atre with a subpoena ad testificandum, dated October 26, 2010, requesting that he appear at the SCI and DOI Manhattan offices. The same subpoenas, dated November 4, 2010, were served on Sevintuna and Krohe. All command, in pertinent part, the witnesses' appearance and attendance "to testify under oath in the matter of an investigation relating to allegations of corruption, conflicts of interest, unethical conduct or other misconduct occurring within the New York City School District." (Krohe Affid., Exh. 3).
II. CONTENTIONS
Petitioners now move for an order restraining respondents from asking questions outside the scope of their jurisdiction and prohibited by law, and quashing the non-judicial subpoenas issued to Atre, Sevintuna and Krohe on the ground that the "entire investigation has been a harassing, overbroad, fishing expedition and involves impermissible questions in violation of the legal prohibitions of Mayoral Executive Order 41." (Krohe Affidavit, ¶ 1). They claim that in every interview SCI "has asked questions about the immigration status and nationality of FTA's employees, including the witnesses themselves and others," and that, to date, SCI has provided it with no information about the substance of the subpoenas. They believe that SCI intends to continue asking about their and others' immigration status and to find evidence that FTA breached its contract with DOE. (Petition to Quash [Pet.], ¶ 15).
Petitioners maintain that they have been cooperative with the investigation thus far, having sought, at SCI's demand, documents from the foreign-based consulting firms despite their belief that India and Turkey, nations of origin of some of their employees, have data privacy rules that would restrict the firms from producing documents to respondents. According to counsel, counsel for respondent asserted that noncompliance would constitute a failure to cooperate which constitutes a breach of the DOE/FTA contract. (Walden Nov. 2010 Aff.).
Petitioners also deny respondents' characterization of the foreign-based consulting firms as subcontractors, asserting that they have "provided extra programming support on a range of projects," and allege that the DOE was aware of the consultants who frequently participated in conference calls with DOE about various projects. (Walden Nov. 2010 Aff., ¶ 7).
Petitioners complain that the SCI representatives harassed them by threatening to contact DOE and persuade them to stop doing business with FTA. They argue that any breach of the DOE/FTA contract with respect to subcontracting is curable and that if there were any question about the nature of their consulting arrangements, they would see to curing any such breach. They maintain that respondents have ignored their request that SCI contact their employees through counsel, and assert that "pending a resolution of any conflict of interest issues," petitioners' counsel represents FTA's employees. (Walden Nov. 2010 Aff.).
Petitioners thus assert that they have been subject to a fishing expedition, in that respondents are simply looking for any violations. Having already voluntarily provided respondents with many documents and agreed to comply with the subpoenas with "reasonable modifications" (Petitioners' Exh. 9), petitioners perceive that they are being harassed, as evidenced by respondents' alleged threats, disruptive visits to the FTA work site, as well as the documented questions to FTA employees about nationality, immigration, and visa status. As many of FTA's employees are foreign-born, petitioners contend that the SCI visits and questions heighten "fears of reprisal, which are common even among legal aliens." (Petitioners' Memorandum of Law, at 2).
Respondents allege that they seek to investigate alleged subcontracts entered into between FTA and foreign companies, which is prohibited by the DOE/FTA contract absent a written waiver. They concede, however, that the current DOE/FTA contract permits FTA consultants to work off-site with prior approval but nonetheless believe that subcontracting with and receiving services from foreign firms is prohibited. They are thus concerned that overseas firms may have had access to confidential DOE data, including information about DOE students, employees, and finances. They allege that there are "apparent inaccuracies and ambiguities concerning foreign workers," and thus seek to determine whether "any false representations were made in this regard." ( Id. ¶ 12).
Respondents also claim that their investigation has thus far revealed that some consultants hired by FTA have been hired through multiple contracts and that therefore, the "hourly fee for the consultant's services was marked up before being passed on to the DOE." (Conroy Aff., ¶ 23). They thus maintain that they are obligated to investigate this "apparent subcontracting" and whether DOE approved it, and seek to determine whether "anyone has made inaccuracies concerning a foreign worker's employment status in connection with the FTA/DOE contracts." ( Id. ¶ 33). They express a need to check the invoices of FTA's consultants, and contend that their document requests include billing records and other documents pertaining to the DOE contracts.
Respondents deny that any of the FTA employees or consultants claimed to have been represented by FTA's counsel or by any other attorney. ( Id. ¶ 15).
Whereas respondents acknowledge that petitioners have provided them with documents concerning the immigration status of FTA employees, they assert that they nonetheless remain "obligated to investigate further to determine whether there are any misrepresentations made to government authorities concerning the circumstances of consultants assigned to work on the DOE-FTA contracts." ( Id., ¶ 38).
SCI also claims that it is authorized to investigate "corruption, conflicts of interest and other misconduct" within the DOE (Respondents' Memorandum of Law, at 3), and that New York Executive Order No. 41 (Executive Order No. 41), which specifically prohibits inquiry into immigration status, does not apply to it, a law enforcement agency, and that in any event, they do not seek to "inquire about a person's immigration status." (Memorandum of Law, at 15). Rather, respondents observe that petitioners have already provided petitions for non-immigrant workers which were allegedly filed with the U.S. Department of Homeland Security, and applications allegedly filed with the U.S. Department of Labor concerning labor conditions of H-B and H-1B1 visa holders (Respondents' Memorandum of Law, at 16), and that inquiry into immigration status is necessary in order to determine "whether inaccurate information was filed by persons affiliated with the DOE/FTA contracts, workers' business sponsors or others." ( Id.). Petitioners deny that respondents are a law enforcement agency absent the power to prosecute crime. (Reply Memo.).
Among other companies, respondents claim a need to investigate transactions and any alleged service contracts between among Mera, the DOE, and FTA.
III. ANALYSIS
The Court of Appeals has held that a "witness subject to a non-judicial' subpoena duces tecum may always challenge the subpoena in court on the ground it calls for irrelevant or immaterial documents or subjects the witness to harassment." ( Myerson v Lentini Moving Stor. Co., 33 NY2d 250, 256; Matter of New York City Dept. of Investigation v Passannante, 148 AD2d 101, 104-105 [1st Dept 1989]). Testimonial subpoenas, as issued here, may be similarly challenged. ( Matter of Parkhouse v Stringer , 12 NY3d 660 , 666).
It is well settled that "no agency of government may conduct an unlimited and general inquisition into the affairs of persons within its jurisdiction solely on the prospect of possible violations of law being discovered, especially with respect to subpoenas duces tecum. . . . There must be authority, relevancy, and some basis for inquisitorial action [internal quotation marks and citations omitted]." ( Matter of Brasky v City of New York Dept. of Investigation , 40 AD3d 531 , 533 [1st Dept 2007]). Subpoenas may not be used as "fishing expeditions" to obtain evidence. ( Matter of Reuters, Ltd. v Dow Jones Telerate, Inc., 231 AD2d 337, 342 [1st Dept 1997]).
On a motion to quash a testimonial subpoena, the movant bears the burden of demonstrating that the subpoenas "lack . . . authority, relevancy or factual basis." ( Matter of Hogan v Cuomo , 67 AD3d 1144 , 1145 [3d Dept 2009]). The issuer must then come forward with a factual basis to establish the relevancy of the materials sought before the witness may be compelled to comply. ( Matter of Condon v Inter-Religious Found. for Community Org. , 18 Misc 3d 874, 877-878 [Sup Ct, New York County 2008], affd 51 AD3d 465 [1st Dept 2008], lv denied 11 NY3d 919). Information is relevant if it bears "a reasonable relationship to the matter under investigation and the public purpose to be achieved." ( Doe v Office of Prof. Med. Conduct of New York State Dept. of Health, 161 AD2d 123, 125 [1st Dept 1990]). Only after the motion is made must the issuer satisfy its burden; the face of the subpoena itself need not reflect such information that would satisfy the burden. ( Id. at 878).
In opposing a challenge to the relevancy of the subpoena, respondents need only "come forward with a factual basis establishing the relevancy to the subject matter of the investigation. It is simply not enough that the proponent merely hopes or suspects that relevant information will develop." ( Matter of Morgenthau , 73 AD3d 415 , 419 [1st Dept 2010]). "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 [internal quotation marks and citations omitted]." ( Anheuser-Busch, Inc. v Abrams, 71 NY2d 327; Matter of Hogan, 67 AD3d at 1145).
Here, although respondents attempt to meet their burden of coming forward with a factual basis to establish the relevancy of the materials sought, the information sought in the subpoenas is overbroad and the subpoenas appear to be fishing expeditions, issued to uncover any violations committed by FTA. ( Matter of Reuters, 231 AD2d at 342). Unlimited information is sought therein concerning any company or person that petitioners have ever been affiliated with, and the scope and/or subject of the investigation is also overbroad and unlimited in that they seek to learn whether any DOE employees, FTA employees or associates, or any other people engaged in improprieties in awarding or executing FTA's contract with DOE.
Respondents' allegations against petitioners also do not implicate any possible criminal activity, conflicts of interest, gross mismanagement, or abuse of authority, which are the asserted bases for respondents' investigative authority. Whether FTA violated its contract with DOE by permitting consultants to perform their work off-site or to access DOE information from outside of the United States or by hiring subcontractors is a breach of contract issue. And whether petitioners made any misrepresentations to other governmental authorities regarding the immigration status of employees is an issue that must be addressed by those governmental authorities absent any assertion that respondents have the duty to do so. Moreover, it is unclear whether respondents have the authority to investigate whether FTA or its employees committed possible immigration violations, and respondents point to no provision in the contract that prohibits FTA from employing workers that are not U.S. citizens.
Thus, if respondents seek certain testimony from petitioners, they must tailor the subpoenas so that they are not "unlimited and general inquisition[s] into [petitioners'] affairs." ( Matter of Brasky, 40 AD3d at 533; see also Matter of Reuters, 231 AD2d at 344 [subpoena unenforceable as document requests "patently overbroad, burdensome and oppressive"]). And, if there exist ambiguities in the documentation provided by FTA, respondents must tailor their requests appropriately.
Petitioners have also provided sufficient evidence that respondents have subjected them and FTA employees to harassment. ( See Matter of New York City Dept. of Investigation v Passannante, 148 AD2d 101). And if respondents seek only testimony from three people, then the visits to the FTA work site, as well as the intrusive questioning of FTA employees, were and are unnecessary.
Regardless of whether SCI is a law enforcement agency, respondents have not demonstrated how testimony about the immigration status of petitioners or other employees is relevant to a legitimate investigation. ( See e.g. Matter of Brasky, 40 AD3d at 533 [materials sought in subpoena exceeded those "relevant to a determination" of DOI's investigation]; see also Matter of Morgenthau, 73 AD3d at 419 [testimonial subpoena should be quashed where respondent failed to show that testimony would be "relevant or material to the subject matter of the charges."]).
The instant record reveals respondents' intentions, and respondents concede that they intend to inquire into the immigration status of petitioners and that they intend to ask if inaccurate immigration status was reported by "others." (Respondents' Memorandum of Law, at 16). Given their intentions and conduct to date, and the alleged justification for further questioning, namely, the alleged issues concerning subcontracting, access by foreign consultants to DOE information, and accurate record keeping records, there is an insufficient basis for the acquisition of additional information concerning the immigration status of petitioners and FTA employees, and petitioners have thus met their burden of demonstrating that questions about the immigration status of petitioners and FTA employees, or anyone remotely affiliated with FTA, are irrelevant and beyond the scope of this investigation.
Whether FTA breached its contract with the DOE is also irrelevant, as the contract permits FTA to employ consultants to work offsite with prior approval. Again, respondents seek to elicit unlimited and general testimony, there is evidence that petitioners have been harassed by respondents, and there is considerable doubt as to whether the inquiries into immigration status have a "reasonable relationship" to what is allegedly being investigated. ( Doe v Office of Professional Medical Conduct of the New York State Dept. of Heath, 161 AD2d at 125).
Accordingly, respondents' motion to compel compliance with the three non-judicial subpoenas is denied, and petitioners' motion to quash the three non-judicial subpoenas is granted.
However, as FTA is not named in the subject subpoenas, it has no standing to bring this motion to quash. ( See Matter of Oncor Communications, Inc. v State of New York, 218 AD2d 60, 62 [3d Dept 1996] [there is no standing where "petitioner has made no claim or showing of a proprietary interest, confidential relationship or privilege with respect to (the materials])."
Given this decision, respondents' other contentions, including their requests for an in camera and ex parte review of the investigation, need not be addressed.
IV. CONCLUSION
Accordingly, it is
ORDERED, that petitioners Tamer Sevintuna, Jonathan Krohe, and Swaroop Atre's motion to quash the non-judicial subpoenas issued to them is granted; it is further
ORDERED, that the motion to quash is denied as to Future Technology Associates, LLC based on lack of standing; and it is further
ORDERED, that respondents' cross motion to compel the non-judicial subpoenas of petitioners Tamer Sevintuna, Jonathan Krohe, and Swaroop Atre is denied.