aqueduct memorandum of law

8/9/2019 Aqueduct Memorandum of Law

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SUPREME COURT OF THE STATE OF NEW YORKCOUNTY OF NEW YORK: PART _______--------------------------------------------------------------------XNEW YORK STATE SENATE,SENATOR JOHN L. SAMPSON, and

SENATOR PEDRO ESPADA, JR.,

Petitioners,-against-

OFFICE OF THE INSPECTOR GENERAL OF Index No: 103789/10THE STATE OF NEW YORK and JOSEPHFISCH, in his capacity as Inspector General ofthe State of New York,

Respondents.--------------------------------------------------------------------X

MEMORANDUM OF LAW IN OPPOSITION TO THE NEW YORK STATE

SENATE AND SENATORS SAMPSON AND ESPADAS MOTION TO QUASH

Joseph FischNew York State Inspector General61 Broadway, Suite 2100New York, NY 10006

Of Counsel

Nelson R. Sheingold, Chief CounselPhilip Foglia, Special Deputy Inspector General


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Table of Contents

STATEMENT OF FACTS ................................................................................................. 2

ARGUMENT.................................................................................................................... 11

Point I. The Speech or Debate Clause is Inapplicable to the Senate and the SenatorsActions in the Process of Selecting the VLT Operator at Aqueduct. ........................... 12

Point II. Senators Sampson and Espada Cannot Demonstrate That Their Testimonyand Materials in Their Possession Are Utterly Irrelevant to a Legitimate Inquiry ofthe Inspector General. ................................................................................................... 24

CONCLUSION................................................................................................................. 29


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PRELIMINARY STATEMENT

The New York State Inspector General submits this memorandum in opposition

to the motion brought by the New York State Senate and Senators John L. Sampson and

Pedro Espada, Jr. to quash subpoenas served upon them by the Office of the State

Inspector General on March 9, 2010 in connection with the Inspector Generals

investigation of the selection of an entity to operate the Video Lottery Terminal (VLT)

facility at Aqueduct racetrack. (Thompson Aff. 3-5, Exs. A-C). In addition to

testimony, the subpoenas to the individual senators seek:

1. materials regarding the solicitation for proposals, memoranda ofunderstanding, responses and supplemental responses;

2. documentation, in any format, regarding evaluation of proposalssubmitted by any entities or individuals;

3. e-mails, internal memoranda, or any other records ordocumentation related to proposals to operate a video lotteryterminal facility at Aqueduct racetrack;

4. calendar notations, telephone logs, or any other recordsdocumenting meetings or communications regarding proposals tooperate a video lottery terminal facility at Aqueduct racetrack; and

5. lists of any campaign contributions received from individuals orprincipals of any entities or groups associated with any entitiessubmitting proposals to operate a video lottery terminal facility atAqueduct racetrack.

In their motion, the Senate and individual Senators do not separately address each

of the Inspector Generals demands; rather, petitioners broadly claim that they are wholly

immune from providing any materials or evidence in their possession relevant to the

Inspector Generals investigation. Distilled to its essence, the Senate and individual

Senators maintain, solely based upon their official status, that they are exempt from

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providing relevant and material evidence to the Inspector General. The Senate and

Senators claims are based upon a fundamental misunderstanding of the scope of

legislative immunity conferred upon them by the Speech or Debate Clause of the New

York State Constitution. This misapprehension of the scope of that immunity is

intertwined with and compounded by a misunderstanding of the factual and legal

prerequisites for issuance of an investigative subpoena by a public body such as the

Office of the Inspector General. Under the appropriate application of the Speech or

Debate Clause and the actual standard for assessing the validity of administrative

subpoenas, the senators, as any other citizen of New York State possessing information

relevant to a legitimate and proper investigation, must comply with lawfully issued

subpoenas.

STATEMENT OF FACTS

Background

The history surrounding the establishment of a video lottery terminal (VLT)

facility at Aqueduct is long and tortured. Since 1955, the New York State Legislature has

awarded to the New York Racing Association (NYRA) the exclusive franchise to conduct

racing and pari-mutuel betting at Belmont Park, Aqueduct, and Saratoga racetracks.

These franchise rights include authorization for the granting of a license to operate VLTs

at Aqueduct Racetrack.1 In 2003, NYRA reached an agreement with the MGM-Mirage

1 In its ruling that VLTs are lotteries permitted under the state constitution, the Court of Appealsexplained: The video lottery is played using video lottery terminals, which are each connected to a centralsystem through the use of site controllers-computers that connect several VLTs both to each other and to

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group to install 4,500 VLTs at Aqueduct. Subsequent delays, including those caused by

NYRAs ultimately dismissed indictment, led to the abandonment of the project by

MGM-Mirage in 2007. NYRAs franchise was scheduled to expire on December 31,

2007, unless further extended by the legislature.

On February 28, 2007, Governor Eliot Spitzer formed the Franchise Review Panel

to solicit and review new bids for the management of the thoroughbred racetracks and

associated VLTs, and four bidding entities sought to obtain the franchise. In early 2008,

NYRA, then in bankruptcy, reiterated its claim of ownership of the land upon which the

three thoroughbred racetracks had been built, thus raising an enormous obstacle and

creating a potentially lengthy delay of the to-be-awarded franchise. In February 2008, an

agreement was reached with the State wherein NYRA would surrender its claim of title to

the three racetracks, vesting clear ownership to New York State, in exchange for receipt

of a new 25-year racing franchise plus a $105 million advance from the State to allow

NYRA to remove itself from bankruptcy. This $105 million was to be repaid from

revenue derived from the VLTs that were previously authorized for Aqueduct. The

settlement awarded NYRA the rights to operate thoroughbred horseracing at Belmont

Park, Aqueduct and Saratoga, with the intention that the State would grant a separate

franchise to operate VLTs at Aqueduct.

the central system. In the most common form of video lottery gaming, participants at individual VLTs playagainst each other by purchasing electronic instant tickets from a finite pool. In order to play, individualsplace cash or other currency into the VLT to purchase an electronic instant ticket. The player thendetermines the game identifier and the price of the electronic ticket to be purchased. The VLT receivesthe next ticket from the site controller and displays the predetermined outcome-win or loss. If the playerwins, the VLT will print an electronically encoded instrument which can be used to play additional videolottery games or can be redeemed for value. Dalton v. Pataki, 5 N.Y.3d 243, 265 (2005).

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The Enactment of Chapter 18 of the Laws of 2008 (Tax Law 1612(e)) and

the 2008 Selection of Delaware North

On February 19, 2008, Governor Spitzer signed into law Chapter 18 of the Laws

of 2008 which, among other things, pertained to the selection of a VLT operator at

Aqueduct. Codified in relevant part in Tax Law 1612(e), the statute provides: The

video lottery gaming operator selected to operate a video lottery terminal facility at

Aqueduct will be subject to a memorandum of understanding between the governor,

temporary president of the senate and the speaker of the assembly.2

On October 10, 2008, Governor David A. Paterson announced the selection of

Delaware North to operate the Aqueduct gaming venue. Delaware North originally

pledged the State $370 million by March 31, 2009, the end of the States fiscal year. The

State and Delaware North never reached a final agreement and, in the midst of the

recession, Delaware North became unable to meet the upcoming March 31 deadline.

Unable to reach an agreement regarding a time frame for payment, on March 10, 2009,

Governor Paterson rejected Delaware Norths proposal, opting instead to restart the

bidding process.3

On April 16, 2009, pursuant to Tax Law 1612(e), a new solicitation and

proposed memorandum of understanding were made available to potential

operators. (Foglia Aff. 8, Exs. A & B). In relevant part, the solicitation

provides that the vendor chosen to operate the VLTs at Aqueduct will be

2 At the time of enactment, these three office holders were Governor Spitzer, Assembly Speaker SheldonSilver and Temporary President Joseph Bruno. At the time of the selection of AEG, only Speaker Silverstill retained his role.3 See State ends deal with Delaware North for casino,Buffalo News, March 11, 2009; Deal for videoslots at NY Aqueduct falls through,Assoc. Press, March 11, 2009.

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selected by the Governor and the Legislative leaders and that the Executive

and Legislative parties . . . making a selection will review any proposed changes

to the ultimate finalized memorandum of understanding with the vendor. Further,

the solicitation states that [t]he State may arrange private presentations by certain

(or all) potential Vendors with representatives of the Executive Branch and the

Legislature, and State agencies as soon as practicable after submission of these

proposals. (Id. 9, Exs. A & B).

The solicitation further states that the state Division of the Lottery (Lottery) will

conduct a pre-qualification review of all potential Vendors in order to determine if

Lotterys standards, contained in regulations promulgated under its statutory authority,

for issuing a lottery license are met, and that this review will concentrate on the skills,

experience and financial resources each entity proposes to employ at the Aqueduct VLT

facility, as well as the reputation of each entity and individual for honesty and integrity.

(Id. 10). Lotterys role notwithstanding, the solicitation specified: The Vendor

selected will be chosen by the unanimous agreement of the Governor, Senate Majority

leader4

and Speaker of the Assembly [who] will enter into the MOU [memorandum of

understanding] promptly thereafter. (Id. 11).

Contemporaneous with the publication of this solicitation, a proposed

memorandum of understanding (MOU) was made available to potential vendors. In

accordance with the solicitation, the MOU provides for three state officials, the

4 Notably, the solicitation requires the agreement of the Senate Majority Leader, currently Senator Espada,in opposition to Tax Law 1612(e) which requires the agreement of the Temporary Speaker, currentlySenator Smith. As discussed below, despite his undeniable involvement in the process, Senator Sampsonwas afforded no official role in the process either by statute or the terms of the solicitation or the MOU.

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Governor, the Assembly Speaker, and the Temporary President of the Senate to select the

operator effective upon their signatures on the finalized MOU. (Id. 12)

The Selection of Aqueduct Entertainment Group (AEG)

On January 29, 2010, Governor Paterson announced that he and Legislative

Leaders have selected Aqueduct Entertainment Group (AEG) to operate the video lottery

terminals at Aqueduct Racetrack.5 This selection prompted immediate public outcry

regarding the legitimacy of the selection process. Initially, amongst other claims,

numerous news reports in the New York Daily News, the New York Post and the New

York Times detailed the selection of Aqueduct Entertainment Group (AEG), chosen by

Governor Paterson, Speaker Sheldon Silver and Senator John Sampson despite offering

an upfront licensing fee that was $100 million less than other bidders. (Id. 21). It was

further alleged that AEG was supported by influential senators who had caused the

Governor to flip-flop on his choice. (Id. 22-24). It further became known that

Governor Paterson had met with Reverend Floyd H. Flake, a prominent member of the

AEG group, three days after the AEG announcement, purportedly to discuss Flakes

endorsement of a candidate for Governor in the 2010 election.6

(Id. 25). Newspaper

accounts accused the Governor of acquiescing to agree to select AEG in order to garner

Flakes support.7 (Id. 26). Allegations later surfaced, buttressed by documents

publically released by the Governor, that AEG had altered its bid after all other bidders

had submitted their final offers.8 (Id. 27).

5 See Statement of Governor David A. Paterson (1/29/10) available athttp://www.state.ny.us/governor/press/press_01291002.html6 After Aqueduct Deal, Governor and Pastor Talk Politics, The New York Times, Feb. 3, 2010.7 See Bad Smells at Aqueduct,New York Daily News, Feb. 4, 2010; Wake Up, New York,New YorkPost, Feb. 7, 2010; Why So Secret, Mr. Paterson?Albany Times Union, Feb. 7, 2010.8 Feds galloping into probe of controversial Aqueduct racino deal,N.Y. Daily News, Feb. 18, 2010.

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As reflected in the release of relevant documents posted on the Governors

website,9

a host of executive agencies within the Inspector Generals jurisdiction

participated in the evaluation process including the Division of the Lottery, the Office of

General Services, the Division of the Budget, the Racing and Wagering Board and the

Empire State Development Corporation. (Id. 13-18).

Pursuant to Executive Law Article 4-A, the Inspector General is statutorily

charged with the authority to receive and investigate complaints from any source, or

upon his or her own initiative, concerning allegations of corruption, fraud, criminal

activity, conflicts of interest or abuse in any covered agency, and to review and

examine periodically the policies and procedures of covered agencies with regard to the

prevention and detection of corruption, fraud, criminal activity, conflicts of interest or

abuse. Executive Law 53(1), (5). The Governor, Lottery, the Office of General

Services, the Division of the Budget (DOB), the Racing and Wagering Board and the

Empire State Development Corporation, and their employees and officials clearly are

under the jurisdiction of the Inspector General.

In February 2010, in the wake of the aforementioned reports of possible

improprieties in the process of choosing a vendor to operate a VLT facility at Aqueduct

racetrack, actuated by the public call to review the procedure resulting in the selection of

AEG and to ensure its validity and the absence of abuse in the process, the New York

State Inspector General commenced an investigation of the executive officials and

agencies involved in the process of evaluating and selecting the VLT franchisee for

Aqueduct racetrack. (Id. 28). Additionally, shortly thereafter, by letter dated February

11, 2010, New York State Assembly Speaker Silver requested that the Inspector General

9 http://www.ny.gov/governor/press/aqueduct_vlt_bid_documents.html

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commence an investigation of the process by which the Lottery and other executive

agencies analyzed the bidders for the Aqueduct racetrack:

Serious questions have been raised regarding the selection process for an

operator of the video lottery terminal (VLT) facility at the AqueductRacetrack. Accordingly, I am respectfully requesting that the Office of theState Inspector General take the following actions:

1. Conduct a review of the process and procedures used by the NYSDivision of the Lottery and other relevant state agencies involved in theevaluation of bids and in the making of recommendations for the selectionof such operator, and determine which bidders were recommendedpursuant to such process.

2. Determine whether the Division of the Lottery and relevant state

agencies followed all applicable statutory provisions such as thosegoverning the procurement of revenue contracts under the State FinanceLaw and the procurement of a VLT operator and the development of realestate at Aqueduct in accordance with section 1612 of the Tax Law.

3. Inquire how the Division of the Lottery will assure that the conditions Iconveyed to the Governor on January 29, and restated in my February 3rdletter to him, are met.

(Id. 29).

The Inspector General proceeded to seek materials relevant to the investigation.

Pursuant to Executive Law 54(4), the Inspector General demanded materials in the

possession of agencies within his jurisdiction germane to the matter under review. (Id.

30). These agencies have fully complied with the Inspector Generals demands and have

fully cooperated in the investigation. (Id. 32). The Inspector General further sought

materials from Governor Paterson and his staff, and the Governor and his staff have

cooperated with the investigation and have been supplying requested materials. (Id.

30, 33). The Inspector General has also received materials as a result of compliance with

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subpoenas served on bidding entities and their various associates including lobbyists and

public relations professionals. (Id. 34).

By letters dated February 17, 2010, the Inspector General requested documents

pertinent to the VLT selection process from Senator Sampson, Senator Smith and

Assembly Speaker Silver. (Id. 31). Speaker Silver has fully cooperated with the

Inspector Generals investigation and the Assembly has voluntarily provided

documentation relevant to the Inspector Generals inquiry. (Id. 35). The Speaker and

Assembly staff have also voluntarily provided sworn testimony about their involvement

in the process. (Id. 36). The Inspector General did not have to issue any subpoenas to

secure this evidence from the Speaker or the Assembly. (Id.) In contrast to the

cooperation of the aforementioned executive officials, private entities, Speaker Silver,

and the Assembly, the Senate and Senators Sampson and Espada have bluntly refused to

assist in the Inspector Generals inquiry. (Id. 37).

Consistent with Tax Law 1612(e)s requirement of agreement among the three

state leaders and the MOU which calls for the signature of Senator Sampson, the

Inspector Generals investigation thus far has confirmed that members of the Senate and

senatorial staff were closely involved with members of the executive branch in the

process of evaluating and selecting a VLT vendor at Aqueduct. (Id. 41). The April

2009 solicitation advises that the selection of the VLT operator will be made by the

Governor and legislative leaders. Currently, as a product of the so-called coup in the

State Senate, Senator Smith remains Temporary President, while Senator Espada serves

as Majority Leader, and Senator Sampson holds the title Senate Majority Conference

Leader. (Id. 42). Given this disjointed, fractured state of the Senate leadership, as

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well as other evidence indicating that they possess relevant information, the Inspector

Generals subpoenas were served on all three titular heads of that body for information

germane to the investigation. (Id. 43). Additionally, although Senator Smith is the

current Temporary President of the Senate who under Tax Law 1612(e) is the sole

representative of the Senate authorized to enter into the MOU, public documents and

other evidence reveals that Senator Sampson was significantly involved for the majority

of the bidding process, and the ostensible final decision maker for the Senate in the

process. (Id. 44). Moreover, as discussed above, contrary the terms of Tax Law

1612(e), Senate Majority Leader Espadas agreement to the selection was required by the

solicitation which lead to the selection of AEG.

Furthermore, numerous emails obtained by the Inspector General from the

Governors counsels office, DOB and Lottery evince direct communications regarding

the award with Senate staffers Christopher Higgins and Bradley Fischer. These emails

included all submissions from the bidders, analyses by DOB, analyses by Lottery

including but not limited to bidders ability to be licensed. (Id. 45). Senate staff,

including Christopher Higgins and Bradley Fischer, also attended meetings with the

executive agencies and the Governors office, which included presentations of the

respective agencies analyses and presentations by the bidders. (Id. 46). Similarly,

materials obtained from lobbyists and other entities associated with the contending

bidders indicate extensive contact with Senate and Assembly staff. (Id. 47). Moreover,

the Inspector Generals investigation thus far has revealed that representatives of bidders

personally met with or were advised to further meet with Senator Sampson, various other

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senators, Counsel to the Majority Shelley Mayer, and other senate staff, regarding their

proposals for the VLT franchise at Aqueduct racetrack. (Id. 48).

Shortly after the Inspector General sent the above-mentioned letters to the senators

seeking their voluntary corporation, Counsel to the Majority Shelley Mayer informed this

affiant that the Senate would cooperate fully but quickly withdrew this offer of

cooperation and indicated that the Senate would not voluntarily comply with the

Inspector Generals requests and would be represented by outside, privately retained

counsel.. (Id. 38). On or about March 9, 2010, the Inspector General served subpoenas

on Senators Sampson and Espada and the New York State Senate. Senator Smith was

served a subpoena on or about March 12, 2010, but is represented by separate counsel

and is not a party to this petition. (Id. 39). On March 23, 2010, Senators Sampson and

Espada and the Senate commenced the instant proceeding by Order to Show Cause to

quash the Inspector Generals subpoenas. Notably, petitioners motion papers include

two documents, each is which is designated an Affirmation, but neither of which

complies with CPLR Rule 2106, which requires petitioners counsel to affirm the truth of

their contents under the penalties of perjury. Thus to the extent that the motion to quash

is based upon the existence of facts (e.g., the nature of allegedly immunized activity), the

petition has placed no sworn allegations of fact before the court.

ARGUMENT

Introduction

Although the Senate and individual senators frame their motion papers to raise

three claims, an analysis of these arguments reveals that their conclusory claims

regarding the propriety of the Inspector Generals subpoenas are dependent upon their

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assertion of legislative immunity under the New York State Constitution. This claim of

legislative immunity is misplaced and represents an effort to stretch the well-established

parameters of an immunity related to the passage of legislation to cover actions

pertaining to the securing of a lucrative state contract by a private vendor. The Senate

and Senators claims are undermined by long-established precedent and the actual rulings

of the cases upon which they superficially rely.

Point I. The Speech or Debate Clause is Inapplicable to the Senate and the

Senators Actions in the Process of Selecting the VLT Operator at Aqueduct.

In their motion, the Senate and Senators Sampson and Espada claim that their

activities related to the selection of a VLT operator at Aqueduct are absolutely immune

from scrutiny under the Speech or Debate Clause of the New York State Constitution.

The Senators attempt to shield their conduct from any review by invoking the Speech or

Debate Clause is based upon a fundamental misunderstanding of the parameters of that

protection.

The Speech or Debate Clause, Article III, 11 of the New York State

Constitution, provides: For any speech or debate in either house of the legislature, the

members shall not be questioned in any other place. This state constitutional provision

is nearly verbatim to the like-provision of the United States Constitution, Art. I, 6, 10

and the New York Court of Appeals has analyzed these state and federal constitutional

10 Art. I 6 of the United States Constitution provides: The Senators and Representatives shall receive aCompensation for their Services, to be ascertained by Law, and paid out of the Treasury of the UnitedStates. They shall in all Cases, except Treason, Felony and Breach of the Peace, be privileged from Arrestduring their Attendance at the Session of their respective Houses, and in going to and returning from thesame; and for any Speech or Debate in either House, they shall not be questioned in any other Place(emphasis added).

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clauses as co-extensive. People v. Ohrenstein, 77 N.Y.2d 38, 53-54 (1990); Maron v.

Silver, _ N.Y.2d _ , 2010 WL 605279 (2010).

Contrary to Senators Sampson and Espadas bald claims, neither the state nor

federal Speech or Debate clauses have ever been held to categorically shield individual

legislators from public scrutiny of their official actions. Indeed, to the contrary, the

Senators bloated interpretation of the Speech or Debate Clause has been expressly

rejected by the United States Supreme Court, the New York Court of Appeals and

virtually every other court that has examined the effect of this provision. Under this

precedent, it is well-settled that the scope of the immunity conferred by the Speech or

Debate Clause is limited to actions undertaken within the sphere of legitimate legislative

activity related to the passage of legislation. Tenney v. Brandhove, 341 U.S. 367, 376

(1951); see also U. S. v. Brewster, 408 U.S. 501, 515-16 (1972) (In no case has this

Court [the United States Supreme Court] ever treated the Clause as protecting all conduct

relating to the legislative process. In every case thus far before this Court, the Speech or

Debate Clause has been limited to an act which was clearly a part of the legislative

process-the due functioning of the process.); Chastain v. Sundquist, 833 F.2d 311, 314

(D.C. Cir. 1987) (The Speech or Debate Clause protects all lawmaking activities

undertaken in the House and Senate, but affords no constitutional immunity beyond its

carefully defined scope.).11

Pointedly, although the United States Supreme Court has highlighted the critical

importance of the clause when appropriately asserted in insulating the legislature from

11As early as 1880, the Supreme Court highlighted that the Speech or Debate Clause only attaches to

things generally done in a session of the House by one of its members in relation to business before it.Kilbourn v. Thompson, 103 U.S. 168, 204 (1880).

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encroachment from the other branches of government regarding the process of enacting

legislation, the Supreme Court has noted that [t]he history of the privilege is by no

means free from grave abuses by legislators and has cautioned that an overly-broad

reading of the clause would transform legislators into super-citizensimmune even from

criminal responsibility for actions taken in the course of their official business. Brewster,

408 U.S. at 516-17. Therefore, [l]egislatures may not . . . acquire power by an

unwarranted extension of privilege . . . [The United States Supreme Court] has not

hesitated to sustain the rights of private individuals when it found Congress was acting

outside its legislative role. Tenney, 341 U.S. at 376. Simply stated, the shield [of the

Speech or Debate Clause] does not extend beyond what is necessary to preserve the

integrity of the legislative process. Brewster, 408 U.S. at 517; see also United States v.

Gravel, 408 U.S. 606, 616 (1972) (It thus protects Members against prosecutions that

directly impinge upon or threaten the legislative process.). In this regard, petitioners

instant, summary claim of immunity resemble the argument directly rejected by the

United States Supreme Court: We would not think it sound or wise, simply out of an

abundance of caution to doubly insure legislative independence, to extend the privilege

beyond its intended scope, its literal language, and its history, to include all things in any

way related to the legislative process. Given such a sweeping reading, we have no doubt

that there are few activities in which a legislator engages that he would be unable

somehow to relate to the legislative process. Brewster, 408 U.S. at 516.

Accordingly, [t]he only reasonable reading of the Clause, consistent with its

history and purpose, is that it does not prohibit inquiry into activities that are casually or

incidentally related to legislative affairs but not a part of the legislative process itself.

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Id. at 528. In order to guard against the fear of abuse of the shield of the Speech or

Debate Clause, the United States Supreme Court has held that [c]laims under the Clause

going beyond what is needed to protect legislative independence are to be closely

scrutinized. Hutchinson v. Proxmire, 443 U.S. 111, 127 (1979). This analysis requires

examination of whether the acts were essential to the deliberations of the senate or part

of the deliberative process of the legislature. Id. at 130.

The United States Supreme Court and New York Court of Appeals have

recognized that individual legislators engage in many tasks beyond the legislative sphere

and when legislators stray from acts related to pending legislation, they shed the

protection of the Speech or Debate Clause:

It is well known, of course, that Members of the Congress engage in manyactivities other than the purely legislative activities protected by theSpeech or Debate Clause. These include a wide range of legitimateerrands performed for constituents, the making of appointments withGovernment agencies, assistance in securing Government contracts,preparing so-called news letters' to constituents, news releases, andspeeches delivered outside the Congress. The range of these relatedactivities has grown over the years. They are performed in part becausethey have come to be expected by constituents, and because they are ameans of developing continuing support for future elections. Althoughthese are entirely legitimate activities, they are political in nature ratherthan legislative, in the sense that term has been used by the Court in priorcases. But it has never been seriously contended that these politicalmatters, however appropriate, have the protection afforded by the Speechor Debate Clause.

U. S. v. Brewster, 408 U.S. 501, 512 (1972) (emphasis added); see also People v.

Ohrenstein, 77 N.Y.2d at 53-55; People v. Norman, 6 Misc. 3d 317 (Sup. Ct. Kings Co.

2004), affd 20 A.D.3d 125 (2d Dept 2005).

Critical to the instant matter, the Supreme Court has definitively found that only

acts generally done in the course of the process of enacting legislation [are] protected.

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Brewster, 408 U.S. at 514; see also Eastland v. United States Servicemens Fund, 421

U.S. 491, 503 (1975) (In determining whether particular activities other than literal

speech or debate fall within the legitimate legislative sphere we look to see whether the

activities took place in a session of the House by one of its members in relation to the

business before it.). The courts have further clearly stated that in order to be in

furtherance of a legitimate legislative purpose, actual legislation must be pending or

contemplated before the legislature: A promise to deliver a speech, to vote, or to solicit

other votes at some future date is not speech or debate, [nor is] a promise to introduce a

bill ... a legislative act. United States v. Helstoski, 442 U.S. 477, 490 (1979); see also U.

S. v. Williams, 644 F.2d 950, 952 (2d Cir. 1981) (The district court correctly ruled,

however, that Speech or Debate Clause protection does not extend to discussions of this

sort, which involve only the possible future performance of legislative functions.).

Concomitantly, [w]hile the Speech or Debate Clause recognizes speech, voting, and

other legislative acts as exempt from liability that might otherwise attach, it does not

privilege either Senator or aide to violate an otherwise valid criminal law in preparing for

or implementing legislative acts. Gravel, supra at 626 (emphasis added).

Despite the overly-broad arguments contained in his motion papers, Senator

Espada is acutely aware of the limitations of the Speech or Debate Clause, as the New

York Court of Appeals articulated these very same limits in litigation involving him.

Rivera v. Espada, 98 N.Y.2d 422, 428-29 (2002).

The core of the Inspector Generals investigation is the conduct of various

executive branch officials, competing vendors and others who interacted with the Senate

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in the selection process. Notably, a legislators efforts to influence the executive branch

have been expressly held to be non-legislative and thus subject to review:

But the Clause has not been extended beyond the legislative sphere. That

Senators generally perform certain acts in their official capacity asSenators does not necessarily make all such acts legislative in nature.Members of Congress are constantly in touch with the Executive Branchof the Government and with administrative agencies-they may cajole, andexhort with respect to the administration of a federal statute-but suchconduct, though generally done, is not protected legislative activity.United States v. Johnson decided at least this much. No argument ismade, nor do we think that it could be successfully contended, that theSpeech or Debate Clause reaches conduct, such as was involved in theattempt to influence the Department of Justice, that is in no wise related tothe due functioning of the legislative process.

* * *Legislative acts are not all-encompassing. The heart of the Clause isspeech or debate in either House. Insofar as the Clause is construed toreach other matters, they must be an integral part of the deliberative andcommunicative processes by which Members participate in committee andHouse proceedings with respect to the consideration and passage orrejection of proposed legislation or with respect to other matters which theConstitution places within the jurisdiction of either House . . . the courtshave extended the privilege to matters beyond pure speech or debate ineither House, but only when necessary to prevent indirect impairment ofsuch deliberations.

Gravel v. U. S., 408 U.S. 606, 624-25 (1972) (internal citations and quotation omitted).

As Senator Espada has recently explained in relation to this lawsuit, the acts under

review stem from a public procurement.12 Under the aforementioned precepts, the

function of awarding of bids is essentially an administrative or executive function not

entitled to the protection of the Speech or Debate Clause. Kamplain v. Curry County Bd.

of Comrs, 159 F.3d 1248, 1252-53 (10th

Cir. 1998) (and cases cited therein). Indeed, it

is well-settled that such determinations, which do not set broad public policy applicable

to all citizens but rather amount to ad hoc determinations or business choices, are

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administrative and not legislative. See Three Rivers Cablevision, Inc. v. Pittsburgh, 502

F. Supp. 1118 (W.D.Pa.1980); Cinevision v. City of Burbank, 745 F.2d 560, 580 (9th

Cir.1984); Franklin Building Corp. v. City of Ocean City, 946 F. Supp. 1161, 1170-72

(D.N.J. 1996); O'Brien v. City of Greers Ferry, 873 F.2d 1115, 1119 (8th Cir. 1989);13

Teleprompter of Erie, Inc. v. City of Erie, 537 F. Supp. 6, 12 (W.D.Pa. 1981); Hershell

Gill Consulting Engineers, Inc. v. Miami-Dade County, 333 F. Supp. 2d 1305 (S.D.Fla.

2004); Sunland Pub. Co. v. City of Jackson, 234 F. Supp. 2d 626 (S.D. Miss. 1999).

Specifically, such actions related to racetracks and the selection of lottery operators in

New York State, including operators of video lottery terminals, have historically been

recognized as an executive function. See, e.g., L. 1967, c. 278; L. 1973, c. 346; L. 1976,

c. 92; L. 2001, c. 383.

Based upon this ample precedent, the Senates conclusory, unsupported

declaration that [t]he selection process of the VLT vendor was unequivocally a

legislative act, by any interpretation, [Thompson Aff. 28] is astonishing as it

contradicts the actual interpretation of the numerous courts that have reviewed analogous

matters. Furthermore, this assertion contradicts the very substance of the decisions upon

which the Senate rudimentarily relies. Understandably, the only legislation mentioned in

petitioners motion papers is Tax Law 1612. This section was enacted on February 19,

2008, when then-Governor Spitzer signed into law Chapter 18 of the laws of 2008. The

matter under review by the Inspector General, the selection of a VLT operator at

Aqueduct, did not occur until nearly two years after the passage of this legislation.

Moreover, under the clear terms of Tax Law 1612(e) and the resultant solicitation and

12 3 Senators Are Subpoenaed on Aqueduct Casino Deal,New York Times March 23, 2010.

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proposed memorandum of understanding proffered by the Governor and legislative

leaders, the selection of the VLT vendor was to be fully effectuated upon the signature of

the Governor and individual legislative leaders; no further legislative action was

contemplated, much less actually engaged in.

The dubious nature of petitioners claim that the Senators actions in the process

of selecting an operator were legislative as covered by the Speech or Debate Clause is

revealed by their distortion and mischaracterization of the terms of Tax Law 1612(e).

Initially, in counsels affirmation, the Senate states that: The selection procedure was

governed by New York Tax Law 1612 which provides that [t]he video lottery gaming

operator selected to operate a video lottery terminal facility at Aqueduct will be [selected

by] the governor, temporary president of the senate and the speaker of the assembly

(brackets in original). Counsel then affirms that: Pursuant to Section 1612 [of the Tax

Law], the NYS Senate and its members were specifically charged with an obligation to

make a legislative decision as to the operator of the VLT facility. (Thompson Aff. 7,

29, 30).

This depiction of the terms of Tax Law 1612 fundamentally and significantly

distorts the contents of that provision. In actuality, 1612(e) states: The video lottery

gaming operator selected to operate a video lottery terminal facility at Aqueduct will be

subject to a memorandum of understandingbetween the governor, temporary

president of the senate and the speaker of the assembly (emphasis added).

Therefore, directly contrary to petitioners mischaracterization and expurgation, pursuant

to the statute, the Senate as a whole was allotted no role in the choice of the operator of

13 Normally, a legislative act is a formulation of policy governing future conduct for all or a class of the

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the VLT facility; rather, the statutory power to agree to the selection of an operator was

granted to one individual member of the Senate: the Temporary President. Moreover,

this choice is not subject to submission before any legislative body or subject to enacting

legislation; rather, it is to be fully and finally effectuated by the Temporary Presidents

entry into a MOU with the Governor and the Speaker.

The Senates skewed portrayal of the clear terms of the statute, solicitation, and

memorandum of understanding unwittingly reveals another fatal flaw in its claims that

the senators acts were supposedly legislative. The New York State Constitution vests

the authority to regulate lotteries in the state to the legislature as a whole. Article 1 9 of

the State Constitution provides that no lottery or the sale of lottery tickets, pool-selling,

book-making, or any other kind of gambling, except lotteries operated by the state and

the sale of lottery tickets in connection therewith as may be authorized and

prescribed by the legislature, the net proceeds of which shall be applied exclusively to

or in aid or support of education in this state as the legislature may prescribe, and except

pari-mutuel betting on horse races as may be prescribed by the legislature and from

which the state shall derive a reasonable revenue for the support of government, shall

hereafter be authorized or allowed within this state; and the legislature shall pass

appropriate laws to prevent offenses against any of the provisions of this section

(emphasis added). Similar to the United States Constitution, Article 3, 14 of the New

York State Constitution requires that all legislation must be approved by a majority of

both houses ( . . . nor shall any bill be passed or become a law, except by the assent of a

majority of the members elected to each branch of the legislature . . .). However, the

Aqueduct VLT statute, on its face and as interpreted by the solicitation and MOU, vests

citizenry.

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the selection of the operator in the individual hands of the Speaker and Temporary

President (along with the Governor) and no subsequent vote on the selection of the

operator by the entire legislature is contemplated or required.

Under the clear terms of the aforementioned provision of the New York State

Constitution, the legislature cannot delegate its legislative powers to individual members

such as the Speaker and Temporary President. New York Public Interest Research

Group, Inc. v. Carey, 86 Misc. 2d 329, 332 (Sup. Ct. Albany Co.), affd 55 A.D.2d 575

(3d Dept 1976) (From these principles it follows that the Constitutional function of

legislating which belongs exclusively to the Legislature cannot be delegated even to its

own committees or committee chairmen.); See also Bowsher v. Synar, 478 U.S. 714,

737 (1986) (Stevens, J. concur) (In short, Congress may not exercise its fundamental

power to formulate national policy by delegating that power to one of its two Houses, to a

legislative committee, or to an individual agent of the Congress such as the Speaker of

the House of Representatives, the Sergeant at Arms of the Senate, or the Director of the

Congressional Budget Office.). The New York Court of Appeals has held that if the

legislature appoints some of its individual members to perform such executive tasks,

these individual legislators have assumed a second non-legislative role which, if of

sufficient duration and import, may amount to a separate public office. People v.

Tremaine, 252 N.Y. 27 (1929). Therefore, the Senate cannot comfortably claim that its

Temporary Presidents authority to unilaterally enter into an MOU and the antecedent

process is somehow legislative without creating accompanying constitutional concerns

about the constitutionality of the entire scheme for selecting a VLT operator.14

14 Indeed, to the extent there is a separation of powers issue present, it does not flow from the InspectorGenerals examination but from this creative three men in a room format for choosing a VLT operator

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The basis of Senators Sampson and Espadas individual claims that they are

immune from review under the Speech or Debate Clause is even more puzzling. Under

the specific terms of 1612(e), only one individual member of the Senate was granted

authority to enter into the MOU: the Temporary President, who was for all times relevant,

Senator Malcolm Smith. Despite this clear statutory language, it is undisputed that

Senator Sampson was intimately involved in the selection process and that other

individual senators were engaged to varying degrees, including Senator Espada who is

named as a party who must agree to the selection according to the solicitation

notwithstanding the language of Tax Law 1612(e) which requires only the Temporary

Presidents agreement. Therefore, not only was Senator Sampsons and these other

members involvement not legislative, it was not even recognized by the relevant

statute, which afforded neither Senator Sampson nor any other Senator any formal role in

the selection. As quoted above, the United States Supreme Court has unambiguously

held that a legislators assistance in securing Government contracts is not a legislative

function protected by the Speech or Debate Clause. Brewster, 408 U.S. at 512. Simply

stated, under this statutory scheme, where no immunity attaches to actions taken by the

Temporary President in exercising a statutory administrative function in selecting an

operator, no derivative immunity can inure to the extra-statutory, gratuitous activities

which may have been undertaken by others in the Senate related to the process.

and the attendant co-mingling of executive and legislative actors in a traditionally administrative function.See People v. Tremaine, 252 N.Y. 27 (1929); Springer v. Government of Philippine Islands, 277 U.S. 189,201-02 (1928); see also I.N.S. v. Chadha, 462 U.S. 919 (1983); Bowsher v. Synar, 478 U.S. 714 (1986);Metropolitan Washington Airports Authority v. Citizens for Abatement of Aircraft Noise, Inc., 501 U.S.252 (1991); State ex rel. West Virginia Citizens Action Group v. West Virginia, 213 W.Va. 255 (2003)(summarizing cases); Greer v. State of Georgia, 233 Ga. 667 (1975); Alexander v. State of Miss. ex rel.Allain, 441 So.2d 1329 (Miss. 1983); State of N.C. ex rel. Wallace v. Bone, 304 N.C. 591 (1982); In reAdvisory Opinion to the Governor, 732 A.2d 55 (R.I. 1999); c.f. State v. A.L.I.V.E. Voluntary, 606 P.2d769 (Alaska 1980).

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Although raised in the context of an Inspector General investigation, the

pernicious consequences of adopting the Senates novel extension of the Speech or

Debate Clause cannot be ignored. It must be noted that, if deemed applicable, the Speech

or Debate Clause would not merely inhibit the Inspector Generals investigation. Rather,

once applicable, this clause would extend a grant of absolute immunity to legislative

actions and thus would necessarily result in immunizing any individual legislators and

their staff for any activities related to the selection of a VLT operator, thus precluding or

impairing not only any administrative review of their actions, but potential criminal

prosecution stemming from these activities. People v. Ohrenstein, 77 N.Y.2d 38.

Moreover, if the senators and their staff members activities in this regard are deemed

legislative acts, the same immunity would also inure to the executive officials involved.

It is well-settled that Speech or Debate immunity is applicable to government officials

in the executive branch when engaged in legislative activities, therefore the executive

branch officials (the Governor and agency officials) who contemporaneously engaged in

these same endeavors would likewise be shielded from liability and review. Humane

Society of New York v. City of New York, 188 Misc. 2d 735, 738 (Sup. Ct. New York

Co. 2001); Bogan v. Scott-Harris, 523 U.S. 44, 55 (We [the United States Supreme

Court] have recognized that officials outside the legislative branch are entitled to

legislative immunity when they perform legislative functions.). The Speech or Debate

Clause simply was not designed to immunize legislators engaging in such administrative

functions as choosing a bidder to be awarded a state procurement contract, and the

Senates invocation of these protections is perilous and unsupported in the law.15

15 Based upon these concerns about the effect of such a finding, the United States Supreme Court has beenquite sparing in its recognition of claims to absolute official immunity. Forrester v. White, 484 U.S. 219,

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Point II. Senators Sampson and Espada Cannot Demonstrate That Their Testimony

and Materials in Their Possession Are Utterly Irrelevant to a Legitimate Inquiry of

the Inspector General.

Divested of their misplaced claim to immunity under the Speech or Debate

Clause, the Senate and individual senators remaining claims regarding the propriety of

the Inspector Generals subpoenas are unavailing.

It is well-settled that in deciding a motion to quash an administrative subpoena,

the entity issuing the subpoena is entitled to great deference. 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, 332

(1988) (quoting Matter of La Belle Creole Intl., S.A. v. Attorney General of State of

N.Y., 10 N.Y.2d 192, 196 (1961)) (internal quotations and citations omitted); see also

Goldin v. Greenberg, 49 N.Y.2d 566, 572 (1980); General Electric v. Rabin, 184 A.D.2d

391, 392 (1st Dept 1992). Where there is authority, relevancy, and some basis for

inquisitorial action (Matter of AHearn v. Committee on Unlawful Practice of Law of

N.Y. County Lawyers Assn., 23 N.Y.2d 916, 918 (1969)), the issuing agency is

required only to demonstrate [its] authority to investigate and issue subpoenas, the

factual basis underlying this investigation and the relevance of the documents being

sought. Somers v. Waters, 1 A.D.3d 829, 830 (3d Dept 2003) (citations omitted).

225 (1988).

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Moreover, the issuing agency is not required to show probable cause or to disclose the

scope of the investigation. Pharmaceutical Society of State of N.Y. v. Abrams, 132

A.D.2d 129, 133 (3d Dept 1987) (citing Matter of Hynes v. Moskowitz, 44 N.Y.2d 383

(1978)).

Under this deferential standard, the Inspector General enjoys a presumption that

he is acting in good faith and must only establish that the materials sought are reasonably

related to the subject matter under investigation and to the public purpose to be achieved

(Abrams v. Thompson, 150 A.D.2d 679, 680 (2d Dept 1989)) and need only make a

preliminary showing that the information sought is reasonably related to a proper subject

of inquiry. Matter of Nicholson v. State Commn. on Jud. Conduct, 50 N.Y.2d 597,

611 (1980).

When examining whether a factual predicate exists supporting an investigation

and the issuance of subpoenas, so long as the [Inspector General], in good faith, is

investigating the conduct of a [covered entity or official], the [Office of the Inspector

General] is acting within the scope of its authority and a subpoena issued pursuant thereto

is not subject to challenge. A witness called before the [Inspector General] may not go

beyond this inquiry to avoid compliance by attacking the specific allegations upon which

the investigation is based. Nicholson, 50 N.Y.2d at 611. Under this standard,

unsurprisingly, petitioners do not and cannot contest that the Inspector General is

pursuing a legitimate and lawful investigation permitting the issuance of subpoenas.

Pursuant to Executive Law Article 4-A, the Inspector General is granted broad

authority to receive and investigate complaints from any source, or upon his or her own

initiative, concerning allegations of corruption, fraud, criminal activity, conflicts of

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interest or abuse in any covered agency. Executive Law 53(1). The Inspector General

is further vested with the duty to review and examine periodically the policies and

procedures of covered agencies with regard to the prevention and detection of corruption,

fraud, criminal activity, conflicts of interest or abuse. Executive Law 53(5). Covered

agencies are defined as all executive branch agencies, departments, divisions, officers,

boards and commissions, public authorities (other than multi-state or multi-national

authorities), and public benefit corporations, the heads of which are appointed by the

governor and which do not have their own inspector general by statute. Under this grant

of authority, the Inspector General clearly possesses jurisdiction to examine the actions of

the Governor, the Division of the Lottery, the Division of the Budget, the Office of

General Services and any other covered agencies involved in the selection process. By

omission, petitioners appear to concede that the Inspector General possesses an adequate

factual predicate justifying the investigation of the process of the selection of AEG.

The Senate and the individual senators further explicitly concede that the

Inspector General possesses the statutory authority to issue subpoenas to entities and

individuals possessing information relevant to a lawful inquiry who are not directly

themselves within the Inspector Generals jurisdiction. (Thompson Aff. 15). This

concession is necessary as it is beyond cavil that evidence can be gathered by means of

subpoena from such third parties. See, e.g., Hogan v. Cuomo, 67 A.D.3d 1144, 888

N.Y.S.2d 665, 668 n. 2 (3d Dept 2009).16 Indeed, the Inspector Generals enabling

statute codifies the Inspector Generals authority to garner evidence from non-covered

16 See also Crowley Foods, Inc. v. Lefkowitz, 75 A.D.2d 940 (3d Dept 1980); Long Island Moving &Storage Assn v. Lefkowitz, 24 A.D. 2d 452 (2d Dept 1965); Westchester County Pharmaceutical Soc.,Inc. v. Abrams, 138 A.D.2d 721 (2d Dept 1988).

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entities by providing separate mechanisms for the Inspector General to obtain records

from covered and non-covered agencies. Executive Law 54.17

Therefore, the only relevant inquiry before this Court is whether the futility of

the process to uncover anything legitimate is inevitable or obvious . . . or [if the]

information sought is utterly irrelevant to any proper inquiry. Anheuser Busch, Inc. v.

Abrams, 71 N.Y.2d 327, 332. In rendering this determination, the burden of

establishing that the requested documents and records are utterly irrelevant is on the

person being subpoenaed. Gertz v. Richards, 233 A.D.2d 366 (2d Dept 1996); Abrams

v. Thruway Food Market & Shopping Center, Inc., 147 A.D.2d 143, 148 (2d Dept

1989); Dairymens League Cooperative Assoc., Inc. v. Murtagh, 274 A.D. 591 (1st Dept

1948).

The Senate and individual senators have woefully failed to meet their burden of

demonstrating that the Inspector Generals subpoenas seek information that is utterly

irrelevant to this investigation and that inquiry of them would be futile. Beyond

stating a portion of the applicable standard (tellingly devoid of reference or mention of

the widely-cited utterly irrelevant test), nowhere in their motion papers do petitioners

deny that they possess such relevant information or that this material is germane to the

Inspector Generals inquiry. In fact, such a claim would strain credulity as the Senate

and its staff were undeniably involved in the process, actually interacted with executive

officials, vendors, lobbyists and bidders, and obviously could shed light upon the actions

that preceded the contingent selection of AEG.

17In fact, in appropriate instances administrative investigatory subpoenas may be issued on entities a priorito determine whether the recipient falls with the issuing entities statutory ambit. Miller v. Waters, 1A.D.3d 829 (3d Dept 2003).

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Petitioners confusion regarding the applicable legal standard is evinced by their

extensive reliance on Alouette Fashions v. Consolidated Edison, 119 A.D.2d 481 (1st

Dept 1986). Alouette, in pertinent part, involved a ruling that City Comptroller lacked

statutory authority to support the commencement of an inquiry surrounding a negligence

claim against the city. Here, petitioners do not and cannot credibly maintain that the

Inspector General lacks jurisdiction to investigate the VLT operator selection process,

which substantially involved various covered agencies and officials.18

Therefore, stripped of their inappropriate resort to the Speech or Debate Clause,

and bereft of any claim in law or reason that they lack reasonably relevant information,

petitioners raise no factual or legal arguments to overcome the deferential standard

afforded in reviewing the Inspector Generals subpoenas. Consequently, these subpoenas

must be enforced.

18 Petitioners further extensive reliance on Matter of Temporary State Commission v. Bergman, 80 Misc.2d 448 (Sup. Ct. New York Co. 1975) is equally misplaced. To the extent relevant or persuasive, the courtin Bergman merely found that in that matter the factual predicate was insufficient.

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CONCLUSION

For the foregoing reasons, respondent respectfully requests that the Court deny

petitioners motion to quash the Inspector Generals subpoenas, compel compliance with

such forthwith, together with such other and further relief this Court deems just and

proper.

Dated: March 29, 2010

New York, New York

Joseph FischNew York State Inspector General

________________

Nelson R. SheingoldChief Counsel

61 Broadway, Suite 2100New York, NY 10006(212) 635-3150

___________________

Philip Foglia

Special Deputy Inspector General61 Broadway, Suite 2100New York, NY 10006(212) 635-3150

aqueduct memorandum of law

Documents