Broadway Stages, Ltd. v New York State Joint Commn. on Pub. Ethics

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[*1] Broadway Stages, Ltd. v New York State Joint Commn. on Pub. Ethics 2020 NY Slip Op 20162 Decided on July 8, 2020 Supreme Court, Albany County Platkin, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and subject to revision before publication in the printed Official Reports.

Decided on July 8, 2020
Supreme Court, Albany County

Broadway Stages, Ltd., Petitioner,


New York State Joint Commission on Public Ethics, , Respondent.


Joshua L. Seifert, Esq.

Attorney for Petitioner

175 Varick Street

New York, New York 10014

Letitia James, Attorney General

Attorney for Respondent

(Christopher J. Hummel, of counsel)

The Capitol

Albany, New York 12224
Richard M. Platkin, J.

Petitioner Broadway Stages, Ltd. commenced this special proceeding, seeking: (1) a declaration that 19 NYCRR part 934 is null and void as being beyond the statutory delegation of authority granted to respondent New York State Joint Commission on Public Ethics ("JCOPE" or "Commission") and (2) an order quashing a non-judicial subpoena duces tecum issued by JCOPE to petitioner in connection with an investigation of alleged violations of Legislative Law article 1-A ("Lobbying Act"). JCOPE opposes the petition and cross-moves pursuant to CPLR 2308 (b) for an order compelling petitioner to comply with the subpoena.


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

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

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

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

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

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

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

On May 22, 2018, JCOPE voted to commence an investigation of Broadway Stages (see Logue Aff., ¶ 22). The agency served a subpoena on Broadway Stages on August 13, 2019 for records relating to potential violations of the Lobbying Act (see id., ¶ 20; see also NYSCEF Doc Nos. 15-16).[FN1] On August 19, 2019, JCOPE served an amended subpoena ("Subpoena") (see Logue Aff., ¶ 25; see also NYSCEF Doc Nos. 17-18).

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


A.Legal Framework

The Lobbying Act provides that "no [lobbyist or client of a lobbyist] shall offer or give a gift to any public official . . . unless under the circumstances it is not reasonable to infer that the [*3]gift was intended to influence such public official" (Legislative Law § 1-m). A "gift" is defined

as "anything of more than nominal value given to a public official in any form, including but not limited to money, service, loan, travel, lodging, meals, refreshments, entertainment, discount, forbearance, or promise, having monetary value" (id. § 1-c [j]).

Public Officers Law § 73 (5) restricts the receipt of gifts by state officers and employees.[FN2] Under the statute, a state official shall not solicit, accept or receive a gift, as defined in Legislative Law § 1-c, from any person prohibited by Legislative Law § 1-m from delivering the gift, unless it would be unreasonable to infer that the gift was given to influence the official (Public Officers Law § 73 [5] [b]). This restriction extends to indirect gifts made to a third party, including a charitable organization, at the official's designation or recommendation or on his or her behalf (see id. § 73 [5] [c]).

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

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

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

Finally, Executive Law § 94 empowers the Commission to investigate violations of the Lobbying Act. In furtherance of this investigatory power, JCOPE is authorized to "subpoena witnesses, compel their attendance and require the production of any books or records which it may deem relevant or material" (Executive Law § 94 [17] [c]).

B.The Parties' Contentions

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

JCOPE responds that its interpretation of the Lobbying Act's gift ban as encompassing indirect gifts is reasonable, rational and consistent with the legislative history of New York's ethics laws. "Thus, irrespective of whether the Commission lawfully adopted the Regulations, which merely provides notice of JCOPE's interpretation, the investigation and Subpoena are within JCOPE's [statutory] authority" (NYSCEF Doc No. 13 at p. 1). As to the regulations, JCOPE argues that they were promulgated in accordance with law pursuant to an express grant of statutory authority (see id. at p. 2). Finally, JCOPE maintains that the investigation into [*4]petitioner's failure to disclose the lobbying activities of its president provides an adequate and independent basis for enforcement of the Subpoena (see id. at p. 1).


An agency seeking to enforce a non-judicial subpoena must show (1) that it has the authority to issue the subpoena, (2) that the materials sought bear a reasonable relation to the subject matter under investigation and the public purpose to be served, and (3) a factual basis for the subpoena (see Myerson v Lentini Bros. Moving & Stor. Co., 33 NY2d 250, 256 [1973]; Matter of New York Temporary State Commn. on Lobbying v Crane, 49 AD3d 1066, 1067-1068 [3d Dept 2008]; New York State Joint Commn. on Pub. Ethics v Campaign for One NY, Inc., 53 Misc 3d 983, 988 [Sup Ct, Albany County 2016] [Hartman, J.]). Similarly, a party challenging a subpoena "bears the burden of demonstrating a lack of authority, relevancy or factual basis for its issuance" (Matter of Hogan v Cuomo, 67 AD3d 1144, 1145 [3d Dept 2009]).

As a preliminary matter, petitioner's challenge to the Subpoena is predicated solely on JCOPE's alleged lack of authority to investigate potential gifts to the Campaign. Petitioner makes no argument that the Subpoena fails to satisfy the remaining two requirements — relevancy and factual basis — thereby necessarily conceding those points. Further, Broadway Stages does not dispute that it is a client of a lobbyist and subject to the Lobbying Act's restrictions on gifts to public officials.

In any case involving a question of statutory interpretation, it is the duty of the Court to "discern and give effect to the Legislature's intent" (Matter of Ramroop v Flexo-Craft Print., Inc., 11 NY3d 160, 165 [2008]; see Matter of Shannon, 25 NY3d 345, 351 [2015]). "As the clearest indicator of legislative intent is the statutory text, the starting point . . . must always be the language itself, giving effect to the plain meaning thereof" (Majewski v Broadalbin-Perth Cent. School Dist., 91 NY2d 577, 583 [1998]). "Of course, where the language is ambiguous, [courts] may examine the statute's legislative history" (Matter of Shannon, 25 NY3d at 351 [internal quotation marks and citations omitted]).

Lobbyists and their clients presumptively are prohibited from giving a "gift" to a public official (Legislative Law § 1-m), and the term "gift" encompasses "anything of more than nominal value given to a public official in any form" (id. § 1-c [j] [emphasis added]). These statutory provisions evince the Legislature's intention to prohibit all forms of gift-giving by lobbyists and their clients to public officials. Further, the gift prohibition is cast in terms sufficiently broad to encompass a gift made to a public official in the form of funds (or other valuable property) being conferred upon a third party at the official's direction or recommendation. In such a case, the "gift" to the public official is the power to direct the funds or other property of a lobbyist or lobbying client to a third party of the official's choosing.

Petitioner responds by observing that the gift ban of Legislative Law § 1-m extends not only to public officials but also to their spouses and unemancipated children. From this, petitioner reasons that the Legislature could not have intended to implicitly ban third-party gifts to other persons and entities, including charitable organizations. However, the provisions of the Lobbying Act governing spouses and unemancipated children are fundamentally different from the prohibition on indirect gifts that serves as a predicate for the Subpoena.

Under Legislative Law § 1-m, the spouse and unemancipated children of a public official are treated in the same manner as the official: a gift from a lobbyist or client to the spouse or child is presumed to be improper, regardless of whether the official was aware of the gift or was involved in directing or recommending the gift. In contrast, the ban on indirect gifts focuses on the public official and his or her conduct in directing or recommending the gift (see 19 NYCRR 934.3 [e]).[FN3] In light of the foregoing, the Court is unconvinced that the Legislature's decision to [*5]ban gifts to the spouse and unemancipated children of a public official forecloses JCOPE's interpretation of the Lobbying Act as prohibiting indirect gifts to a third party undertaken at the behest of the official.

Further support for JCOPE's interpretation of the gift ban is found in the legislative history of the Lobbying Act and in other ethics laws falling within JCOPE's enforcement authority. The gift ban was enacted in 2007 as part of the Public Employees Ethics Reform Act (see L 2007, ch 14 ["PEERA"]), which substantially reformed both the Lobbying Act, governing the conduct of lobbyists and their clients, and the Public Officers Law, governing the conduct of state officials.

Both the Governor's Program Bill memorandum and the State Assembly Memorandum in Support explain that the "sweeping reforms" brought about by PEERA were intended to ensure that public officials "adhere to the highest possible ethical standards, in an effort to restore public trust and confidence in government" (NYSCEF Doc No. 21 at p. 5; see Doc No. 22 at p. 4). The memoranda state that PEERA was intended to "prohibit[] a public official from permitting a third party to receive, accept or solicit a gift from a lobbyist under circumstances where it is reasonable to infer the gift was intended to influence the official (as where an official agrees with a lobbyist's request to make a gift to charity in the official's name . . . )" (NYSCEF Doc No. 22, at pp. 3-4 [emphasis added]; see Doc No. 21 at p. 6).

In addition to strengthening the prohibition on lobbyists and lobbying clients giving gifts to public officials, PEERA added two new sections to Public Officers Law § 73 (5) to prohibit state officials from receiving such gifts. Section (b) of Public Officers Law § 73 (5) bars state officials from accepting or receiving a gift from a lobbyist or lobbying client, and section (c) expressly prohibits the receipt of indirect gifts by state officials.[FN4]

Specifically, Public Officers Law § 73 (5) (c) prohibits state officials from permitting "the solicitation, acceptance, or receipt of any gift, as defined in [Legislative Law § 1-c], from any person who is prohibited from delivering such gift pursuant to [Legislative Law § 1-m] to a third party including a charitable organization, on such official's designation or recommendation . . . ." Notably, the Public Officers Law's prohibition on the receipt of indirect gifts from lobbyists and lobbying clients is framed in terms of the Lobbying Act's definition of "gift" (see Legislative Law § 1-c [j]) and the Lobbying Act's ban on gifts to public officials (see id. § 1-m).

Moreover, even prior to PEERA, it was recognized that where a gift could not be given to a public official directly, it would be improper for the official to direct the gift to a third party. Thus, in a 1994 opinion, the former State Ethics Commission interpreted Public Officers Law § 73 (5) as banning indirect gifts made to "any other person or entity, including a charitable organization, on the State officer or employee's designation or recommendation" (Advisory Opinion No. 94-16 at p. 6). JCOPE's immediate predecessor, the former Commission on Public Integrity, reaffirmed this principle in a 2008 opinion: the gift ban cannot be circumvented by directing a gift to a third party selected or recommended by a public official (see Stamm Aff., ¶ 15; NYSCEF Doc No. 20, Part III-E).[FN5]

In adopting the challenged regulations, JCOPE read the gift provisions of the Lobbying Act and the Public Officers Law as a whole and interpreted the restrictions of Legislative Law § 1-m as prohibiting lobbyists and their clients from giving the same type of indirect gifts that Public Officers Law § 73 (5) prohibits state officials from receiving. In contrast, the alternative construction of the Lobbying Act advanced by petitioner would ascribe to the Legislature an intention to punish state officials for accepting gifts from lobbyists and lobbying clients while overruling pre-PEERA interpretations of the term "gift" so as to insulate lobbyists and their clients from the consequences of improper gift-giving.[FN6] The legislative history of PEERA shows that there are good reasons to be deeply skeptical of such a construction.

To be sure, the Legislature could have avoided any doubt about the giving of indirect gifts by including language in the Lobbying Act similar to Public Officers Law § 73 (5) (c). Nonetheless, when the pertinent statutory text is given a liberal (but reasonable) construction and read in light of the legislative history of PEERA and the manner in which JCOPE's predecessors construed similar provisions, the Court does not believe that the omission of such language evinces a clear intention on the part of the Legislature to allow a lobbyist or lobbying client to avoid the gift ban by bestowing a gift upon a third party at the behest of a public official.

The Court therefore concludes that JCOPE's interpretation of the Lobbying Act is rational, reasonable and consistent with the overarching legislative scheme concerning gift restrictions set forth in the Public Officers Law and Lobbying Act (see Matter of McCulloch v New York State Ethics Commn., 285 AD2d 236, 238-242 [3d Dept 2001]). Moreover, as the body charged by law with enforcing the gift restrictions and investigating violations thereof (see Executive Law § 94; Nassau Health Care Corp. v New York State Ethics Commn., 196 Misc 2d 867, 872-873 [Sup Ct, Nassau County 2003] [Austin, J.]), JCOPE's reasonable interpretation of the Lobbying Act should be accorded deference in any event (see Matter of Rubenfeld v New York State Ethics Commn., 43 AD3d 1195, 1199-1200 [3d Dept 2007]).

Petitioner also challenges JCOPE's authority to promulgate 19 NYCRR 934.3 (e), the regulation banning lobbyists and their clients from making indirect gifts to public officials. As stated above, however, JCOPE permissibly interpreted the Lobbying Act's gift ban as encompassing indirect gifts, and the challenged regulation merely reflects the agency's interpretation of the relevant statutes. Accordingly, petitioner is not entitled to a judgment declaring 19 NYCRR 934.3 to be ultra vires.[FN7]

For essentially the same reason, the Court rejects petitioner's contention that the Subpoena should be quashed because JCOPE lacks authority to investigate conduct that would only constitute a violation of its regulations. In any event, the provision relied upon by petitioner (see Executive Law § 94 [17] [a]) does not restrict JCOPE's authority to investigate potential regulatory violations.[FN8]


Accordingly, it is

ORDERED that petitioner's application to quash the subpoena is denied, and respondent's cross motion to compel compliance with the subpoena is granted; and it is further

ADJUDGED and DECLARED that respondent did not exceed its authority in promulgating 19 NYCRR 934.3, to the extent challenged herein; and it is further

ORDERED that petitioner shall comply with the subpoena within thirty (30) days from being served with notice of entry of this Decision, Order & Judgment; and finally it is

ADJUDGED that the petition is dismissed.

This constitutes the Decision, Order & Judgment of the Court, the original of which is being uploaded to NYSCEF for entry by the Albany County Clerk. Upon such entry, counsel for respondent shall promptly serve notice of entry on all parties entitled to such notice (see Uniform Rules for Trial Cts [22 NYCRR] § 202.5-b [h] [1], [2]).

Dated: July 8, 2020

Albany, New York



A.J.S.C. Footnotes

Footnote 1:JCOPE agreed to stay service of the subpoena until certain of petitioner's threshold objections to the investigation were resolved (see Logue Aff., ¶ 23).

Footnote 2: As the statute applies only to state officials, it is not directly implicated by JCOPE's investigation into donations made to the Campaign allegedly at the direction of Mayor de Blasio.

Footnote 3:This distinction is most evident in the language of the regulation providing that a lobbyist or client cannot circumvent the prohibition on direct gifts to the spouse or child of a public official by bestowing gifts on a third party at the direction of the spouse or child (see id.).

Footnote 4: Given the Legislature's recognition that a lobbyist or lobbying client's gift to a third party at the behest of a public official has the same untoward effects as a direct gift, the Court necessarily rejects petitioner's assertion that such a gift constitutes "beneficent behavior that has no connection to the conduct the Legislature sought to censure in the first place" (Petition, ¶ 3). "In other words, if, under the circumstances, it would not be unreasonable to infer that a gift is offered with an intent to influence a public official, the intent to influence is just as problematic if the gift is made instead to a third party at the request of the official" (Stamm Aff., ¶ 26).

Footnote 5: Indeed, it has long been recognized that the law does not permit one to do indirectly that which cannot be done directly (see People ex rel. Burby v Howland, 155 NY 270, 280 [1898]). To hold otherwise would leave the law "at the mercy of ingenious efforts to circumvent its objects and to defeat its commands" (id. at 281).

Footnote 6:Consistent with longstanding home-rule principles, PEERA does not regulate the conduct of local government officials in relation to the receipt of gifts from lobbyists and their clients.

Footnote 7: In any event, "an agency can adopt regulations that go beyond the text of legislation, provided they are not inconsistent with the statutory language or its underlying purposes" (Matter of LeadingAge NY, Inc. v Shah, 153 AD3d 10, 16 [3d Dept 2017] [internal quotation marks and citation omitted], affd 32 NY3d 249 [2018]). Moreover, JCOPE's enabling legislation expressly authorizes it to adopt rules in relation to the gift ban (see Executive Law § 94 [17] [a]).

Footnote 8: As argued by JCOPE, there also is an independent, alternative basis for issuance of the Subpoena. Specifically, JCOPE alleges that petitioner failed to disclose the lobbying activities of its president (see Logue Aff., ¶ 21; Stamm Aff., ¶ 3) and that her activities may have required petitioner to register and report as a lobbyist under Legislative Law §§ 1-e and 1-h (see Logue Aff., ¶¶ 13-14). In this regard, Executive Law § 94 authorizes JCOPE to investigate violations of the Lobbying Act, including failure to register as a lobbyist, "and to issue subpoenas in furtherance of its investigation" (Campaign for One NY, 53 Misc 3d at 990; see also Matter of O'Connor v Ginsberg, 106 AD3d 1207, 1209-1210 [3d Dept 2013], lv denied 21 NY3d 864 [2013]; Crane, 49 AD3d at 1067-1068). Further, the law does not prohibit a subpoena from being issued or sustained on an alternative, independent ground (see e.g. People v Salinas, 48 Misc 3d 791, 807-808 [Sup Ct, Bronx County 2015]).

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