Matter of Empire Wine & Spirits LLC v. Colon , 43 N.Y.S.3d 542 ( 2016 )

State of New York
Supreme Court, Appellate Division
Third Judicial Department
Decided and Entered: December 1, 2016 522621
________________________________
In the Matter of EMPIRE WINE &
SPIRITS LLC,
Respondent,
v
MEMORANDUM AND ORDER
NOEL COLON, as Director of
Enforcement for the New
York State Liquor Authority,
et al.,
Appellants.
________________________________
Calendar Date: October 18, 2016
Before: Peters, P.J., Garry, Devine, Clark and Aarons, JJ.
__________
Eric T. Schneiderman, Attorney General, Albany (Fredrick A.
Brodie of counsel), for Noel Colon and others, appellants.
Whiteman Osterman & Hanna, LLP, Albany (William S. Nolan of
counsel), for respondent.
__________
Garry, J.
Appeal from an order of the Supreme Court (Connolly, J.),
entered May 22, 2015 in Albany County, which, among other things,
granted petitioner's application pursuant to CPLR 2308 to compel
certain respondents to comply with subpoenas ad testificandum.
The State Liquor Authority (hereinafter SLA) charged
petitioner, a wine retailer, with 16 counts of improper conduct
pursuant to 9 NYCRR 53.1 (n) for shipping wine to customers in
states that prohibit their residents from receiving such
shipments. In support of its defenses, petitioner issued
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subpoenas ad testificandum to obtain the testimony of several of
SLA's senior officials, including SLA's general counsel,
respondent Jacqueline Flug; SLA's director of enforcement,
respondent Noel Colon; SLA's director of public affairs,
respondent William Crowley; and SLA's deputy commissioner of
licensing, respondent Kerry O'Brien. At the administrative
hearing, Colon and O'Brien refused to testify upon the advice of
counsel for SLA, respondents Mark D. Frering and Margarita
Marisco. Counsel for SLA further stated that Crowley and Flug
would likewise refuse to testify. The Administrative Law Judge
adjourned the hearing to permit petitioner to commence
proceedings to compel compliance with the subpoenas. Petitioner
then commenced a special proceeding pursuant to CPLR 2308 (b) and
401 to compel Flug, Colon, Crowley and O'Brien to comply with
petitioner's subpoenas. Respondents joined issue and cross-moved
for an order pursuant to CPLR 2304 quashing the subpoenas.
Supreme Court granted petitioner's application and denied the
cross motion. Respondents appeal.1
Petitioner asserts that SLA has never before sought to
discipline a licensee for the conduct at issue, which is
allegedly consistent with industry standards and was acceptable
to SLA under its prior policies. According to petitioner, the
challenged subpoenas are intended to obtain information
pertaining to, among other things, SLA's past and present
policies regarding out-of-state shipping, the standards
applicable to the charges of improper conduct against petitioner
and evidence related to penalty mitigation. CPLR 2308 (b)
provides that, upon a motion to compel a respondent to comply
with a non-judicial subpoena, the court "shall order compliance"
if it determines that the subpoena was authorized. Here, it is
undisputed that petitioner was authorized by SLA's regulations to
issue the subpoenas (see 9 NYCRR 54.3 [h]; see also CPLR 2302
[a]). Respondents nevertheless contend that their motion to
quash should have been granted based upon their claims that the
1
Although all six respondents are named as appellants in
the notice of appeal, the appellants' brief was only filed on
behalf of Flug, Colon, Crowley and O'Brien (hereinafter
collectively referred to as respondents).
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information sought by the subpoenas is privileged, irrelevant,
beyond the scope of the administrative hearing, cumulative and
burdensome. We affirm, finding no abuse of Supreme Court's
discretion in the denial of respondents' cross motion (see
generally Matter of Kapon v Koch, 23 NY3d 32, 39 [2014]).
Turning first to the subpoena directed to Flug, respondents
claim that, given her role as SLA's general counsel, petitioner's
questions will necessarily elicit information protected by the
attorney-client privilege, which applies to "confidential
communication[s] made to [an] attorney for the purpose of
obtaining legal advice or services" (Matter of Comprehensive
Habilitation Servs. v Attorney Gen. of State of N.Y., 278 AD2d
557, 558 [2000] [internal quotation marks and citations omitted],
lv denied 96 NY2d 706 [2001]). However, although a subpoena
duces tecum can be vacated in advance on the basis of privilege,
a different analysis applies to a subpoena that seeks testimony
rather than documents (see Matter of Beach v Shanley, 62 NY2d
241, 248 [1984]). Where, as here, a witness has been served with
a subpoena ad testificandum, "a claim of privilege cannot be
asserted until the witness appears before the requisite tribunal
and is presented with a question that implicates protected
information" (Matter of Holmes v Winter, 22 NY3d 300, 319 [2013],
cert denied ___ US ___, ___ , 134 S Ct 2664 [2014]; see Matter of
Beach v Shanley, 62 NY2d at 248; 4-2304 Weinstein-Korn-Miller, NY
Civ Prac ¶ 2304.13). Flug is entitled to invoke the attorney-
client privilege if and when petitioner propounds questions that
implicate protected information, but we agree with Supreme Court
that she must first comply with the subpoena by appearing at the
administrative hearing. "Only in this context can an intelligent
appraisal be made as to the legitimacy of the claim of privilege"
(Matter of Pennock v Lane, 18 AD2d 1043, 1044 [1963]; see Desai v
Blue Shield of Northeastern N.Y., 128 AD2d 1021, 1022 [1987];
Ocean-Clear, Inc. v Continental Cas. Co., 94 AD2d 717, 718-719
[1983]).2
2
We reject respondents' argument that this Court should
impose a more rigorous standard due to Flug's role as SLA's
general counsel. This argument is premised upon federal and
trial court case law addressing efforts to compel the testimony
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Respondents' claims that the subpoenas seek irrelevant,
cumulative and otherwise improper information are likewise
premature. When no specific questions have yet been posed, an
objection on the basis of relevance is so speculative that
"[p]rophecy in such circumstances will step into the place that
description and analysis may occupy more safely" (Matter of Edge
Ho Holding Corp., 256 NY 374, 382 [1931]). Accordingly, "a
subpoena will be quashed 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" (Matter of New York Temporary State Commn. on Lobbying v
Crane, 49 AD3d 1066, 1067 [2008] [internal quotation marks,
brackets and citations omitted]; see Matter of Hogan v Cuomo, 67
AD3d 1144, 1146 [2009]).
Here, respondents have made no showing of utter
irrelevance, nor demonstrated that the information at issue will
be so completely outside the scope of the administrative hearing
that the subpoenas are obviously futile, particularly with regard
to petitioner's claims related to penalty mitigation and the
applicable standards. A similar analysis applies to respondents'
conjectural contention that testimony elicited from the four
officials may be cumulative to one another's testimony as well as
that already obtained from an SLA employee who testified before
the hearing was adjourned. Whether petitioner's questions
pursuant to the subpoenas will address the same subjects already
covered by previous witnesses cannot be determined until the
of opposing counsel, and addresses policy concerns not present
here (see e.g. Shelton v American Motors Corp., 805 F2d 1323,
1327 [8th Cir 1986]; Dufresne-Simmons v Wingate, Russotti &
Shapiro, LLP, 53 Misc 3d 598, 606-607 [Sup Ct, Bronx County
2016]; Q.C. v L.C., 47 Misc 3d 600, 602-603 [Sup Ct, Westchester
County 2015]; Stevens v Cahill, 50 Misc 3d 918, 922 [Sur Ct, NY
County 2015]). Notably, Flug has never acted directly as counsel
for SLA in this proceeding; instead, Frering and Marisco appear
as counsel, and petitioner has not sought to compel their
testimony. Despite her title, Flug is apparently named as one of
several senior officials potentially possessing non-privileged
information pertaining to SLA's general policies and standards.
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questions are posed. Likewise, respondents' claim that subpoenas
against senior officials may potentially become burdensome and
interfere with enforcement operations if large numbers of other
licensees begin to employ them in disciplinary proceedings is
both speculative and irrelevant to determining whether a proper
basis exists for quashing these subpoenas.
Finally, respondents claim that the true purpose of
petitioner's subpoenas is to demonstrate that SLA has engaged in
selective or discriminatory enforcement, and that such a defense
is not ordinarily developed as a direct defense in an
administrative proceeding, but should be separately submitted to
a judicial tribunal following the conclusion of the
administrative process (see Matter of 303 W. 42nd St. Corp. v
Klein, 46 NY2d 686, 693 n 5 [1979]; Matter of Bell v New York
State Liq. Auth., 48 AD2d 83, 84 [1975]). This claim is also
premature and would more properly be raised in response to
specific questions at the administrative hearing. Petitioner was
authorized to issue the challenged subpoenas; respondents did not
meet their burden to demonstrate that the subpoenas are obviously
futile or that the information sought is completely irrelevant
and immaterial. Accordingly, Supreme Court properly denied the
cross motion to quash the subpoenas (see Matter of Edge Ho
Holding Corp., 256 NY at 381; Matter of Hogan v Cuomo, 67 AD3d at
1145; Matter of New York Temporary State Commn. on Lobbying v
Crane, 49 AD3d at 1068).
Peters, P.J., Devine, Clark and Aarons, JJ., concur.
ORDERED that the order is affirmed, with costs.
ENTER:
Robert D. Mayberger
Clerk of the Court