Opinion
June 7, 1991
Arthur S. Friedman for Chowdhury Azam, respondent.
Ronald M. Kleinberg for Church Avenue Pharmacy Corp., Inc., respondent.
Robert Abrams, Attorney-General (Dick L. Sedefian of counsel), for petitioner.
In this criminal contempt proceeding for failure to comply with a Grand Jury subpoena, respondent Chowdhury Azam moves at the end of petitioner's case for dismissal.
The motion brings once again into focus the nature of the criminal contempt in this case. Is criminal contempt a civil proceeding, a criminal proceeding or a proceeding which is "sui generis" without any rules except those created by the courts? In particular, on a motion such as this does the court apply the criteria set forth in CPLR 4401, CPL 290.10 or does the court create its own criteria since Judiciary Law §§ 750 to 752 do not specify any standard? What is the standard for holding an individual liable for the acts of a corporation? Does the court apply the civil rule regarding liability of an individual for the omissions of a corporation, Penal Law § 20.25 as to liability of an individual for corporate conduct, or does the court create its own criteria since Judiciary Law §§ 750 to 752 contain no such standards?
Throughout this proceeding and trial the court had to determine procedural rules, discovery rules (such as whether the petitioner must disclose any written or recorded statement of witnesses in accordance with CPL 240.45 or People v Rosario [ 9 N.Y.2d 286]) and the criteria for determining the adequacy of the pleading in this case. All these issues require the application of standards, but which standards are to be applied has been the subject of much discussion and debate between the parties and the court.
The Attorney-General's position is that criminal contempt is "sui generis", and neither civil nor criminal procedures are applicable.
CPL 1.10 (1) states that the Criminal Procedure Law is applicable to criminal actions and proceedings.
A criminal action commences with the filing of an accusatory instrument (CPL 1.20). This matter was commenced by an order to show cause which is not an accusatory instrument listed under CPL (see, CPL 1.20). This proceeding is not a criminal action.
The authorization to commence criminal contempt by order to show cause does not come from any statute. Judiciary Law § 751 does not specify the form of pleading in criminal contempt. Historically, orders to show cause appear to have always been assumed to be the proper method of commencing criminal contempt.
While the proceeding is not a criminal action it may be a criminal proceeding (see, Matter of Darvin M. v Jacobs, 69 N.Y.2d 957). If it is a criminal proceeding, the Criminal Procedure Law will apply.
CPL 1.20 (18) (b) as is relevant here reads as follows: "'Criminal proceeding' means any proceeding which * * * (b) occurs in a criminal court and is related to a prospective * * * criminal action * * * or involves a criminal investigation." In the instant case, the criminal contempt proceeding is being tried in a criminal part of this court and relates to a prospective indictment for Medicare fraud. The Attorney-General is conducting a criminal investigation into potential criminal liability. While these factors would indicate that this matter is a criminal proceeding, they are not determinative (Matter of Abrams [John Anonymous], 62 N.Y.2d 183, 190-191). The court must examine the "true nature of the proceeding" and the "relief sought" (Matter of Abrams [John Anonymous], supra, at 191, 193).
In determining the "true nature" of this proceeding the court has considered the following: (a) the subpoena that was issued in this case was made pursuant to CPL 610.20 (2) which authorizes a prosecutor to issue a subpoena for attendance of any witness at a Grand Jury. The subpoena issued is not an office subpoena but a mandate of the court issued in the name of the court or as in this case in the name of the Grand Jury (People v Natal, 75 N.Y.2d 379, 384-385). It was issued under the Grand Jury's authority to investigate criminal activity (see, Virag v Hynes, 54 N.Y.2d 437). The Grand Jury under whose authority the subpoena was issued is a creature of CPL article 190 as well as the New York State Constitution; (b) historically, criminal contempt arising out of criminal matters are deemed criminal proceedings (People ex rel. New York Socy. for Preservation of Cruelty to Children v Gilmore, 88 N.Y. 626, 628; see also, People ex rel. Negus v Dwyer, 90 N.Y. 402, 407).
Cases such as Matter of Douglas v Adel ( 269 N.Y. 144), Department of Hous. Preservation Dev. v 24 W. 132 Equities ( 137 Misc.2d 459, affd, no opn 150 A.D.2d 181, appeal dismissed 74 N.Y.2d 841), and New York City Health Hosps. Corp. v Local 2507 of Dist. Council 37 of Am. Fedn. of State, County, Mun. Employees ( 139 Misc.2d 67) are not to the contrary but are supportive of this proposition. These cases hold that criminal contempt arising out of a civil action are civil special proceedings and apply the rules under CPLR. By a parity of logic criminal contempt arising out of a criminal action should apply the rules under the CPL (but see, Board of Educ. v Pisa, 54 A.D.2d 821 [holding criminal contempt in a civil action is "essentially a criminal proceeding"]; Ingraham v Maurer, 39 A.D.2d 258 [criminal contempt is a criminal proceeding even though it arises out of a civil action]).
Thus, courts have applied criminal rules to criminal contempt arising out of criminal proceedings; (c) due process accorded respondents/defendants in criminal contempt actions are those accorded a criminal defendant in a criminal proceeding and not those accorded a civil defendant in a civil action (see, Ingraham v Maurer, 39 A.D.2d 258, 259, supra; State Univ. v Denton, 35 A.D.2d 176, 180-181). Persons prosecuted for criminal contempt are entitled to appointment of counsel (Department of Hous. Preservation Dev. v Lamison, 118 Misc.2d 1013, 1014-1016), the right to cross-examine witnesses (State Univ. v Denton, supra), the right to be heard before being held in contempt (Matter of Rodriguez v Feinberg, 40 N.Y.2d 994), the right to be "present and proffer evidence" (Sassower v Finnerty, 96 A.D.2d 585, 586, lv denied sub nom. Sassower v Signorelli, 61 N.Y.2d 985), the right to trial by jury in accordance with criminal rules (Bloom v Illinois, 391 U.S. 194). The burden of proof in criminal contempt is that the petitioner must show each element beyond a reasonable doubt (People v Shapolsky, 8 A.D.2d 122, 129). Thus a respondent/defendant in criminal contempt is accorded all of the procedural safeguards of a criminal defendant (see also, 22 NYCRR 701.3); (d) nisi prius courts have applied the Penal Law defense of justification to Judiciary Law criminal contempt (People v Lennon, 115 Misc.2d 738, 742-743, contempt determination confirmed on other grounds sub nom. Matter of Balter v Regan, 97 A.D.2d 953, affd 63 N.Y.2d 630; People v Gumbs, 124 Misc.2d 564; see also, Matter of Fuhrer v Hynes, 72 A.D.2d 813; People v Joy, 133 Misc.2d 779). It is clear that the nisi prius courts found that criminal contempt is a criminal proceeding; (e) all the elements of Judiciary Law § 750 are contained in Penal Law § 215.50 (criminal contempt as a crime). The facts and the burdens of proof and all other matters are identical in Judiciary Law § 750 and Penal Law § 215.50. Thus, a prosecution pursuant to Judiciary Law § 750 may bar Penal Law prosecution under double jeopardy principles (see, People v Colombo, 31 N.Y.2d 947). The two contempts are thus identical and there appears to be no reason why the two should be treated differently (cf., People v Leone, 44 N.Y.2d 315); (f) the nature of the relief sought is incarceration. Incarceration is an extreme limitation on an individual's freedom of movement. The relief is thus more in the nature of a criminal relief than a civil relief.
Considering all the above factors, the court concludes that criminal contempt for failure to comply with a Grand Jury subpoena arising out of a criminal investigation is a criminal proceeding within the definition of CPL 1.20 (18) (b).
The court finds that the failure to preserve the investigator's notes is a violation of CPL 240.45 and People v Rosario ( 9 N.Y.2d 286, supra). The court is mandated to impose sanctions upon the petitioner (People v Wallace, 76 N.Y.2d 953). At the conclusion of the trial, the court will charge itself on missing evidence with regard to the investigator's notes (People v Kelly, 62 N.Y.2d 516, 521-522).
The Attorney-General argues that Azam's criminal liability is based upon the corporation's liability for failure to comply with this subpoena. The Attorney-General cites many Federal cases to support this proposition. In New York however, the courts are not free to create criminal liability of an individual for the failure of a corporation to comply with an order unless specifically provided by statute. Absent statutory authority the court cannot create personal liability of an individual for the acts or conduct or omission of a corporation (People v Byrne, 77 N.Y.2d 460; People v Brainard, 192 App. Div. 816, 819; People v Smith, 190 Misc. 871; People v Fleishman, 133 Misc. 288).
The Judiciary Law does not contain any provision for creating personal liability for the failure of a corporation to abide by the mandates of a court. However, the Penal Law does have a specific statute creating personal liability for the crimes committed by a corporation.
Penal Law § 5.05 (2) as is relevant, reads as follows: "Unless otherwise expressly provided, or unless the context otherwise requires, the provisions of this chapter shall govern the construction of and punishment for any offense defined outside of this chapter and committed after the effective date thereof, as well as the construction and application of any defense to a prosecution for such an offense" (emphasis supplied).
If something is an "offense" defined by a statute outside the Penal Law, Penal Law provisions will still apply.
The term "offense" is defined as follows: "'Offense' means conduct for which a sentence to a term of imprisonment or to a fine is provided by any law of this state or by any law, local law, or ordinance of a political subdivision of this state, or by any order, rule or regulation of any governmental instrumentality authorized by law to adopt the same." (Penal Law § 10.00.) Reading these provisions in conjunction, the court finds that Judiciary Law § 750 is a statute containing an "offense". Thus, the Penal Law covers various aspects of Judiciary Law criminal contempt.
Penal Law § 20.25 provides for criminal responsibility of an individual for the crimes committed by corporations. This section has been applied to non-Penal Law statutes (Alcoholic Beverage Control Law — People v Byrne, 77 N.Y.2d 460, 467, supra; People v Alrich Rest. Corp., 53 Misc.2d 574; Administrative Code of City of New York — People v Sakow, 45 N.Y.2d 131, 135; People v Durch, 140 Misc.2d 353, 356; General Business Law — People v Elmhurst Milk Cream Co., 116 Misc.2d 140, 158; People v Aquarian Age 2000, 85 Misc.2d 504, 506; and local ordinances — People v Artrol Corp., 67 Misc.2d 1087, 1092; see also, People v Matherson, 64 Misc.2d 680, 683-684). This court notes with interest that in Matter of Grand Jury Subpoena Duces Tecum (Morano's 5th Ave.) ( 144 A.D.2d 252, 256), the court adopted in a criminal contempt proceeding a standard requiring that an individual must personally participate in the willful disobedience of the corporation. This is identical with the standard under Penal Law § 20.25, although the court did not cite that section.
The court finds that the standard to be used in this proceeding is that set forth in Penal Law § 20.25.
[Portions of opinion omitted for purposes of publication.]