Jurisdictional Statement — George Campbell Painting Corp. v. Reid

Supreme Court brief1968

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SUPREME COURT. U. &

In THE

OCT 2 - 1967 |

ADEN, F. DAVIS, CLERK

Supreme Court of the Buited

October Term, 1967

Nof vi 8

_Grorce CAMPBELL PaintinG Corp.,

Appellant,

against

_ Wiutiam Ren, Francis V. Mapican, Ira S. Rossins, Mem-

bers of the New York City Housing Authority, and Tie

New Yorx Crry Housine AutHority, *

Appellees.

No. .......... ie

In the Matter. of

GrorceE CAMPBELL PAINTING Cokp., |

wees Appellant,

against

Wiu1uM Rem, Francis V. Mavican, Ina S. Rosains, Mem-

bers of the New York City Housing Authority, and THE

New York Cytry Hovusine AUTHORITY,

daaalions.

JURISDICTIONAL STATEMENT

. Tuxopore M. Ruzow

R 201 East 42nd Street

New York, New York 10017 ©

Attorney for Appellant

Ausert A. BLINDER :

Harry Lipner

StreEPHEN HocHHAUSER

Of Counsel

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TABLE OF CONTENTS

PAGE

Orrnions BELow ............... dle deen skoer eve Rete - 9g

PMN ec cssensscnnnecnses Serna te Phamatanee 2

AMER PRINT sisi ieee hess ehaieoes 4

STATEMENT OF THE CASE ..cccccccccchcccsscssssssessssssesssesseeees ie i

THE SUBSTANTIAL FEDERAL QUESTION 2:.......0.0c0cce = 8

APPENDIX - : }

Opinion of Supreme Court, New York County,

MI Me sce ccsecvciencvcatereease aevuornelepmes neat - 13

Opinion of Supreme Court, New York County, -

SN he cas siscsspasesoncaccomnsonntaiomuaiescnneatione 16

. ' Opinions of the eee Division, First" De-

: Sn SNE SOAR LCRAAT eS ROC 17.

Opinion of the Court of Appeals, State of New it

PIE ccs ioscicleoreieenaateert ace aaa 18:

Opinion of the Court of Appeals, State of ‘tn

~ York, Fuld, J,, in Gardner v. Broderick ........ 20

New York Public Authorities Law §§2601-3 ....... 24

TABLE OF AUTHORITIES’

- PAGE

Cases:. fad |

Adler v. Board of Education, 342 U. 8. 485, 96 L. ed

i We ns ogo ncrvcncnarnnsrnecsarsecsonstenvorerse 10

Beilan v. Board of Education, 357 U. S. 399, 2. L. ed

2d 1414, 78 S. Ct. 1317 (1958) oo ceececeeeceeeeeeeeeeee 8,9, 11

Caristo Const. Corp: v. Rubin, 10 N. Y. 2d 538, 225

ie ee eee 10 ~

Cohen v. Hurley, 366 U. S. 117, 6 L. ed 2d 156, 81 S. .

Gardner v. Broderick, 20 N. Y:2d 227 (1967) oo... 2,11

‘Garrity v. New Jersey, 385 U. 8S. 493, 17 L. ed 2d 562, ;

87 S. Ct. 616 (1967) ...... 25 NE AR eo 9,11

Grae, In re, 282 N. Y. 428 (1940) oo.c....cccccccecesceeeeseseeees 9

Griffin v. California, 380 DT. S. 609, 14 L. ed 2d 106, |

_ Kedroff v. Saint Nicholas Cathedral, 344 U. S. 94, 97

. . Lied 120, 738. Ct. 143 (1952) .......0. 3

Keyishian v. Board of Regents, 385 U. S. 589, 17 L ed |

629, 87-S. Ct. 675 (1967) one eccccccccclecccecesecsessesseeseeees 9, 10

Kimm v. Rosenberg, 363 U. S. 405, 4 L. ed 24.1299, 80

ccc aiiecncsichceesscssecsesenm vf 9,11

Lerner v. Casey, 357 U.S. 468, 2 L. ed 2d 1423; 78 S.

ETE ee a a 8, 9,11

Malloy v. Hogan, 378 U. S. 1, 12 L. ed 2d 653, 84 8. Ct.

1489 (1966) EL 6 ST RTE RE oT 9,11 -

Nelson v. Les Angles, 362 U. 8. 1, 40. ed 2d 494, 80

iol cass sacstsusenngeovcosvaiacscneree 9,11

PAGE

Schroeder v. New York, 371 U. S. 208, 9 L. ed ad 255,

as Mee I iis AR cersnesedsmeencsvenentanseseetonine 3

Slochower v. Board of Education of N. Y., 350 U. S. _-

551, 100 L. ed 692, 76 S. Ct. 637 (1956) ................ 3, 8,11

Spevack v. Klein, 385 U. S. 511, 17 L. ed 2d 574,87

OR eet CIR cana siee gm CERIN 8, 10, 11

Zara Contracting Corp., Matter of, 45 Misc. 2d 497,

257 N. Y. S. 2d 479 (Sup. Ct. Alb. Co. 1964), aff’d

23 A. D. 2d 718, 257 N. Y. S. 2d 118 (3d Dept.

1965) .............. Telia ee AIRY Saeed NT ROTA tl Re 10

Statutes: |

New York Code of Criminal Procedure, $258 ................ 11

New York State Civil Practice Law and Rules

SE” RE Ei et alla Corn 2,5

Public Authorities Law §§2601-2 .00..0.00..0cceeee. 2, 3,4

United States Constitution hn ,

14th Amendment ......................... ssi Sh de sere RE Ae 4

IN THE

Supreme Court of the United States

_ October Term, 1967

RF s-, p

| ae a Se

re om

Grorce CaMPBELL Parntinc Corp., wee

Appellant,

agatnst : °

WuuiuM Ren, Francis v. Maniean, Ira S. Rosstns, Mem-

bers of the New York City Housing Authority, and THe

New York Crry Houstne Autuority, °

Appellees.

agin

In the Matter of © ba

Gerorce CAMPBELL PaintTiIne Corp.,

Appellant,

a gaimst

Wuuum Ren, Francis V. Manecan, Ira S. Ropsrns, Mem-

-bers of, the New York City Housing Authority, and THE

New York Cwry Housine AvutHorIty,

| . , Appellees.

JURISDICTIONAL. STATEMENT |

This jurisdictional statement covers two appeals from

the New York State Court of Appeals, both of which in-

‘volve identical questions.. Rule 15(3) Supreme Court

Rules. . ‘ .

Opinions Below

In the Appendix are reprinted the opinions in the Spe-

cial Proceeding commenced pursuant to CPLR, Article .

78, in the Supreme Court, New York County: 48 Misc. 2d

544, 765 N.Y.S. 2d 304, the Appellate Division, First Depart-

ment, 275 N.Y.S. 2d 363 (not officially reported), and the

Court of Appeals, 20 N.Y. 24 ——.

Also reprinted aré the opinions in the plenary action in

the Supreme Court, New York County, unofficially reported

in New York Law Journal, March 8,.1966, the Appéllate

Division, First Department, 26 A.D. 2d 912, 275 N.Y.S. 24

365, and the Court of Appeals, 20 N.Y. 2d ——.

In addition, there is added hereto the Court of Appeals

opinion in Gardner v. Broderick, 20 N. Y. 2d 227, decided .

- together with these cases, and on which the Court of Ap-

peals relied in its decision.”

Jurisdiction

(i) In both cases the constitutionality of a state statute,

Public Authorities Law §§2601-2 was challenged but upheld

in the state courts. They provide for automatic disqualifi-

cation from doing business with the state upon refusal to

waive, in advance, the privilege against self-incrimination.

One proceeding was brought pursuant to Article 78 of the

New York State Civil Practice Law and Rules to review

‘an official determination that resulted in a five year dis-

qualification of appellant’s eligibility to bid on. public con-

tracts as well as the cancellation of appellant’s three out-

° ° .

standing contracts. The official determination was that one

of appellant’s officers had violated the provisions of §2602

and had caused a breach of the contract provisions made

“mandatory by §2601. That proceeding was dismissed. (48

Mise. 2d 544, 265 N.Y.S. 2d 304) with leave to prosecute

a plenary action for breach of contract. ~The other case

here is the- plenary action. .

(ii) The judgment sought to be reviewed was made and

entered on July 7, 1967, by the New York State Court of

Appeals. It held that the statute was constitutional. The

‘notice of appeal was filed on September 18, 1967 in. the

Supreme Court of the State of New York, to which the

record in this case had been remitted by the Court of Ap- *

peals on July 7, 1967.

. (iii) The jurisdiction of this Court over this appeal is

-~ conferred by 28 U.S.C. §1257(2).

(iv) The cases believed to sustain this Court’s jurisdic-

tion are: Slochower v. Board of Education of N. Y;, 350

U. S. 551, 100 L. ed 692, 76 S. Ct. 637 (1956) ; Schroeder v.

New York, 371 U. S. 208, 9 L. ed 2d 255, 83 S. Ct. 279 (1962) ;

Kedroff v. Saint Nicholas Cathedral, 344 U. S. 94, 97 L.-ed

120,73 S. Ct. 143 (1952).

(v) The validity of the New York State Public Authori-

ties Law §§2601-2 is involved. The complete text is set

forth in the appendix., It is published in McKinney’s Cop-

solidated Laws of New York Annotated, Book 42, Part 2,

pp. 415-17. a shi

, 5 oe

Questions Presented —

1. Whether the 14th Amendment is offended by New

York State’s Public Authorities’ Law, §§2601-2, which re-

quire. the disqualification of a corporation from eligibility .

’ to bid on public contracts when one of its officers or direc-

tors asserts his privilege against self-incrimination. when

called before a grand jury? Saher Sing

{a) If not, does the fact that the recaicitrant. wit-

ness resigned his office and surrendered his control of

the company’s affairs prior to being called as a witness

make thé application of the statute repugnant to the

14th Amendment? . |

~ 2. Whether New York State’s statutory requirement,

‘Public Authorities Law §2601, that all public contracts’ con-

tain an agreement to waive. the privilege against self-in-

crimination, is an unconstitutional condition of doing busi-

ness with the state and its agencies t

Statement of the Case

- The appellant is a corporation engaged in the painting

contracting business. A substantial portion of its business

- consisted of work done for the State of New York, its agen-

_cies and public authorities. Since 1959, when §§2601-2 of

the Public Authorities Law went into effect, all of the con-

"” tracts with public authorities on which appellant was the

successful bidder were required to provide that-if a grand

jury conducts an investigation into its affairs, all-of its offi-

cers and directors must testify and waive their privilege _

against self-incrimination or the contracts will be cancelled,

and appellant’s name will be placed on a blacklist and it will

suffer a five-year disqualification. of eligibility * bid on

any public contracts.

In the spring of 1965, a’ sella jury was omni in vine

York County to investigate possible irregularities. in bid-

ding on public contracts. All of appellant’s officers and

directors agreed to testify and waive the privilege against

self-incrimination.. On April 13, 1965, one of appellant’s . _

former officers* refused to waive his privilege against self- -

incrimination.

’

He was not asked any questions and he did not refuse

to answer any questions. Yet, because he wouldn’t waive

his privilege in advance, andeemen was — penal-

ized.

Appellant challenged the blacklisting in the two pro-

ceedings on appeal here. In the Article 78 proceeding

appellant sought a hearing to review the disqualification. —

Appellant argued that the blacklisting was improper be-

cause, strictly construed, the statute did not apply to the

appellant because the recalcitrant. witness was not an

‘‘officer or direttor’’ at the time he refused to waive. his

privilege. This was the first case that sought to construe

the statute. If the statute was construed as inapplicable to

appellant then none of the constitutional problems would

have to have been reached. Appellees moved to dismiss the

proceeding, and Mr. Justice Tilzer granted the motion,

* The officer in question had resigned and surrendered’ his 10%

stock interest prior to being subpoenaed to testify. He did this ~

- because of the statute and in an attempt to avoid injury to the five |

other stockholders and four other officers, all but two of whom de-

rived their livelihood from appellant.

holding that appellant had-a more adequate reinedy in a

plenary action for breach of the cancelled contracts in

which .it could also have sought equitable relief (infra,

p. 15). An appeal was taken and a plenary action was

commenced for breach of contract.

In the plenary action appellant moved for a preliminary

injunction. In urging the court to construe the statute

strictly,- appellant argued that such a construction was

salutary because |

_ “ Respondents’ interpretation of the statute [that

‘a former officer could, for selfish reasons, cause a

corporation to be disqualified] would give to one per-

_ son -the right, arbitrarily, to forfeit another’s prop-

erty. This raises serious constitutional questions of

due process. It is not likely that the New York State —

+ Legislature could have intended such an unfair result,

, especially one so fraught. with constitutional prob-

lems.’’ (Appellant’s Brief to the Supreme Court, New. °

York County, in the plenary action, p. 17.)

This was how the constitutional question was first raised.

. The lower court refused to grant a preliminary injunc-

tion and also refused to dismiss the complaint. Mr. Justice

Schweitzer simply stayed the action pending the outcome

of the appeal from the dismissal from the Article 78 pro-

‘ceeding. Again the decision did not deal with the merits of

- appellant’s contentions (igfra, pp. 16-17).

~ Appeals from both lower court determinations were »

_ consolidated for argument before the Appellate Division of

the Supreme Court. Appellees lodged a cross-appeal in

_the plenary action. Appellant again argued that the court

should adopt a strict construction of the statute to avoid

the constitutional issue, but if the court construed the ©

statute as applicable to appellant, then it should refuse to

enforce it because it was repugnant to the 14th Amendment.

Thus, appellant’s -briefs in both cases contained as its first

argument:

_ Pornt I(a) The disqualification of [appellant] is

unauthorized by the Public Anthorities Law; or (b) ;

The statute is repugnant to the federal and New York

State Constitutions’’: |

The argument urged by appellant was:

‘‘No wrongdoing can be imputed to the naceetiie of .

constitutional rights. Griffin v. California, 38 U.S. 609,

14 L. ed 2d 106 (1965); Steinberg v. United States,

supra. The operative wrong here can only be argued

to be lack of candor. See separate opinion by Mr.

_ Justice Frankfurter in the Beilan, supra.and Lerner,

supra, cases at 375 U.S. 410, 2 L. ed 2d 1433. In fact,

the Court of Appeals has held that mere refusal to -

waive immunity cannot even: be deemed a refusal to be

candid. In re Grae, 282 N.Y. 428 (1940). - In any event,

petitioner has not been guilty of any lack of candor and

should ‘not be penalized’’? (Page 16 of Appellant’s

Brief to the Appellate Division in both cases.)

_ It is not clear whether the Appellate Division rejected

this argument. It. appears from its decisions (infra, p

17) that it deemed the contracts, which contained the provi-

sion required by §2601, to have estopped’ appellant from -

‘complaining.

| Further appeals, one by permission and one as of right,

- were taken to the Court of Appeals. In the interim, on

_ January 16, -1967, this Court announced its decision in

, re v. Klein, 385 U. 8. 511, 17 L. ed 2d 574, 87 8. Ct.

625. Consequently, the arguments presented by appellants.

to the Court of Appeals had an additional dimension based

on scent argument, that the Spevack case was controlling.

On July 7, 1967, the Court of ignuin affirmed the dis-

missal of both proceedings, stating: F

‘“‘We hold that: Section 2601 of the Publie Authori-

ties Law ‘is constitutional (Matter of Gardner v.

Broderick, 20 N.Y. ™ 227 [decided herewith] )’’.*

The Substantial F siden Question

The federal tuietion raised is whether the ‘assertion 2 of

the constitutional privilege against self-incrimination be-

automatic disqualification from bidding on public contracts.

‘The ruling by the New York Court of Appeals in this

‘ case departs from well imbedded precedents in this Court

that the assertion of the privilege may not, by-itself, result

ina forfeiture or penalty.

In Slochower v. Board of iktiiselien 350 U. S. 551, 100

L. ed 692, 76 S. Ct. 637 (1956) this Court held that the mete

assertion of the privilege, without more, could not result

in automatic dismissal of a public school teacher. In later

_ decisions, Betlan v. Board .of Education, 357 U. S. 399, 2

_L. ed 2d 1414, 78 S. Ct. 1317 (1958) (public school teacher),

Lerner v. Casey, 357 U. S. 468, 2 L: ed. 2d 1423, 78 8. Ct. 1311

* The opinion in Gardner v. Broderick is: reprinted’ in the ap-

Pee infra, pp. 20-23.

i‘

(1958) (subway conductor), Nelson v. Los Angeles, 362

U.S. 1, 4 L. ed 2d 494, 80 S. Ct. 527 (1960) (social workers),

S. Ct. 527 (1960) (deported alien), this Court distinguished ~

between dismissal based solely on asserting the privilege

- and dismissal where the questions which were not answered

bore upon the person’s qualifications. Thus, it was lack of

candor that justified the dismissal, and, without more, the

‘assertion of the privilege could not be equated to a lack of

candor. Until now this had also been the. view of the New

York courts. ‘In re Grae, 282 N. Y. 428 (1940). |

‘aieiaie. this Court, far from eisai from these

principles, has cast doubt on even the limited rationale in _

Beilan, Lerner,’ Nelson and Kimm. Thus, in Malloy v.

Hogan, 378 U.S. 1, 8, 12 L. ed 2d 653, 84 S. Ct. 1489 (1964),

this Court stated that the privilege meant ‘‘the right to .

remain silent * * *.and to suffer no penalty * *.* for such -

silence’’. ~

In Griffin v. California, 380 U. S.-609, 14 L. ed 2d 106, 85

S. Ct.-1229 (1965), this Court stated that anything that. -

makes the assertion of the privilege costly ‘ents down on,

= privilege’’. -

: ‘Malloy and Griffin were criminal cases, as was last

_ term’s decision in Garrity v. New Jersey, 385 U. 8. 493; 17

L. ed 2d 562,.87 S. Ct. 616'(1967) in which the privilege

against self-incrimination was held to be a right ‘‘of con-

stitutional stature whose exercise a state may not condition

by the exaction of a price’’.

- But, last term this Cont. alao declared the Feinberg

; Law unconstitutional in Keyishian v. Board of Regents, 385

U.S. 589, 17 L. ed 629, 87 S. Ct. 675 (1967), overruling

Adler v. Board of Education, 342 U. 8..485, 96 L. ed 517, 72

S. Ct. 380 (1952), which not even Slochower had suggested.

And, in Spevack v. Klein, 385 U. S. 511, 17 L. ed 2d 574, 87 |

S. Ct. 625 (1967), this Court overruled Cohen v. Hurley, 366

U. S. 117, 6 L. ed 2d 156, 81 S. Ct. 954 (1961) holding that —

even when questioned on matters relating to his qualifica-

tions, a lawyer’s refusal to answer on the basis of his privi-

lege against self-incrimination could not result i in the revo-

cation of his license to practice. .

- In spite of this trend, the New York Court of Appeals .

has in this case sanctioned the disqualification of a company __

where its former president was not even asked any ques-

tions. The disqualification was solely because he refused to

waive his a: in advance.

The statute: that the Court of: Appeals ‘apheld ¥ was ‘de-

signed for no other purpose than to make assertion of the’

privilege costly. Disqualification is automatic only when

the privilege is asserted or its waiver is refused. Indeed,

upon indictment for bribery or other corrupt praetices,

there is only discretionary refusal to accept bids. Matter

of Zara Contracting Corp., 45 Mise. 2d 497, 257 N.¥.S. 2d .

" 479 (Sup. Ct. Alb. Co. 1964), aff’d 23 A.D. 2d 718, 257

N.Y.S. 2d 118 (3d Dept. 1965); Caristo Const. Corp. vy.

Rubin, 10 N.°Y. 2d 538, 225 N.Y.S. 2d 502 (1962). There

is not even a statute making conviction of such a crime

an automatic disqualification. Automatic disqualification -

results only from asserting the privilege. |

as Moreover, since the statute deals solely with testimony

before the grand jury, it has none of the positive features

:. * il |

discussed in Beilan, Lerner, Nelson and Kimm and by the

dissenters in Spevack. Grand Jury testimony is ‘secret

under. New York’s Codé of Criminal Procedure, §258. The.

District Attorney may not disclose a witness’ testimony to

the interested government agency regardless. of how it

bears on the witness’s qualifications.

._ Not even the dissenting opinions in Spevack, Garrity,

. Keyishian, Malloy and Griffin suggest doing away with the

Slochower doctrine. Yet the Court of Appeals has done

just that. It states in Gardner v. Broderick, 20 N. Y. 2d 2217,

decided together with the instant e»se, that witnesses have

‘‘no constitutional right to remain in office when they refuse

to discuss’ with frankness and candor whether they have |

faithfully performed their duties’. By citing Gardner as

the basis of its holding in these cases, the court has equated

a refusal to sign a waiver of the privilege in advance with a

refusal to be frank and candid, even though no question

- was asked and no answer refused.

; The foregoing are substantial federal constitutional is- ~«

_ ‘sues inevitably posed by this appeal. In addition, two

ies subsidiary — also pose substantial federal ques-

tions. :

First, if the statute is pxonstitutional, can contracts

- containing its mandatory/ language nonetheless: be en-

forced? Since the Court of Appeals held the statute con-,

, Stitutional, it did not reach this issue. The Appellate

‘Division did not seem to think it had to even reach the

constitutionality of the statute because - of the existence

‘of the contracts.

‘ _ I 3 :

Second, even if the statute is not invalid for the reasons

expressed above, is it repugnant to the due process clause

insofar as it has been applied to a corporation because of

the acts of a former non-controlling officer? The Court of

Appeals held that due process was satisfied by the pro-

cedure in §2603 for discretionary feinstatement. It re-

jected appellant’s contention-that discretionary reinstate-

ment is no remedy for erroneous disqualification and is

offensive to accepted notions of due process.

Conclusion |

F or the reasons stated above, it is — that

this Court determine, that it has jurisdiction over this

appeal. | |

Respectfully submitted,

THEoporE M. Ruzow

. 201 East 42nd Street

_ New York, New York 10017

' Attorney for Appellant

Aussi A. Buixven | a

Harry Lipner “-

Of Counsel -

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