Mastro DFS Contempt Motion
Mastro DFS Contempt Motion
COUNTY OF RICHMOND
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
In the Matter of the Application of JAMES :
THOMSON, MEGHAN THOMSON, JAMES :
REYES SALAZAR, BRANDON LINKER, and : Index No. 080319/09
JAMES HART, :
: Special Election Part
Petitioners, :
: Justice Giacobbe
- against -
:
DATA AND FIELD SERVICES, INC., DAVID :
THOMAS, as the Treasurer of Debi Rose 4 City :
Council, BOARD OF ELECTIONS IN THE CITY :
OF NEW YORK, and NEW YORK STATE :
BOARD OF ELECTIONS, :
:
Respondents. :
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– and –
RALPH J. PORZIO
686 Forest Avenue
Staten Island, New York 10310
Telephone: (718) 448-4000
Facsimile: (718) 876-9302
Page
PRELIMINARY STATEMENT....................................................................................................................1
E. At The June 1 Status Conference, DFS Finally Revealed The Identities Of Its
New Board Members And Released The Two-Week-Old Kaye Report For
The First Time, But It Has Since Failed To Turn Over The Documents This
Court Ordered It To Produce To Petitioners ..................................................................14
F. The New DFS Website Belies DFS’s Counsel’s Claims That DFS Is Now
“Independent” Of The WFP And Not Offering Its Valuable Voter Database
To Its Candidate-Clients......................................................................................................17
ARGUMENT...................................................................................................................................................26
i
TABLE OF CONTENTS
(Continued)
Page
CONCLUSION...............................................................................................................................................41
ii
PRIVILEGED & CONFIDENTIAL
ATTORNEY WORK PRODUCT
DRAFT - 9/9/2010 - 1:44:57 PM
TABLE OF AUTHORITIES
Page(s)
Cases
Balkin v. Balkin,
43 A.D.3d 967, 842 N.Y.S.2d 523 (2d Dep’t 2007) ........................................................................ 26, 39
Bell v. White,
55 A.D.3d 1211, 867 N.Y.S.2d 729 (3d Dep’t 2008) .............................................................................23
Birch v. Carroll,
210 A.D.2d 119, 620 N.Y.S.2d 56 (1st Dep’t 1994)...............................................................................24
Callahan v. Carey,
12 N.Y.3d 496, 909 N.E.2d 1229 (2009) .................................................................................................28
Campanella v. Campanella,
152 A.D.2d 190, 548 N.Y.S.2d 279 (2d Dep’t 1989) .............................................................................22
Chan v. Barry,
36 A.D.3d 579, 827 N.Y.S.2d 295 (2d Dep’t 2007) ...............................................................................22
Chernow v. Chernow,
51 A.D.3d 705, 857 N.Y.S.2d 721 (2d Dep’t 2008) ...............................................................................22
iii
TABLE OF AUTHORITIES
(Continued)
Page(s)
Coppola v. Stroker,
235 A.D.2d 536, 653 N.Y.S.2d 134 (2d Dep’t 1997) .............................................................................28
Davey v. Kelly,
57 A.D.3d 230, 869 N.Y.S.2d 37 (1st Dep’t 2008).................................................................................23
Doubrovinskaya v. Dembitzer,
20 Misc. 3d 440, 858 N.Y.S.2d 874 (Sup. Ct. Kings Cnty. 2008).........................................................22
Glennon v. Mayo,
174 A.D.2d 600, 571 N.Y.S.2d 307 (2d Dep’t 1991) .............................................................................23
Gordon v. Janover,
121 A.D.2d 599, 503 N.Y.S.2d 860 (2d Dep’t 1986) .............................................................................23
Ireland v. Wilenzik,
296 A.D.2d 771, 745 N.Y.S.2d 316 (3d Dep’t 2002) .............................................................................23
Levine v. Angsten,
6 A.D.3d 340, 775 N.Y.S.2d 518 (1st Dep’t 2004).................................................................................24
iv
TABLE OF AUTHORITIES
(Continued)
Page(s)
McCormick v. Axelrod,
59 N.Y.2d 574, 453 N.E.2d 508 (1983) ...................................................................................................21
Nigro v. Nigro,
44 A.D.3d 831, 843 N.Y.S.2d 664 (2d Dep’t 2007) ...............................................................................22
Odimgbe v. Dockery,
153 Misc. 2d 584, 582 N.Y.S.2d 909 (N.Y. Civ. Ct. 1992)....................................................................24
Rubackin v. Rubackin,
62 A.D.3d 11, 875 N.Y.S.2d 90 (2d Dep’t 2009)....................................................................................24
Wolf v. Bergano,
263 A.D. 825, 31 N.Y.S.2d 309 (2d Dep’t 1941)....................................................................................22
Wolstencroft v. Sassower,
212 A.D.2d 598, 623 N.Y.S.2d 7 (2d Dep’t 1995)..................................................................................25
v
TABLE OF AUTHORITIES
(Continued)
Page(s)
Statutes
Regulations
vi
PRELIMINARY STATEMENT
This is a motion to hold Respondent Data and Field Services, Inc. (“DFS”) in contempt of
this Court’s February 23, 2010 Order (the “Order”) endorsing the parties’ settlement terms. Because
DFS is willfully violating this Court’s Order in multiple, material respects, Petitioners are now
At its core, this court-ordered settlement compelled the Working Families Party (the
“WFP”) to sever its control over DFS, the separately-incorporated for-profit campaign services
company that the WFP created to further its corrupt scheme to evade State election laws and City
campaign finance laws. The scheme worked this way: The WFP endorsed particular local
candidates, who then hired DFS to run their campaigns. In turn, DFS, the WFP’s corporate puppet,
funneled vast resources into those campaigns while grossly undercharging those candidates for
DFS’s “Cadillac” services, in order to evade State and City disclosure, contribution and expenditure
laws. In the 2009 election cycle, the scheme proved to be remarkably effective, skewing the electoral
making a mockery of our local campaign finance laws in the process. In short, the WFP’s corrupt
The Rose Campaign provided a textbook example of the WFP’s modus operandi. As a result
of this settlement, the Rose Campaign was forced to pay $13,525 more for DFS’s services—an
amount that pushed it over the legal expenditure limit for a publicly-financed campaign—including
additional amounts for key staff, get-out-the vote operations, canvassing expenses, and access to
The most important parts of this court-ordered settlement, though, are the ones designed to
protect the integrity of our local democracy and its campaign finance system going forward—
namely, the requirements imposed on DFS that it “promptly implement reforms in its corporate
1
structure and corporate governance to ensure that it adheres to proper corporate formalities and
operates independently and not under the control of the Working Families Party.” Ex. A (Order) at
¶ 4.1 These court-ordered reforms include DFS’s obligations to: (i) “effectuate the appointment of
sufficient independent directors to constitute a majority of its Board of Directors” in order “to
implement procedures, best practices and by-laws intended to ensure that DFS . . . is operated
independently and not under the control of the WFP;” (ii) “establish management, administrative,
and employment structures that are independent and not controlled by the WFP;” (iii) have “an
independent expert” approved by Petitioners or the Court “conduct an evaluation of the actual fair
market value” of DFS’s state-of-the-art voter database and then charge that amount to its candidate-
clients accessing that valuable system; and (iv) “charge its candidate-clients (or their committees) fair
market value for the actual services provided by DFS as a for-profit corporation.” Id. at ¶ 4 (a), (b),
(e) & (f). But DFS has since either failed to comply with these court-ordered obligations,
DFS has failed to comply with its court-ordered obligations in at least four material respects:
First, the DFS Board has announced its intention to violate the Order’s directive that DFS
“charge its candidate-clients (or their committees) fair market value for the actual services provided
by DFS as a for-profit corporation.” Id. at ¶ 4(e). In express contravention of that obligation, DFS
has resolved to reconstitute itself as a “taxable, nonprofit corporation” and adopted a “written policy
that it will not contract to charge a CFB-regulated campaign below DFS’s best estimate of its costs
of fulfilling its contract.” Ex. B (Report to the Governing Boards of the Working Families Party and
Data and Field Services, Inc., dated May 14, 2010 (“Kaye Report”)) at 14, 17; Ex. C (Letter from A.
Celli to R. Mastro, dated June 25, 2010) at 1 (admitting that DFS had adopted the recommendations
1 Unless otherwise stated, citations denominated as “Ex. __” refer to Exhibits to the Affirmation of Randy M.
Mastro, dated September 9, 2010 (the “Mastro Aff.”), submitted in support of this Motion.
2
in the Kaye Report); Ex. D (www.workingfamiliesparty.org/kayereport/) (stating that “[t]he WFP
also endorsed the Kaye Report recommendations pertaining solely to DFS,” including the
recommendation that “DFS will reconstitute itself as a taxable, nonprofit corporation”). A “for-
profit corporation” necessarily charges at a profit, not “cost.” Therefore, DFS’s latest gambit is just
another way to unfairly advantage WFP-backed candidates by institutionalizing its charging of them
at “cost” for field services for which a “for-profit” corporation would necessarily charge more to
generate a customary profit margin. Hence, DFS’s stated intention directly contravenes the Order’s
Second, DFS is seeking to evade its court-ordered obligations by continuing to offer its
candidate-clients its valuable voter database—once stored in a CRM software program called the
Voter Activation Network (the “VAN”)—through another CRM software program without first
retaining an independent expert to assess its fair market value and then charging that amount. See
Ex. A at ¶ 4(g). This transparent “shell game” of switching the CRM software program housing its
valuable voter database cannot relieve DFS of its court-ordered obligation to have an independent
assessment done and then charge its candidate-clients fair market value for such access.
Third, DFS has violated the Order by failing to constitute a new Board, a majority of whose
members are “independent” of the WFP, as that term is defined in the Order. Indeed, of the new
four-member DFS Board, one new director (Jeffrey Dupee) is concededly not “independent,”
having worked directly for the WFP over the past two years; and another new director (Ed Ott)
worked within the past two years for the New York City Central Labor Council, AFL-CIO, which
has contributed to the WFP, meaning he, too, does not qualify as an “independent” director under
Fourth, DFS has failed to take the steps necessary to comply with its court-ordered
3
independent of the WFP.” That much is evident from the rubber-stamp reappointment of DFS
executive staff, including Michael Boland as DFS’s Executive Director; the office space DFS
continues to share with the WFP; the myriad representations on DFS’s new website belying any
notion of “independence” from the WFP; and the recent public admissions by a former employee,
paid by DFS but hired by the WFP, that he left his job disillusioned after being “encouraged by
higher-ups to falsify signatures and addresses on petitions supporting the left-wing party’s push to
repeal a state law that took rent regulation out of the city’s hands and gave it to the state.” Ex. E
(Sally Goldenberg, Working ‘Sham’-ilies, N.Y. Post, July 12, 2010). In other words, it is business as
As a result of this contumacious conduct, the WFP and DFS have denied all New York
voters—on whose behalf Petitioners have prosecuted this special proceeding—the protections
needed to prevent the WFP from corrupting future election cycles in this systematic way. Moreover,
there has been a willful contempt of this Court’s Order. And for that, the offending party must be
held accountable. The WFP and its corporate arm, DFS, obviously haven’t learned from their
mistakes. They have shown no remorse or contrition—only defiance of this Court’s Order. With a
new state election cycle looming this Fall, we should never forget what the WFP did last year, and
never let it happen again. Contempt sanctions are the only way to compel the WFP and DFS to
comply with their legal obligations. We therefore urge this Court immediately to impose severe
2 That the WFP has reportedly escaped federal indictment is irrelevant to the sanction warranted for the misconduct
here. Indeed, the WFP’s problems are far from over, as even it admitted in its recent press release on this subject.
See Ex. F (WFP Statement, released on August 20, 2010) (“Of course, the NYC Campaign Finance Board, as part of
the post-election audit process of campaigns that participate in the public campaign finance system, is auditing the
campaigns that contracted for services with Data & Field Services in 2009.”).
4
Accordingly, Petitioners respectfully request that this Court issue an order: (1) holding
Respondent DFS in contempt of this Court’s Order, pursuant to Judiciary Law §§ 753(A)(3), 756
and 773, and imposing compounding monetary fines on DFS for each day of non-compliance, and
awarding Petitioners their costs and fees in prosecuting this special proceeding; (2) alternatively,
imposing sanctions on DFS for violating this Court’s Order, pursuant to N.Y. Comp. Codes R. &
Regs. tit. 22, § 130-1.1(c)(2); and (3) compelling DFS immediately to comply with all of its
obligations under this Court’s Order and, in the event DFS continues to fail to comply, taking the
steps necessary to coerce DFS’s compliance, including, if necessary, ordering the imprisonment of a
DFS corporate officer pursuant to Judiciary Law § 753(A). In the interim, the Court should require
DFS to make document disclosures, pursuant to CPLR § 408, concerning its alleged compliance
with the Order and, if necessary, then hold an evidentiary hearing to resolve this contempt motion.3
STATEMENT OF FACTS
On October 23, 2009, Petitioners James Thomson, Meghan Thomson, James Reyes Salazar,
Brandon Linker and James Hart (collectively, “Petitioners”)—all registered Staten Island voters—
commenced this special proceeding against Respondents DFS and Debi Rose 4 City Council (the
“Rose Campaign”) (collectively, “Respondents”) to require the Rose Campaign to amend its public
filings under the State Election Law to make complete and accurate disclosure of the actual fair
market value of the full services it was receiving from DFS as the field services arm of the WFP and
to rebate any such amounts to DFS. The gravamen of the pleading was that the WFP endorsed
3 Petitioners also request that this Court order DFS to comply with the Court’s June 1 directive to produce copies of
its new by-laws, new standard form contracts, and the DFS Board’s resolution adopting the recommendations
contained in the Kaye Report or, alternatively, make those documents already submitted to the Court ex parte a
matter of public record.
5
Rose’s candidacy and then funneled vast amounts of free in-kind services to the Rose Campaign
through DFS, in violation of local law contribution and expenditure limits imposed on campaigns
accepting public financing. See N.Y. City Admin. Code §§ 3-703(1)(f), 3-703(6). The Rose
Campaign, in turn, never reported those in-kind contributions in its required state and local public
filings, in violation of the State Election Law (as well as local law). See N.Y. Elec. Law § 14-104(1);
To skirt local campaign finance laws, the WFP employed this same scheme in local races
throughout New York City in 2009, unfairly advantaging WFP-backed candidates and skewing the
level playing field those laws seek to ensure. As a result, WFP-backed candidate won surprising
victories in several local and citywide races. But the WFP’s scheme did not go unnoticed: As even
the WFP recently acknowledged, the New York City Campaign Finance Board currently “is auditing
the campaigns that contracted for services with Data & Field Services in 2009.” Ex. F.
Since the beginning of this special proceeding, DFS has repeatedly violated this Court’s
orders. See Mastro Aff. at ¶ 3. On October 26, 2009, three days after Petitioners commenced this
special proceeding, this Court first ordered DFS to produce documents in an amended order to
show cause (the “OTSC”). See Ex. G (Order to Show Cause, dated Oct. 26, 2009). The OTSC
required Respondents including DFS to produce all relevant documents outlined there to the Court
by 12:00 p.m. on October 29, 2009, yet DFS appealed to the Appellate Division, Second
Department, literally at the court-ordered deadline, and convinced a single Justice of the Appellate
Division to block DFS’s discovery obligations. See Ex. H (Affidavit of Attorney Alexander Rabb in
Support of Application for Review of Ex-Parte Order by Respondent Data and Field Services, Inc.,
6
The following day, on October 30, 2009, the parties appeared before this Court for a hearing
on the merits of Petitioners’ claims. At that time, this Court again ordered discovery, after which it
would conduct an evidentiary hearing on Petitioners’ application. When DFS again sought to evade
its discovery obligations and failed to make full disclosure, this Court rejected its objections and
ordered DFS to produce all relevant, non-privileged documents in response to Petitioners’ revised
DFS again refused to produce any documents on November 12, attempting to justify its
outright disobedience of this Court’s second discovery order by claiming that Respondents’ filing of
a joint motion to dismiss the Verified Petition and other related motions on the day discovery was
Following extensive briefing of Respondents’ motions, this Court denied DFS’s motion to
dismiss and ordered DFS to produce its responsive documents “forthwith.” This was now the third
time the Court had ordered DFS to make its required disclosures. Id. at ¶ 6.
Then, on December 23, 2009, nearly two months after the date DFS was first ordered to
produce documents, Respondents jointly made a sparse production totaling barely 1,000 pages. At
the time, Respondents misrepresented to Petitioners and this Court that the production included all
responsive documents in their possession, custody or control. Id. at ¶ 7. That proved to be a bald-
faced lie.
Petitioners repeatedly requested that DFS rectify the obvious deficiencies in its production
and even served trial subpoenas on individual DFS and WFP officials to try to obtain them. But it
was not until January 14, 2010—the second day of trial when several DFS witnesses were literally
about to take the witness stand to testify—that DFS’s counsel finally handed Petitioners’ counsel
approximately 1,000 more pages of additional responsive documents. Id. at ¶ 8. DFS’s counsel’s
7
misrepresented to the Court at the time that “99%” of those documents were exact copies of
already-provided documents. That proved to be another bald-faced lie: upon review, more than
80% of those documents turned out to be newly produced. Ex. I (01/14/2010 Trial Tr.) at 155:1.
In the face of these repeated misrepresentations and inexcusable delays on DFS’s part, this
Court decided that same day that it would have to adjourn the evidentiary hearing and force DFS
first to make full disclosure. The Court denounced DFS’s misconduct in no uncertain terms:
The discovery process in this case has been outrageous to date. It’s
been outrageous. We started this back in the fall sometime, and I
have issued orders directing document production, directing
discovery, and they haven’t been complied with. They just
haven’t. . . . I am tired of the noncompliance with the discovery. I’m
fed up with it and it’s going to end.
Id. at 155:5–155:20.
The Court then ordered Respondents to “meet with [their] clients, get their files, go through
those files and produce what has to be produced in time so that when we come back we’ll be able to
go forward without more delays,” setting a February 5, 2010 deadline as Respondents’ last chance
to complete their document production. Id. at 156:6–156:9. The Court warned DFS’s counsel to
Id. at 155:21–156:2.
On February 5, 2010, DFS produced more than 100,000 pages of previously unproduced
documents that were clearly required under the Court’s prior discovery orders, including a raft of
“smoking gun” e-mails, many of which plainly demonstrated the manipulation of expenses, the
intentional decision to withhold charges for certain personnel and services, and, most importantly,
the intentional attempt to mislead the New York City Campaign Finance Board (the “CFB”) during
8
the critical period prior to the primary election when questioned about the scope of services
provided by DFS to the Rose Campaign. Because of the sweeping scope of this new production—
and its damning contents—it was obvious that DFS’s prior discovery derelictions had been willful
and intended to cover up its own misconduct. Indeed, even this massive document dump seemed
designed for the same purpose—to try to bury its misdeeds in a mountain of paper and
Sanctions on Respondent[] DFS . . . [and] to Compel DFS to Disclose Metadata and Non-Privileged
It was only at that point that DFS, facing imminent sanctions and certain defeat at trial, felt
compelled to settle.
Just before oral argument on Petitioners’ Motion for Sanctions and the recommencement of
trial, on February 23, 2010, the parties executed—and the Court so-ordered—the Stipulation of
Settlement and Order resolving this special proceeding (the “Order”). Mastro Aff. at ¶ 9. The
Order required, inter alia, that DFS “promptly”—defined elsewhere in that same documents as
meaning within 30 days4—“implement reforms in its corporate structure and corporate governance
to ensure that it adheres to proper corporate formalities and operates independently and not under
the control of the Working Families Party,” “including” but not limited to “the following”:5
4 The Order required the Rose Campaign to amend its public financial disclosure reports “promptly,” but “in any
event within 30 days of the date of entry of” the Order. Ex. A at ¶ 2. Thus, the parties to the Order clearly
intended the term “promptly,” as used elsewhere in the Order, to mean “within 30 days of the date of entry of” the
Order. Id.
5 DFS was also required to implement other specific reforms, which are not detailed here because they are not at
issue in this application. See id. at ¶ 4(c), (d).
9
“DFS shall effectuate the appointment of sufficient independent directors to constitute a
majority of its Board of Directors. They shall have a mandate to implement procedures,
best practices and by-laws intended to ensure that DFS is operated in a manner that
complies with all applicable state and local campaign finance laws, and is operated
independently and not under the control of the WFP;” Ex. A at ¶ 4(a).
“DFS shall establish management, administrative, and employment structures that are
independent of and not controlled by the WFP,” and “cause its payroll system, finance
assure that they are independent of and not controlled by the WFP;” Id. at ¶ 4(b).
“DFS shall change its standard contract with candidate-clients or their committees to
provide express terms identifying,” among other things, the quantity and quality of the
services to be provided, the employee(s) providing those services, and, for canvassing
contracts, “the number of canvassing shifts that DFS agrees to provide;” Id. at ¶ 4(e).
“DFS shall charge its candidate-clients (or their committees) fair market value for the
“DFS shall not provide access to the VAN to its candidate-clients or their committees
unless it shall first have caused an independent expert,” approved by Petitioners or the
Court, “to conduct an evaluation of the actual fair market value of the VAN to its
candidate-clients (or their committees) for whom or which DFS provides services,” and,
thereafter, “charge its candidate-clients and their committees the amount determined by
the independent expert to be the actual fair market value of the VAN.” Id. at ¶ 4(g).
10
D. DFS Has Resisted Petitioners’ Efforts To Confirm DFS’s Compliance With
Its Obligations Under The Order
On March 10, 2010, Petitioners sent a letter to DFS reminding it of its obligation to comply
with all provisions in the Order and “‘promptly implement’ all of these reforms by no later than
March 25, 2010.” Ex. J (Letter from R. Mastro to L. Mandelker & A. Rabb, dated Mar. 10, 2010) at
1–2. On March 16, 2010, DFS replied that it had complied with its obligation to issue a
“supplemental invoice for $8,525 to Debi Rose 4 City Council,” that “the search for and vetting (for
compliance with the Stipulation) of potential independent directors, law firms and certified public
accountancy firms is well under way, as is review of DFS’ practices and procedures,” and that DFS
would not offer any of its services to its candidate-clients—including access to the VAN—unless it
had first complied with the requirements of the Order. Ex. K (Letter from L. Mandelker to R.
Mastro, dated Mar. 16, 2010) at 1. However, DFS claimed that it was not required to meet any of its
On March 22, 2010, Petitioners wrote to DFS again, warning that Petitioners would not
accept DFS’s “delays” in “implementing these reforms,” DFS did so “at its own peril, and
[Petitioners] will not hesitate to return to court, if necessary,” to ensure compliance. Ex. L (First
In that same letter, Petitioners also requested a copy of the invoice DFS issued to the Rose
Campaign pursuant to its obligations under the Order, and that DFS keep Petitioners apprised of its
progress in implementing the required reforms. See id. The same day, DFS’s counsel responded by
refusing to share a copy of the invoice that DFS claimed to have issued to the Rose Campaign in
compliance with the Order. See Ex. M (Letter from L. Mandelker to R. Mastro, dated Mar. 22, 2010)
at 1. The only reason DFS’s counsel proffered for this refusal was that “[t]he stipulation does not
require your clients to review, approve or even receive a copy of the invoice,” and “I am reluctant to
11
Petitioners replied that same day that “it would be a gesture of good faith on your part to
provide the invoice confirming your client’s compliance.” Ex. N (Second Letter from R. Mastro to
L. Mandelker, dated Mar. 22, 2010) at 1. The following day, DFS’s counsel once again refused to
provide any copy of the invoice to Petitioners. Ex. O (Letter from L. Mandelker to R. Mastro, dated
On April 6, 2010, DFS’s counsel wrote to Petitioners purporting to confirm “that DFS is in
compliance with the Stipulation of Settlement and Order” but directly addressing only a few of
DFS’s obligations. Ex. P (Letter from A. Celli to R. Mastro, dated Apr. 6, 2010) at 1. Specifically,
DFS’s counsel claimed that: (a) “DFS has constituted a Board of Directors with a majority of
members who are ‘independent,’ as defined in paragraph 4(a) of the Stipulation”; (b) DFS has
“identified a certified public accounting firm and is in the final stages of formalizing the engagement
of that firm”; and (c) “DFS issued a supplemental invoice in the sum of $8,525 to” the Rose
Campaign. Id. While the letter did not expressly address the status of the new by-laws, it did
indicate that, “[w]ith respect to the other obligations set forth in the Stipulation—such as the
requirements to review and, if necessary, change structure, policies, practices, and procedures—DFS
staff has begun these reviews in earnest and will work with the Board and this firm to complete the
review and implement any necessary changes.” Id. DFS’s counsel further claimed that “a new
standard contract for DFS is currently in draft, and it awaits review, comment and adoption by the
Board and senior staff,” and that “DFS will not provide access to the VAN until and unless an
independent expert has conducted an evaluation of its fair market value, as required by paragraph
4(g).” Id.
On April 9, 2010, Petitioners’ counsel once again tried in vain to learn the specifics of DFS’s
purported compliance with its obligations under the Order. Specifically, Petitioners’ counsel wrote
to DFS’s counsel requesting that DFS “identify DFS’s newly-appointed Board members (and who,
12
among them, is supposedly ‘independent’),” and, “when [DFS] purports to be in compliance with its
other obligations under this court-ordered decree, . . . to apprise us—and the Court—of the
particulars of its purported compliance.” Ex. Q (Letter from R. Mastro to A. Celli, dated Apr. 9,
On May 6, 2010, Petitioners’ counsel, having received no response from DFS’s counsel, was
compelled to write to this Court seeking a status conference with all parties to determine whether
Respondents had complied with all of their obligations under the Order. See Ex. R (Letter from R.
Mastro to Hon. Anthony I. Giacobbe, dated May 6, 2010) at 1–2. In that letter, Petitioners’ counsel
briefly informed the Court of DFS’s refusal to provide Petitioners’ counsel with even the basic
information necessary to confirm compliance with the Order, including the names of the allegedly
“independent” Board members constituting a majority of the newly appointed DFS Board. See id. at
1. Petitioners’ counsel also informed the Court that, although DFS’s counsel had claimed on April 6
that “DFS ha[d already] constituted a Board of Directors with a majority of members who are
‘independent.’” Ex. P at 1. In that letter, Petitioners’ counsel advised that he was recently contacted
by an individual who said he had been “approached” about becoming a new DFS Board member.
This fact—combined with DFS’s refusal to provide the names of the allegedly “independent” DFS
Board members—cast doubt on DFS’s assertion in its earlier April 6, 2010 letter that DFS had
constituted an “independent” Board and was otherwise complying with the Order. Ex. R at 1.
On May 7, 2010, DFS wrote to the Court in response to Petitioners’ May 6 letter and
confirmed DFS’s refusal to cooperate with Petitioners’ reasonable requests for confirmation of
DFS’s compliance with the Order. See Ex. S (Letter from A. Celli to Hon. Anthony I. Giacobbe,
dated May 7, 2010) at 1–2. DFS’s counsel stated simply that DFS would not provide the names of
the allegedly “independent” Board members and other basic details needed to confirm DFS’s
compliance because “DFS is . . . not required to provide Petitioners with any of the information
13
[Petitioners] request,” and that any information DFS provided to Petitioners in its April 6 letter was
only “provided as a courtesy from incoming counsel.” Id. at 1–2. To try to explain why Petitioners’
counsel had been contacted by a prospective “independent” Board member after DFS claimed to
have constituted its Board, DFS’s counsel claimed only that DFS “sought additional board members
after April 6, 2010,” even though a majority of “independent” directors had already been appointed.
Id. at 1.
In response to this letter exchange, the Court then held a status conference on June 1, 2010.
E. At The June 1 Status Conference, DFS Finally Revealed The Identities Of Its
New Board Members And Released The Two-Week-Old Kaye Report For
The First Time, But It Has Since Failed To Turn Over The Documents This
Court Ordered It To Produce To Petitioners
Only when it had to appear before this Court did DFS disclose for the first time the names
of its four newly appointed Board members—Ed Ott, Frances Fox Piven, James Pope and Jeffrey
Dupee—and laid out why, in its view, the first three of those members were “independent” within
the meaning of the Order. See Mastro Aff. at ¶ 28. (DFS’s counsel admitted that Jeffrey Dupree, a
paid computer programming consultant to the WFP, is not “independent,” but then erroneously
claimed that Ott, a recent top official with the New York City Central Labor Council, a past WFP
contributor, is. Id.) DFS’s counsel revealed that this new Board had met three times, adopted new
DFS by-laws, approved new DFS standard form contracts, and passed a resolution adopting the
recommendations contained in the Kaye Report—a review commissioned by the WFP and
conducted by former New York Court of Appeals Chief Judge Judith Kaye. That report was dated
May 14, 2010, see Ex. B, but not publicly released until more than two weeks later when the parties
appeared before this Court at the June 1 status conference. See Mastro Aff. at ¶ 14.
When Petitioners then asked DFS’s counsel to turn over certain confirming documents, he
declined, causing this Court to direct DFS to produce the requested documents to the Court and
14
Petitioners’ counsel. See id. at ¶ 39. DFS’s counsel eventually produced these documents to the
During the conference, DFS’s counsel also detailed certain of the Kaye Report’s
recommendations that had been adopted by the DFS Board, see id. at ¶ 15, some of which clearly
conflict with DFS’s obligations under the Order. Specifically, DFS’s counsel confirmed that the
DFS Board adopted the Kaye Report’s recommendation that DFS reconstitute itself as a “taxable,
nonprofit corporation” and adopt a “written policy that it will not contract to charge a CFB-
regulated campaign below DFS’s best estimate of its costs of fulfilling its contract.” Ex. B at ¶¶ 1,
2(c); see also Ex. C (Letter from A. Celli to R. Mastro, dated June 25, 2010) at 1. The Kaye Report
reasoned that the DFS Board “might conclude that the nonprofit form is more consonant with
DFS’s goals and operations,” Ex. B at 14, despite the fact that the Order clearly requires that, going
forward, DFS “charge its candidate-clients (or their committees) fair market value for the actual
services provided by DFS as a for-profit corporation.” Ex. A at ¶ 4(e) (emphasis added). Thus, this
policy recommendation adopted by the DFS Board now purports to make it acceptable for DFS to
charge candidate-clients only enough to recoup its “costs” when contracting with “CFB-regulated
6 At the time of that submission to the Court, DFS’s counsel had to admit in a cover letter, dated June 18, 2010, that
he earlier misspoke when he claimed the new DFS Board had approved new DFS by-laws. See Ex. NN at 2. In
fact, a different board not constituted in conformity with the court-ordered settlement adopted the new DFS by-
laws, and only after that was the new DFS Board constituted. See id.
7 In this regard, the Kaye Report effectively confirmed that Petitioners were right all along when they originally
alleged in their pleading that DFS had been undercharging its candidate-clients and the WFP had been subsidizing
DFS’s operating shortfall. As the Kaye Report found: “Although organized as a for-profit corporation, DFS
acknowledges that it generally did not observe corporate formalities.” Ex. B at 8. Instead, “DFS generally has
operated as an arm or division of WFP,” and the financial staff it shared with the WFP made “periodic
reconciliations” between the respective accounts of WFP and DFS. Id. at 6, 8, 22. Obviously, those
“reconciliations” were necessary to enable the WFP to cover DFS’s operating shortfalls.
15
Also during that conference, DFS attempted—but failed—to substantiate DFS’s compliance
with the Order’s mandate that DFS “establish management, administrative, and employment
structures that are independent of the WFP.” Ex. A at ¶ 4(a)–(b). DFS disclosed only one step
Michael Boland as its Executive Director. In truth, this was a re-appointment: Boland—a former
WFP employee—was also serving as the Executive Director of DFS when it was undercharging
WFP-backed campaigns. See Ex. EE (Edward-Isaac Dovere, “Who Took Over WFO Operations?”
City Hall News (Nov. 29, 2009)) (“Mike Boland, who identified himself as the director of Data &
Field Services”). Moreover, although DFS claimed to have taken minor symbolic steps to establish
its independence from the WFP—such as the establishment of a separate website, telephone
number, and letterhead—DFS’s counsel acknowledged that DFS continued to work out of the
WFP’s office in Brooklyn. Indeed, the Kaye Report even found that DFS continues to share
employees with the WFP. Ex. B at 20. In other words, it is business as usual at DFS—same
executive staff, and same shared office space and employees with the WFP. Id. at 22 (“DFS
operates out of the same office space in Brooklyn housing the WFP.”)
Finally, DFS’s counsel sought to assure the Court and Petitioners that DFS would not offer
its candidate-clients access to the Voter Activation Network (the “VAN”), Mastro Aff. at ¶ 17—
which necessarily includes its valuable voter database stored there—without first complying with its
obligation to “cause an independent expert to conduct an evaluation of the actual fair market value
of the VAN” and thereafter “charge its candidate-clients and their committees the amount
determined by the independent expert to be the actual fair market value of the VAN.” Ex. A at ¶
4(g). DFS’s counsel went further: he advised that DFS was not even planning to make its
state-of-the-art voter tracking system available to its candidate-clients. Mastro Aff. at ¶ 17. He
made no mention at that time, however, that DFS was intending to try to circumvent the Court’s
16
Order in this regard by moving its valuable voter database into a different but comparable software
system.
F. The New DFS Website Belies DFS’s Counsel’s Claims That DFS Is Now
“Independent” Of The WFP And Not Offering Its Valuable Voter Database
To Its Candidate-Clients
DFS’s new website contains striking evidence of DFS’s failure to comply with its obligations
For example, during the June 1 conference, DFS’s counsel informed the Court and
Petitioners in no uncertain terms that DFS is not licensing the VAN—including its valuable voter
database—to any of its candidate-clients and has no plans to do so in the future. Mastro Aff. at ¶
17; see also Ex. B at 13 (stating that DFS “currently has no plans to provide clients access to the
VAN”). Yet DFS’s new website includes “CRM database management and administration” among
continuing to offer its valuable voter database through some form of CRM software package, of
which the VAN is but one type. See, e.g., Ex. W (Ned Madden, “Voter Relationship Management:
The Constituent Is the Customer,” CRM Buyer (Mar. 31, 2008)) at 3–4, 5; Ex. X (A. Ross email to E.
Jenkins, dated Dec. 3, 2009) (confirming that the VAN is one type of CRM software package).
management.” Ex. W at 2. It is simply a software system that displays data regarding customers—
or, in this case, constituents—in an organized and accessible manner. See id. The heart of that
system, though, remains DFS’s valuable voter database, meticulously collected and updated at
enormous expense. See Ex. Y (Affirmation of Martin E. Connor, dated March 9, 2010) at ¶ 8
(“Indeed, the VAN was particularly valuable in the case of the Rose Campaign because it already
contained within its data base the results of extensive voter canvassing and, in particular, canvassing
in Rose's district during her special election campaign, identifying thousands of voters pre-screened
17
and as likely voter targets for her. DFS’s failure to charge fair market value for VAN access
constituted another five-figure in-kind contribution to the Rose Campaign.”); Ex. Z (Supplemental
Affidavit of Jake Menges, dated March 9, 2010) at ¶ 7 (“In my expert opinion, DFS should have
charged the Rose Campaign at least $10,000 or more for VAN access” and that “DFS claimed to
have typically charged City Council campaigns $500.00 for early access and $1,000.00 for access to
the VAN, sums far below the actual value of the VAN.”). Thus, DFS is using the ruse of a new
software system housing this valuable voter database to try to evade having to charge its candidate-
clients fair market value for this package, as the court-ordered settlement clearly requires.
DFS’s new website also confirms that DFS remains very much under the control of the
WFP, and is anything but independent of the WFP. In addition to sharing the same offices at 2
office space in Brooklyn housing the WFP.”), DFS and the WFP use identical language on their
websites to describe the employees they seek and the benefits they offer. Compare Ex. II
Ex. B at 20 (confirming DFS and WFP share employees). The “Jobs” pages of DFS’s new website
and the WFP’s website mirror each other: they both recruit “dedicated, progressive individuals, who
share our passion for economic justice to work on exciting campaigns for universal health care,
green energy, and progressive taxation and to elect strong progressive candidates” and “fighting for
justice for working people,” and offer prospective employees “Full Health Benefits, Paid vacation /
Sick Days, Full Training Provided, [and] Work in a Friendly, Inspiring setting fighting for justice for
working people.” Compare Ex. II, with Ex. JJ. If DFS were truly independent of the WFP and truly
intended to work for non-WFP-backed campaigns, as they claimed they might at the June 1
18
conference, DFS would not be seeking the exact same employees as the WFP and would not already
know that these employees will work for candidate who share the exact same positions as the WFP.
A former DFS employee recently went public, exposing DFS’s continuing involvement in
the WFP’s corrupt schemes. That former DFS employee “was so disturbed by the [party’s] practices
that he walked out after only one week on the job.” Ex. E (Sally Goldenberg, “Working ‘Sham’-
ilies,” N.Y. Post (July 12, 2010)). Although he applied for a job with—and believed he had been
hired by—the WFP, he later learned that he was working for and would be paid by DFS. Id. The
former employee reported that he became disillusioned after being “encouraged by higher-ups to
falsify signatures and addresses on petitions supporting the left-wing party’s push to repeal a state
law that took rent regulation out of the city’s hands and gave it to the state.” Id.
Since the June 1 conference, DFS’s counsel has refused to provide Petitioners with copies of
any of the documents this Court directed DFS to produce, insisting Petitioners first have to consent
to an onerous and unnecessary protective order to hold them in strict confidence. See Ex. OO
(DFS’s Proposed Stipulation and Protective Order); see also Ex. NN (Letter from A. Celli to Hon.
Anthony I. Giacobbe, dated June 18, 2010) at 1–2. In blanket fashion, DFS’s counsel simply
characterized these few documents as “confidential and proprietary [in] nature,” Ex. NN at 1, even
though DFS touted the substance of what they supposedly say. E.g., Ex. C (Letter from A. Celli to
R. Mastro, dated June 25, 2010) at 1 (“As we explained during the Court conference on June 1,
2010, the Board passed a resolution on May 26, 2010 adopting all of the recommendations of the
Kaye Report.”); id. (further disclosing “that the Board adopted the resolution creating a ‘written
policy that it will not contract to charge a CFB-regulated campaign below DFS’s best estimate of its
19
DFS’s June 18 letter also revealed for the first time that DFS established a separate “initial
‘organizing’ board” whose members “served on a short term basis to enact the by-laws and
commence new operations under the Stipulation.” Ex. NN at 2. At the June 1 conference, DFS’s
counsel made no mention whatsoever of this “initial ‘organizing’ board.” And its composition
remains a mystery to this day. Instead, DFS’s counsel simply stated that DFS had now appointed a
new Board with a majority of “independent” members, the new Board had met three times, and new
by-laws and the Kaye Report’ recommendations had been adopted, misleading the Court and
Petitioners into believing that the new DFS Board had adopted them when, in fact, that was done by
a separate, yet-to-be-revealed “initial ‘organizing board.’” Id.; see also Ex. MM (E-mail from E. Saylor
Finally, in response to Petitioners’ counsel’s June 18 letter, DFS’s counsel confirmed that the
newly constituted DFS Board adopted the Kaye Report’s recommendation that DFS reconstitute
itself as a “taxable, nonprofit corporation” and adopt a “written policy that it will not contract to
charge a CFB-regulated campaign below DFS’s best estimate of its costs of fulfilling its contract.”
Ex. B at ¶¶ 1, 2(c); see also Ex. C (Letter from A. Celli to R. Mastro, dated June 25, 2010) at 1. DFS’s
counsel tried to rationalize the adoption of this policy by claiming “costs are the floor” of what DFS
will charge its candidate-clients. In other words, DFS’s counsel has now admitted that, at least in
some cases, DFS will charge its clients only enough to cover its costs, without charging any profit
margin, as a “for-profit corporation” necessarily would and the court-ordered settlement requires
Petitioners have the right to seek to enforce the Order, and this Court has the inherent and
express authority to entertain such an application, including by the Order’s express terms. See Ex. A
at ¶ 9 (“This Court shall retain jurisdiction over this special proceeding to oversee, implement and
20
enforce the terms of this stipulation and order, and to render any further decisions required
hereunder.”); see also Cambridge Assocs. v. Town of N. Salem, 228 A.D.2d 537, 539, 644 N.Y.S.2d 775,
776 (2d Dep’t 1996) (where, as here, such language appears in the order incorporating a settlement
agreement, “the Supreme Court retain[s] jurisdiction over the matter.”); Matter of Fontana D’Oro
Foods, Inc., 122 Misc. 2d 1091, 1093, 472 N.Y.S.2d 528, 530 (Sup. Ct. Richmond Cnty. 1983) (same).
The New York Judiciary Law expressly provides for this Court to enter contempt orders and
to sanction parties for their “disobedience.” Under that New York law:
Judiciary Law § 753(A)(3) (emphasis added). In addition, an application for contempt may be made
by motion. See id. § 756 (“An application to punish for a contempt punishable civilly may be
commenced by notice of motion returnable before the court or judge authorized to punish for the
offense . . . .”).
McCormick v. Axelrod, 59 N.Y.2d 574, 583, 453 N.E.2d 508, 512–13 (1983) (internal citations
omitted). A “so-ordered” stipulation constitutes a “lawful order of the court.” See HCE Assocs. v.
21
3000 Watermill Lane Realty Corp., 173 A.D.2d 774, 775, 570 N.Y.S.2d 642, 643 (2d Dep’t 1991)
(affirming relief granted, which “was to compel [defendant] to comply with a stipulation made in
open court”); Various Tenants of 446-448 W. 167th St. v. N.Y.C. Dep’t of Housing, 153 Misc. 2d 221, 588
N.Y.S.2d 840 (1st Dep’t 1992) (per curiam) (affirming the order adjudging respondent in civil
contempt for violating a so-ordered stipulation); Wolf v. Bergano, 263 A.D. 825, 825, 31 N.Y.S.2d 309,
310 (2d Dep’t 1941) (holding that plaintiff’s motion for contempt should have been granted for
defendants’ “failure to comply with a judgment in favor of the plaintiff, entered upon a stipulation
a “binding, independent contract between the parties which must be strictly enforced.” Chernow v.
Chernow, 51 A.D.3d 705, 706, 857 N.Y.S.2d 721, 722 (2d Dep’t 2008). “Such stipulations are
governed by general contract principles.” Chan v. Barry, 36 A.D.3d 579, 579, 827 N.Y.S.2d 295, 296
(2d Dep’t 2007); see also Doubrovinskaya v. Dembitzer, 20 Misc. 3d 440, 443, 858 N.Y.S.2d 874, 877
(Sup. Ct. Kings Cnty. 2008) (“A stipulation of settlement is a contract, enforceable according to its
terms.”). The “strict enforcement of settlement agreements” is favored because it “not only serves
the interest of efficient dispute resolution but is also essential to the management of court calendars
and integrity of the litigation process.” IDT Corp. v. Tyco Group, 13 N.Y.3d 209, 213–14, 918 N.E.2d
913, 916 (2009) (internal brackets omitted); see also Nigro v. Nigro, 44 A.D.3d 831, 831, 843 N.Y.S.2d
664, 665 (2d Dep’t 2007) (“This is all the more so in the case of ‘open court’ stipulations within
Of note, in holding a party in contempt, “the court need not find willful or intentional
conduct on the part of the contemnor. Nor is the court required to find that the contemnor
benefited from his act of disobedience.” Campanella v. Campanella, 152 A.D.2d 190, 194, 548
N.Y.S.2d 279, 281 (2d Dep’t 1989). Indeed, “the mere act of disobedience, regardless of its motive,
22
is sufficient to sustain a finding of civil contempt if such disobedience defeats, impairs, impedes or
prejudices the rights of a party.” Gordon v. Janover, 121 A.D.2d 599, 600, 503 N.Y.S.2d 860, 862 (2d
With respect to the remedy to be imposed for DFS’s contempt, the Court may require the
offending party to make the aggrieved party whole for any “actual loss or injury.” Judiciary Law §
773; see also Gordon, 121 A.D.2d at 600, 503 N.Y.S.2d at 862 (“The court may, in an action to punish
for civil contempt . . . impose upon the offending party the other party’s reasonable costs and
expenses, including attorney’s fees.”); accord Glennon v. Mayo, 174 A.D.2d 600, 601, 571 N.Y.S.2d 307,
308–09 (2d Dep’t 1991); Davey v. Kelly, 57 A.D.3d 230, 230, 869 N.Y.S.2d 37, 38 (1st Dep’t 2008)
(affirming award of counsel fees and costs as remedy for contempt); Diorio v. City of Peekskill Common
Council, 13 A.D.3d 523, 523, 787 N.Y.S.2d 72, 73 (2d Dep’t 2004) (holding that, even where an
offending party’s belated compliance with an order was agreed to by the movant-petitioner, the trial
court still should have awarded petitioner “the amount of the petitioner’s attorney’s fee incurred on
the motion to hold the respondent in civil contempt, including the reasonable attorney’s fee incurred
in pursuing this appeal”). Even “[w]here it is not shown that such an actual loss or injury has been
caused, a fine may be imposed, not exceeding the amount of the complainant’s costs and expenses,
and two hundred and fifty dollars in addition thereto, and must be collected and paid, in like
manner. A corporation may be fined as prescribed in this section.” Judiciary Law § 773.
Furthermore, the Court may fashion a remedy sufficient to coerce the offending party to
cure itself of its contempt. Under Judiciary Law § 753(A), this includes both the imposition of
compounding monetary fines on a daily basis, see, e.g., Bell v. White, 55 A.D.3d 1211, 1214, 867
N.Y.S.2d 729, 732 (3d Dep’t 2008) (affirming order that “plaintiff [] pay defendants $100 per day for
every day of delay or failure to comply with [the court’s] current order”); Ireland v. Wilenzik, 296
A.D.2d 771, 773, 745 N.Y.S.2d 316, 318 (3d Dep’t 2002) (leaving undisturbed Supreme Court’s
23
order that contemnor “pay an additional $250 per day until the sanctions were paid”); Matter of Marc
Rich & Co., A.G., 707 F.2d 663, 670 (2d Cir. 1983) (holding, with respect to civil contempt, that “the
coercive fine of $50,000 per day did not constitute an abuse of the district court’s discretion”), as
well as an order of imprisonment of the contemnor. See, e.g., Rubackin v. Rubackin, 62 A.D.3d 11, 16,
875 N.Y.S.2d 90, 93 (2d Dep’t 2009) (holding that “imprisonment for civil contempt is ordered
where the defendant has refused to do an affirmative act required by the provisions of an order
which, either in form or substance, was mandating in its character. Imprisonment in such cases is
not inflicted as a punishment, but is intended to be remedial by coercing the defendant to do what
he had refused to do. The decree in such cases is that the defendant stand committed unless and
until he performs the affirmative act required by the court’s order.”); Odimgbe v. Dockery, 153 Misc. 2d
584, 588, 582 N.Y.S.2d 909, 913 (N.Y. Civ. Ct. 1992) (holding that “sanctions for civil contempt can
include indefinite imprisonment until the contemnor complies with the order” and ordering 20-day
This Court may also simply impose sanctions on DFS for violating its Order, pursuant to
New York’s general sanctions rule. See N.Y. Comp. Codes R. & Regs. tit. 22, § 130-1.1(c)(2) & (3)
(permitting the imposition of sanctions for “frivolous” conduct, meaning conduct “undertaken
primarily to delay or prolong the resolution of the litigation, or to harass or maliciously injure
another” or the “assert[ion of] material factual statements that are false”); Levine v. Angsten, 6 A.D.3d
340, 340, 775 N.Y.S.2d 518, 518 (1st Dep’t 2004) (affirming order imposing a $50-per-day sanction
One type of frivolous conduct is the violation of a settlement agreement or the disobedience
of a court order. See, e.g., Birch v. Carroll, 210 A.D.2d 119, 120, 620 N.Y.S.2d 56, 57 (1st Dep’t 1994)
(affirming award of “costs to the plaintiff pursuant to 22 NYCRR part 130” because the defendants’
24
conduct “resulted in substantial expense to the plaintiff and delay in the parties’ performance under
the settlement agreement”); Clifton Country Rd. Assocs. v. Vinciguerra, 225 A.D.2d 932, 933, 639
N.Y.S.2d 175, 176 (3d Dep’t 1996) (holding that, even absent a finding of civil contempt, “costs,
including reasonable counsel fees, may be imposed where, as here, a party engages in conduct that ‘is
undertaken primarily to delay or prolong the resolution of the litigation, or to harass or maliciously
injure another’”) (quoting N.Y. Comp. Codes R. & Regs. tit. 22, § 130-1.1(c)(2)); see also Then ex rel.
Then v. N.Y.C. Transit Auth., 22 Misc. 3d 1129(A), 881 N.Y.S.2d 367, 2009 WL 565085, at *2 (Sup.
Ct. Queens Cnty. Mar. 4, 2009) (imposing sanctions, including “for the costs of the motion for
In any event, this Court also has the authority to grant Petitioners’ motion to compel DFS to
comply with the Order. See Camelot of Staten Island, Inc. v. Metro. Mgmt., LLC, 56 A.D.3d 505, 506,
867 N.Y.S.2d 208, 209–10 (2d Dep’t 2008); see also Pappas v. Hooda Realty, Inc., 277 A.D.2d 437, 438,
715 N.Y.S.2d 906, 906 (2d Dep’t 2000) (affirming with costs order which “granted the plaintiffs’
Sassower, 212 A.D.2d 598, 598, 623 N.Y.S.2d 7, 8 (2d Dep’t 1995) (affirming order which “granted
the plaintiff’s motion to compel her compliance with a stipulation of settlement and imposed
sanctions,” as well as separate order which “held her in contempt based on its finding that she had
contract, must be read as a whole, with every part interpreted with reference to the whole so as to
give effect to its general purpose.” Camelot of Staten Island, 56 A.D.3d at 505, 867 N.Y.S.2d at 209.
25
D. Application To Compel DFS To Disclose Documents
Under New York law, where, as here, a “so-ordered” stipulation so provides, the court
retains its supervisory power over the proceeding. See Teitelbaum Holdings, Ltd. v. Gold, 48 N.Y.2d 51,
56, 421 N.Y.S.2d 556, 558-59, 396 N.E.2d 1029, 1031 (1979). The Court’s powers in this regard
include the powers (i) to hold an evidentiary hearing (see 288/98 W. End Tenants Corp. v. Mosesson, 144
A.D.2d 305, 305, 534 N.Y.S.2d 178, 178 (1st Dep’t 1988)), and (ii) to compel disclosure. See SMD
Capital Group LLC v. EPR Capital LLC, 45 A.D.3d 314, 314-15, 846 N.Y.S.2d 89, 90 (1st Dep’t
2007).
Indeed, even where a “so-ordered” settlement agreement does not explicitly contemplate
such disclosure, a court in its supervisory role may order a party to disclose documents and other
materials relevant to ensuring that the party is complying with the order’s terms. See Balkin v. Balkin,
43 A.D.3d 967, 968, 842 N.Y.S.2d 523, 524 (2d Dep’t 2007) (affirming the grant of respondent’s
motions for enforcement of the parties’ settlement agreement and to compel production of
documents necessary to ensure compliance); see also Cruz v. Brentwood Union Free Sch. Dist., -- A.D.3d -
--, 897 N.Y.S.2d 499, 500 (2d Dep’t 2010) (holding that “supervision of disclosure is generally left to
ARGUMENT
DFS has violated this Court’s Order in at least four material respects, each of which,
standing alone, warrants the imposition of contempt sanctions here. Collectively, they compel it.
First, the DFS Board has violated the Order’s mandate that DFS “charge its
candidate-clients (or their committees) fair market value for the actual services provided by DFS as a
adopting a “written policy that it will not contract to charge a CFB-regulated campaign below DFS’s
26
best estimate of its costs of fulfilling its contract,” per the Kaye Report’s recommendations. Ex. A
Second, DFS has violated the Order by offering its valuable voter database to current and
prospective clients without first retaining an independent expert to evaluate its fair market value.
Ex. A at ¶ 4(g).
Third, DFS has violated the Order’s mandate that DFS “operate[ ] independently and not
under the control of” the WFP by failing to appoint a majority of the members of its
newly-constituted Board who are “independent” of the WFP, as that term is defined in the Order.
Ex. A at ¶ 4(a).
Fourth, DFS has violated the Order by failing to take steps sufficient to “establish
management, administrative, and employment structures that are independent of and not controlled
The fact of the matter is that DFS remains the captive corporate shell of the WFP. It has
flouted this Court’s orders long enough. Now, it must be held accountable for its misconduct and
made to live up to the benefit of its bargain. In the interim, it should be compelled to make
document disclosures concerning its alleged compliance with the court-ordered settlement, and if
necessary to decide this contempt motion, the Court should hold an evidentiary hearing. In any
event, the Court should enter an order holding DFS in contempt and imposing sanctions sufficient
27
I.
On May 26, 2010, the newly appointed DFS Board passed a resolution adopting all of the
recommendations of the Kaye Report, including the recommendations that DFS “reconstitute[e]
[itself] as a taxable, nonprofit corporation” and adopt a “written policy that it will not contract to
charge a CFB-regulated campaign below DFS’s best estimate of its costs of fulfilling its contract.”
Ex. B at 17; see also Ex. C (Letter from A. Celli to R. Mastro, dated June. 25, 2010) at 1. In doing so,
DFS resolved to transform itself from a for-profit corporation into a not-for-profit, and to charge at
least some of its clients no more than its own costs, which is obviously far below what a true for-
profit corporation would charge its candidate-clients because it would eliminate any profit margin
whatsoever. DFS’s adoption of these recommendations clearly violates the plain language of the
Order, which requires that “DFS shall charge its candidate-clients (or their committees) fair market
value for the actual services provided by DFS as a for-profit corporation.” Ex. A at ¶ 4(e) (emphasis
added). Thus, Petitioners respectfully request that this Court hold DFS in contempt and compel
DFS to comply with the express terms of the Order, regardless of its Board’s resolutions to the
contrary.
“A consent decree is in the nature of a contract, which [the Court] must interpret in light of
its plain language.” Callahan v. Carey, 12 N.Y.3d 496, 502, 909 N.E.2d 1229, 1233 (2009) (internal
citation and quotation marks omitted). “[P]rinciples of contract construction require that plain
language should be given effect, and that every provision should be deemed to have some meaning.”
Coppola v. Stroker, 235 A.D.2d 536, 537, 653 N.Y.S.2d 134, 135 (2d Dep’t 1997) (internal citation
28
meaningless or without force or effect.” Ronnen v. Ajax Elec. Motor Corp., 88 N.Y.2d 582, 589, 648
By its plain language, the Order requires DFS to remain constituted “as a for-profit
corporation.” Ex. A at ¶ 4(e). Since its formation in 2007, DFS has been registered with the New
York Secretary of State as a for-profit corporation, yet “DFS acknowledges that it generally did not
observe corporate formalities.” Ex. B at 8. Rather—as Petitioners alleged in their Verified Petition,
and as DFS’s own documents and the Kaye Report prove—“DFS generally has operated as an arm
or division of WFP.” Id. at 6. In this role, DFS provided prohibited, coordinated support for WFP-
backed candidates without concern for its profitability, evidenced by the fact that “a shared financial
staff . . . serviced both DFS and WFP” and “the bookkeeping [ ] typically involved periodic
reconciliations” between the respective accounts of WFP and DFS. Id. at 22. To cure this public
deceit, Petitioners expressly included the term “as a for-profit corporation” in the Order to ensure
that DFS would finally become what it had always claimed to be: a true “for-profit corporation.”
Ex. A at ¶ 4(e). By resolving to reconstitute DFS as a “taxable, nonprofit corporation,” DFS has
chosen to ignore and render meaningless this essential provision of the Order, and has violated a
fundamental tenant of New York law that a party to an agreement may not “pick and choose which
provisions suit its purposes.” See God’s Battalion of Prayer Pentagon’s Church, Inc. v. Miele Assocs., LLP, 6
8 Of note, taxable nonprofits are exceedingly rare. According to the Congressional Research Service, as of 2009,
ACORN—a long-time affiliate of the WFP—was the only corporation in the United States that structured itself this
way. See Ex. T (U.S. House of Rep. Committee on Oversight and Government Reform Ranking Member Staff
Report, “Is ACORN Intentionally Structured As a Criminal Enterprise?” (July 23, 2009)) at 89. The Staff Report
also cited Bruce Hopkins, the Director of the Nonprofit Law Center, who “explained that the ONLY reason a
nonprofit would want a non-exempt status would be to conduct political activities without reporting them to the
Internal Revenue Service.” Id. In other words, these latest machinations are simply a continuation of the WFP’s
scheming to avoid its legal obligations.
29
The plain language of the Order also requires DFS to charge “fair market value . . . as a
for-profit corporation.” Ex. A at ¶ 4(e). In other words, it must charge more than just its “costs”; it
must also charge a customary profit margin, as any “for-profit corporation” would. The Order
could not be clearer: “DFS shall charge its candidate-clients (or their committees) fair market value
for the actual services provided by DFS as a for-profit corporation.” Id. (emphasis added). As even the
Kaye Report concedes, “[w]ith regard to a for-profit company, ‘[t]he fair market value of services for
which the Company bills its clients presumably contains a profit element above the out-of-pocket
and overhead costs to the Company for providing such services.’” Ex. B at 14 n.5 (quoting NYC
Campaign Finance Board, Advisory Opinion No. 2007-5 (Sept. 6, 2007)). Yet DFS has adopted a
policy to charge its clients as a “taxable, nonprofit corporation” and in a manner that expressly
The adoption of these recommendations, taken together, show that DFS has implemented a
plan to return to the illicit practices that necessitated this special proceeding—drastically under
charging WFP-backed candidates—in direct violation of the Order. Indeed, to charge at “cost”
gives its WFP-backed candidates an unfair advantage—and huge cost savings—over opponents
having to use the services of “for-profit” field operatives charging customary profit margins. See Ex.
Y (Affirmation of Martin E. Connor, dated March 9, 2010) at ¶ 9 (“[A] 20 percent mark up on costs
and an additional success fee would be commonly charged by a for-profit political consulting firm
providing field services to campaigns.”); Ex. Z (Supplemental Affidavit of Jake Menges, dated
March 9, 2010) at ¶ 10 (“In my expert opinion, DFS—a for-profit corporation registered as such
with the State of New York—should have charged the Rose Campaign a profit margin above the
costs of the services it provided to the Rose Campaign. In my experience, for-profit political
additional success fee on winning campaigns.”). To conclude otherwise would “render [this]
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contractual provision meaningless [and] without force or effect,” denying Petitioners and all New
York voters the protections and benefits in this settlement in protecting our local democracy from
future abuses. See Ronnen, 88 N.Y.2d at 589, 648 N.Y.S.2d at 425. Accordingly, this Court should
hold DFS in contempt for resolving to become a “nonprofit” and charge some clients at “cost,”
impose compounding fines (and fees and costs) to coerce compliance, and order DFS to fully
comply with the settlement’s terms that it charge its candidate-clients “fair market value . . . as a for-
profit corporation.”
II.
DFS has violated the Order by continuing to offer its valuable voter database—once
provided through the VAN—to its candidate-clients through a different software package without
first securing a fair market valuation of the database by an independent expert. The Order clearly
states that:
Ex. A at ¶ 4(g).
DFS acknowledges that, to date, it has not secured a valuation of the VAN by an
independent expert. Its counsel claimed during the June 1 conference that DFS has no plans to
offer that state-of-the-art valuable voter database to its clients now or in the future. However,
DFS’s new website puts the lie to those claims, as DFS includes “CRM database management and
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administration” as among the “List of Primary Services” it is currently offering to clients. See Ex. U
(www.dataandfield.com/services).
database of DFS’s valuable voter information, and (2) a CRM software program utilized to store,
organize, and access that information. The value of the VAN to DFS and its customers lies
predominantly in the vast compilation of valuable voter information, and this value is enhanced by
the functionality of the chosen CRM software program through which it is stored, organized and
accessed. See Ex. X (A. Ross email to E. Jenkins, dated Dec. 3, 2009) (describing the
comprehensiveness of the so-called “back-end” data and the VAN and non-VAN options on the
so-called “front-end”). Many different CRM software programs can duplicate the VAN software’s
the market). Consequently, to allow DFS to offer its valuable voter database to its clients through a
CRM software system that only differs from the VAN in minor non-substantive ways would render
the Order’s independent assessment of its value meaningless: Through that transparent ruse, DFS
could continue to provide the valuable voter database portion of the VAN through a substantially
similar CRM management program while perpetually ignoring its obligation to determine and
charge its candidate-clients the actual fair market value of that extraordinary service. Obviously, that
would not be consistent with the requirements and intent of this court-ordered settlement.
Such a repackaging of the VAN system violates both the letter and spirit of the parties’
settlement. Indeed, it is a bad-faith attempt to get around the requirements of this Court’s Order.
Like any other contractual obligation, settlement obligations must be fulfilled so as to avoid
rendering the parties’ agreement meaningless. John A. Paige Jr. Contracting, Inc. v. Gush, 35 A.D.3d
991, 992, 826 N.Y.S.2d 477, 478 (3d Dep’t 2006) (although the parties’ settlement agreement did not
32
expressly mention the installation of utilities, the installation was nevertheless a material component
of the settlement; to determine otherwise “would render meaningless the ‘tolling’ clause” of the
It is now apparent that DFS is continuing to offer its valuable voter database to its clients
through a CRM software package that is functionally equivalent to the VAN’s software component.
See, e.g., Ex. CC (Jack Douglas, “Election Campaigns Turn to CRM,” destination CRM.com (July 14,
2000)) (“[P]olitical campaigns are having increasing success using the same customer relationship
management (CRM) tools and techniques with voters that companies use with customers.”); Ex.
DD (Paul W. Taylor, “Political CRM,” Government Technology (Oct. 5, 2004)) (“Complex and
highly partisan CRM is being deployed by both major parties to help tip election results in their
favor, district by district, mobilizing their respective bases and wooing fickle swing voters.”). Hence,
even if DFS no longer uses the exact same VAN software system as the CRM platform through
which it compiles and accesses its valuable voter information, DFS is still obligated to have an
independent expert assessment done of its fair market value and charge its candidate-clients
Under New York law, a party breaches a settlement agreement when its noncompliance
violates the agreement’s spirit and purpose. See Abbey Funeral Dirs., Inc. v. Smith, 24 Misc. 2d 492,
494, 204 N.Y.S.2d 439, 440-41 (Sup. Ct. N.Y. Cnty. 1960), aff’d, 14 A.D.2d 837, 218 N.Y.S.2d 527
(1st Dep’t 1961), appeal denied, 11 N.Y.2d 642, 225 N.Y.S.2d 1026 (1962); see also Kennedy v. Town of
Thompson, 99 A.D.2d 606, 607, 471 N.Y.S.2d 714, 715 (3d Dep’t 1984) (holding that defendant
breached the parties’ settlement agreement where “the result [of defendant’s purported technical
compliance] was to defeat the purpose of the stipulation to provide proper diversion of water away
from plaintiff’s property”). For example, in Abbey Funeral Directors, defendants bound themselves in
a settlement agreement to change their of-record name “Abbey Park Funeral Chapel,” because it
33
conflicted with the name of plaintiff funeral establishment, “The Abbey.” 24 Misc. 2d at 494, 204
N.Y.S.2d at 440–41. The court held that defendants’ subsequent use of the name “Abbey
Parkchester” was a “violation of the spirit, if not the letter, of the stipulation . . . . The substitution
of ‘Abbey Parkchester’ for ‘Abbey Park’ is a transparent evasion of the terms of the stipulation.” Id.
In this case, DFS’s actions amount to a similarly transparent evasion of the terms of the
parties’ settlement as memorialized in the Order. DFS apprised the Kaye Report’s authors that it
has no plans to offer its VAN database to any campaigns. Ex. B at 13. DFS’s counsel made
identical misrepresentations at the June 1 conference before this Court, stating that DFS no longer
provides its clients with access to the VAN or even to the database of information previously
housed there. However, DFS’s new website prominently advertises its voter database as “CRM
software package and is easily replaced by another, functionally equivalent CRM software package.
Regardless of the CRM software package, however, the most valuable component of DFS’s state-of-
the-art voter database remains the same: its comprehensive, up-to-date voter information, stored,
organized and accessed there. Ex. X (A. Ross email to E. Jenkins, dated Dec. 3, 2009) (indicating
that all of the data acquisition and enhancement are part of the “back-end,” which means that it is
unaffected by whatever CRM shell, be it VAN or non-VAN, that is placed on the “front-end”).
Moreover, the current DFS website home page highlights DFS’s offering of the services of “an elite
team” of “IT professionals” —undoubtedly the same team as before. See Ex. V
(www.dataandfield.com/home).
These facts confirm that, contrary to its claims, DFS is actively marketing its valuable voter
database as one of its core services. DFS’s ongoing provision of this valuable voter database—
formerly accessed through a CSM software system known as the VAN, and now presumably
34
accessed through a different but similar CRM software package—is a transparent attempt to skirt its
requirements under this Court’s Order. In doing so, DFS has violated the plain language, purpose
and spirit of the Order. Accordingly, it should be held in contempt for this independent reason as
well and compelled to comply with its settlement obligations so that it cannot continue to
undercharge its candidate-clients for this valuable voter database in the upcoming Fall election cycle.
III.
DFS has also violated this Court’s Order by failing to appoint a majority of independent
members to its new Board. The court-ordered settlement requires that most of DFS’s new Board of
Directors must be “independent,” which is expressly defined there to mean the following:
Ex. A at ¶ 4(a). DFS now has a new four-member Board, so at least three of them must qualify as
“independent” to satisfy the Order’s requirements. DFS acknowledges that new Board member
Jeffrey Dupee was employed by the WFP in the past two years as a computer programming
consultant and, therefore, is not “independent.” See also Ex. B at 12 (not including Mr. Dupee as
among the independent members). Although DFS claims otherwise, another new Board member,
Ed Ott, is also not “independent,” as that term is defined in the parties’ settlement. Within the past
two years, he served as the Executive Director of the New York City Central Labor Council, AFL-
CIO (“NYC CLC”) and, then, as a consultant there. See Ex. KK (Elizabeth Benjamin, “Central
Label Council Deadlocked on Citywide Races,” Daily News (Aug. 20, 2009)) (noting the “retirement
earlier this summer of [the NYC CLC’s] longtime executive director, Ed Ott, who is now working as
a consultant”). The NYC CLC has been a “contributor to the WFP.” See Ex. LL (WFP’s July 2006
35
Periodic Report to the N.Y.S. Board of Elections, Schedule C) at 12 (showing NYC CLC $250
contribution to the WFP on June 7, 2006). Accordingly, because Mr. Ott has been employed by the
NYC CLC within the past two years and the NYC CLC has been a contributor to the WFP, he is
not “independent” within the meaning of the Order. Thus, by appointing only two independent
members to its new four-member Board, DFS has violated the Order.
IV.
Finally, there are numerous other indicia of lack of independence that, either alone or in
their aggregate, show that DFS has not fully “establish[ed] management, administrative, and
employment structures that are independent of and not controlled by the WFP.” Ex. A at ¶ 4(b).
For example, DFS has reappointed Mike Boland as its Executive Director. See page 16, supra.
However, Mr. Boland had already been director of DFS prior to entry of the Order, see Ex. EE
(Edward-Isaac Dovere, “Who Took Over WFO Operations?” City Hall News (Nov. 29, 2009))
(“Mike Boland, who identified himself as the director of Data & Field Services”), while
simultaneously serving as Canvass Staff Director and then Field Director for the WFP. See Ex. FF
(College Democrats of New York 2009 Convention Schedule) (identifying Boland as “WFP Field
Director”). Thus, he is clearly not independent of the WFP. Moreover, DFS and the WFP still
management system might enable the WFP and DFS to document the division of labor among
shared employees and allow for effective monitoring.”) (emphasis added). Thus, it is business as usual
at DFS, employing the same executive staff and continuing to share office space with the WFP.
36
In addition, DFS’s website identifies individuals it seeks to hire, using language that is
identical to that found on WFP’s website, and makes clear they will be working to elect candidates
who share the WFP’s political philosophy. See pages 18–19, supra. These concerted employment
efforts were recently exposed by a former employee who went public with his shocking experience
there. He originally applied to work for the WFP. Upon his hiring, he learned that he was, in fact,
being employed and paid by DFS. See Ex. E (Sally Goldenberg, “Working ‘Sham’-ilies,” N.Y. Post
(July 12, 2010)). Unwilling to commit the improprieties expected of him (including forging petition
In sum, this Court should hold DFS in contempt, based on any or all of the foregoing
violations of this Court’s Order, and this is especially so because DFS has failed to comply with this
Court’s orders throughout this special proceeding. See HCE Assocs., 173 A.D.2d at 775, 570
N.Y.S.2d at 643 (“[T]he defendant’s history of compliance with court orders is such that in the
interest of justice, the court’s exercise of discretion in compelling it to comply with the stipulation,
after hearing oral argument on the motion was provident”) (internal citation omitted).
V.
Petitioners are prejudiced by DFS’s noncompliance because (1) Petitioners are deprived of
the benefit of their bargain, as embodied in this Court’s Order; and (2) DFS’s noncompliance
effectively restores the harm that Petitioners and all New York voters suffered last Fall when the
WFP and DFS orchestrated their corrupt scheme to circumvent State election law and City
campaign finance law. See Various Tenants of 446-448 W. 167th St. v. N.Y.C. Dep’t of Housing, 153
Misc. 2d 221, 222, 588 N.Y.S.2d 840, 841 (1st Dep’t 1992) (per curiam) (With respect to the showing
37
of “prejudice,” it suffices that Petitioners’ “rights in the litigation were necessarily and significantly
impaired.”).
Upon finding DFS in contempt, the Court should award Petitioners the fees and costs they
incurred in connection with this special proceeding, including reasonable attorney’s fees. See
Judiciary Law § 773; see also Children’s Village v. Greenburgh Eleven Teachers’ Union Federation of Teachers,
249 A.D.2d 435, 435-36, 671 N.Y.S.2d 503, 504 (2d Dep’t 1998) (“[T]he attorney’s fees incurred by
the appellant in connection with the [respondent]’s [earlier] appeal from the order which held
[respondent] in contempt are a ‘direct product of the contempt proceeding’ and are therefore
recoverable”). Moreover, in addition to the $250 provided in Judiciary Law § 773, the Court should
impose compounding daily fines. See, e.g., N.Y. State Nat’l Org. for Women v. Terry, 159 F.3d 86, 90 (2d
Cir. 1998) (noting earlier affirmance of a “schedule of prospective coercive civil sanctions for future
violations,” providing, inter alia, that failure to comply with the order “shall subject him or her to
civil damages of $25,000 per day for the first violation . . . each successive violation of this Order
shall subject the contemnor to a civil contempt fine double that of the previous fine”); Ex. QQ, State
Farm Mut. Auto. Ins. Co. v. Cohan, No. CV 09-2990(JS)(WDW), 2010 WL 3000685, at *3 (E.D.N.Y.
July 28, 2010) (“Appropriate sanctions should include daily fines starting on July 31 in the amount of
$25,000 and doubling each day until the subpoenas are complied with, and payment to the plaintiff .
. . of all reasonable attorneys’ fees and costs associated with the unnecessarily protracted process of
Alternatively, this Court should award, as sanctions over DFS’s frivolous and deceitful
misconduct—including its noncompliance with the Court’s Order and its counsel’s repeated
misstatements to the Court and Petitioners at the June 1 hearing. Such sanctions would include, but
not be limited to fees and costs, including reasonable attorney’s fees to Petitioners under N.Y.
Comp. Codes R. & Regs. tit. 22, § 130-1.1. See Clifton Country Road, 225 A.D.2d at 933, 639 N.Y.S.2d
38
at 177 (holding that “an award of costs is appropriate” where the defendant “delayed for months” in
performing his obligations, and when he finally endeavored to do so, his actions still were “not in
compliance with this [c]ourt’s prior order”). Costs should be calculated as “actual expenses
reasonably incurred and reasonable attorney’s fees.” N.Y. Comp. Codes R. & Regs. tit. 22, § 130-
1.1(a).
In any event, the Court should enter an order compelling DFS to fully comply with both the
VI.
In the interim, Petitioners respectfully request that this Court order DFS to make
comprehensive document disclosures concerning DFS’s alleged compliance with the Order. This
Court clearly possesses the power to issue such discovery orders so as to ensure that a party is in
compliance with a settlement order. See, e.g., Balkin v. Balkin, 43 A.D.3d 967, 968, 842 N.Y.S.2d 523,
524 (2d Dep’t 2007) (affirming order granting motion to compel production of documents necessary
to ensure compliance with the parties’ settlement agreement). Indeed, at the June 1 conference, this
Court already directed DFS to provide Petitioners with several such documents—namely, a copy of
DFS’s new by-laws, its new standard form contracts, and the DFS Board’s resolution adopting the
recommendations contained in the Kaye Report—which are essential to determine whether DFS
has complied with its obligations under the Order. See Mastro Aff. at ¶ 39. Petitioners are simply
39
requesting that this Court reaffirm that directive with respect to all documents concerning DFS’s
Unfortunately, as has been its modus operandi, DFS flouted this Court’s June 1 directive by
confidentiality restrictions—a precondition never imposed by this Court. See Ex. OO (DFS’s
Proposed Stipulation and Protective Order); see also Ex. NN (Letter from A. Celli to Hon. Anthony
I. Giacobbe, dated June 18, 2010) at 1–2. DFS has proffered no basis for such Draconian
restrictions, except to assert, baselessly, that the Requested Documents are “confidential and
proprietary [in] nature.” Ex. NN at 1. Moreover, on numerous prior occasions, DFS also violated
this Court’s clear orders. See, e.g., supra, Statement of Facts, Section B (discussing the several orders
required before DFS produced relevant documents in its possession—a production not made until
the eve of trial). Therefore, to ensure DFS’s compliance with this Order, the Court should require
Finally, in the event that this Court determines there are any factual disputes to be resolved
on this contempt motion, it should hold an evidentiary hearing. See, e.g., City Wide Sewer & Drain
Serv. Corp. v. Carusone, 39 A.D.3d 687, 688, 834 N.Y.S.2d 283, 284–85 (2d Dep’t 2007) (remanding
for “an evidentiary hearing on the issue of whether the defendant solicited the plaintiff’s customers,
thereby violating the court-ordered stipulation”); Seven Hanover Square Corp. v. Kaufman, 81 A.D.2d
9 Petitioners also request that this Court order DFS to comply with the Court’s June 1 directive to produce copies of
its new by-laws, new standard form contracts, and the DFS Board’s resolution adopting the recommendations
contained in the Kaye Report or, alternatively, make those documents already submitted to the Court ex parte a
matter of public record.
10 For the convenience of the Court, Petitioners have provided a set of Document Disclosure Demands to which
Petitioners respectfully request this Court direct DFS to respond and produce responsive documents. See Ex. PP.
40
789, 789, 439 N.Y.S.2d 36, 37 (1st Dep’t 1981) (“Enough has been shown [by movant for civil
contempt] so that the proceeding should not be dismissed on affidavits but an evidentiary hearing
should be held.”).
CONCLUSION
For all of the foregoing reasons, Petitioners respectfully request that this Court grant
Petitioners’ motion and hold DFS in contempt for violating this Court’s Order by: (1) resolving to
reconstitute itself as a “taxable, nonprofit corporation” and adopting “a written policy that it will not
contract to charge a CFB-regulated campaign below DFS’s best estimate of its costs of fulfilling its
contract”; (2) offering its database of voter-related information to its current and prospective clients
absent a fair market valuation of the database by an independent expert; (3) failing to appoint a
majority of “independent” members to its new Board; and (4) failing to implement sufficient
reforms to “establish management, administrative, and employment structures that are independent
of the WFP.” In light of DFS’s contempt, Petitioners also respectfully request that this Court
impose compounding daily fines starting at $250 until DFS fully cures itself of its contempt, award
Petitioners their fees and cost (including reasonable attorney’s fees) in bringing this special
proceeding, otherwise sanction DFS for its frivolous litigation practices, and compel DFS to comply
with all of its court-ordered obligations and, in the event DFS continues to fail to comply, taking the
steps necessary to coerce DFS’s compliance, including, if necessary, ordering the imprisonment of a
DFS corporate officer. In the interim, Petitioners respectfully request that this Court order DFS to
make document disclosures concerning its alleged compliance efforts and, if necessary, hold an
evidentiary hearing to decide this contempt motion. Finally, Petitioners respectfully request that this
Court grant such other and further relief as the Court deems just and proper.
41