New York Law Review

Matter of Grand Jury Subpoena Duces Tecum Served Upon Morano, 69 N.Y.2d 700 (1986): Jurisdiction Over Out-of-State Documents of Corporations Doing Business In-State

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Matter of Grand Jury Subpoena Duces Tecum Served Upon Morano, 69 N.Y.2d 700 (1986)

A corporation doing business within a state is subject to that state’s subpoena power, compelling the production of documents under its control, regardless of where those documents are physically located.

Summary

This case addresses whether New York courts can compel corporations doing business in New York to produce documents located outside the state in response to a subpoena. The Court of Appeals held that it can, clarifying that the Uniform Act to Secure the Attendance of Witnesses from Without the State in Criminal Proceedings (CPL 640.10) is not the exclusive means to obtain such documents. Because the corporations were doing business in New York, they were subject to New York’s jurisdiction and subpoena power, enabling the court to order the production of all documents under their control, irrespective of their location. This ruling ensures that businesses operating within New York cannot shield documents from legal scrutiny by storing them out of state.

Facts

Two New Jersey corporations and their president, all doing business in New York, were served with subpoenas. These subpoenas required them to produce records held in New Jersey before a New York County Grand Jury investigating Medicaid fraud. The corporations sought to quash the subpoenas, arguing that the only way to compel production of out-of-state documents was through the Uniform Act to Secure the Attendance of Witnesses from Without the State in Criminal Proceedings (CPL 640.10).

Procedural History

The lower courts denied the motion to quash the subpoenas, ordering the corporations to produce the requested documents. The corporations appealed. The Court of Appeals affirmed the lower courts’ decision, holding that CPL 640.10 is not the exclusive means to compel the production of out-of-state documents from corporations doing business within New York.

Issue(s)

Whether the issuance of compulsory process pursuant to CPL 640.10, the Uniform Act to Secure the Attendance of Witnesses from Without the State in Criminal Proceedings, is the exclusive means by which an out-of-State corporation doing business in New York may be compelled to produce out-of-State documents at a criminal proceeding within New York.

Holding

No, because corporations doing business in New York are considered “within the state” for jurisdictional purposes and are therefore subject to New York’s subpoena power, allowing the court to compel the production of documents under their control, regardless of location.

Court’s Reasoning

The Court reasoned that CPL 610.10 allows a person “within the state” to be compelled to attend a criminal proceeding and produce evidence via subpoena. Because the corporations were doing business in New York, they were “within the state” for jurisdictional purposes, citing Laufer v. Ostrow, 55 N.Y.2d 305, 309-310 and Tauza v. Susquehanna Coal Co., 220 N.Y. 259, 267-268. The court also referenced Matter of Standard Fruit & S. S. Co. v. Waterfront Commn., 43 N.Y.2d 11, 15-16, to support the holding that the lower courts correctly required the corporations to produce all documents within their control, regardless of location.

The Court explicitly stated that “Pursuant to CPL 610.10, a person ‘within the state’ may be required to attend a criminal proceeding and to produce specified physical evidence by the issuance and service upon him of a subpoena.”

The Court emphasized the practical implications of its decision, clarifying that corporations cannot avoid compliance with New York subpoenas simply by housing documents outside of the state’s borders. This ensures the effectiveness of legal proceedings within New York and prevents corporations from using out-of-state document storage as a shield against legal scrutiny. The court also explicitly rejected the contrary holding in Matter of Brennick v Hynes (68 AD2d 980, lv denied 47 NY2d 706), stating that “To the extent that Matter of Brennick v Hynes reaches a contrary result, it is not to be followed.” This creates a clear precedent for lower courts to follow, solidifying the reach of New York’s subpoena power over corporations operating within its borders.

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