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Municipal Revenue Services, Inc. v. Xspand

April 4, 2007


The opinion of the court was delivered by: Thomas M. Blewitt United States Magistrate Judge

(Judge Jones)

(Magistrate Judge Blewitt)


I. Background

On March 13, 2007, we conducted oral argument regarding the pending discovery disputes between Plaintiff and Defendants, as well as non-party Pennsylvania State Senator Pileggi's dispute with Plaintiff.*fn1 We now resolve the dispute brought pursuant to the February 13, 2007 Motion to Quash Subpoenas of non-party Senator Dominic Pileggi and the Pennsylvania Senate. (Doc. 239).

In an Order dated February 23, 2007 (Doc. 244), we directed the parties to file all of their respective briefs with respect to the aforementioned Motions two days prior to the oral argument. The Motion to Quash Subpoenas of non-party Senator Dominic Pileggi and the Pennsylvania Senate (Doc. 239) is the subject of this Memorandum.

II. Motion to Quash Subpoena of non-party Senator Dominic Pileggi (Doc. 239)

Plaintiff served two subpoenas of non-party Pennsylvania State Senator Dominic Pileggi, one to produce a list of documents attached to the subpoena, and the second to seek the testimony of Senator Pileggi. (Doc. 239, Ex. A).*fn2 On February 13, 2007, counsel for Senator Pileggi and the Pennsylvania Senate filed a Motion to Quash Plaintiff's subpoenas, with attached copies of Plaintiff's subpoenas, as well as a support Brief. (Docs. 239 & 240). Plaintiff filed, on March 5, 2007, a Response in Opposition to the Motion to Quash Subpoenas and a Cross-Motion to Compel Compliance with its Subpoenas, along with a support Brief and exhibits. (Docs. 250 & 251). As stated above, on March 13, 2007, the Court heard oral argument regarding this ripe Motion.

Counsel for Senator Pileggi and the Pennsylvania Senate moved to quash the Plaintiff's subpoenas pursuant to Fed. R. Civ. P. 45(c)(3)(A)(iii) and (iv) since he claimed that they seek the disclosure of privileged and protected matters. At argument, as noted in his Supplemental Brief (Doc. 266, p. 1, n. 1), counsel orally moved for a Protective Order under Rule 26(c), in the alternative.*fn3 Counsel argued that Senator Pileggi was entitled to absolute legislative immunity and that the documents which Plaintiff requested him to produce were privileged under the Speech and Debate Clause. Counsel cited to the case of Bogan v. Scott-Harris, 523 U.S. 44 (1998), with respect to support for the Constitutionally based legislative immunity doctrine, derived from the Speech and Debate Clause, and to the Third Circuit case of Youngblood v. DeWeese, 352 F. 3d 836 (2003), for support that state legislators are protected by the Clause.*fn4 Counsel for Senator Pileggi stated that the Speech and Debate Clause bars suit against legislators and prevents testimony by legislators regarding matters within the legitimate legislative sphere, i.e. all issues of legislative actions of state legislators.

Counsel stated that protected documents include material regarding development of legislation and crafting of legislation, as well as matters involving the legislative process and communications with constituents. Counsel said that Plaintiff's document subpoena seeks documents regarding legislative activities of Senator Pileggi as evidenced by the list of documents Plaintiff requested in its attachment to this subpoena. Counsel argued that Plaintiff wants documents regarding the drafting, development and enactment of the Pennsylvania legislation (HB #2638) which allowed for the assignment and the purchase of tax liens by private entities from taxing authorities. (Doc. 266, p. 2). Counsel claimed that these documents are part of the legislative process, and he claimed that Plaintiff seeks documents with respect to Senator Pileggi's role in this process. Counsel stated that Senator Pileggi's documents regarding the complete legislative process before, during and after the Bill's enactment are privileged by the legislative immunity doctrine. Counsel also stated that Plaintiff's subpoena seeks documents regarding the Senator's legislative efforts and communications with other legislators and his constituents, and that Plaintiff wants disclosure of privileged documents used in the enactment of the stated Bill. Counsel pointed out that, since the documents are privileged, then it is irrelevant if the documents may help Plaintiff in its present lawsuit.

Counsel stated that the Senator would provide Plaintiff with requested information from financial reports and with respect to political contributions because these documents were admittedly not subject to legislative immunity. Specifically, in his Supplemental Brief, Doc. 266, p. 3 and n. 4, counsel for the Senator stated:

As stated at oral argument, the Senator will produce documents regarding political contributions.*fn5

We shall thus order Senator Pileggi to provide the agreed upon information to Plaintiff within ten (10) days of the date of this Memorandum and Order.

The Senator's counsel contended that the requested documents, which are dated prior to the enactment of the law, are privileged and protected by legislative immunity, and that the documents dated after enactment of the law are also privileged. Counsel stated that Senator Pileggi's dealings with the tax lien issue and with Pennsylvania municipalities after the passage of the law were privileged matters, since they were part of the legislative process to see how the law was working and to see if it required revisions. (Doc. 266, p. 3). Thus, counsel concluded that Plaintiff's subpoenas, both for documents and for the Senator's testimony, violated the legislative immunity doctrine.

Counsel pointed to other remedies Plaintiff had available to it prior to the law's enactment, such as contacting legislators regarding its position on the proposed law and arguing either for or against its passage. Counsel also stated that if Plaintiff was unhappy with the law, it had available a remedy, i.e. to work against the re-election of the legislators who voted in favor of the law. Counsel requested that the Court grant Senator Pileggi's Motion to Quash Plaintiff's subpoenas, or, alternatively, to grant his oral Motion for a Protective Order, and to deny Plaintiff's Motion to Compel his compliance with the subpoenas.

Plaintiff argued that the documents and testimony it seeks through its subpoenas to Senator Pileggi are not protected by legislative privilege, and Plaintiff cited to the case of U.S. v. Brewster, 408 U.S. 501 (1972), for support. Plaintiff contended that Senator Pileggi circumvented federal law to help Defendant BSC, and Plaintiff contended that the Senator's actions resulted in significant loss of money to Pennsylvania taxpayers. Plaintiff claimed that Senator Pileggi was involved in influencing Pennsylvania taxing authorities to use Defendants' products and to sell Defendants their tax liens, and stated that the documents reflecting the Senator's influence are the type it was seeking in its subpoena. Plaintiff argued that Senator Pileggi was not involved in the legislative process in helping Defendants' business activities in Pennsylvania, and in helping with their quest to purchase tax liens and delinquent tax claims from Pennsylvania taxing authorities. Plaintiff cited to the McDade criminal case to support its contention that Senator Pileggi's conduct in assisting Defendants' marketing activities were not protected by legislative immunity. See U.S. v. McDade, 28 F. 3d 283 (1994).

Plaintiff stated that the documents it seeks from Senator Pileggi are relevant to its claims since he was involved with Defendants in the alleged acts of unfair competition aimed against it. Plaintiff stated that Senator Pileggi influenced Pennsylvania taxing authorities to use Defendants' services and to sell their tax liens to Defendants. Plaintiff alleged that the Senator received substantial money to promote Defendants' products, and that Defendants relied upon his activities to steer the taxing authorities towards Defendants' services. Plaintiff said that it wanted the documents regarding Senator Pileggi's alleged activities to influence Pennsylvania municipalities, and the documents regarding the alleged improper marketing campaign and political activity directed against it.

Plaintiff attached to its Brief, Doc. 251, as Exhibits 12-14, e-mails from Defendants and their agents, which, according to Plaintiff, relate to bundling political contributions to give to Senator Pileggi as reward for his support of their products. Plaintiff explains its position in detail on pages 2-3 of its support Brief, Doc. 251.*fn6 Plaintiff stated that Senator Pileggi was the beneficiary of the bundling activities of the Defendants, and that Scura's documents reveal that the Senator set up meetings with municipal authorities and officials to encourage them to do business with Defendants and to shut out Plaintiff from doing business. Plaintiff stated that Senator Pileggi was the "poster boy for the pay to play" scheme it is alleging existed.*fn7 Plaintiff indicated that Attorney Melinson's records, which it received after the Court's in camera review, showed Senator Pileggi's role in this scheme, and that the Senator was contacted by Defendants' agents to arrange meetings with public officials. Plaintiff stated that Senator Pileggi then made personal pleas to public officials and promoted Defendants' business and services in Pennsylvania. In turn, Plaintiff claims that the actions of Senator Pileggi effectively precluded it from doing business in Pennsylvania. Thus, the information which Plaintiff seeks from Senator Pileggi is not related to his follow-up, with constituents, regarding the impact of the enactment of HB # 2638 and whether the law needed amendment. (See Doc. 266, Exs. C and D).

Plaintiff concluded that Senator Pileggi was not acting in a legislative nature and in a legislative sphere with respect to the documents and testimony it seeks from him. Rather, Plaintiff stated that the Senator was acting to promote Defendants' business, and that he was not drafting and passing legislation. As correctly noted in Senator Pileggi's Supplemental Brief (Doc. 266, p. 2, n. 3), Plaintiff indicated that it was removing from ¶8. of its January 2007 document subpoena to Senator Pileggi the reference to "relating to legislation" contained in document Request No. 8. (See Doc. 239, Ex. A, p. 5, ¶ 8.). We deem the stated phrase withdrawn from Plaintiff's stated subpoena.

In reply, counsel for Senator Pileggi argued that the legislative immunity doctrine is broad, and that the legislative process is dynamic and involved a wide range of communications with other legislators and business officials. He argued that Plaintiff can get the documents concerning Senator Pileggi from other sources, and that Plaintiff has a remedy.*fn8

Plaintiff filed a Supplemental Brief on March 19, 2007, in opposition to Senator Pileggi's Motion to Quash and in support of its Motion to Compel. (Doc. 259). As discussed below, we agree with Plaintiff that the documents and testimony it seeks in its present Subpoenas relate to business activities that Senator Pileggi allegedly conducted on behalf of Defendants, and relate to political undertakings. We concur with Plaintiff that the requested documents and testimony do not relate to legislative activities and communications concerning legislation. We also agree with Plaintiff that, in this case, Senator Pileggi is not entitled to legislative immunity and that he must comply with Plaintiff's ...

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