This appeal presents the issue of whether New York may exercise long-arm jurisdiction over an out-of-State cooperative, suspected of being a participant in a conspiracy in restraint of trade affecting New York State residents and owned, in part, by New York member-dealers for which it regularly collects dues, consolidates purchase orders and pays bills. A secondary issue is whether the subpoena at issue is, as argued, overly broad and unduly burdensome.
American Dental Cooperative, Inc. (ADC), a Delaware corporation, is a purchasing cooperative for 30 "full service”
ADC’s principal functions include consolidation of the members’ purchases in order to qualify for manufacturers’ discount programs; sponsorship and development of a line of private label products; promotional and educational activities for its members; and the preparation of a product information description book for their use. Although it orders goods and services for its members and pays the monthly bills, it does not distribute products in this or any other State.
ADC is not licensed to do business in New York and does not have a resident agent or maintain an office within the State. It has never kept a bank account or any corporate books or records or held meetings here. None of its employees resides in New York. It neither owns nor leases property in New York. Its president last visited New York in his representative capacity 3 or 4 years ago to attend a professional dental show.
Sometime in 1985 the Attorney-General of the State of New York began an investigation into allegations that certain
The two major commodities of the dental products industry are dental supplies, the consumable items used by dentists and replaced at frequent intervals (e.g., floss, burs), and dental equipment, such as X rays, dental chairs and delivery systems. Dentists generally purchase dental products from dealers, who buy them directly from the manufacturers. For years, two types of dealers serviced dentists’ needs — full servicе dental products dealers, who also sell dental equipment, and mail-order dealers, who sell only supplies. Dental equipment was sold and serviced only by full service dealers. Sometime in 1979-1980, however, mail-order and small store discount dealers began to enter the dental equipment retail business. Usually, they were able to charge less for comparable equipment than were the full service dealers.
The Attorney-General alleges that he has received information indicating that full service dealers have conspired, in violation of the Donnelly Act and Federal antitrust laws, to pressure dental equipment manufacturers into refusing to sell to mail-order and discount dealers or selling to them on discriminatory terms. In particular, full service dealers are alleged to have organized the "D.O.M. movement”, a boycott of аll but "dealer-oriented manufacturers”, i.e., manufacturers who sell only to full service dealers. In addition, some dealers who sell equipment under their own private label in competition with the major manufacturers have offered to reduce or eliminate their private label sales if the manufacturers confine their sales to only full service dealers. The Attorney-General has also received informatiоn tending to demonstrate that some dental equipment manufacturers have succumbed to this pressure and have agreed to maintain prices at a higher level. Such conduct will obviously reduce competition
The Attorney-General has reason to believe that ADC is involved in the D.O.M. movement аnd may be participating in this alleged conspiracy on behalf of its members, including those domiciled in New York. The Attorney-General further believes that, irrespective of whether it is actually participating in the alleged conspiracy, ADC is likely to have information relevant to his investigation. Accordingly, in December 1985, he served ADC with interrogatories and a subpoena duces tecum, which was authorized by judicial ordеr, issued ex parte, reciting that ADC was subject to service outside of the State pursuant to CPLR article 3.
ADC moved to quash a subpoena, arguing that it is not doing or transacting business in New York and therefore is not amenable to personal jurisdiction. ADC also argued that the investigation was not authorized since the Attorney-General had failed to meet the threshold requirements of section 343 of the General Business Law, and that the dоcument request and interrogatories were unduly burdensome and overbroad. The motion court, citing the ex parte order authorizing out-of-State service, held that the jurisdictional question was beyond its power to review and declined to address the issue. Finding that the Attorney-General’s investigation was statutorily authorized, and that the subpoena was neither overly broad nor unduly burdensome, it denied the motion. We affirm.
The refusal оf the court to consider the merits of ADC’s jurisdictional challenge contravenes the clear and unambiguous language of section 343 of the General Business Law,
Turning to the latter issue first, we note that the Legislature has enunciated a strong public policy in New York in favor of free competition and has empowered the Attorney-General to bring civil suits under both State and Federal law and to institute criminal prosecutions to vindicate this policy. (See, Columbia Gas v New York State Elec. & Gas Corp.,
As already noted, on the basis of information obtained from various industry sources, inсluding confidential informants, the Attorney-General has reason to believe that certain dental products dealers, have, using D.O.M. as a code phrase, combined or conspired to eliminate discount and mail-order competition in violation of the law. Since the inception of the D.O.M. movement, of which ADC is alleged to be a leading proponent, several dental products manufacturers have ceased
The Attorney-General may issue a subpoena to the participants in a Donnelly Act violation, or "whenever he believes it to be in the public interest that an investigation be made” (General Business Law § 343). Contrary to ADC’s arguments, all that the Attorney-General need show in support of his subpoena in the face of a motion to quash is his authority, the relevance of the items sought, and some factual basis for his investigation. (Matter of Crowley Foods v Lefkowitz,
Nor is there merit to ADC’s jurisdictional argument. A foreign corporation is subject to personal jurisdiction if it is "doing business” in the State of New York. (Tauza v Susquehanna Coal Co.,
It is undisputed that more than 10% of ADC’s members, for which it acts as a purchasing agent for the transmittal and billing of orders on a continuing basis, are located in New York. ADC also sponsors and develops private label products for its New York members and prepares and distributes product informаtion books to them. In addition, its New York members must conform to ADC’s bylaws, thus allowing it to exert influence over various aspects of their operation. In such circumstances, ADC is both transacting business and supplying services here. "It is important to emphasize that one need not be physically present in order to be subject to the jurisdiction of our courts under CPLR 302 for, particularly in this day of instant long-range communications, one can engage in extensive purposeful activity here without ever actually setting foot in the State.” (Parke-Bernet Galleries v Franklyn,
ADC claims that CPLR 302 cannot serve as the basis for jurisdiction since there is no factual predicate demonstrating a "nexus between a cause of action against ADC and its transacting of business within the state or its contracting * * * to ship, distribute or supply goods or services within the state.” In this connection, ADC argues that it is not a target of the Attorney-General’s investigation. This assertion is without basis in the record and is made in the face of the Attorney-General’s statement to the contrary. The cause of action in this matter is, of course, the suspected agreement to engage in a concerted refusal to buy from manufacturers who sell to discounters and mail-order dealers. Such an agreement would unequivocally violate the antitrust laws. ADC’s аlleged advocacy of a boycott of low priced competitors may be a service that it agreed to provide to its New York members, thus subjecting it to jurisdiction under CPLR 302 (a) (1). New York members regularly contribute dues to support these services.
Finally, and in any event, these activities, if proven, would constitute the common-law tort of restraint of trade, a wrongdoing which would have an injurious effect on consumers оf dental products, mail-order dental products, discount dental products dealers and independent service organizations within the State. Such conduct, therefore, would bring ADC within the scope of CPLR 302 (a) (3), in that it "committed] a
The cases upon which ADC relies are inapposite. In J. E. T. Adv. Assocs. v Lawn King (
Finally, ADC asserts, in vague and conсlusory terms, that the subpoena is overbroad and burdensome. It objects, inter alia, to the number of definitions, 29 in all, and subparts, as well as the six-year time frame that the subpoena covers. None of these objections, however, is sufficient to warrant quashing or modifying the subpoena in any way.
The validity of a subpoena, particularly in an antitrust investigation, turns on whether the material sought is relevant to the subject matter under investigation. "Only where the futility of the process to uncover anything legitimate is inevitable or obvious must there be a halt upon the threshold.” (Matter of Edge Ho Holding Corp.,
The reason for this standard is obvious. An investigation would be stymied at the outset if law enforcement officials had to pinpoint exactly what the subpoenaed materials were expected to reveal. As the court explained in Matter of Edge Ho Holding Corp. (supra,
In this case, even a cursory comparison of the challenged discovery demands with the matters under investigation demonstrates that the test of relevance set forth in Virag v Hynes (
Insofar as ADC’s claims that the instructions and definitions are too detailed are concerned, this court, in Matter of Grandview Dairy v Lefkowitz (
Accordingly, the order of the Supreme Court, New York County (David H. Edwards, Jr., J.), entered on September 17, 1986, denying petitioner’s motion to quash or modify respondent’s subpoena should be affirmed, without costs or disbursements.
Carro, Asch, Rosenberger and Smith, JJ., concur.
Order, Supreme Court, New York County, entered on September 17, 1986, unаnimously affirmed, without costs and without disbursements.
Notes
. Full service dental products dealers maintain local showrooms and a sales and service staff and typically sell equipment for considerably more than do mail-order and discount dealers.
. General Business Law § 343, insofar as is relevant, provides: "Any person, persons, partnership, corporation, company, trust or association subject to service of a summоns within or without the state pursuant to article three of the civil practice law and rules shall be subject to the service of a subpoena properly issued pursuant to this section. Any subpoena served hereunder without the state shall be issued on an ex-parte order of the court based upon a showing that the information or testimony sought bears a reasonable relationship to the subject matter under invеstigation * * * Any person, persons, partnership, corporation, company, trust, or association, who has been served with [a] subpoena pursuant to this section may make a motion, pursuant to section twenty-three hundred four of the civil practice law and rules, to quash, fix conditions, or modify such subpoena.”
. An appellate court need not rely on the rationale articulated in the court of original jurisdiction to affirm a decision. (See, Weissmann v Euker,