One of our mantras at CCP is that “more speech is always better.” Ideas should be judged on their merits, rather than the identity or motivations of the speaker. Some of our nation’s most important political writings were published anonymously, such as The Federalist Papers and Common Sense.
So when New York State Comptroller Thomas DiNapoli filed a suit for the books and records of Qualcomm, our first thought was to look at the law. We would never impugn his motives just because he’s running for re-election in 2014, or because there are rumors that he aspires to even higher office. However, why does the Comptroller need political disclosure from this one company? Here’s what we found.
As the sole trustee of the New York State Common Retirement Fund, DiNapoli’s legal obligation is to take actions which “are necessary or required for the proper fiscal management of the retirement system.” According to the official complaint, DiNapoli wants “to determine how shareholder funds are being spent for political purposes.” In essence, he doesn’t want Qualcomm spending money on political activity which negatively affects the value of the company. DiNapoli has the right to inspect the books and records of Qualcomm for any purpose “reasonably related” to his interest as a shareholder. But to be “reasonably related,” an interest has to be economic, not political. And DiNapoli would have to show some evidence that Qualcomm’s managers breached their duties to the company. We don’t like his odds.
DiNapoli is hiring the good people at Bernstein Litowitz Berger & Grossman in Manhattan. We expect that Qualcomm also retains very good lawyers, and probably has the money and the willpower to fight this case for a long time. Indeed, Qualcomm had over $19 billion in revenue in 2012, a number which is probably several orders of magnitude greater than their political spending, if any. But the law requires that Mr. DiNapoli act in the financial interest of the retirement fund, so we assume this is money well-spent.
We too, would like to ensure the financial stability of New York’s retirement system. So as lawyers, we offer Mr. DiNapoli this bit of free advice: lawyers are very, very expensive. The Comptroller may have the power to spend millions of taxpayer dollars to get the political activity records at Qualcomm. But this action against Qualcomm will only be securing the retirement account of some corporate lawyers.