DFS WFP Settlement

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					                                 SETTLEMENT AGREEMENT

       WHEREAS, Data and Field Services, Inc. (“DFS”), a New York for-profit corporation,

was incorporated in February 2007; and

       WHEREAS, DFS at its inception was affiliated with the Working Families Party of New

York State (“WFP”), a New York political party; and

       WHEREAS, DFS was formed with the intent that it would undertake door-to-door

canvassing and other field operations, included but not limited to: (i) in support of the WFP and

its agenda as a political party (“party-building activities”); (ii) in support of issues of concern to

the WFP (“issue advocacy activities”); (iii) as a vendor to candidates for federal, state and local

office and their campaign committees (“election-related activities”); and (iv) as a vendor to other

non-profit organizations; and

       WHEREAS, employees of the WFP had previously carried out the election-related and

party-building activities later carried out by DFS, and it is anticipated that, WFP will conduct

this work in the future; and

       WHEREAS, Petitioners James Thomson, Meghan Thomson, James Reyes Salazar,

Brandon Linker and James Hart (collectively “Petitioners”) filed a petition (“the Thomson

Proceeding”), alleging that, as a New York for-profit corporation, DFS made illegal, undisclosed

in-kind corporate contributions to Debi Rose 4 City Council, Rose’s campaign committee for the

2009 primary and general elections (the “Rose Campaign”), by either failing to charge or

undercharging the Rose Campaign in multiple respects, in violation of Article 14 of the New

York State Election Law; and

       WHEREAS, DFS has denied all of the allegations in the Thomson Proceeding; and
       WHEREAS, in February 2010, DFS, Petitioners, and the Rose Campaign entered into a

Stipulation of Settlement and Order in the Thomson Proceeding (the “2010 Stipulation and

Order”) that required DFS and the Rose Campaign to take certain actions and refrain from taking

other actions, including but not limited to: requiring DFS to issue an invoice and supplemental

invoice to the Rose Campaign totaling $13,525.00; and requiring DFS to promptly implement

reforms in its corporate structure and corporate governance to ensure that it adhered to proper

corporate formalities and operated independently and not under the control of the WFP, the

Working Families Organization (“WFO”), and affiliated entities or organizations, including, but

not limited to, the following: (a) to form an independent board of directors, as defined in the

2010 Stipulation and Order; (b) to charge candidates and their committees fair market value as a

for-profit company; (c) to establish management, administrative and employment structures that

are independent of and not controlled by the WFP; (d) to charge its candidate-clients (or their

committees) fair market value for the actual services provided by DFS as a for-profit

corporation; and (e) not to provide the Voter Action Network (the “VAN”) to its candidate-

clients or their committees without first obtaining an evaluation by an independent expert of the

fair market value of the VAN to its candidate-clients or their committees and charging its

candidate-clients or their committees that amount for access to the VAN; and

       WHEREAS, in exchange for the guarantees set forth in the 2010 Stipulation and Order,

and after the Rose Campaign satisfied its obligations thereunder, Petitioners subsequently

voluntarily dismissed the Thomson Proceeding against the Rose Campaign; and

       WHEREAS, the Court retained jurisdiction over the Thomson Proceeding to oversee,

implement and enforce the terms of the 2010 Stipulation and Order, and to render any further

decisions required under its terms; and




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        WHEREAS, in September 2010, Petitioners filed a motion to hold DFS in contempt of

the 2010 Stipulation and Order, to compel DFS’s compliance with that Order, and to compel

DFS’s disclosure of certain documents in the Thomson Proceeding, alleging that DFS had

violated the terms of the 2010 Stipulation and Order in multiple, material respects (the “First

Contempt Motion”); and

        WHEREAS, DFS opposed Petitioners’ First Contempt Motion; and

        WHEREAS, by a Decision and Order, dated April 14, 2011, in the Thomson Proceeding,

the Hon. Anthony I. Giacobbe, Justice of the Supreme Court of the State of New York, held DFS

in contempt of the 2010 Stipulation and Order (the “Contempt Order”) for, inter alia, resolving

to reconstitute itself as a not-for-profit corporation; resolving to charge its clients at cost, rather

than at fair market value, for the actual services it provides its clients; providing access to the

voter information files once contained in the VAN to its clients without first obtaining an

evaluation by an independent expert of the fair market value of those voters information files’

fair market value; failing to effectuate the appointment of sufficiently independent directors to

constitute a majority of its Board of Directors, as defined in the 2010 Stipulation and Order; and

failing to establish and maintain its independence from the WFP, the WFO and their affiliated

entities and organizations, as evidenced in part by the fact that DFS continues to share office

space with WFP, that DFS’s current Executive Director is the former Field Director for the WFP,

and that there is no division of labor among employees DFS admittedly shares with the WFP;

and

        WHEREAS, DFS contests those findings, as well as the Contempt Order itself, and has

appealed from the Contempt Order to the Appellate Division of the Supreme Court of the State

of New York, Second Judicial Department, No. 2011-04879 (the “DFS Appeal”); and




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       WHEREAS, Petitioners contend that the Contempt Order was properly entered and

would be affirmed on appeal in its entirety; and

       WHEREAS, Petitioners filed a motion to hold DFS in further contempt of the 2010

Stipulation and Order and Contempt Order, to impose more severe sanctions on DFS for its on-

going violations of those orders, and to compel DFS’s disclosure of certain documents on June

10, 2011 (the “Second Contempt Motion”); and

       WHEREAS, Petitioners filed an application for a determination of their costs and

disbursements, including attorneys’ fees, incurred in the prosecution of their First Contempt

Motion, as directed by the Court in its Contempt Order (the “Application for a Determination of

Costs and Fees”); and

       WHEREAS, DFS is prepared to cease operating, as set forth herein, and to provide the

additional considerations provided herein, in order to resolve this matter; and

       ACCORDINGLY, DFS, Petitioners, and the WFP (the “Settling Parties”), by and

through their undersigned counsel, enter into this Settlement Agreement (“Settlement

Agreement”) in consideration of the mutual covenants and promises contained herein and other

good and valuable consideration, and to avoid the risk, inconvenience and expense of litigation

and without any admission of fault or liability on the part of the Settling Parties;

               IT IS HEREBY AGREED,

       1.      Within sixty (60) days of the Effective Date of this Settlement Agreement

(“Effective Date” as defined in paragraph 20 below), DFS shall cause to be paid one hundred

thousand dollars ($100,000.00) to the law firm of Gibson, Dunn & Crutcher LLP (“Gibson

Dunn”), to defray attorneys’ fees incurred in the Thomson Proceeding in connection with the

Contempt Order (the “$100,000.00 Payment”).




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       2.      DFS hereby agrees that, as of five (5) business days of the Effective Date forward,

it will not (i) engage in any election-related activities on behalf of any candidate and/or

his/her/their authorized committees who is/are seeking local, state, or federal office; or (ii)

provide services to a committee making independent campaign expenditures pursuant to federal,

state, or local law. DFS further agrees that, as of sixty (60) days of the Effective Date forward, it

will not (i) engage in party-building activities; (ii) engage in issue advocacy activities on behalf

of the WFP, WFO, their affiliates or any other third party; and/or (iii) provide canvassing

services or field operations to any person or entity. It is DFS’s intent to wind up the business.

Accordingly, within sixty (60) days of the Effective Date, DFS shall submit separate Requests

for Consent to Dissolution (as well as any other filings that must accompany such): one to the

New York State Department of Taxation and Finance, and the other to the New York City

Department of Finance, pursuant to N.Y. Bus. Corp. Law § 1004, and shall also

contemporaneously deliver a copy of these two Requests for Consent to Dissolution (along with

any accompanying filings, excluding the tax returns) to Gibson Dunn (the “Dissolution Request

and Notification”). Therefore, DFS shall not voluntarily withdraw these Requests for Consent to

Dissolution or take any other steps to prevent the New York State Department of Taxation and

Finance, or the New York City Department of Finance, from consenting to the dissolution of

DFS. Within five (5) days of the date DFS obtains the consent of the New York State

Department of Taxation and Finance and the New York City Department of Finance to the

dissolution of DFS, DFS shall deliver a copy of such consents to Gibson Dunn. In addition,

within thirty (30) days of the date DFS obtains the consent of the New York State Department of

Taxation and Finance and the New York City Department of Finance to the dissolution of DFS,

DFS shall cause to be signed and delivered to the New York Department of State a valid




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certificate of dissolution of DFS, pursuant to N.Y. Bus. Corp. Law §§ 1003 and 1004. DFS shall

also contemporaneously deliver a copy of this certificate of dissolution to Gibson Dunn. Nothing

herein, however, shall prohibit DFS from engaging in administrative, regulatory, and winding-up

activities as provided for in N.Y. Bus. Corp. Law §§ 1005 and 1006, including but not limited to

responding to subpoenas and governmental inquiries, paying debts, disposing of assets, making

filings with government authorities and/or taking or refraining from taking actions in order to

comply with this Settlement Agreement.

       3.      The WFP hereby agrees that, as of sixty (60) days of the Effective Date forward,

it will not pay as a vendor or give monetary contributions to any for-profit or not-for-profit

corporation that charges candidates and/or their authorized committees to conduct election-

related activities in New York if that corporation has as an employee or officer who is a covered

person under this Settlement Agreement. The term “covered person” is herein defined as any

current or past senior staff member of WFP or DFS, any current or past member of the DFS

Board of Directors, or any current or past Executive Officer of the WFP New York State

Executive Committee until such person has not served in any such capacity at DFS and/or WFP

for three years. The term “senior staff member” shall mean any person who receives $50,000.00

or more in compensation in any calendar year from DFS, the WFP, or DFS and the WFP

together, provided however that the income limit shall be adjusted upward by $5,000.00 every

five years, beginning on the five-year anniversary of the Effective Date. This prohibition shall

not apply to any for-profit or not-for-profit corporation that (a) has directly received at least

$100,000.00 from candidates or their authorized committees in exchange for election-related

services in either of the two calendar years immediately preceding its retention as a vendor, and

(b) employs no more than one (1) covered person during its retention as a vendor. This




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prohibition also shall not apply to any accounting firm, law firm, or not-for-profit organization

providing legal services.

       4.      Petitioners hereby agree that, within two (2) business days of the date on which

DFS and the WFP execute this Agreement, Petitioners will request that the Court (i) stay all

ongoing obligations under the Contempt Order and 2010 Stipulation and Order for sixty-seven

(67) days from the Effective Date; and (ii) hold in abeyance any decision or ruling on

Petitioners’ pending Second Contempt Motion and Application for a Determination of Costs and

Fees for sixty-seven (67) days from the Effective Date.

       5.      Petitioners further agree that, from the Effective Date forward, neither they nor

any one of them, nor their successors or assigns, nor any person acting in concert with them, will

take any steps to enforce the Contempt Order, provided however that Petitioners shall be relieved

of the obligations and restraints on their action under this paragraph, if (i) Gibson Dunn is not

paid $100,000.00 as set forth in paragraph 1 above; or (ii) DFS fails to fully satisfy its

Dissolution Request and Notification obligations pursuant to paragraph 2 above. Petitioners also

agree that, within five (5) business days of DFS’s full satisfaction of both (a) its $100,000.00

Payment obligation pursuant to paragraph 1 above, and (b) its Dissolution Request and

Notification obligations pursuant to paragraph 2 above, Petitioners will (i) request that the Court

in the Thomson Proceeding issue an order stating that DFS has no ongoing obligations under the

Contempt Order; (ii)withdraw their pending Second Contempt Motion and Application for a

Determination of Costs and Fees; and (iii) refrain from making any other motions or applications

in the Thomson Proceeding, other than the motions to (a) terminate all ongoing obligations under

the Contempt Order and 2010 Stipulation and Order pursuant to this paragraph 5 and paragraph 6




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below, and (b) request that the Court dismiss, discontinue and/or relinquish jurisdiction of the

Thomson Proceeding pursuant to paragraph 14 below.

       6.      Petitioners further agree that, from the Effective Date forward, neither they nor

any one of them, nor their successors or assigns, nor any person acting in concert with them, will

take any steps to enforce the 2010 Stipulation and Order, except as provided in paragraph 16

below, and provided that Petitioners shall be relieved of the obligations and restraints on their

action under this paragraph, if (i) Gibson Dunn is not paid $100,000.00 as set forth in paragraph

1 above; or (ii) DFS fails to fully satisfy its Dissolution Request and Notification obligations

pursuant to paragraph 2 above. Petitioners also agree that, upon DFS’s full satisfaction of both

(a) its $100,000.00 Payment obligation pursuant to paragraph 1 above, and (b) its Dissolution

Request and Notification obligations pursuant to paragraph 2 above, this Settlement Agreement

supersedes the 2010 Stipulation and Order. Petitioners also agree to request, within five (5)

business days of DFS’s full satisfaction of both (a) its $100,000.00 Payment obligation pursuant

to paragraph 1 above, and (b) its Dissolution Request and Notification obligations pursuant to

paragraph 2 above, that the Court in the Thomson Proceeding issue an order stating that DFS has

no ongoing obligations under the 2010 Stipulation and Order.

       7.      If, after Petitioners make their request(s) pursuant to paragraphs 5 and 6 above,

the Court refuses to terminate all ongoing obligations under the Contempt Order and/or the 2010

Stipulation and Order, then (i) this Settlement Agreement is null and void; (ii) none of the

Settling Parties are required to take any of the steps set forth herein; and (iii) Gibson Dunn is

required to return the $100,000.00 paid pursuant to paragraph 1 above.

       8.      The Settling Parties entered into a confidentiality agreement in the Thomson

Proceeding, pursuant to which DFS produced certain documents (the “Confidentiality




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Agreement”). The Confidentiality Agreement, a copy of which is appended hereto as Exhibit A,

is incorporated by reference into this Stipulation, but shall survive as a contract between the

Settling Parties that can be enforced in any court of competent jurisdiction and proper venue.

       9.      Upon DFS’s full satisfaction of both (a) its $100,000.00 Payment obligation

pursuant to paragraph 1 above, and (b) its Dissolution Request and Notification obligations

pursuant to paragraph 2 above, Petitioners forever release and discharge DFS and WFP from any

and all actions or causes of action, demands, suits, liabilities, or claims, including claims for

attorneys’ fees and disbursements, whether known or unknown, that they may have, had or may

have from the beginning of time until the execution of this Agreement. Nothing in this paragraph

shall preclude or limit Petitioners from seeking to enforce the terms in this Agreement.

       10.     Upon DFS’s full satisfaction of both (a) its $100,000.00 Payment obligation

pursuant to paragraph 1 above, and (b) its Dissolution Request and Notification obligations

pursuant to paragraph 2 above, Petitioners forever release and discharge the current and past

members of the WFP New York State Executive Committee, the current and past members of the

DFS Board of Directors, and DFS’s and WFP’s managers, principals, members, owners, officers,

employees, representatives, agents, attorneys, successors, and assigns from any and all actions or

causes of action, demands, suits, liabilities, or claims, including claims for attorneys’ fees and

disbursements, whether known or unknown, that they may have, had or may have from the

beginning of time until the execution of this Agreement to the extent such relate to the Thomson

Proceeding and/or the activities of the DFS and/or WFP. Nothing in this paragraph shall preclude

or limit Petitioners from seeking to enforce the terms in this Agreement.

       11.     Upon DFS’s full satisfaction of both (a) its $100,000.00 Payment obligation

pursuant to paragraph 1 above, and (b) its Dissolution Request and Notification obligations




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pursuant to paragraph 2 above, DFS and WFP forever release and discharge Petitioners and their

agents, attorneys, successors, and assigns from any and all actions or causes of action, demands,

suits, liabilities, or claims, including claims for attorneys’ fees and disbursements, whether

known or unknown, that he may have, had or may have from the beginning of time until the

execution of this Agreement. Nothing in this paragraph shall preclude or limit DFS and/or WFP

from seeking to enforce the terms in this Agreement.

       12.     Upon DFS’s full satisfaction of both (a) its $100,000.00 Payment obligation

pursuant to paragraph 1 above, and (b) its Dissolution Request and Notification obligations

pursuant to paragraph 2 above, the current and past members of the WFP New York State

Executive Committee, the current and past members of the DFS Board of Directors, and DFS’s

and WFP’s managers, principals, members, owners, officers, employees, representatives, agents,

attorneys, successors, and assigns forever release and discharge Petitioners and their agents,

attorneys, successors, and assigns from any and all actions or causes of action, demands, suits,

liabilities, or claims, including claims for attorneys’ fees and disbursements, whether known or

unknown, that he may have, had or may have from the beginning of time until the execution of

this Agreement to the extent such relate to the Thomson Proceeding and/or the activities of the

DFS and/or WFP. Nothing in this paragraph shall preclude or limit DFS and/or WFP from

seeking to enforce the terms in this Agreement.

       13.     Gibson Dunn agrees that if it commences or represents any party who commences

any other lawsuit, claim, action, demand, suit, or liability of any kind against DFS, WFP, and/or

the WFO within sixty (60) days of the Effective Date of this Settlement Agreement, Gibson

Dunn will return the $100,000.00 paid pursuant to paragraph 1 to DFS, or if the $100,000.00 has

not yet been paid, the Settling Parties agree that for purposes of this Settlement Agreement the




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$100,000.00 will be treated as if it was paid on the 59th day after the Effective Date. Nothing in

this paragraph shall preclude or limit Petitioners from seeking to enforce the terms of this

Settlement Agreement.

       14.     Petitioners agree to discontinue the Thomson Proceeding and ask the Court to

relinquish jurisdiction within five (5) business days of DFS’s full satisfaction of both (a) its

$100,000.00 Payment obligation pursuant to paragraph 1 above, and (b) its Dissolution Request

and Notification obligations pursuant to paragraph 2 above. If, after Petitioners make their

request(s) pursuant to this paragraph 14, the Court refuses to permit the Thomson Proceeding to

be dismissed and/or refuses to relinquish jurisdiction of the Thomson Proceeding, then (i) this

Settlement Agreement is null and void; (ii) none of the Settling Parties are required to take any

of the steps set forth herein; and (iii) Gibson Dunn must return the $100,000.00 to DFS.

       15.     DFS agrees to voluntarily withdraw the DFS Appeal within five (5) business days

of when the Thomson Proceeding is dismissed.

       16.     DFS and WFP agree that any violation of paragraphs 2-3 of this Settlement

Agreement would give rise to irreparable harm to Petitioners such that, provided that all other

prerequisites of a preliminary or permanent injunction are found by a court to have been satisfied

(i.e., likelihood of success on the merits, and the balance of equities tipping in favor of the

moving party), an injunction would be appropriate to prevent any on-going violation.

Accordingly, in the event that Petitioners demonstrate that DFS or WFP have violated paragraph

2 or 3, in addition to any other remedies available to Petitioners at law or in equity, Petitioners

shall be entitled to obtain an injunction enforcing paragraphs 2-3 from a court of competent

jurisdiction. The Settling Parties hereby agree that the adjudication of any claim arising under the

terms of this Settlement Agreement shall be brought in the first instance in the Supreme Court of




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the State of New York, New York County, Commercial Division (or its closest equivalent in

New York County if the Commercial Division does not exist), which the Settling Parties agree is

the appropriate venue for any such adjudication. If Petitioners demonstrate that DFS or WFP

violated paragraphs 2 or 3 above, Petitioners shall also be entitled to reasonable attorneys’ fees

and costs for enforcement of this Settlement Agreement, as well as liquidated damages in a sum

not to exceed $200,000.00; but in no event shall DFS or WFP be entitled to attorneys’ fees due to

a finding that it is the prevailing party. Petitioners have no right to discovery unless they first

make a prima facie showing that DFS or WFP have violated paragraph 2 or 3 above. If a court

finds that DFS violated paragraph 2 but refuses to enjoin DFS from violating paragraph 2, then

the Petitioners may request that that court re-impose the obligations set forth in paragraph 4 of

the 2010 Stipulation and Order, as applied in the Contempt Order.

       17.     At any time after December 31, 2021, the WFP may request Petitioners to agree

to void any and/or all of the provisions of this Settlement Agreement due to changed

circumstances. For the purposes of this Settlement Agreement, the term “changed

circumstances” shall mean a material change of governing law or the interpretation of it or

unforeseen and unforeseeable circumstances that result in the Agreement being significantly

more onerous than expected. If Petitioners and the WFP cannot reach an agreement as to whether

there are changed circumstances, the Settling Parties agree that dispute will be resolved by

binding arbitration in New York City, by the American Arbitration Association, pursuant to its

Commercial Arbitration Rules. The arbitration decision will be final and binding on the Settling

Parties. Arbitration will be the sole means of resolving such disputes. The arbitrator will be

empowered to void any and/or all provisions of this Settlement Agreement if he or she finds

changed circumstances, as that term is defined in this paragraph. The Settling Parties waive their




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rights to resolve disputes concerning whether there are changed circumstances by court

proceedings or any other means, and all parties irrevocably waive their rights to appeal the

arbitrator’s decision in any forum. In addition, the Settling Parties expressly agree to submit to

personal jurisdiction in New York State in any arbitrated dispute. Petitioners also agree that

Gibson, Dunn & Crutcher LLP or its successor firm shall accept service on their behalf.

         18.    Nothing herein shall be interpreted as limiting, interfering with, or prohibiting the

WFP or any other organization from engaging in party-building activities, election-related

activities, or issue advocacy activities, from employing former or current employees of DFS, or

from taking any other action permitted by law, other than as provided herein. It is anticipated that

the WFP will itself conduct the activities previously conducted by DFS.

         19.    Nothing herein shall be interpreted as limiting, interfering with, or prohibiting any

candidate for office, individual, or group of individuals from forming a political committee

pursuant to local, state, or federal election law, whether or not such committee becomes

incorporated.

         20.    The “Effective Date” shall be the date on which the Court agrees to stay for sixty-

seven (67) days all ongoing obligations under the 2010 Stipulation and Order and Contempt

Order.

         21.    This Settlement Agreement constitutes and contains the entire agreement and

understanding between the Settling Parties. Except as provided for in paragraphs 5, 6, and 16

above, this Settlement Agreement supersedes and replaces all prior negotiations and all prior

agreements, whether written or oral, concerning the subject matter hereof.




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       22.     This Settlement Agreement shall be construed under, and interpreted in

accordance with, the internal laws of the State of New York without regard to its rules governing

conflict of laws.

       23.     The Settling Parties have both cooperated in the drafting and preparation of this

Settlement Agreement. Hence, in any construction or interpretation of this agreement, the same

shall not be construed against any party on the basis that the party was the drafter.

       24.     This Settlement Agreement cannot be modified, amended or changed, except in

writing signed by the Settling Parties.

       25.     This instrument may be executed in counterparts and in multiple originals. Faxed

or electronically sent pdf documents shall be treated as originals.

       EXECUTED,


Dated: October __, 2011
       New York, New York




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