The New York Court of Appeals, the state's highest court, will hear
Berman v. City of New York, originally filed in 2009, after the case had already made its way through
Eastern District Court and Second Circuit without a conclusive holding.
The case was filed 5 years ago by Eric Berman, of
Lacy Katzen, LLP, and debt buyer DBA Asset Holdings challenging Local Law 15 in 2009. The
original issue was whether New York City's Local Law 15, designed
to regulate debt collection agencies, would apply to law firms who are
also engaged in the practice of collecting debts.
Judge Vitaliano of the Eastern District ruled that the law does not apply
to plaintiff law firms who are attempting to collect debts, and that additionally,
Local Law 15 violates a provision of the New York City Charter, because
it purports to cloak the City with the authority to grant or withhold
licenses to practice law. That decision was appealed by the City of New
York, and in December of 2013, the three-judge panel comprised of Judges
Pooler, Parker, and Chin heard oral arguments made by both sides. The
panel was unable to write an opinion that conclusively dealt with the
legal issues, and instead, they posed two questions for the New York State
Court of Appeals:
Does Local Law 15, insofar as it regulates attorney conduct, constitute
an unlawful encroachment on the state's authority to regulate attorneys
and is there a conflict between the law and Sections 53 and 90 of the
New York Judiciary Law?
- Does Local Law 15 violate §2203(c) of the New York City Charter?
While the Second Circuit agreed that the legislative intent of Local Law
15 was to curb unscrupulous collection agencies in their operation that
"practice abusive tactics such as threatening delinquent debtors
or calling people at outrageous times of the night", they could not
resolve the clash between the type of conduct that an attorney could engage
in as approved by the law and conduct that was prohibited. Although Local
Law 15 outlines specific circumstances under which an attorney could engage
in debt collection activities such as when it is done by a law firm on
behalf of and in the name of a client solely through activities that may
only be performed by an attorney, it is unclear when they would fall into
activities traditionally performed by debt collectors which could violate the law.
The second question raises issues between §2203 of the Charter and
potential enforcement powers found in Local Law 15. §2203 grants
the commissioner of the Department of Consumer Affairs the power and authority
to carry out duties over all licenses and permits except in cases when
that power is already conferred on other persons or agencies. The commissioner
has the power to enforce the law, perform various functions, make recommendations,
conduct research, and facilitate exchange across a broad spectrum of business
and consumer activities involving permits and licenses.
 Section 53 gives the New York Court of Appeals authority to make rules
on the admission of attorneys to practice law and Section 90 gives New
York courts the power to regulate attorney conduct.