Providing Debt Relief for Clients Throughout the State of New York

NY Court of Appeals to Hear Berman v. City of New York Case

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:

  1. 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? [1]
  1. 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.

Source: http://www.newyorklawjournal.com/id=1202675123849?


[1] 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.