Commercial Division Blog

Posted: November 4, 2014 / Categories Commercial, Law Firms and Professional Ethics

Second Circuit Asks Court of Appeals to Clarify Power of New York City to Regulate Law Firms Engaged in Debt Collection

On October 29, 2014, in Eric M. Berman, P.C. v. City of New York, 13-CV‐598, the Second Circuit certified two questions to the Court of Appeals regarding the power of the City of New York to regulate law firms engaged in debt collection activities.

In Eric M. Berman, P.C., the plaintiff law firms, which "attempt to collect debts," brought an action "seeking, among other remedies, a declaratory judgment that Local Law 15," which regulates law firms that engage in debt collection, "violates Article IX of the New York Constitution, the New York Municipal Home Rule Law, the New York Judiciary Law, and the New York City Charter." The EDNY granted the plaintiffs partial summary judgment, holding that "Local Law 15 conflicted with the State's authority to regulate attorneys," and "violated a provision of the New York City Charter by purporting to provide the City with the effective authority to grant or withhold licenses to practice law, which is a function reserved to the State."

The Second Circuit reserved decision and certified the following questions to the 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 Local Law 15 and Sections 53 and 90 of the New York Judiciary Law?

If Local Law 15’s regulation of attorney conduct is not preempted, does Local Law 15, as applied to attorneys, violate Section 2203(c) of the New York City Charter?