Eric M. Berman, P.C., et al., Respondents,v.City of New York, et al., Appellants.BriefN.Y.November 17, 2014 To be argued by: JANET L. ZALEON (15 MINUTES REQUESTED) State of New York Court of Appeals ERIC M. BERMAN, P.C., LACY KATZEN, LLP, Plaintiffs-Respondents, -against- CITY OF NEW YORK NEW YORK CITY COUNCIL, NEW YORK CITY DEPARTMENT OF CONSUMER AFFAIRS, JONATHAN MINTZ, in his official capacity as the Commissioner of the New York City Department of Consumer Affairs, Defendants-Appellants. BRIEF FOR APPELLANTS RICHARD DEARING NICHOLAS R. CIAPPETTA JANET L. ZALEON of Counsel February 19, 2015 ZACHARY W. CARTER Corporation Counsel of the City of New York Attorney for Appellants 100 Church Street New York, New York 10007 Tel: (212) 356-0860 or 2500 Fax: (212) 356-2509 jzaleon@law.nyc.gov TABLE OF CONTENTS Page TABLE OF AUTHORITIES ...................................................................... iii PRELIMINARY STATEMENT .................................................................. 1 QUESTIONS PRESENTED ....................................................................... 4 STATEMENT OF THE CASE .................................................................... 4 A. Background on the Regulation of Deceptive and Abusive Debt-Collection Practices .............................................................. 4 B. The City’s Licensing and Regulation of Debt-Collection Agencies .......................................................... 8 1. The statutory and regulatory scheme ......................................... 8 2. The provisions concerning law firms and attorneys .................. 11 C. The Federal Lawsuit Challenging the 2009 Amendments ............. 13 1. The district court’s preemption ruling ...................................... 14 2. The Second Circuit Certifies Questions to this Court ................ 16 ARGUMENT ........................................................................................... 18 POINT I LOCAL LAW 15 IS NOT PREEMPTED BY THE STATE JUDICIARY LAW.. ........................................................................ 18 A. The City’s Licensing of Nonlegal Debt-Collection Activities Overseen or Performed By Attorneys Does Not Conflict With the State Judiciary Law Simply Because Those Persons Also Hold Law Licenses. ................................................................. 21 ii Page 1. Local Law 15 does not expressly conflict with the sections of the Judiciary Law governing attorney admission and discipline. ..................................................... 21 2. Local Law 15 does not impose any additional prerequisite requirements as to attorneys’ ability to practice law. .............. 25 B. Local Law 15 Does Not Intrude Upon Any Field of Regulation that Is Reserved Solely to the State.. ........................................ .32 POINT II LOCAL LAW 15 DOES NOT VIOLATE NEW YORK CITY CHARTER § 2203(c). ............................................................. 38 CONCLUSION......................................................................................... 44 - iii - TABLE OF AUTHORITIES Cases Page Aponte v. Raychuk, 140 Misc. 2d 864 (Sup. Ct., NY Co., 1988), aff’d, 160 A.D.2d 636 (1st Dep’t 1990) ................................................ 27-28 Aponte v. Raychuk, 160 A.D.2d 636 (1st Dep’t 1990) ........................................................ 26-27 Avila v. Rubin, 84 F.3d 222 (7th Cir. 1996) .................................................................... 30 Cloman v. Jackson, 988 F.2d 1314 (2d Cir. 1993) ......................................................... 7 n.4, 31 Consolidated Edison Co. v Town of Red Hook, 60 N.Y.2d 99 (1983) .......................................................................... 32-33 DJL Rest. Corp. v. City of New York, 96 N.Y.2d 91 (2001) ................................................................... 18, 32, 33 Eric M. Berman, P.C. v. City of New York, 770 F.3d 1002 (2d Cir. 2014) .................................................................. 16 Eric M. Berman, P.C. v. City of New York, 895 F.Supp.2d 453 (E.D.N.Y. 2012) .................................................. passim Forti v. New York State Ethics Comm’n, 75 N.Y.2d 596 (1990) ............................................................................ 34 Goehler v. Cortland County, 70 A.D.3d 57 (3d Dep’t 2009) ................................................................ 37 Greco v. Trauner, Cohen & Thomas, LLP, 412 F.3d 360 (2d Cir. 2005) .................................................................... 30 iv Page Greens at Half Hollow, LLC v. Town of Huntington, 15 Misc. 3d 415 (Sup. Ct., Suffolk Co., 2006) ......................................... 37 Guggenheimer v Ginzburg, 43 N.Y.2d 268 (1977) ............................................................................ 28 Heintz v. Jenkins, 514 U.S. 291 (1995). .......................................................................... 6 n.3 Jancyn Mfg. Corp. v. County of Suffolk, 71 N.Y.2d 91 (1987) ................................................................... 18, 32, 33 Matter of Lenahan, 34 A.D.3d 13 (4th Dep't 2006) ............................................................... 22 Mahler v. Gulotta, 297 A.D.2d 712 (2d Dep’t), lv. denied, 98 N.Y.2d 615 (2002). ............................................................. 43 Miller v. Upton, Cohen & Slamowitz, 687 F. Supp. 2d 86 (E.D.N.Y. 2009) ................................................... 7 n.4 Miller v. Wolpoff & Abramson, LLP, 321 F.3d 292 (2d Cir.) cert. denied, 540 U.S. 823 (2003) ........... 7 n.4, 30, 31 Matter of N.Y. County Lawyers’ Ass’n v. Bloomberg, 19 N.Y.3d 712 (2012) ............................................................................ 37 Matter of N.Y. Tel. Co. v. Envtl. Control Bd., 1999 N.Y. Misc. LEXIS 565, (Sup. Ct., Queens Co., 1999) ..................... 42 Nielsen v. Dickerson, 307 F.3d 623 (7th Cir. 2002) .................................................................. 30 People v. Diack, __ A.D.3d __, 2015 NY Slip Op 01376 (Feb. 17, 2015)............................ 33 v Page People v. Law Offices of Andrew F. Capoccia, LLC, 289 A.D.2d 650 (3d Dep’t 2001)............................................................. 34 Matter of Rosenblum v. New York City Conflicts Bd., 18 N.Y.3d 422 (2012) ............................................................................ 25 Matter of Roth v. Turoff, 127 Misc. 2d 998 (Sup. Ct., Bronx Co., 1985), aff'd, 124 A.D.2d 471 (1st Dep’t 1986) ................................................ 28-29 Vatore v. Comm’r of Consumer Affairs of City of N.Y., 83 N.Y.2d 645 (1994) ............................................................................ 33 Matter of Wong, 275 A.D.2d 1 (1st Dep’t 2000) ................................................................ 22 Zakrzewska v. New School, 14 N.Y.3d 469, 480 (2010) .................................... 25 Matter of Zuckerman, 20 N.Y.2d 430 (1967) ............................................................................ 22 Statutes and Regulations Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692e .............. 31 FDCPA 1986 Amendments Pub. L. 99-361, 100 Stat. 768 ......................... 6 New York Constitution Article IX, § 2(c) .................................................... 18 Education Law §§ 3020, 3020-a .................................................................. 25 Judiciary Law § 53 .................................................................................................. passim § 90 .................................................................................................. passim vi Page Municipal Home Rule Law § 10(1)(i) .......................................................................................... 18, 43 § 11(1)(e) .................................................................................... 36, 37. 38 N.Y. Code of Rules and Regulations (N.Y.C.R.R.) Rules of Professional Conduct (22 N.Y.C.R.R. § 1200.0), Rules 1.0, 7.1 ...................................................................................... 27 Rule 5.3 .............................................................................................. 23 State Debt Collection Regulations 23 N.Y.C.R.R. Part 1 ................................................................. 6 n.3, 35 23 N.Y.C.R.R. § 1.1(e)(7) ............................................................. 35 n.10 New York City Charter § 28 .................................................................................................. 42, 43 § 38 ....................................................................................................... 43 § 1138(b) ............................................................................................... 43 § 2203(c) .......................................................................................... passim § 2303 ................................................................................................... 42 Former 1936 NYC Charter of 1936 § 773(a) ........................................... 41 Former Greater NY Charter of 1936 § 641 .......................................... 41-42 vii Page Administrative Code of the City of New York § 20-104(e)(2) ........................................................................................ 25 §§ 20-104(e), 20-105, 20-106 ................................................................... 11 §§ 20-488 to 20-294.1 ............................................................................... 8 § 20-488 .................................................................................................. 9 § 20-489(a)(5) ........................................................................ 12, 13, 19, 22 §§ 20-491, 20-492 ..................................................................................... 8 § 20-493.1 ........................................................................................ 11, 36 § 20-493.2 ........................................................................................ 11, 36 § 20-494 ....................................................................................... 8, 11, 21 Rules of the City of New York 6 R.C.N.Y. § 1-13 .................................................................................. 25 6 R.C.N.Y. § 2-190 ........................................................................... 11, 36 6 R.C.N.Y. § 2-191 ................................................................................ 11 6 R.C.N.Y. § 2-192 ........................................................................... 11, 36 6 R.C.N.Y. § 2-193 ................................................................................ 11 6 R.C.N.Y.§ 2-194 ............................................................................ 11, 36 viii Page Other Authorities DCA, Department Of Consumer Affairs Secures Nearly $1 Million in Consumer Restitution from Debt Collection Agency that Illegally Collected on Payday Loans, (Jan. 5, 2015), http://www.nyc.gov/html/dca/html/pr2015/pr_010515.shtml ........ .5 n.1 Federal Trade Comm’n, Statements of General Policy or Interpretation, Staff Commentary on the Fair Debt Collection Act, 53 Fed. Reg. 500097, 50100 (1988) ..................................................... 6 n.3 H. REP. 99-405, at 1-2 (1985), 1986 U.S.C.C.A.N. 1752 ........................... 5, 6 Legal Aid Soc’y, et al., Debt Deception: How Debt Buyers Abuse the LegalSystem to Prey on Lower Income New Yorkers, at 4, http://www.neweconomynyc.org/wp- content/uploads/2014/08/DEBT_DECEPTION_FINAL_WEB- new-logo.pdf. .................................................................................... 7 n.6 Elizabeth Ody, Debt Firms Play ‘Whack-a-Mole’ to Skirt Fee Ban, BLOOMBERG NEWS (Sept. 29, 2011), http://www.bloomberg.com/news/articles/2011-09-30/debt-firms- play-whack-a-mole-to-skirt-fee-ban ..................................................... 7 n.7 Connie Prater, States, Feds Target Debt-Settlement Legal Firms Over Upfront Fees: Despite Bans on Upfront Fees For Debt Relief, Some Law Firms Bypass Restrictions, CREDITCARDS.COM (Apr. 12, 2012), http://www.creditcards.com/credit-card- news/debt_settlement-upfront-fees-banned-law-firms-1282.php. .......... 7 n.7 U.S. Consumer Protection Financial Board, FAIR DEBT COLLECTION PRACTICES ACT: CFPB ANNUAL REPORT 2014, http://files.consumerfinance.gov/f/201403_cfpb_fair-debt- collection-practices-act.pdf. ................................................................ 5 n.2 PRELIMINARY STATEMENT This appeal, on questions of New York law certified to this Court by the United States Court of Appeals for the Second Circuit, asks whether the State Judiciary Law completely immunizes law firms and attorneys from New York City’s laws regulating debt-collection agencies, simply by virtue of their status as law firms and attorneys, and even as to activities for which no law license is required. Plaintiffs here are debt-collection law firms that sued in federal district court to raise federal- and state-law claims challenging Local Law 15 of 2009, to the extent that it makes the City’s debt-collection law applicable to law firms and attorneys that regularly engage in nonlegal debt-collection activities. The United States District Court for the Eastern District of New York (Vitaliano, J.) held that Local Law 15, as applied to plaintiffs, is preempted by the provisions of the New York Judiciary Law governing the admission and discipline of attorneys. The Second Circuit certified the preemption question to this Court, as well as a related question as to whether the New York City Charter prohibits the City’s Department of Consumer Affairs (DCA) from applying the City’s debt-collection licensing scheme to law firms and attorneys. The Court should hold that neither the State Judiciary Law nor the City Charter prevents application of the City’s debt-collection laws to law firms and 2 attorneys to the extent that they regularly engage in debt-collection activities that do not require the possession of a law license. The 2009 local law was designed to make clear that a debt-collection agency cannot evade the City’s rules for the protection of consumers simply by organizing debt-collection activities under the aegis of a law firm or an attorney. The 2009 amendments thus help to ensure that abusive and deceptive debt-collection practices may be appropriately addressed. The underlying debt-collection practices targeted by the law include the tactics of businesses, known as “debt buyers,” that purchase thousands of defaulted debts at a steep discount and then try to collect the face amounts of the debts. Debt collectors often engage in high-volume collection telephone calls and send boilerplate “dunning” letters demanding payment, based on computer printouts that lack details of the debts. Frequently, consumers are contacted by someone who does not know the source of the debt, whether the consumer disputes the debt, or whether the consumer actually has paid some or all of the amount allegedly due. Whether or not such contacts are nominally conducted by or under the supervision of an attorney, they typically are not based on any attorney’s review of particular consumers’ debts or case files. Local Law 15 is not preempted, because there is no conflict between (a) the State Judiciary Law provisions governing admission and discipline of 3 attorneys and (b) the local law’s provisions imposing licensing and regulatory requirements on law firms and attorneys and law firms that regularly engage in debt-collection activities of a type that are also commonly performed by lay debt-collection firms as well. The local law was drafted, after comment from debt-collection attorneys, to ensure that it would not affect an attorney’s representation of a particular client based on a legal judgment that a debt is owed. The local law thus subjects a law firm or attorney—including nonlegal collection staff—to licensing and regulation only with regard to debt-collection activities that do not constitute legal practice or the provision of legal services. A debt-collection agency should not escape the City’s regulations for the protection of vulnerable and unsophisticated consumers simply by placing a lawyer at the helm of the organization. Nothing suggests that the New York State Legislature intended the Judiciary Law to have so sweeping a preemptive effect as to nullify all application of local debt-collection rules to law firms and attorneys, even as to nonlegal debt-collection activities. 4 QUESTIONS PRESENTED 1. Does the New York Judiciary Law immunize law firms and attorneys from the City’s rules as to debt-collection activities that do not require possession of a law license, such as mass mailings to and high-volume telephone calls to alleged debtors that are not based on an attorney’s review of any particular case file? 2. Does New York City Charter § 2203(c) prohibit the City’s Department of Consumer Affairs from requiring attorneys and law firms that regularly engage in the debt-collection activities described above to obtain the same license that other debt-collection agencies operating in the City must obtain? STATEMENT OF THE CASE A. Background on the Regulation of Deceptive and Abusive Debt- Collection Practices For decades, curbing abusive, deceptive, and unfair debt-collection practices has been a central focus of consumer-protection efforts at all levels of government. Yet problems in the industry remain widespread. In New York City, debt collectors’ practices have consistently generated either the first or 5 second highest number of consumer complaints to DCA.1 And a recent report from the federal Consumer Financial Protection Board identified debt collection as “one of today’s most important consumer financial concerns.”2 Debt-collection businesses have frequently been organized as law firms, partly to exploit regulatory loopholes that often exempt attorneys, and partly because casting debt-collection efforts as communications from a law firm heightens their impact on consumers. Indeed, less than a decade after the enactment of the federal Fair Debt Collection Practices Act (FDCPA) in 1977, the number of attorneys engaged in the debt-collection business had outstripped the number of lay debt-collection firms. H. REP. 99-405, at 1-2 (1985), reprinted in 1986 U.S.C.C.A.N. 1752, at 1752. A 1985 House report noted that attorney debt-collection firms were using practices and fee structures similar to those used by lay debt-collection firms, were employing lay persons as account representatives and collectors, and were touting their then- exemption from the FDCPA in solicitations to creditors in order to gain a 1 DCA, Department Of Consumer Affairs Secures Nearly $1 Million in Consumer Restitution from Debt Collection Agency that Illegally Collected on Payday Loans, http://www.nyc.gov/html/dca/html/pr2015/pr_010515.shtml (Jan. 5, 2015). 2 U.S. Consumer Protection Financial Board, FAIR DEBT COLLECTION PRACTICES ACT: CFPB ANNUAL REPORT 2014, at 2, http://files.consumerfinance.gov/f/201403_cfpb_fair- debt-collection-practices-act.pdf. See also id. at 10-23 (describing the more than 200,000 complaints about the debt-collection industry received by federal regulators in 2013). 6 competitive edge over other collection firms. H. REP. 99-405, at 3-6, 1986 U.S.C.C.A.N. at 1754-56. The same House report found that attorney debt-collection firms were engaging in abuses similar to those already prohibited for other debt collectors, including “late night telephone calls to consumers, calls to consumers’ employers concerning the consumers’ debts, frequent and repeated calls to consumers, disclosure of consumers’ debt to third parties, [and] threats of legal action on small debts where there is little likelihood that legal action will be taken.” 1986 U.S.C.C.A.N. at 1755. These developments led Congress to repeal the FDCPA’s attorney exemption in 1986. Pub. L. 99-361, 100 Stat. 768.3 In the ensuing decades, debt-collection law firms have remained prominent in the third-party debt collection industry. Cases brought under the 3 Commentary from the Federal Trade Commission indicated that, following the 1986 repeal of the attorney exemption, attorneys or law firms that engaged in “traditional debt collection activities,” such as sending dunning letters or making collection calls, would be covered by the FDCPA, whereas “those whose practice [was] limited to legal activities would not be covered.” Federal Trade Comm’n, Statements of General Policy or Interpretation, Staff Commentary on the Fair Debt Collection Act, 53 Fed. Reg. 500097, 50100 (1988). The U.S. Supreme Court later rejected this understanding and held that the FDCPA applied even to litigation activities conducted by attorneys, citing the fact that the text of the FDCPA did not contain any limited exemption for such legal activities. See Heintz v. Jenkins, 514 U.S. 291, 295-99 (1995). By contrast, as discussed below, the text of Local Law 15 does contain an exemption for activities that require possession of a law license. New York State’s Department of Financial Services (DFS) recently promulgated regulations governing debt collectors that similarly exempt activities in litigation. See 23 N.Y.C.R.R. Part 1. 7 FDCPA show that some law firms are sending out over a million debt- collection letters per year.4 Debt-collection law firms may employ numerous debt collectors, but relatively few attorneys.5 In addition, the principals of some debt-collection law firms, including several in New York City, also own affiliated LLCs that act as debt buyers, which law firms are usually prohibited from doing directly.6 And in a related vein, reports state that debt-settlement firms have increasingly used affiliations with law firms to try to skirt federal restrictions on charging upfront fees to consumers.7 4 See, e.g., Miller v. Wolpoff & Abramson LLP, 321 F.3d 292, 305-06 (2d Cir.) cert. denied, 540 U.S. 823 (2003) (law firms sent out over 100,000 dunning letters per month); Cloman v. Jackson, 988 F.2d 1314, 1316, 1320-1321 (2d Cir. 1993) (New York attorney’s signature appeared on about a million debt-collection letters annually); Miller v. Upton, Cohen & Slamowitz, 687 F. Supp. 2d 86, 103 (E.D.N.Y. 2009) (describing practice of law firms “renting their letterhead” for use on mass debt-collection letters). 5 See, e.g., https://www.pressler-pressler.com (last visited on February 18, 2015) (website of New Jersey-based law firm touting “300 employees and 19 attorneys,” and advertising “a total retail collection environment”). 6 See Legal Aid Soc’y, et al., Debt Deception: How Debt Buyers Abuse the Legal System to Prey on Lower Income New Yorkers, at 4, http://www.neweconomynyc.org/wp- content/uploads/2014/08/DEBT_DECEPTION_FINAL_WEB-new-logo.pdf. 7 See, e.g, Elizabeth Ody, Debt Firms Play ‘Whack-a-Mole’ to Skirt Fee Ban, BLOOMBERG NEWS (Sept. 29, 2011), available at http://www.bloomberg.com/news/articles/2011-09-30/debt- firms-play-whack-a-mole-to-skirt-fee-ban; Connie Prater, States, Feds Target Debt-Settlement Legal Firms Over Upfront Fees: Despite Bans on Upfront Fees For Debt Relief, Some Law Firms Bypass Restrictions, CREDITCARDS.COM (Apr. 12, 2012), http://www.creditcards.com/credit- card-news/debt_settlement-upfront-fees-banned-law-firms-1282.php. 8 B. The City’s Licensing and Regulation of Debt-Collection Agencies 1. The statutory and regulatory scheme In 1984, the New York City Council enacted Local Law 65, the first version of the local consumer-protection law concerning debt-collection practices (Appendix [“A”] 75, A93, A95, A97, A166-168). New York City Administrative Code §§ 20-488 to 20-494.1 (formerly codified as §§ B32-97.0 to B32-102.1). In 2009, the City Council enacted amendments to that law as Local Law 15, in the wake of the financial crisis, and largely in response to the rise of debt buyers in the collection industry. The 2009 amendments, made after hearing testimony and comments from consumer advocates and members of the debt-collection industry, strengthened the consumer protections and the DCA’s authority under the law (compare A99-101 with A166-168; see A187-188, A327-330). The Administrative Code makes it “unlawful for any person to act as a debt collection agency without first having obtained a license” from DCA and complying with “all other applicable law, rules and regulations” (A93, A167). The law requires debt-collection agencies to apply for a two-year license for a fee of $150, and prescribes penalties for noncompliance (A95, A97, A100-101). Admin. Code §§ 20-491, 20-492, 20-494. The standard DCA license application, with a brief supplement tailored for debt-collection agency 9 licenses, requires the applicant to disclose of information about the business and its principals, their licensing history with DCA, their criminal and civil litigation history, and the nature of the debt-collection activities that the business engages in. The City Council’s legislative declaration describes the public policy underlying the licensing requirement (A75, A166). Admin. Code § 20-488. The City Council found that “[w]hile the majority of those engaged in [debt collection] are honest and ethical in their dealings,” a “minority of unscrupulous collection agencies” practiced “abusive tactics such as threatening delinquent debtors, or calling such people at outrageous times of the night,” which tactics “would shock the conscience of ordinary people.” The Council considered that, because of “the sensitive nature of the information used in the course of [a debt-collection] agency’s everyday business, and the vulnerable position consumers find themselves in when dealing with these agencies, it is incumbent upon this council to protect the interests, reputations and fiscal well-being of the citizens of this city against those agencies who would abuse their privilege of operation,” by licensing the agencies (A170-172). The enactment of Local Law 15 followed a hearing before the City Council’s Committee on Consumer Affairs, featuring testimony about abusive 10 debt-collection practices that plagued consumers, especially since the onset of the financial crisis in 2008 (A181, A189-190). Abusive practices increased with the rise of debt buyers who “purchase debt owed to credit card companies and other financial institutions at a discount and then engage in heavy-handed collection campaigns” to collect the face amount of the debt (A181). When initially contacting a consumer to collect a debt that was often years old, debt collectors often failed to identify “either the original creditor or the itemization of the debt” (A189). Indeed, debt buyers routinely used a computer printout that lacked documentation demonstrating that the debts were actually due and owing, and even lacked details of disputed or paid debts, which could show that the consumer did not owe the money (A197-198). Thus, “[w]ithout adequate identifying information, consumers are at a loss to address the issue” (A189). DCA’s witness described consumers’ complaints that their alleged debts actually resulted from billing errors, identity theft or mistaken account listings, or from a failure to credit payments made on the debt or to honor settlement agreements (A189). Also, debt collectors often pursued debts beyond the statute of limitations without informing consumers that they could no longer be required to pay (A189). With the enactment of Local Law 15, the Administrative Code and its implementing regulations specify numerous actions that licensed debt- 11 collection agencies must take, and practices that are prohibited, to ensure the protection of consumers. A debt-collection agency must provide consumers with certain disclosures about the debt, a call-back number to a phone answered by a natural person, and “written confirmation of any debt payment schedule or settlement agreement reached regarding the debt” (A100). Admin. Code § 20-493.1; 6 R.C.N.Y. §§ 2-190, 2-192, 2-193, 2-194. A debt-collection agency is forbidden to: (a) attempt to collect a debt, or contact a consumer, once the consumer has requested verification of the debt, until verification of specified information is provided; and (b) “[c]ontact a consumer about or seek to collect a debt on which the statute of limitations for initiating legal action has expired unless such agency first provides the consumer such information about the consumer’s legal rights as the commissioner prescribes by rule” (A100). Admin. Code § 20-493.2; 6 R.C.N.Y. § 2-191. Violation of the provisions concerning licenses or debt-collection practices may, after a hearing, result in monetary penalties or license revocation (A100-101). Admin. Code §§ 20-104(e), 20-105, 20-106, 20-494(a). 2. The provisions concerning law firms and attorneys As originally enacted in 1984, the City’s regulatory scheme exempted from the definition of “debt collection agency” an attorney “collecting a debt as an attorney on behalf of and in the name of a client” (A166 [former 12 § B32.97.1(c)(5), now § 20-489(a)(5)]). Local Law 15 amended the definition of “debt collection agency” in Administrative Code § 20-489(a) to reflect the prevalence of debt buyers and to revise and clarify the scope of the exemption from that definition for law firms and attorneys operating as debt collectors (A174, A176, A182-183). The initial proposal for the bill that became Local Law 15 would have amended Administrative Code § 20-489(a)(5) to provide that a “debt collection agency” would not include: “any attorney-at-law or law firm collecting a debt in such capacity on behalf of and in the name of a client through legal activities such as the filing and prosecution of lawsuits to reduce debts to judgments, but not any attorney-at-law or law firm who regularly engages in activities traditionally associated with debt collection, including but not limited to, sending demand letters or making collection telephone calls” (A176). Representatives of the debt-collection industry testified at a hearing and provided written statements in opposition to the bill (A12, A224, A231, A331- 342). They argued, for instance, that requiring licensing for an attorney who sends “demand letters” would affect an attorney’s ability to pursue litigation on behalf of a client, because a letter must be sent before a lawsuit is initiated (A230-232). 13 As ultimately enacted, Local Law 15 revised the definition of “debt collection agency” to exclude “any attorney-at-law or law firm collecting a debt in such capacity on behalf of and in the name of a client solely through activities that may only be performed by a licensed attorney, but not any attorney-at-law or law firm or part thereof who regularly engages in activities traditionally performed by debt collectors, including, but not limited to, contacting a debtor through the mail or via telephone with the purpose of collecting a debt or other activities as determined by rule of the commissioner” (A99; see A436). Admin. Code § 20-489(a)(5). C. The Federal Lawsuit Challenging the 2009 Amendments Although plaintiffs obtained licenses from the DCA to operate as debt- collection agencies, they also sued the City of New York, the City Council, the DCA, and the DCA Commissioner, seeking a judgment declaring Local Law 15 unlawful and enjoining its enforcement as applied to attorneys (A12-14 ¶¶ 1-5; A43-44; A520-529, A531-539). Plaintiffs described themselves as “law firm[s] that — among other things — seek[] to recover amounts due and owing on consumer debt portfolios” (A14 ¶¶ 6, 8).8 Plaintiffs’ ten causes of action alleged that the application of Local Law 15 to attorneys violated the Contract 8 The complaint described the debt portfolios as belonging to “passive debt investors” who buy the debts and contract with debt collectors and law firms to collect them (A14-15 ¶ 9, A23-24). 14 Clause and Commerce Clause of the United States Constitution; violated the Due Process Clause on vagueness grounds; was preempted by New York State’s General Business Law §§ 601-602 and Judiciary Law §§ 53 and 90; and was unenforceable under City Charter § 2203(c) (A34-44). 1. The district court’s preemption ruling The District Court (Vitaliano, J.), granted in part and denied in part the parties’ motions for summary judgment (A555-629; 895 F.Supp.2d 453). The Court granted summary judgment to defendants dismissing plaintiffs’ claims based on the Contract Clause, vagueness, and General Business Law § 600-602 (A568-573, A620-629). The Court denied summary judgment to both parties on the Commerce Clause claims, and the parties thereafter stipulated to dismiss those claims without prejudice (A580-620, A628-629, A631, A550). The district court granted summary judgment to plaintiffs, however, on their Sixth and Seventh Causes of Action, asserting that the application of the City’s debt-collection rules to attorneys and law firms regularly engaged in debt-collective activities are preempted by the New York Judiciary Law and prohibited by the City Charter (A573-580, A628, A631). The court thus rendered judgment declaring that “New York City Local Law 15, along with its accompanying regulations,” are “without force and effect as applied to” plaintiffs (A628, A631). 15 The district court deemed Local Law 15 inconsistent with Judiciary Law §§ 53 and 90, because “[t]he admission of attorneys to the New York bar, as well as their supervision and regulation, is vested with the judiciary,” and “the regulation of attorneys’ conduct is not within the police power of municipalities” (A573-574). In the court’s view, “[u]nder Local Law 15, no attorney or law firm may regularly represent creditors seeking to recover on consumer debts without first obtaining a DCA license and, having obtained a license, complying with DCA licensing requirements, but “when an attorney contacts a debtor on behalf of a client, she acts as an officer of the court, and is subject to the supervision and control of the New York judiciary” (A574-575). The district court considered defendants’ argument that the local law regulated nonlegal debt-collection activities, but held that the judiciary had also set standards for attorneys’ performance of nonlegal functions (A575-576). The court further held that such activities as contacting debtors, negotiating settlements, and threatening legal action “are tasks routinely performed by attorneys,” which could not be limited by Local Law 15 and its regulations (A576-578). Thus, the district court decided that “Local Law 15 is in direct conflict with the New York Judiciary Law” (A574). The Court added a “see also” citation to City Charter § 2203(c) (A574). The Court provided no other 16 analysis of its grant of summary judgment on the claim based on City Charter § 2203(c) (A629, A631). 2. The Second Circuit’s order certifying questions to this Court The defendants alone appealed from the judgment. Upon that appeal, the Second Circuit entered an order certifying questions of New York law to this Court (A635-654; 770 F.3d 1002). In its opinion, the Second Circuit noted that “Local Law 15 does not, on its face, appear to regulate an attorney who is collecting a debt in her representative capacity as a licensed attorney, in the name of a client, and through activities that only a licensed attorney can perform” (A645-646). The Court analyzed lower court cases where preemption had been raised concerning the application of local laws to attorneys, as discussed below (A646-650). The Second Circuit concluded that it could not predict how this Court “would answer the question here of the State’s authority to regulate an attorney’s debt collection activities when those activities are not reserved for licensed attorneys” (A650). The Second Circuit further observed that “Local Law 15 implicates policy questions of significant importance to New York City and the State,” as the law seeks to address “substantial concerns about the effects of consumer debt on its residents and the manner in which that debt is collected” (A650- 17 651). Because of the “policy considerations” expressed by the City Council in the legislative declaration accompanying Local Law 15 “as well as the policy judgments that are involved in determining the scope of attorney regulation by the State,” the Second Circuit determined that this Court “should have the opportunity to address in the first instance whether Local Law 15 is preempted insofar as it regulates attorney conduct” (A651). The Second Circuit pointed out that the district court had granted summary judgment to plaintiffs on their claim about City Charter § 2203(c), but “did not address the issue in detail” (A652). The Second Circuit deemed the § 2203(c) issue “substantially intertwined with the issues discussed above concerning the scope of the State’s authority to regulate attorneys” (A652). Accordingly, the Second Circuit certified the following two questions to this Court: (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 Local Law 15 and Sections 53 and 90 of the New York Judiciary Law?” and (2) “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?” (A653). The Second Circuit noted its understanding that this Court might “reformulate or expand these certified questions as it deems appropriate” (A653). 18 Thereafter, this Court accepted the certification of the questions of New York law (A633). ARGUMENT POINT I LOCAL LAW 15 IS NOT PREEMPTED BY THE STATE JUDICIARY LAW. The State Constitution and its implementing legislation, the Municipal Home Rule Law, vest local governments with broad legislative powers. Local governments may not, however, adopt local laws that are “inconsistent with the State Constitution or any general law of the State.” DJL Rest. Corp. v. City of New York, 96 N.Y.2d 91, 94 (2001); N.Y. Const., Art. IX, § 2(c)(ii); Mun. Home Rule Law § 10(1)(i), (ii). “State preemption occurs in one of two ways— first, when a local government adopts a law that directly conflicts with a State statute and second, when a local government legislates in a field for which the State Legislature has assumed full regulatory responsibility.” Id. (citation omitted); Jancyn Mfg. Corp. v. County of Suffolk, 71 N.Y.2d 91, 96-97 (1987). Before the federal district court, plaintiffs framed their Judiciary Law preemption argument solely in terms of a purported direct conflict between Local Law 15 and Judiciary Law §§ 53 and 90. Before the Second Circuit, plaintiffs added a claim of field preemption. The first certified question posed by the Second Circuit appears to encompass both types of preemption (A653). 19 The Court should answer the first certified question in the negative, because neither conflict nor field preemption applies here (A653). There is no conflict between Local Law 15 and State Judiciary Law §§ 53 and 90, and the local law does not unlawfully encroach upon the authority of the State Judiciary to regulate legal practice. To the contrary, Local Law 15 reflects an appropriately calibrated approach: law firms and attorneys that regularly engage in debt-collection activities that do not require a law license and are commonly performed by lay debt-collection businesses are subject to licensing and regulation as “debt-collection agencies,” but attorneys and law firms remain exempt from local regulation insofar as they perform functions reserved to licensed attorneys. Admin. Code § 20-489(a)(5). Local Law 15 thus embodies a critical distinction. The local law does not purport to regulate the conduct of an attorney when performing the function, unique to a licensed attorney, of exercising legal judgment on behalf of a client to determine whether a particular consumer owes a debt. Under those circumstances, the actions that an attorney takes in representing the client’s interest—including phone calls and letters—will not subject the attorney or firm to licensing as a debt-collection agency and will not be regulated by local law. But if the attorney is regularly engaged in the nonlegal practices of debt- collection agencies—such as high-volume collection calls, deployment of 20 automated telephone calls, or mailing of routine dunning letters, all of which may be performed in an attorney’s name but without the attorney’s consideration of the particular case—then those debt-collection activities would render the attorney or law firm subject to licensing as a debt-collection agency, and the activities would be regulated by local law.9 When the scope of the Local Law 15 is properly understood, it becomes clear that the local law does not conflict with the State Judiciary Law or encroach upon the Judiciary’s province as to the admission and discipline of attorneys and regulation of legal practice. Contrary to plaintiffs’ claims, the Judiciary Law does not clothe law firms and attorneys with sweeping immunity from local regulation as to activities that are distinct from the practice of law and that are commonly conducted by lay debt-collection firms as well. 9 Consumer advocates who urged the City Council to enact Local Law 15 cited the high volume of lawsuits filed by debt collectors (e.g. A289-290, A294). The provision as enacted would not reach an attorney’s filing of lawsuits in a representative capacity, on behalf of a bona fide client, since that is an activity for which a law license is required. 21 A. The City’s Licensing of Nonlegal Debt-Collection Activities Overseen or Performed By Attorneys Does Not Conflict With the State Judiciary Law Simply Because Those Persons Also Hold Law Licenses. 1. Local Law 15 does not expressly conflict with the sections of the Judiciary Law governing attorney admission and discipline. As an initial matter, it is clear that Local Law 15 does not expressly conflict with § 53 or § 90 of the Judiciary Law. Judiciary Law § 53 authorizes this Court to prescribe rules concerning the admission of attorneys to practice law in New York State. Nothing in Local Law 15 affects attorneys’ admission to practice law. The local law does not purport to give DCA the power to exclude any person from the practice of law or prevent any person from being admitted to the practice of law. Nor does Local Law 15 expressly conflict with Judiciary Law § 90. Section 90 gives the Appellate Division authority over the discipline, suspension and removal of attorneys for misconduct. No provision of Local Law 15 affects, much less intrudes on, the courts’ disciplinary authority. If a penalty were assessed against an attorney under Administrative Code § 20-494 for noncompliance with the licensing requirement or the regulations concerning debt-collection activities, the attorney would still remain entitled to practice law unless and until the Appellate Division disciplined the attorney. Therefore, the federal district court mistakenly relied on cases involving the 22 scope of attorney-disciplinary proceedings (A574). Matter of Zuckerman, 20 N.Y.2d 430, 438-439 (1967), cert. denied, 390 U.S. 925 (1968) (dealing with whether an attorney may invoke the Fifth Amendment privilege in disciplinary proceedings); Matter of Wong, 275 A.D.2d 1, 5-7 (1st Dep’t 2000) (holding that attorney should be censured for sexual misconduct committed prior to admission to the bar). Local Law 15 also creates no conflict with the general provision in Judiciary Law § 90(2) that gives the courts “power and control” over attorneys. Local Law 15 regulates debt-collection activities that are performed by both attorneys and non-attorneys, and expressly exempts attorneys from regulation insofar as they perform functions reserved to licensed attorneys. Admin. Code § 20-489(a)(5). Thus, the local law does not apply where an attorney communicates with a third party on behalf of a bona fide client and does so based on an exercise of legal judgment as to whether the particular third party owes the attorney’s client a debt. The federal district court correctly observed that the Appellate Division may discipline a licensed attorney even for conduct that does not constitute the practice of law or the provision of legal services. But it does not follow that Local Law 15 is therefore preempted. This Court has made clear that “[t]he fact that both the State and local laws seek to regulate the same subject matter 23 does not in and of itself give rise to an express conflict.” Jancyn Mfg., 71 N.Y.2d at 97. Apart from the DCA’s licensing and regulatory scheme, the Appellate Division retains the discretion to discipline an attorney in connection with debt-collection practices, if the Court finds misconduct under the Rules of Professional Conduct. See Matter of Lenahan, 34 A.D.3d 13, 14-15 (4th Dep’t 2006) (suspending attorney from practice because, inter alia, she violated prior Disciplinary Rule 1-104(d), now Rule of Professional Conduct 5.3, by failing to supervise non-lawyers and ensure they did not engage in illegal and abusive debt-collection practices). The federal district court mistakenly reasoned that if the courts have the authority to discipline an attorney for certain conduct, a local government must therefore be barred from regulating the same conduct. But as the district court itself observed, the courts may discipline attorneys even “for nonlegal activities conducted prior to their admission to the bar” (A576). 895 F. Supp. 2d at 470. Surely such activities are not retroactively immunized from local regulation merely because the wrongdoer later becomes a licensed attorney. The City’s position does not rest on a “cramped view of the scope of the judiciary’s authority over attorney conduct,” as the district court suggested. Id. To the contrary, the district court embraced an overly expansive conception of conflict preemption—incorrectly holding that local regulation of an attorney’s 24 nonlegal activities must necessarily be preempted anytime that the courts have the authority to discipline the attorney for the same activities. Plaintiffs’ conflict preemption arguments fail not only as to the licensing provision of Local Law 15, but also as to the specific requirements enacted in local law as to debt-collection activities. None of the particular requirements in Local Law 15 prohibits conduct that is authorized by Judiciary Law § 90 or the Rules of Professional Conduct promulgated pursuant to that law. For instance, the Rules of Professional Conduct do not authorize attorneys to write or telephone a debtor to demand payment while failing to verify the source or amount of the debt. If a state provision did confer upon attorneys such a right, there would be a conflict, because Local Law 15 prohibits debt-collection agencies from contacting debtors by mail or telephone to demand payment without verifying the source or amount of the debt. But because state law does not authorize attorneys to engage in such conduct, there is no conflict. Indeed, all of the requirements imposed by Local Law 15 on debt-collection agencies are consistent with the standards of honest and ethical conduct established by the Rules of Professional Conduct. Local Law 15 is compatible with and complementary to the attorney disciplinary process for the further reason that the two schemes serve different core purposes. The attorney disciplinary process focuses on whether an 25 individual may practice law in this state, and in some instances, affords redress to an attorney’s own clients. In contrast, the City’s licensing and regulatory scheme focuses on addressing harm to third parties, such as consumers, resulting from particular abusive debt-collection practices. See, e.g., Admin. Code § 20-104(e)(2) (authorizing DCA Commissioner to provide for redress to injuries caused by a licensee’s violations); 6 R.C.N.Y. § 1-13 (requiring licensees to respond to consumer complaints within 20 days). The two regulatory schemes, with different purposes and effects, may co-exist and do not conflict. Cf. Matter of Rosenblum v. New York City Conflicts Bd., 18 N.Y.3d 422. 430-431 (2012) (rejecting claim that Educ. Law §§ 3020 and 3020-a, which concern disciplinary proceedings against teachers, precluded the City’s Conflict of Interest Board from imposing a fine for ethics violations under separate local law); Zakrzewska v. New School, 14 N.Y.3d 469, 480 (2010) (rejecting preemption where local law “provide[d] a greater penalty than state law”). 2. Local Law 15 does not impose any additional prerequisite requirements as to attorneys’ ability to practice law. Plaintiffs have argued, citing Zakrzewska, 14 N.Y.3d at 480, that, even if Local Law 15 does not expressly conflict with any provision of the State Judiciary Law, its licensing requirement is nonetheless preempted as to attorneys and law firms because it imposes a “prerequisite additional 26 requirement” on attorneys’ ability to practice law beyond the requirements of the Judiciary Law. But this argument is mistaken. Local Law 15 requires that law firms or attorneys must obtain a debt- collection license from the DCA if they regularly engage in debt-collection activities of a sort that do not require possession of a law license. The requirement to obtain a DCA license does not impose any additional prerequisite to holding a law license, because an attorney retains full freedom to engage in the practice of law without becoming licensed by DCA as a debt- collection agency. The lack of a DCA license merely means that the attorney is prohibited from engaging in debt-collection activities that do not constitute the practice of law, such as sending mass mailings or making high-volume telephone calls to alleged debtors that are not based on the exercise of legal judgment as to the particular matters in question. Similarly, if DCA revokes an attorney’s debt-collection license based on findings that the attorney has engaged in a pattern of violations and misconduct, the attorney nonetheless retains full ability to engage in the practice of law. Contrary to plaintiffs’ contentions, the courts’ authority over attorneys does not preempt all local consumer-protection regulations that apply to attorneys. In Aponte v. Raychuk, 160 A.D.2d 636, 636 (1st Dep’t 1990), the Appellate Division affirmed a preliminary injunction issued against an 27 attorney for violating a section of the New York City Consumer Protection Law that prohibited deceptive advertisements by any “person.” The Appellate Division found “no inconsistency between the local law and the legislative delegation of authority to this court to regulate the conduct of attorneys” or “any implied legislative intent to preempt this area of regulations.” 160 A.D.2d at 636. Moreover, the local laws prohibiting deceptive advertising were held not to be preempted, even though the rules of attorney discipline rules have long regulated attorney advertising. Rules of Professional Conduct, 22 NYCRR § 1200.0, Rules 1.0, 7.1. The trial court in Aponte noted that the city law authorized a remedy not found in the Appellate Divisions’ rules on attorney advertising, i.e., “civil penalties and injunctions restraining deceptive or misleading advertisements.” Aponte v. Raychuk, 140 Misc. 2d 864, 868 (Sup. Ct., NY Co., 1988), aff’d, 160 A.D.2d 636, 636 (1st Dep’t 1990). The court explained that “although the State has a comprehensive scheme to regulate attorneys’ conduct, it does not appear to preempt the City’s attempt to protect its consumers.” 140 Misc. 2d at 869. The court concluded that, “[r]ather than being inconsistent with the scheme, the City’s law supplements it, providing additional protection to the consuming public,” especially “‘the ignorant, the unthinking and the credulous who, in making purchases, do not stop to 28 analyze but are governed by appearances and general impressions.’” Id. (quoting Guggenheimer v. Ginzburg, 43 NY2d 268, 273 (1977)). The same reasoning applies here. Furthermore, the primary case cited by the federal district court in support of its preemption holding—Matter of Roth v. Turoff, 127 Misc.2d 998 (Sup. Ct., Bronx Co., 1985), aff’d, 124 A.D.2d 471 (1st Dep’t 1986)—actually points away from a finding of preemption. In Roth, the lower state courts held that a local law requiring the licensing of taxicab brokers could not be applied to an attorney who represented clients associated with the taxicab industry, where only “a minimal part of [the attorney’s practice involve[d] acting as a broker in the selling and purchasing of taxi medallions.” 127 Misc. 2d at 999. The circumstances of Roth are sharply different from those presented here. Most critically, Roth involved the activities of an attorney in negotiating a specific transaction for sale or purchase of a taxi medallion on behalf of a client, whereas Local Law 15 would regulate the mass issuance of collection calls or letters without an attorney’s evaluation of particular consumers’ alleged debts. Indeed, the trial court in Roth specifically noted that it was not passing on the validity of the local law “as to persons who, while they may be attorneys are in no way functioning as such but are merely acting as brokers in the literal sense of that word.” 127 Misc. 2d at 1000. This case thus presents a 29 question that was expressly reserved in Roth: Local Law 15 applies to attorneys and law firms that are not functioning as such when conducting the debt- collection activities that are subject to local regulation. Moreover, in Roth, the local law would have imposed civil and criminal penalties upon an attorney who, without obtaining the local license, performed core activities of legal practice, such as “prepar[ing] a bill of sale and a security agreement in connection with the sale of a taxicab.” 127 Misc. 2d at 1000. By contrast, Local Law 15 expressly exempts from licensing and regulation those activities that may be performed solely by an attorney. And while the attorney in Roth negotiated taxi medallion transactions only as a “minimal part” of his practice, Local Law 15 applies only to attorneys and law firms who “regularly” engage in nonlegal debt-collection activities. For all of these reasons, Roth provides no support to plaintiffs here. The Second Circuit thus correctly observed that Local Law 15 is “different from” the local law at issue in Roth (A648). The Circuit noted that “it appears possible for an attorney to perform the debt collection functions particular to a licensed attorney without being subject” to Local Law 15, whereas the local law invalidated in Roth “limited the ‘usual and normal privileges’ of attorneys” (A648 [quoting Roth, 127 Misc. 2d at 100]). This contrast between Local Law 15 and the law rejected in Roth contributed to the 30 Second Circuit’s decision to certify a question to this Court (A648-649). The Court should hold that Local Law 15 sufficiently differentiates between (1) an attorney’s legal activities in representing a client, which are exempt from regulation, and (2) nonlegal debt-collection activities that, when regularly conducted by an attorney or law firm, are subject to local regulation. A body of precedent developed under the FDCPA strongly reinforces the conclusion that Local Law 15 regulates nonlegal debt-collection activities, and does not regulate the practice of law. The Second Circuit has recognized that an attorney or law firm that sends out mass-produced dunning letters without reviewing the facts relevant to the collectability of particular debts “is not, at the time of the letter’s transmission, acting as an attorney,” and is not “providing actual legal services.” Greco v. Trauner, Cohen & Thomas, LLP, 412 F.3d 360, 364 (2d Cir. 2005); Miller v. Wolpoff & Abramson, LLP, 321 F.3d 292, 305 (2d Cir.), cert. denied, 540 U.S. 823 (2003) (noting that mass dunning letters sent on attorney letterhead often may not reflect “meaningful attorney involvement” or any exercise of “professional judgment”). See also Nielsen v. Dickerson, 307 F.3d 623, 634-636 (7th Cir. 2002); Avila v. Rubin, 84 F.3d 222, 229 (7th Cir. 1996). Thus, the Second Circuit has held that, absent an appropriate disclaimer, mass dunning letters sent on attorney or firm letterhead may violate the 31 FDCPA’s ban on the use of false, deceptive or misleading statements in the collection of a debt under 15 U.S.C. § 1692e, because such letters falsely imply that they are “from” an attorney acting as such. See Cloman v. Jackson, 988 F.2d 1314, 1316, 1320-1321 (2d Cir. 1993) (affirming judgment holding that New York attorney whose signature appeared on about a million debt-collection letters annually had violated the FDCPA); Miller, 321 F.3d at 305-306 (remanding for further proceedings as to law firms that sent out around 110,000 dunning letters per month). These federal cases support our argument that debt-collection activities do not constitute the practice of law or the provision of legal services merely because an attorney or law firm is involved. The federal district court erroneously held that our reliance on federal cases and federal law was misplaced, because the Supremacy Clause of the U.S. Constitution makes federal law superior to state law, whereas local law is subordinate to state law (A579-580). See 895 F. Supp. 2d at 473. The City does not argue that Local Law 15 is valid simply because federal law regulates the same conduct or imposes similar requirements; such an argument would indeed ignore the basic structure of our federal system. Rather, defendants cite federal case law under the FDCPA to demonstrate the widespread recognition that certain common debt-collection activities may be made under the aegis of an attorney or law firm, yet not constitute the practice of law, unless an 32 attorney exercises professional judgment based on the particular circumstances of consumers’ alleged debts. The district court disregarded this key point and, on that basis, incorrectly held that Local Law 15 conflicts with §§ 53 and 90 of the State Judiciary Law. B. Local Law 15 Does Not Intrude Upon Any Field of Regulation that Is Reserved Solely to the State. Local Law 15 is also not barred by the doctrine of field preemption, because it does not regulate in a field that is entirely and exclusively occupied by state law. Judiciary Law § 90 does authorize the courts to regulate the field of the practice of law. Nonetheless, the Judiciary Law does not reflect any legislative intent to preempt localities from regulating nonlegal debt-collection activities when they are regularly engaged in by persons holding law licenses or businesses organized as law firms. No express provision of the Judiciary Law purports to oust localities from operating in that field. Nor does state regulation of the practice of law and matters of attorney admission and discipline provide a basis for finding implied intent to preclude localities from regulating in the distinct field of nonlegal debt-collection activities. This Court has held that implied intent to preempt a field “may be found in a ‘declaration of State policy by the State Legislature … or from the fact that the Legislature has enacted a comprehensive and detailed regulatory scheme in a particular area.’” DJL Rest., 96 N.Y.2d at 95 (quoting Consolidated Edison Co. 33 v Town of Red Hook, 60 N.Y.2d 99, 105 (1983)). For instance, the State’s Alcoholic Beverage Control Law “impliedly preempts its field.” DJL Rest., 96 N.Y.2d at 95. This Court has also recently held that the comprehensive State regulatory scheme for registered sex offenders preempted a local law limiting where such an individual could reside. People v. Diack, __ A.D.3d __, 2015 NY Slip Op 01376 (Feb. 17, 2015). Where “the State has preempted an entire field, a local law regulating the same subject matter is deemed inconsistent with the State’s overriding interests because it either (1) prohibits conduct which the State law, although perhaps not expressly speaking to, considers acceptable or at least does not proscribe, or (2) imposes additional restrictions on rights granted by State law.” Jancyn Mfg., 71 N.Y.2d at 97 (citation omitted); accord DJL Rest., 96 N.Y.2d at 95; Vatore v. Comm’r of Consumer Affairs of City of N.Y., 83 N.Y.2d 645, 649 (1994). For the reasons discussed above, Local Law 15 does not address or affect the regulation of legal practice by the Judiciary under the authority granted by the State Legislature. Local Law 15 does not regulate activities that require an attorney’s license, but rather regulates only traditional debt-collection activities that are commonly engaged in by lay debt-collection firms as well. And the DCA’s imposition of sanctions for violating the regulations concerning debt- 34 collection activities does not affect an attorney’s right to practice law. Only the Appellate Division’s disciplinary process can do that. Any assertion that the Judiciary Law occupies the relevant field here is further undercut by this Court’s recognition that attorneys are not insulated from regulation by branches of government other than the Judiciary. Indeed, this Court has held that the practice of law, even including whom to represent, is “subject to reasonable restrictions imposed by the legislative, judicial and executive branches of government.” Forti v. New York State Ethics Comm’n, 75 N.Y.2d 596, 604, 612-613 (1990) (upholding Executive Law provisions that imposed “expanded restrictions on the business and professional activities of certain former government employees,” including attorneys); see People v. Law Offices of Andrew F. Capoccia, LLC, 289 A.D.2d 650, 651 (3d Dep’t 2001) (holding that criminal prosecution of attorney for fraudulent business practices was not barred by provisions for regulating the practice of law in Judiciary Law § 90(2)). The district court’s observation that these restrictions were enacted by the State Legislature, not by local governments, misses the point: the fact remains that the restrictions are not found in the Judiciary Law and so support our point that the Judiciary Law does not displace all other sources of regulation as to conduct undertaken by attorneys. 35 Recent debt-collection regulations promulgated by the State’s Department of Financial Services (DFS) drive home the point. See 23 N.Y.C.R.R. Part 1. Those regulations—adopted by the State’s financial regulator, not by the Judiciary—do not contain an exemption for all debt- collection activities engaged in by attorneys or law firms, but rather contain a limited exemption for specified conduct in the course of legal proceedings.10 DFS’s debt-collection regulations thus further refute plaintiffs’ suggestion that all regulation of debt-collection activities engaged in by attorneys or law firms intrudes upon the Judiciary’s province of regulating the practice of law. The Second Circuit correctly stressed that “Local Law 15 implicates policy questions of significant importance” to the City and State (A650-651). Under Local Law 15, when an attorney or law firm is actually operating as a debt-collection agency, the attorney or firm must obtain a license from DCA and adhere to the local law and regulations that protect consumers from deceptive and abusive collection practices, require appropriate disclosures to 10See 23 N.Y.C.R.R. § 1.1(e)(7) (providing that “debt collector” does not include “any person with respect to (i) serving, filing, or conveying formal legal pleadings, discovery requests, judgments or other documents pursuant to the applicable rules of civil procedure; (ii) communicating in, or at the direction of, a court of law or in depositions or settlement conferences or other communications in connection with a pending legal action to collect a debt on behalf of a client; or (iii) collecting on or enforcing a money judgment.” 36 consumers, and require adequate record-keeping about the nature and amount of the debt and about the consumer’s payments. The local law seeks to ensure that consumers are provided with critical information by collectors, such as the name of the creditor, the name of the collection agency and the amount of the debt at the time of collection. Admin. Code § 20-493.1. A debt collector must also provide a call-back number answered by a natural person and confirm settlement agreements and payment schedules in writing. Id.; 6 R.C.N.Y. §§ 2-192, 2-194. Debt collection efforts must cease until a consumer receives the requested verification of a debt (a computer tape or printout does not suffice as a response to a request for verification), and a consumer must be advised if the statute of limitations has lapsed. Admin. Code § 20-493.2; 6 R.C.N.Y. 2-190. These are requirements that lawyers and law firms should not be permitted to evade simply because they hold a separate licensing status for their provision of legal services. Plaintiffs have also mistakenly relied on Municipal Home Rule Law § 11(1)(e) (A574, A643, A653). Section 11(1)(e) prohibits a local legislative body from adopting a local law that supersedes a state statute, if the local law “[a]pplies to or affects the courts as required or provided by article six of the constitution.” But article six of the State Constitution concerns only the 37 jurisdiction of the courts and the organization of the court system—areas upon which Local Law 15 in no way intrudes. In sharp contrast, courts applying Municipal Home Rule law § 11(1)(e) have invalidated local laws that infringed on the jurisdiction or authority of the courts. For example, in Goehler v. Cortland County, 70 A.D.3d 57, 60 (3d Dep’t 2009), the Appellate Division invalidated a county law that purported to create an assigned counsel plan that deviated from the permissible methods of assigning counsel that were authorized by state statute, reasoning that the county law “relate[d] to the courts’ inherent power and discretionary duty in proper cases to assign counsel to indigent litigants.” Similarly, in Greens at Half Hollow, LLC v. Town of Huntington, 15 Misc. 3d 415, 420-421 (Sup. Ct., Suffolk Co., 2006), Supreme Court struck down a town law that purported to create an administrative body to decide zoning violations in derogation of the jurisdiction of district courts as expressly set forth in state statute. But see Matter of N.Y. County Lawyers’ Ass’n v. Bloomberg, 19 N.Y.3d 712, 723-724 (2012) (holding that City’s plan to “appoint institutional providers to conflict cases independently of the bar associations and the court” did not violate Municipal Home Rule law § 11(1)(e)), Local Law 15 does not resemble the above local laws: Local Law 15 does not affect the jurisdiction or authority of the state courts and, in any 38 event, does not purport to supersede any state statute. Thus, nothing in Municipal Home Rule Law § 11(1)(e) calls into question our showing that Local Law 15 operates outside of any field that is exclusively occupied by state law. POINT II LOCAL LAW 15 DOES NOT VIOLATE NEW YORK CITY CHARTER § 2203(c). The second question certified by the Second Circuit asks whether, “[i]f Local Law 15’s regulation of attorney conduct is not preempted,” does the local law, as applied to attorneys, violate New York City Charter § 2203(c)?” (A653). The only issue previously raised in this case was whether, if preemption did apply, the application of Local Law 15 to attorneys would also be prohibited by Charter § 2203(c). The Second Circuit therefore posed a question that had not been asked. This Court should reformulate the second question to ask whether, if the application of Local Law 15 to attorneys is preempted, application of the law would also violate City Charter § 2203(c). The Court should then decline to reach the reformulated second question because Local Law 15 is not preempted.11 If the Court does reach the question, 11 Although the City maintains that Local Law 15 is not preempted, there would also be no reason to reach the question of the application of Charter §2203(c) if this Court were to find that the local law is preempted, as preemption alone would render Local Law 15 unenforceable. 39 it should answer the question in the negative, regardless of how it is formulated. As the Second Circuit pointed out, the parties and the district court did not discuss plaintiffs’ contentions about City Charter § 2203(c) in much detail (A574-575, A631, A652-653). Section 2203(c) confers the authority to grant, suspend, cancel, and revoke licenses in the City upon the DCA commissioner, “except in the cases with respect to which and to the extent to which any of said powers are conferred on other persons or agency by laws.” Plaintiffs alleged a violation of § 2203(c) in that Local Law 15 “purports to provide the DCA Commissioner with effective authority to grant or withhold licenses to practice law, which authority is vested solely with the New York State Judiciary” (A39 ¶ 129). Thus, plaintiffs’ argument under the City Charter was merely a corollary of their preemption argument: if Local Law 15 were preempted by the authority vested in the state judiciary to regulate the practice of law, then, according to plaintiffs, DCA’s application of the licensing law to attorneys would also violate Charter § 2203(c). The district court, without elaborating, granted summary judgment on the § 2203(c) claim along with the preemption claim (i.e., the Sixth and Seventh Causes of Action) (A631). 40 Contrary to the manner in which plaintiffs presented their argument under § 2203(c) in the district court, the Second Circuit suggested that the second certified question should come into play only if this Court were to “determine[] that Local Law 15 is not preempted” by state law (A653). The Second Circuit thus appears, perhaps inadvertently, to have introduced a new issue into this case—namely, whether § 2203(c) of the City Charter might limit application of Local Law 15 to attorneys in circumstances where the law is not preempted by the State Judiciary Law. Because no party raised such an argument, and in any event the argument would be insubstantial, this Court should accept the Second Circuit’s invitation to reformulate the certified questions and should conform the second certified question to the issue actually raised in this case regarding Charter § 2203(c). This would make clear that the question need not be reached if the Court determines that Local Law 15 is not preempted by state law. In the event that the Court declines to reformulate the second certified question, the Court should still answer the question in the negative. Section 2203(c) of the City Charter adds nothing here that is not better captured in the state-local preemption analysis. For all the reasons stated in Point I, state law does not preempt the application of Local Law 15 to the licensing of attorneys who regularly engage in traditional debt-collection activities, and those 41 activities must be conducted in accordance with the consumer-protection provisions of the local law and its regulations. Because there is no preemption, the authority to regulate attorneys’ debt-collection activities has not been conferred on the judiciary by state law. Consequently, there is also no basis to argue that application of Local Law 15 to attorneys would violate City Charter § 2203(c). Whether or not this Court reformulates the second certified question, there is an additional reason why it should answer the question in the negative. Charter § 2203(c), read in light of its context and purpose, pertains solely to the allocation of licensing authority among city agencies, not allocation of authority between state and city agencies. Section 2203(c) does not restrict the City Council’s legislative powers to modify or limit its application. The provision vests DCA with default licensing authority within the City, unless another city agency has been vested has been given such authority in a specific area by another law. Indeed, DCA is the successor agency to the City’s Department of Licenses, whose authority was set forth in the similarly worded § 773(a) of the 1936 New York City Charter. That section, proposed by a charter revision commission and adopted by the voters, first included the “default” provision as a shorter replacement for an unwieldy list of the powers of the Department of Licenses in § 641 of the 42 former Greater New York Charter. The new enactment, § 773(a), served in essence as a kind of rule of construction or a statutory traffic signal: if no other provision applies, then licensing authority falls to this agency. Section 2203(c) still operates this way. Indeed, in some cases, specific provisions of the City Charter and local laws do confer certain licensing authority on other city agencies besides DCA. E.g., City Charter § 2303 (conferring power over taxi licenses on the New York City Taxi and Limousine Commission); Matter of N.Y. Tel. Co. v. Envtl. Control Bd., 1999 N.Y. Misc. LEXIS 565, at *12-13 (Sup. Ct., Queens Co., 1999) (holding that, where local law specifically conferred exclusive enforcement authority on the City’s Department of Information Technology and Telecommunications, that agency could not administratively delegate its statutory authority to DCA). Thus, Charter § 2203(c) does not purport or intend to limit DCA’s ability to enforce Local Law 15, regardless of whether the local law is preempted by state law. Such a limit would in essence function as a limitation on the City Council’s ability to delegate powers to DCA in the Administrative Code, since that is what occurred here. However, there is simply no indication that such a limitation is intended by this provision. When the Charter does impose such an unusual limitation on the Council’s home rule powers, it generally does so explicitly. See Charter § 28 (including specific restrictions and requirement for 43 certain local laws), § 38 (referendum requirements), § 1138(b) (recently enacted term limits restrictions). An appellate court has found that a local law was not prohibited even where a local charter provision stated that such a local law was not “authorized,” so long as other authority existed for the local law. Mahler v. Gulotta, 297 A.D.2d 712, 714 (2d Dep’t), lv. denied, 98 N.Y.2d 615 (2002). Section 2203(c), which is far less explicit than the provision discussed in Mahler, clearly does not function as a restriction on the City’s legislative body, acting pursuant to its Charter and home rule powers. In this case, there is no contradiction to be resolved or Charter restriction to be addressed. On the contrary, Charter § 2203(c) generally vests DCA with licensing authority under local law. The City Council, acting pursuant to powers delegated by Municipal Home Rule Law § 10 as well as Charter § 28(a), also has specifically vested DCA with the power to license debt- collection agencies by local law, ever since the first licensing law for debt- collection agencies was enacted in 1984. Plaintiffs have never suggested that authority to issue a debt-collection license to attorneys has been conferred on any city agency other than DCA. For this reason, too, regardless of the formulation of the second certified question, the Court should answer the question in the negative. 44 CONCLUSION For all these reasons, the first certified question should be answered in the negative. The second certified question should be reformulated to ask whether, if the application of Local Law 15 to attorneys is preempted, application of the law would also violate City Charter § 2203(c), and the Court should decline to reach the question because Local Law 15 is not preempted, or should answer it in the negative. If the second question is not reformulated, then the question as originally presented should be answered in the negative. Dated: New York, NY February 19, 2015 RICHARD DEARING NICHOLAS R. CIAPPETTA JANET L. ZALEON of Counsel Respectfully submitted, ZACHARY W. CARTER Corporation Counsel of the City of New York Attorney for Appellants By: ________________________ JANET L. ZALEON Assistant Corporation Counsel 100 Church Street New York, NY 10007 Tel: (212) 356-0860 or 2500 Fax: (212) 356-2509 jzaleon@law.nyc.gov