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New York State Professional Process Servers Association, Inc. v. City of New York

United States District Court, S.D. New York

August 18, 2014

New York State Professional Process Servers Association, Inc. on behalf of itself and aggrieved members, and Howard D. Clarke, and Stephen J. Boyko, Inc. d/b/a Consolidated Claims Service, Individually, and as Representatives for all similarly situated Process Server Individuals and Process Serving Agencies as defined by the New York City Administrative Code, Title 20, Chapter 2, Section 20-404, Plaintiffs,
City of New York and Michael T. Bloomberg, Bill de Blasio, Jonathan E. Mintz, Alba Pico, Marla Tepper, Esq., Sanford Cohen, Esq. Nancy J. Schindler, Esq. Bruce Dennis, Esq., James M. Plotkin, Esq. Nicholas J. Minella, Esq., Alvin Liu, Esq. Shannon Bermingham, Jordan Cohen, Esq., Philip Kimball, Esq. Lori Barrett, Esq. Megan Roberts, Esq., Wanda Day, Esq., Fred R. Cantor, Esq., Allison Rene Johnson, Esq., Eunice Rivera, G. Pikulina, P. Kumar, Michele Mirro, Esq., Mitchell B. Nisonoff, Esq. Lee Fawkes, Esq. Steven T. Kelly, Esq., Nancy Tumelty, Esq., Susan Kassapian, Esq., Maurice Nwikpo-Oppong, Esq., Eryn A. DeFontes, Esq., Richard Zeitler, Jr., Esq., David Scott Paul, Esq., Shanet Viruet, Esq., and Judith Gould, Esq., all Individually and in their capacities as officials and employees of the City of New York, Defendants.

Tracy J. Harkins, Mount Sinai, NY, for Plaintiffs New York State Professional Process Servers Association, Howard D. Clarke, and Stephen Boyko, Inc.

Sherryl R. Neufeld, Mark W. Muschenheim, Jasmine M. Georges, Corporation Counsel of the City of New York, New York, New York, for Defendants New York City and Individual City Defendants.

Walter A. Kretz, Jr., Scopetta Seiff Kretz & Abercrombie, LLP, New York, NY, for Defendants Susan Kassapian and Michelle Miro.


DENISE COTE, District Judge.

The New York State Professional Process Servers Association ("NYSPPSA"), Howard D. Clarke, and Stephen Boyko, Inc. (collectively, "Plaintiffs") bring this putative class action against the City of New York ("City") and thirty-eight individual defendants associated with the enforcement of City process server rules, including elected officials, City employees, and administrative law judges ("City Defendants") (collectively "Defendants") in their official and individual capacities. Plaintiffs contend that the City administratively enforces process server laws and regulations without authority. On this basis Plaintiffs bring claims under 42 U.S.C. 1983 ("Section 1983"), and the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. 1961, et seq. Plaintiffs also contend that certain provisions of the New York City Administrative Code ("Administrative Code") are unconstitutionally vague, and that penalties the City imposes on process servers violate the Excessive Fines Clause of the Eighth Amendment to the United States Constitution. Finally, Plaintiffs bring a claim under New York state law for defamation, and challenge several of the Defendants' actions on state law grounds.

Defendants have moved to dismiss the Plaintiffs' amended complaint ("Amended Complaint"). For the following reasons, the Defendants' motion to dismiss is granted as to the federal claims. The Court declines to exercise supplemental jurisdiction over the state claims.


The following facts are taken from the Amended Complaint, or are undisputed facts on which the parties rely in addressing this motion to dismiss. NYSPPSA is an association representing process serving agencies and individual process servers licensed under New York City law. Howard D. Clarke is an individual process server licensed by the City. Stephen J. Boyko, Inc. is a process serving agency licensed by the City. The City Defendants are elected officials and New York City Department of Consumer Affairs ("DCA") officials, including administrative law judges.

Under the Administrative Code, process servers must obtain a license issued by the City. As a condition of obtaining a license, process servers must pass a licensing test. Process servers are regulated by the DCA. A description of the DCA's system for administratively enforcing process server laws and regulations follows.

In enforcing the City's process server laws and regulations, DCA staff attorneys serve as prosecutors, and administrative law judges adjudicate alleged violations. These violations include record keeping deficiencies, reporting deficiencies, and the failure to comply with other relevant provisions of the Administrative Code governing process servers. DCA attorneys employ their investigatory powers in determining whether to instigate an administrative prosecution. These powers include the issuing of subpoenas and the random auditing of process server records. According to Plaintiffs, the DCA sometimes directs process servers not to disclose the existence of the subpoenas to anyone.

Since at least 2005, and through the present, some violations of the City's process server rules have been administratively adjudicated in the DCA Tribunal ("Tribunal"). In the Tribunal, hearings are held before administrative law judges, who render findings of fact and recommendations for any penalties, which are subject to ultimate approval by the Commissioner of DCA. Penalties that are imposed can include the suspension of licenses and the imposition of fines. Plaintiffs state that the DCA has imposed fines in excess of statutory maximums. Plaintiffs also state that DCA has imposed cumulative penalties for the same offense. Tribunal proceedings do not afford parties the same procedural protections employed in criminal courts. City and DCA officials sometimes communicate with DCA administrative law judges regarding DCA policies and directives. Process servers can appeal the Tribunal's and DCA's determinations to New York state court in a Rule 78 proceeding. See N.Y. C.P.L.R. 7801, et seq.

Before a matter gets to the Tribunal stage, DCA officials sometimes resolve charges through "Consent Orders" and "Assurance of Discontinuance" agreements between DCA and process servers. These agreements can provide for the imposition of fines and injunctive directives. The fines and penalties imposed on process servers who settle are generally lower than those imposed by the Tribunal. If a process server has signed a settlement agreement and is charged with a subsequent violation, DCA will assert a charge for violation of the settlement agreement in addition to the violation of the underlying law or regulation and seek fines and/or penalties for violation of the settlement in addition to those imposed for violation of the underlying law or regulation.

DCA has also on occasion denied process servers the renewal of their licenses based on investigations into alleged delinquencies on the ground that a process server has failed to demonstrate the integrity and honesty necessary to hold a license. Plaintiffs assert that DCA does not always provide process servers with hearings in connection with these renewal determinations.

Plaintiffs filed the original complaint in this action on February 26, 2014. On March 7, the Court denied an application from Plaintiffs for a temporary restraining order and preliminary injunction enjoining the administrative enforcement of the City's process server laws and regulations. Plaintiffs applied again for a preliminary injunction on March 21, which was denied on March 28. Plaintiffs filed their Amended Complaint on May 19, 2014. Defendants filed their motion to dismiss on June 6.[1] The motion was fully submitted on June 27.


When deciding a motion to dismiss under Rule 12(b)(6), Fed. R. Civ. P., a court must "accept all allegations in the complaint as true and draw all inferences in the non-moving party's favor." LaFaro v. New York Cardiothoracic Grp., PLLC , 570 F.3d 471, 475 (2d Cir. 2009). To survive a motion to dismiss, "a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face." Ashcroft v. Iqbal , 556 U.S. 662, 678 (2009). A complaint must do more, however, than offer "naked assertions devoid of further factual enhancement." Id . (citation omitted).

I. Absolute Immunity

As a threshold matter, Defendants contend that the claims against the City Defendants in their individual capacities are barred by the doctrine of absolute immunity. Absolute immunity gives "public officials entrusted with sensitive tasks a protected area of discretion within which to carry out their responsibilities." Mangiafico v. Blumenthal , 471 F.3d 391, 394 (2d Cir. 2006) (citation omitted). Persons "performing adjudicatory functions" are entitled to absolute immunity from damages liability for their judicial acts. Butz v. Economou , 438 U.S. 478, 514 (1978); Spear v. Town of W. Hartford , 954 F.2d 63, 66 (2d Cir. 1992) (applying Butz to local executive officers). Absolute immunity thus applies "to administrative law judges." New York Civil Liberties Union v. New York City Transit Auth. , 684 F.3d 286, 300 (2d Cir. 2012). And "agency officials performing certain functions analogous to those of a prosecutor" may claim absolute immunity with respect to such acts. Butz , 438 U.S. at 515. Absolute immunity "is not overcome by allegations of bad faith or malice." Mireles v. Waco , 502 U.S. 9, 11 (1991). It may be overcome, however, if the individual acts "in the complete absence of all jurisdiction." Id. at 12.

Plaintiffs' claims against the City Defendants in their individual capacities are barred by the doctrine of absolute immunity. Those claims are predicated on prosecutorial and adjudicatory functions undertaken by Defendants in enforcing the laws governing City process servers. See Butz , 438 U.S. at 514.

Plaintiffs contend that the City Defendants are not entitled to absolute immunity because they "acted with a complete absence of jurisdiction." This contention rests on the Plaintiffs' argument that the enforcement of the Administrative Code provisions that apply to process servers may only occur in criminal court. Because this argument is groundless for the reasons explained below, the City Defendants are entitled to absolute immunity. Accordingly, the claims against Defendants in their individual capacities are dismissed.

II. Statutory Interpretation

Plaintiffs' Amended Complaint is primarily predicated on the contention that Administrative Code § 20-106(a) ("Section 106(a)") requires all enforcement of City process server laws and regulations to occur in criminal court. Based on this interpretation of Section 106(a), Plaintiffs contend that the DCA acts ultra vires in administratively enforcing those rules. Plaintiffs predicate their Section 1983 and RICO claims on this proposition. A description of Section 106(a) and the statutory framework regulating process servers in the City follows.

Title 20 of the Administrative Code governs the oversight of City licensees regulated by DCA. New York City, N.Y., Code § 20 et seq. ("Title 20"). Chapter one of Title 20 ("Chapter One") of the Administrative Code is entitled "License Enforcement, " and contains provisions for the enforcement of regulations that apply to licensed entities generally. See id. § 20-101, et seq. Chapter two of Title 20 ("Chapter Two") contains provisions applicable to specific classes of licensed entities. There are thirty-two classes of licensees regulated under Chapter Two, including, for example, owners of sidewalk cafes, auctioneers, owners of laundries, locksmiths, and debt collectors. See id. § 20-201, et seq. Subchapter 23 of Chapter Two governs the conduct of licensed process servers and provides for penalties for violations of laws and regulations applicable to process servers. Id . 20-403 et seq.

At least three provisions of the Administrative Code address the enforcement of the laws and regulations related to entities licensed under Title 20. Section 106(a) provides for criminal penalties for violations of any provision of Chapter Two or associated regulation

Except as otherwise specifically provided in chapter two of this title, or in subdivision b of this section, any person, whether or not he or she holds a license issued under chapter two, who violates any provision of chapter two or any regulation or rule promulgated under it shall, upon conviction thereof, be punished for each violation by a fine of not less than twenty-five dollars nor more than five hundred dollars, or by imprisonment not exceeding fifteen days, or both; and any such person shall be subject also to a civil penalty in the sum of one hundred dollars for each violation, to be recovered in a civil action.

Id. § 20-106 (emphasis supplied).

Administrative Code § 20-104(e) ("Section 104(e)") provides the DCA with authority to administratively enforce ...

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