United States District Court, E.D. New York
GEM FINANCIAL SERVICE, INC. d/b/a GEM PAWNBROKERS, Plaintiff,
v.
CITY OF NEW YORK, and POLICE OFFICERS JOHN DOE # 1-10, Defendants.
MEMORANDUM & ORDER
MARGO
K. BRODIE, UNITED STATES DISTRICT JUDGE
Plaintiff
Gem Financial Service, Inc. (“Gem”), doing
business as Gem Pawnbrokers, commenced the above-captioned
action on March 28, 2013 against, among others, Defendants
City of New York (the “City” or
“Defendant”) and Police Officers John Doe # 1-10,
(Compl., Docket Entry No. 1), and filed an Amended Complaint
on May 2, 2014, alleging, inter alia, unlawful
searches and seizures in violation of the Fourth Amendment,
selective enforcement under the Equal Protection Clause of
the Fourteenth Amendment, and malicious prosecution under New
York state law, (Am. Compl., Docket Entry No. 25). Currently
before the Court are the parties' cross-motions for
summary judgment.[1] Defendant moves for summary judgment as to
Plaintiff's (1) Fourth Amendment as-applied claim for
search and seizure of collateral property, (2) Equal
Protection claim for selective enforcement, (3) municipal
liability claim, [2] and (4) state malicious prosecution claim.
(Def. Mot. for Summ. J. (“Def. Mot.”), Docket
Entry No. 86; Def. Mem. in Supp. of Def. Mot. (“Def.
Mem.”), Docket Entry No. 86-9.) Plaintiff cross-moves
for declaratory relief holding New York City Charter §
436 (“section 436”) and New York City Local Law
No. 149 (“Local Law 149”) facially
unconstitutional under both the United States and New York
State Constitutions. (Pl. Mot. for Summ. J. (“Pl.
Mot.”), Docket Entry No. 87; Pl. Mem. in Supp. of Pl.
Mot. (“Pl. Mem.”), Docket Entry No. 87-2.) For
the reasons discussed below, the Court grants in part and
denies in part both motions for summary judgment.
I.
Background
a.
Factual background
Plaintiff
Gem is a licensed collateral loan broker, also known as a
pawnbroker, and second-hand dealer. (Def. Statement of
Material Facts Pursuant to Local R. 56.1 (“Def.
56.1”) ¶ 9, Docket Entry No. 86-1.) As of April of
2014, Gem had twenty separate retail stores throughout New
York City. (Id. ¶ 10.)
In New
York City, pawnbrokers and second-hand dealers have been
subject to a variety of state and local regulations that
require the recording and reporting of certain transactional
information. (Id. ¶¶ 1, 5-8.) Pursuant to
statute, including section 436, Defendant has broad
supervisory authority over pawnbrokers and second-hand
dealers, including the authority to question employees,
examine premises and the records and merchandise thereon, and
may issue summons for failures to comply with the various
requirements. (Id. ¶ 3.)
Beginning
in 2010, the New York City Police Department
(“NYPD”) instituted a policy designed to
“encourage” the use of LeadsOnline, a
“web-based electronic data transfer” database
which serves as a repository for information that pawnbrokers
and second-hand dealers are required to record and store
pursuant to statute. (Id. ¶ 22.) LeadsOnline
allows police officers to download and view every uploaded
transaction. (Memo re: Increase Voluntary Use of
“LeadsOnline” Electronic Pawnshop Database
(“Increase Use Memo”), annexed to Def. Mot. as
Ex. R, Docket Entry No. 86-7.) The NYPD believed LeadsOnline
would “allow for the gathering of information on
crimes, criminals, and possibly the recovery of
property.” (Id.) At the time, only sixteen out
of approximately 145 pawnshops in New York City used
LeadsOnline. (Id.)
Gem was
an early adopter of LeadsOnline. In 2007, Gem approached the
NYPD about the potential use of LeadsOnline as “an
effort to extend an olive branch and [desire to] develop a
mutually beneficial relationship.” (Affidavit of Harold
Dambrot in Supp. of Pl. Mot. (“Dambrot Aff.”)
¶ 2, annexed to Pl. Mot. as Ex. A, Docket Entry No.
87-4.) Accordingly, Gem used LeadsOnline in 2010. (Def. 56.1
¶ 26.) However, Gem discontinued its use in February of
2011. (Id. ¶ 27.) Harold Dambrot, Gem's
Senior Vice President for Legal Matters, explained that Gem
discontinued the use of LeadsOnline because of the
“constant” police holds, i.e., requests to hold
onto property, and requests for photographs of collateral.
(Id. ¶¶ 15, 29-30.)
The
NYPD encouraged officers to “actively recruit[]”
pawnshops, second-hand dealers, and other businesses to use
LeadsOnline. (March 30, 2011 Leads Online Recruitment and
Survey (“March 30, 2011 Memo”), annexed to Def.
Mot. as Ex. R, Docket Entry No. 86-7.) Officers were also
instructed to “approach [pawnbrokers] . . . to explain
the benefits and operation” of LeadsOnline. (May 12,
2010 Expansion of Voluntary Participation of Pawnbrokers in
the “LeadsOnline” Database (“May 12, 2010
Memo”), annexed to Def. Mot. as Ex. R, Docket Entry No.
86-7.)
According
to Gem, after it discontinued use of LeadsOnline, there was a
noticeable increase in the police presence at its stores,
beginning in the summer of 2011. (See Dambrot
Aff.¶ 3.) Joseph Taranto, a manager at one Gem store,
testified that the number of police visits at his particular
location increased from one to two times per day in 2010, to
four to five times per day in the following years, pursuant
to the efforts to increase the number of stores using
LeadsOnline. (Joseph Taranto Dep. (“Taranto
Dep.”) 18:25-19:1, annexed to Pl. Mot. as Ex. II,
Docket Entry No. 87-38.) Dambrot, Taranto, and other Gem
employees also testified at their depositions that such
interactions were often hostile, accompanied by threats of
arrest, and business disruption.[3] (See, e.g., Karan
Ragoo Dep. in Supp. of Pl. Mot. (“Ragoo Dep.”)
53:14- 19, annexed to Pl. Mot. as Ex. JJ, Docket Entry No.
87-39 (“The nature of the threat was as soon as he came
in he says you are not using LeadsOnline and he could shut me
down.”).) The NYPD also issued Gem seven criminal
summonses for various violations during this time. (Gem
Summons, annexed to Def. Mot. as Ex. S, Docket Entry No.
86-7.) One summons, issued on September 19, 2012, was
dismissed on December 21, 2012 after Gem appeared in court
before Judge Raciti at the Criminal Court of the City of New
York in Kew Gardens, New York. (See December 21,
2012 Hr'g Tr. 5:18-22, annexed to Def. Mot. as Ex. GG,
Docket Entry No. 86-8.)
Other
pawnshops have testified to similar experiences. Joseph
Buoninfante, the senior manager of Quick Cash USA, LLC, a
pawnbroker chain with nearly twenty stores in New York City,
explained that their stores experienced a sharp increase in
the number of police visits beginning in 2012. (Joseph
Buoninfante Aff. in Supp. of Pl. Mot. (“Buoninfante
Aff.”) ¶ 2, annexed to Pl. Mot. as Ex. J, Docket
Entry No. 87-13.) According to Buoninfante, these visits were
accompanied by threats and orders to hold jewelry.
(Id.) As a result, Quick Cash USA gave in to the
NYPD's demands to use LeadsOnline. (Id. ¶
3.) Upon doing so, the alleged harassment ceased.
(Id.) Likewise, David Kaminsky, the president of EZ
Pawn Corp., a pawnbroker chain with fourteen different stores
in New York City, explained their stores were subject to an
increased police presence, threats, harassment, and bullying,
upon cancellation of their service with LeadsOnline on two
separate occasions, in 2012 and May of 2015. (David Kaminsky
Aff. in Supp. of Pl. Mot. (“Kaminsky Aff.”)
¶¶ 2, 5, annexed to Pl. Mot. as Ex. I, Docket Entry
No. 87-12.)
In
addition to the asserted hostile nature of the police visits,
Gem also complains more generally about officers' seizure
and holds of pledged items. Gem has specifically identified
eight seizures and holds as examples of problematic police
conduct. (Def. 56.1 ¶¶ 31, 52.) Gem contends that
the specifically identified seizures and holds are only
examples of a much larger number of such actions. (Dambrot
Aff. ¶¶ 2-3, 6-10; Sandra Lopez Dep. (“Lopez
Dep.”) 32:13- 19, annexed to Pl. Mot. as Ex. KK, Docket
Entry No. 87-40; Ragoo Dep. 26:24-27:5; Khariton Popilevsky
Dep. (“Popilevsky Dep.”) 30:19-25, annexed to Pl.
Mot. as Ex. GG, Docket Entry No. 87-36.)
Defendant
contends that officers had probable cause to believe the
seized items were stolen, except for one pledged item for
which it could not verify NYPD involvement. (Def. 56.1
¶¶ 31-45; Def. Mem. 8 n.5.) The NYPD acknowledges
that where an item is not in plain view, and they do not
obtain consent to search, the premises must be secured and a
warrant obtained before any search and seizure beyond that of
an ordinary administrative inspection can be effectuated.
(Joseph J. Esposito Dep. (“Esposito Dep.”)
34:5-13, annexed to Pl. Mot. as Ex. O, Docket Entry No.
87-16.) Similarly, holds of collateral are to be temporary in
nature, designed to “freeze the location” so that
a search warrant may be obtained. (Patrick Timlin Dep.
(“Timlin Dep.”) 65:2-7 (describing an order
requiring a store owner to hold collateral
“indefinitely” as “inappropriate”),
annexed to Pl. Mot. as Ex. P, Docket Entry No.
87-19;[4] Esposito Dep. 34:14-21 (“[I]f we
feel that we want to apply for a search warrant to seize that
property, part of the process would be to freeze the location
so that the property could not be disposed of while we were
applying for a warrant.”).) The NYPD concedes that it
has never secured a warrant to seize any item from Gem
between 2010 and June 21, 2016, and has never obtained a
warrant to search Gem's premises. (June 21, 2016 Letter
re: Supplemental Demands (“Supplemental Demands”)
2, 4, annexed to Pl. Mot. as Ex. W, Docket Entry No. 87-26.)
The NYPD also does not maintain records of hold requests for
collateral in the possession of pawnbrokers. (Def. Resp. to
Pl. First Set of Interrogs. (“Def. Resp. to
Interrogs.”) 5, annexed to Pl. Mot. as Ex. V, Docket
Entry No. 87-25.)
Defendant
contends that Dambrot, as Gem's authorized employee,
consented to every hold and seizure. (Def. Mem. 3.) Dambrot
testified that he never voluntarily consented to any seizure
or hold request, only relenting after being given “the
typical warning [that he could] be arrested for possession of
stolen property, or interference with governmental
administration.” (Dambrot Aff. ¶ 7.) Dambrot
explained that he consistently requested a warrant when the
NYPD sought to seize collateral, and generally requested a
warrant or further information when the NYPD sought to place
holds on property.[5] (Id.) Despite his initial
protests, Dambrot testified that his resolve was eventually
overcome by threats of arrest, harassment of customers, and
disruption of business more generally. (Id.; Harold
Dambrot Dep. (“Dambrot Dep.”) 92:1-3, annexed to
Def. Mot. as Ex. D, Docket Entry No. 86-4.) Gem also explains
it was under no legal obligation to keep such records of
NYPD's hold and seizure requests, and visits by officers.
(Dambrot Aff. ¶ 4.)
b.
The regulatory scheme governing warrantless searches
i.
The statutory framework
Collateral
loan brokers and second-hand dealers in New York City operate
under a regulatory framework that includes several provisions
of the New York State General Business Law, the New York City
Charter, the New York City Administrative Code, and the Rules
of the City of New York (“RCNY”). At the state
level, Chapter 20, Article 5 of the General Business Law
regulates collateral loan brokers. See N.Y. Gen.
Bus. Law Ch. 20, Art. 5. Section 43 of the General Business
Law requires collateral loan brokers to keep a book with
specific information concerning loans and collateral. N.Y.
Gen. Bus. Law Ch. 20, Art. 5 § 43. Section 45 of the
same law discusses inspection of such records and states in
pertinent part:
The said book and any and all other books and records
regularly kept by such collateral loan broker shall at all
reasonable times be open to the inspection of the attorney
general, the state comptroller, the mayor or local licensing
authority, all judges of the criminal courts, the
superintendent of police, police inspectors, captains of
police and police justices of such cities, or any or either
of them, or of any person who shall be duly authorized in
writing for that purpose by any or either of them, and who
shall exhibit such written authority to such collateral loan
broker.
N.Y. Gen. Bus. Law Ch. 20, Art. 5 § 45.
New
York City law also affords the NYPD Police Commissioner (the
“Commissioner”) the authority to conduct
administrative searches of certain trades, including
pawnbrokers and second-hand dealers. Section 436 of the New
York City Charter discusses the Commissioner's search
power and states in pertinent part:
The commissioner shall possess powers of general supervision
and inspection over all licensed or unlicensed pawnbrokers .
. . dealers in second-hand merchandise . . . and in
connection with the performance of any police duties he shall
have power to examine such persons, their clerks and
employees and their books, business premises, and any
articles of merchandise in their possession. A refusal or
neglect to comply in any respect with the provisions of this
section on the part of any pawnbroker . . . dealer in
second-hand merchandise . . . or any clerk or employee of any
thereof shall be triable by a judge of the criminal court and
punishable by not more than thirty days' imprisonment, or
by a fine of not more than fifty dollars, or both.
N.Y. City Charter § 436. Several sections of the New
York City Administrative Code expressly govern the operations
of second-hand dealers and pawnbrokers. Section 20-277
discusses the reporting requirements of pawnbrokers which has
changed since the commencement of this litigation. At the
commencement of this litigation, Section 20-277 stated:
The police commissioner, at such times as he or she may
prescribe in a written notice served upon any pawnbroker by a
member of the police department, may require such pawnbroker
to report to such commissioner, upon blank forms to be
furnished by the police department, a description of all
goods, articles or things, or any part thereof, pawned or
pledged in the course of business of such pawnbroker during
the days specified in such notice, stating the numbers of the
pawn tickets issued therefor, the amounts loaned thereon, and
such identifying marks as may be on the goods pawned. If such
notice from the police commissioner so prescribes, such
pawnbroker, until he or she is notified to discontinue so
doing, shall keep and furnish on such forms, a general
description as to sex, color and apparent age of every person
depositing such pledges.
N.Y. City Code § 20-277.[6] Section 20-267 is an analogous
provision directed at second-hand dealers. See N.Y.
City Code § 20-267. Section 20-272(b) addresses lost or
stolen goods and stated in pertinent part:
Every dealer in second-hand articles who shall have or
receive any goods, or articles lost or stolen, or alleged or
supposed to have been lost or stolen, shall exhibit the same,
on demand, to the commissioner or departmental inspector . .
. to any police officer, or to any person, duly authorized in
writing by the commissioner . . . who shall exhibit such
written authority to the dealer.
N.Y. City Code § 20-272. Section 20-273 discusses the
information second-hand dealers are required to keep and
stated that pawnbrokers must keep a “book in which
[that information] shall be legibly written in English . . .
.”[7] See N.Y. City Code §
20-273(a)-(b). Subsection (d) discusses police inspection of
said books and stated in pertinent part:
Such book, at all reasonable times, shall be open to the
inspection of any police officer, to the commissioner or
departmental inspector . . . or any person duly authorized in
writing for such purposes by the commissioner . . . who shall
exhibit such written authority to the dealer.
N.Y. City Code § 20-273(d).[8] A violation of “any of
the provisions of this subchapter or any rule or regulation
issued thereunder” is a class A misdemeanor.
See N.Y. City Code § 20-275. In addition, 6
RCNY § 1-16 authorizes the Department of Consumer
Affairs (“DCA”) to conduct inspections of on-site
books and records required to be maintained by licensees
under the New York City Administrative Codes. The DCA
inspections are to be “conducted at least once in every
two-year period” and the licensees must make records
available “during business hours.” 6 RCNY §
1-16.
In
2013, after the commencement of this action, the New York
City Council enacted Local Law 149, requiring pawnbrokers and
second-hand dealers to report transactions electronically,
amending sections 20-267, 20-273, and 20-277. (See
Local Law No. 149, annexed to Def. Reply in Supp. of Def.
Mot. (“Def. Reply”), Docket Entry No. 88, as Ex.
LL, Docket Entry No. 88-3.) On June 3, 2015, a New York State
Supreme Court enjoined the various statutes including section
436 and Local Law 149, granting a preliminary injunction
while finding the statutes likely to be facially
unconstitutional under Article 1 § 12 of the New York
State Constitution. Collateral Loanbrokers Ass'n of
New York, Inc. v. City of New York, 18 N.Y.S.3d 578
(Sup. Ct. 2015), rev'd, 46 N.Y.S.3d 600 (App.
Div. 2017). After granting a stay of the Supreme Court's
ruling pending appeal, the New York Appellate Division, First
Department, reversed, finding the plaintiffs unlikely to
succeed on the merits. Collateral Loanbrokers Ass'n
of New York, Inc. v. City of New York, 46 N.Y.S.3d 600,
605 (App. Div. 2017), appeal dismissed, 29 N.Y.3d
974 (2017). In its analysis, the Appellate Division
distinguished between Local Law 149 and its transactional
reporting requirements and other statutes that oversee
physical inspections of commercial premises. Id. at
604.
ii.
NYPD guidance
In
1998, George A. Grasso, then-Deputy Commissioner of Legal
Matters of the NYPD, promulgated a memorandum entitled
“Guidelines for the Inspection of Pawnbroker and
Secondhand Dealers Businesses, ” (“Grasso Memo,
” annexed to Pl. Mot. as Ex. C, Docket Entry No. 87-6).
The Grasso Memo, addressed to “Chief of Detectives,
” discusses the various laws governing pawnbrokers and
second-hand dealers and establishes guidelines “in
order to insure that the administrative searches . . .
conducted by this Department survive constitutional challenge
. . . .” (Id. at 2.) The Grasso Memo advises
officers, inter alia, to visit stores during regular
business hours and request to inspect required books and
records. (Id. at 5.) The Grasso Memo further advises
that if an officer develops probable cause to believe that
criminal activity is afoot during an inspection, the premises
“should be secured and a search warrant obtained before
a search of the premises is commenced.” (Id.)
Finally, the Grasso Memo reiterates that an officer may seize
property only if “its evidentiary or contraband
nature” is apparent and the property is in plain view.
(Id.)
More
recently, on August 1, 2013, the NYPD promulgated Patrol
Guide Procedure No. 214-38, (“Patrol Guide, ”
annexed to Pl. Mot. as Ex. D, Docket Entry No. 87-7). The
Patrol Guide's purpose is “[t]o establish a
systemic inspection of pawnbrokers and second-hand dealers by
patrol precincts.” (Id.) The Patrol Guide
reiterates aspects of the Grasso Memo concerning the
warrantless inspection of pawnbrokers and second-hand
dealers. (Id.) In addition, the Patrol Guide
provides guidelines to officers on the retention and review
of electronic records uploaded by pawnbrokers and second-hand
dealers to an online database. (Id.) Pursuant to the
Patrol Guide, officers are directed to inspect on-site
records at least once every ten days if those records are not
maintained electronically. (Id.) Electronic records,
however, are to be reviewed weekly. (Id.)
On
August 5, 2016, certain aspects of the Grasso Memo and the
Patrol Guide were codified in 38 RCNY § 21-11. Under 38
RCNY § 21-11(a), officers are to examine the “last
twenty articles purchased or received in pledge . . . that
are still in inventory, ” “[c]ompare the articles
to the description . . . listed in the” store records,
and review the entries for “completeness, accuracy, and
legibility.” These inspections “must occur
regularly, and in no event less often than once per quarter
during the calendar year.” 38 RCNY § 21-11(a).
c.
Procedural background
Gem and
former Plaintiff Mitchell Kaminsky filed the original
Complaint on March 28, 2013 against Defendants the City,
Police Officers John Doe # 1-10, and former Defendant the
NYPD, alleging unlawful search and seizure, malicious
prosecution, differential treatment (under a class one
theory) in violation of the Fourth and Fourteenth Amendments,
and municipal liability. (Compl.) Gem and Kaminsky also
alleged claims under the New York State Constitution, the New
York Civil Rights Law (“NYCRL”) and New York
state common law for malicious prosecution and tortious
interference.
Defendants
moved to dismiss the Complaint on July 12, 2013. At oral
argument on March 6, 2014, the Court dismissed Kaminsky from
the action and dismissed all claims against the NYPD. (Minute
Entry dated March 6, 2014.) By Memorandum and Order dated
March 17, 2014 (the “March 17, 2014 Decision”),
the Court granted in part and denied in part Defendants'
motion to dismiss. Gem Fin. Serv., Inc. v. City of New
York, No. 13-CV-1686, 2014 WL 1010408, at *16 (E.D.N.Y.
Mar. 17, 2014) (“Gem I”). The Court
granted Defendants' motion to dismiss Gem's class of
one Equal Protection claim, federal malicious prosecution
claim, NYCRL claim, and tortious interference claim.
(Id.) The Court denied Defendants' motion to
dismiss Gem's Fourth Amendment claim, state law malicious
prosecution claim, municipal liability claim, and request for
equitable relief. (Id.) In denying the motion to
dismiss as to the Fourth Amendment claim, the Court assumed,
for purposes of the motion to dismiss, that section 436 was
constitutional and held that the seizures and holds fell
outside even the expansive scope of that statute. See Gem
I, 2014 WL 1010408, at *6. Rather than dismiss Gem's
as-applied challenge against the warrantless inspections of
its stores, the Court reasoned that the NYPD's alleged
actions went even beyond the broad authorization in
section 436. See Id. at *7-8. The Court did not
limit or dismiss any portion of Gem's Fourth Amendment
claim.[9]
Gem
filed an Amended Complaint on May 2, 2014, adding Keith
Watts[10] as a Plaintiff. In addition to its
Fourth Amendment, [11] state malicious prosecution, and
municipal liability claims, Gem also alleged a selective
enforcement claim in violation of the Equal Protection
Clause. (See generally Am. Compl.)
Defendant
moved for reconsideration of the March 17, 2014 Decision as
to the Fourth Amendment and state malicious prosecution
claims and moved to dismiss the selective treatment Equal
Protection claim. (Def. Mot. for Reconsideration and to
Dismiss (“Def. Reconsideration”) 1, Docket Entry
37.) By Memorandum and Order date March 31, 2015
(“March 31, 2015 Decision”), the Court denied
Defendants' motions in their entirety. Gem Fin.
Serv., Inc. v. City of New York, No. 13-CV-1686, 2015 WL
1475853, at *10 (E.D.N.Y. Mar. 31, 2015) (“Gem
II”).
II.
Discussion
a.
Standard of review
Summary
judgment is proper only when, construing the evidence in the
light most favorable to the non-movant, “there is no
genuine dispute as to any material fact and the movant is
entitled to judgment as a matter of law.” Fed.R.Civ.P.
56(a); Wandering Dago, Inc. v. Destito, 879 F.3d 20,
30 (2d Cir. 2018); see also Cortes v. MTA NYC
Transit, 802 F.3d 226, 230 (2d Cir. 2015). The role of
the court “is not to resolve disputed questions of fact
but only to determine whether, as to any material issue, a
genuine factual dispute exists.” Rogoz v. City of
Hartford, 796 F.3d 236, 245 (2d Cir. 2015) (first
quoting Kaytor v. Elec. Boat Corp., 609 F.3d 537,
545 (2d Cir. 2010); and then citing Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 249-50 (1986)). A genuine
issue of fact exists when there is sufficient “evidence
on which the jury could reasonably find for the
plaintiff.” Anderson, 477 U.S. at 252. The
“mere existence of a scintilla of evidence” is
not sufficient to defeat summary judgment. Id. The
court's function is to decide “whether, after
resolving all ambiguities and drawing all inferences in favor
of the nonmoving party, a rational juror could find in favor
of that party.” Pinto v. Allstate Ins. Co.,
221 F.3d 394, 398 (2d Cir. 2000).
b.
Section 1983 claims
Plaintiff
asserts the following claims against Defendant under section
1983: (1) as-applied and facial challenges under the Fourth
Amendment for unlawful searches and seizures, (2) selective
enforcement action under the Equal Protection Clause, and (3)
municipal liability. Defendant moves for summary judgment as
to all claims.
Under
section 1983, individuals may bring a private cause of action
against persons “acting under color of state law”
to recover money damages for deprivations of their federal or
constitutional rights. Matusick v. Erie Cty. Water
Auth., 757 F.3d 31, 55 (2d Cir. 2014) (quoting 42 U.S.C.
§ 1983). To establish a viable section 1983 claim, a
plaintiff must show “the violation of a right secured
by the Constitution and laws of the United States” and
that “the alleged deprivation was committed by a person
acting under color of state law.” Vega v. Hempstead
Union Free Sch. Dist., 801 F.3d 72, 87-88 (2d Cir. 2015)
(citations and internal quotation marks omitted).
i.
As-applied Fourth Amendment claim
Plaintiff
brings an as-applied claim under the Fourth Amendment for
unlawful searches and seizures for warrantless administrative
inspections of its commercial premises. In addition,
Plaintiff asserts a claim for seizures and holds of
collateral property, both independent and as part of its
overall claim regarding the inspections.[12] Defendant
specifically challenges the claim for seizure and holds of
collateral property on four bases: (1) Plaintiff has no
reasonable expectation of privacy in the pledged items,
records, and the information therein; (2) the pledged items
were seized pursuant to voluntary consent; and/or (3) the
plain view doctrine; and (4) there was no practice or policy
to form the basis of municipal liability. The Court
separately discusses each challenge below.
1.
Reasonable expectation of privacy
Defendant
argues that Plaintiff does not have a reasonable expectation
of privacy in the records or the pledged items because they
are subject to inspection under the administrative scheme
applicable to pawnbrokers and second-hand dealers. (Def. Mem.
7; Def. Reply 25-26.) With respect to the content of the
records, Defendant argues that Plaintiff has no reasonable
expectation of privacy because the information therein is
provided by customers, and is required and subject to review
by statute. (Def. Mem. 7.) While unclear, Plaintiff appears
to assume a reasonable expectation of privacy in the records,
the information therein, and the pledged items based on
language from New York v. Burger, 482 U.S. 691
(1987) (“Burger”).[13]
The
Fourth Amendment protects “[t]he right of the people to
be secure in their persons, houses, papers, and effects
against unreasonable searches and seizures.” U.S.
Const. amend. IV. “A search occurs when the Government
acquires information by either ‘physically intruding on
persons, houses, papers, or effects, ' or otherwise
invading an area in which the individual has a reasonable
expectation of privacy.” United States v.
Ganias, 755 F.3d 125, 133 (2d Cir. 2014) (citations
omitted). “A seizure occurs when the Government
interferes in some meaningful way with the individual's
possession of property.” Id. (citations
omitted).
Generally,
as a threshold matter, there must be a reasonable expectation
of privacy in the places or items for there to be a search or
seizure within the meaning of the Fourth Amendment. See
California v. Ciraolo, 476 U.S. 207, 211 (1986)
(“The touchstone of Fourth Amendment analysis is
whether a person has a ‘constitutionally protected
reasonable expectation of privacy.'” (citation
omitted)); United States v. Simmonds, 641 F.
App'x 99, 104 (2d Cir. 2016) (“It is well
established that the Fourth Amendment applies only to spaces
in which an individual has a reasonable expectation of
privacy.”); Shaul v. Cherry Valley-Springfield
Cent. Sch. Dist., 363 F.3d 177, 184 (2d Cir. 2004)
(finding no search or seizure claim because plaintiff had no
reasonable expectation of privacy in personal property
maintained in classroom after being suspended); United
States v. Moran, 349 F.Supp.2d 425, 467 (N.D.N.Y. 2005)
(“Where there is no legitimate expectation of privacy,
there is no search or seizure within the ambit of the Fourth
Amendment.” (citation omitted)); see also Fla. v.
Jardines, 569 U.S. 1, 11 (2013) (“The
Katz [v. United States, 389 U.S. 347
(1967), ] reasonable-expectations test ‘has been
added to, not substituted for, ' the
traditional property-based understanding of the Fourth
Amendment.” (citation omitted)). In assessing the
legitimacy of an expectation of privacy, courts employ a
“two-part” inquiry from Katz:
“first, has the individual manifested a subjective
expectation of privacy in the object of the challenged
search? Second, is society willing to recognize that
expectation as reasonable?” Ciraolo, 476 U.S.
at 211.
“One
who owns or lawfully possesses or controls property will in
all likelihood have a legitimate expectation of privacy by
virtue of th[e] right to exclude.” Rakas v.
Illinois, 439 U.S. 128, 143 n.12 (1978). Under
Katz, this property-based expectation of privacy
extends to “private” business records containing
“the kind of commercially sensitive information”
that society does not “ordinarily . . . expect[] to
[be] disclose[d].” Patel v. City of Los
Angeles, 738 F.3d 1058, 1062 (9th Cir. 2013),
aff'd sub nom. City of Los Angeles, Calif. v.
Patel, 576 U.S. __, __, 135 S.Ct. 2443 (June 22, 2015);
United States v. AJS Merch., Inc., 90-CR-121, 1993
U.S. Dist. LEXIS 21320, at *24-26 (W.D.N.Y. May 24, 1993);
see also United States v. Torres, 949 F.2d 606, 608
(2d Cir. 1991) (“Neither possession nor ownership of
property establishes a legitimate expectation of privacy
unless the party vigilantly protects the right to exclude
others.”).
Despite
the expectation of privacy in certain private, commercially
sensitive business records, the Second Circuit has held that
“records required to be kept pursuant to valid
regulatory programs have a ‘public aspect' for
purposes of constitutional analysis, and thus are not private
papers entitled to the protection of the [F]ourth or [F]ifth
amendments.” Donovan v. Mehlenbacher, 652 F.2d
228, 231 (2d Cir. 1981) (applying the “required
records” doctrine to documents required to be kept by
labor regulations); Sec. & Exch. Comm'n v.
Olsen, 243 F.Supp. 338, 339 (S.D.N.Y. 1965) (holding
production of SEC required documents to be
“quasi-public records” and did not constitute an
unreasonable search and seizure under the Fourth Amendment);
Glenwood TV, Inc. v. Ratner, 480 N.Y.S.2d 98, 102-03
(App. Div. 1984) (“It is clear that ‘the modern
businessman has little or no expectation of privacy in his
business records, especially those documents prepared in
...