Collateral Loanbrokers Association of New York, Inc., et al., Plaintiffs-Respondents,
The City of New York, et al., Defendants-Appellants.
Zachary W. Carter, Corporation Counsel, New York (Kathy C.
Park of counsel), for appellants.
Kriss & Brignola, LLP, Albany (Mark C. Kriss and Paul
Solda of counsel), for respondents.
Richter, J.P., Gische, Tom, Gesmer, Moulton, JJ.
Supreme Court, Bronx County (Mitchell J. Danziger, J., ),
entered on or about April 5, 2019, which granted
plaintiffs' motion for summary judgment, inter alia,
enjoining defendants from enforcing General Business Law
§ 45, New York City Charter §§ 435 and 436,
Local Law No. 149 of 2013 and the resulting amendments to
Administrative Code of City of NY §§ 20-267,
20-273, and 20-277, Rules of City of New York Department of
Consumer Affairs (6 RCNY) § 1-16 and Police Department
(38 RCNY) §§ 21-03(a) and (b), 21-04(a) and (c),
21-07(a)-(f), and 2108, and the procedures outlined in a 1998
memorandum by then NYPD Deputy Commissioner of Legal Matters
George A. Grasso, and in NYPD Patrol Guide Procedure No.
214-38, and denied defendants' motion for summary
judgment dismissing the action in its entirety, unanimously
modified, on the law, to deny plaintiffs' motion and to
grant defendants' motion as to all of the aforementioned
statutes, regulations, and procedures, except New York City
Charter § 436, and otherwise affirmed, without costs.
The Clerk is directed to enter judgment accordingly.
underlying action, plaintiffs challenged the aforementioned
statutes, regulations and procedures that monitored the
business activities of pawnbrokers and second-hand dealers.
Plaintiffs asserted that the regulatory scheme violated New
York State's Constitutional prohibition against
unreasonable searches and seizures by establishing electronic
reporting requirements and authorizing on-premises
administrative searches by the NYPD and the New York City
Department of Consumer Affairs.
prior appeal in this action, this Court reversed an order
that granted plaintiffs' motion for a preliminary
injunction prohibiting enforcement of the statutes,
regulations, and procedures at issue here, concluding
plaintiffs had not shown a likelihood of success on the
merits (see Collateral Loanbrokers Assn. of N.Y., Inc. v
City of New York, 148 A.D.3d 133, 135 [1st Dept 2017],
appeal dismissed 29 N.Y.3d 974');">29 N.Y.3d 974 )
. Considering the question now on the
merits we hold that all of plaintiffs' claims fail and
must be dismissed, except with respect to NY City Charter
§ 436. Plaintiffs' non-constitutional claims also
fail as a matter of law.
Charter § 436 provides, in relevant part:
"The [police] commissioner shall possess powers of
inspection over all licensed or unlicensed pawnbrokers...
[and] dealers in second-hand merchandise... within the city;
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... 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
(New York City Charter § 436).
important "not to nullify more of a legislature's
work than is necessary" (Ayotte v Planned Parenthood
of N. New England, 546 U.S. 320, 329 ).
Accordingly, we hold that NY City Charter § 436 is
facially unconstitutional to the extent that it provides that
the commissioner "shall have power to examine such
persons, their clerks and employees and their books, business
premises, and any articles of merchandise in their
possession" (see e.g. Gem Fin. Serv., Inc. v City of
New York, (298 F.Supp 3d 464, 499 [ED NY 2018]). That
portion of NY City Charter § 436 is facially
unconstitutional because it is unlimited in scope, and
provides "no meaningful limitation on the discretion of
the inspecting officers" (id. at 497). NY City
Charter § 436 contains no limits on the time, place, and
scope of searches of persons or property. It contains no
record keeping requirements and it authorizes an immediate
arrest for a failure to comply.
to defendants' argument, NY City Charter § 436 is
not merely a general authorizing statute that looks to other
sources to articulate and refine specific legal standards for
searches. NY City Charter § 436 incorporates no other
statute, regulation, or procedure that could cabin the
unfettered discretion that NY City Charter § 436 gives
to the NYPD. While the City's adherence to its limiting
rules and procedures, such as the Grasso memorandum and the
Patrol Guide, might render an as-applied challenge unlikely,
these rules do not, by themselves correct the facial
overbreadth of NY City Charter § 436 (see Gem Fin.
Serv. Inc., 298 F.Supp 3d at 499).
with respect to the reporting requirements contained in the
statutory and regulatory scheme, we again conclude that there
is little or no expectation of privacy in the reported
information, whether in traditional paper or electronic form,
and that the requirements at issue, which are imposed on a
closely regulated industry, sufficiently describe and limit
the information to be provided, and are reasonably related to
the regulatory authority of the agency to which the
information is provided (see California Bankers Assn. v
Shultz, 416 U.S. 21, 67 ).
respect to the inspection programs, we reiterate that, except
for NY City Charter § 436, the statutory and regulatory
scheme is unlike the unconstitutional scheme in People v
Scott (Keta), 79 N.Y.2d 474');">79 N.Y.2d 474 ). The
regulatory scheme here was not created solely to uncover
evidence of criminality. Rather it serves to enforce the
reporting requirements that provide consumer protection. The
scheme qualifies as "pervasive," because this
industry has been subject to a long tradition of regulation
requiring that it create, maintain, and make transactional
records available for inspection (see People v
Quackenbush, 88 N.Y.2d 534, 541-542 ). The scheme
also is properly "designed to guarantee the certainty
and regularity of... application" so as "to provide
either a meaningful limitation on the otherwise unlimited
discretion the statute affords or a satisfactory means to
minimize the risk of arbitrary and/or abusive
enforcement" (id. at 542 [internal quotation
marks and citation omitted]).
of Los Angeles, Calif. v Patel (__ U.S. __, 135 S.Ct.
2443 ) does not compel a different result. The
challenged municipal ordinance stated, in relevant part, that
hotel guest records "shall be made available to any
officer of the Los Angeles Police Department for
inspection," and provided that "[w]henever
possible, the inspection shall be conducted at a time and in
a manner that minimizes any interference with the operation
of the business" (id. at 2448). Thus, the
ordinance failed to provide either a minimum number of
inspections or inspections on a "regular basis"
(id. at 2456). The ordinance further authorized the
immediate arrest of a hotel owner if the owner failed to make
guest records available for police inspection (id.
at 2452). The United States Supreme Court held that the