In re New York State Land Title Association, Inc., et al., Petitioners-Respondents,
New York State Department of Financial Services, et al., Respondents-Appellants.
Letitia James, Attorney General, New York (Steven C. Wu of
counsel), for appellants.
Dunn & Crutcher LLP, New York (Mylan Denerstein of
counsel), for respondents.
Renwick, J.P., Manzanet-Daniels, Oing, Singh,
Supreme Court, New York County (Eileen A. Rakower, J.),
entered on or about August 5, 2019, which granted the
petition to annul Insurance Regulation 208, codified at 11
NYCRR part 228 on October 18, 2017, effective December 18,
2017, unanimously reversed, on the law, the petition denied,
and the proceeding brought pursuant to CPLR article 78
dismissed, without costs.
appeal reprises our review of the State's safe harbor
regulations implementing its prohibition of the use of
valuable inducements by title insurers to garner additional
title insurance business. On appeal from a prior order which
also granted the petition and annulled Insurance Regulation
208 in its entirety, this Court found that only two
provisions were properly annulled, and "remand[ed] to
Supreme Court for review of any arguments for affirmative
relief raised in the petition that the court declined to
reach because its grant of the petition rendered them
academic" (Matter of New York State Land Tit. Assn.,
Inc. v New York State Dept. of Fin. Servs., 169 A.D.3d
18, 34 [1st Dept 2019]). This Court found that Insurance Law
§ 6409(d) is unambiguous," and that except for
provisions not at issue here, "Insurance Regulation 208
has a rational basis as it echoes and further defines the
legislative intent behind Insurance Law § 6409(d)"
(id. at 22). On remand, Supreme Court agreed with
petitioners' due process and free speech challenges to 11
NYCRR § 228.2(c), which sets forth a non-exhaustive list
of examples of activities by title insurers that are
permitted under certain conditions, in contrast with 11 NYCRR
§ 228.2(b), which sets forth prohibited activities.
contend that section 228.2(c) is unconstitutionally vague in
setting forth a non-exhaustive list of activities that are
"permissible, provided[, ]" among other things,
that they are "reasonable and customary, and not lavish
or excessive" (11 NYCRR § 228.2[c]). The court
should have rejected this vagueness challenge, since section
228.2(c) "is sufficiently definite to give a person of
ordinary intelligence fair notice that his contemplated
conduct is forbidden," and "the enactment provides
officials with clear standards for enforcement so as to avoid
resolution on an ad hoc and subjective basis"
(People v Stephens, 28 N.Y.3d 307, 312 ). A
law that "employs terms having an accepted meaning long
recognized in law and life cannot be said to be so vague and
indefinite as to afford... insufficient notice of what is
prohibited or inadequate guidelines for adjudication"
(id.). Of course, reasonableness is one of the most
commonly applied legal standards (see United States v
Johnson, 911 F.3d 849, 854 [7th Cir 2018] ["
(r)easonable' is one of those protean words that resists
specification" and "is ubiquitous in statutes and
regulations"), and indicates an objective test which
does not give license to enforce the provision in an
arbitrary or subjective manner (see Stephens, 28
N.Y.3d at 312; but see Giaccio v Pennsylvania, 382
U.S. 399 ). Similarly, the words "lavish" and
"excessive," standing in clear contrast with the
word "reasonable," provide adequate notice of the
type of behavior that is proscribed. The word
"customary" also sets forth a standard that can be
understood by an ordinary person (see People v
Byron, 17 N.Y.2d 64, 66  [rejecting vagueness
challenge to ordinance proscribing "excessive or unusual
provisions of section 228.2(c) generally permitting
advertising, charitable contributions, and political
contributions are consistent with the right to free speech
under the First Amendment to the United States Constitution
and article I, § 8 of the New York Constitution.
"[W]hen speech' and nonspeech' elements are
combined in the same course of conduct, a sufficiently
important governmental interest in regulating the nonspeech
element can justify incidental limitations on First Amendment
freedoms... if it furthers an important or substantial
governmental interest; if the governmental interest is
unrelated to the suppression of free expression; and if the
incidental restriction on alleged First Amendment freedoms is
no greater than is essential to the furtherance of that
interest" (United States v O'Brien, 391
U.S. 367, 376 ). Moreover, the First Amendment
"accords a lesser protection to commercial speech than
to other constitutionally guaranteed expression"; as
long as commercial speech is not misleading or related to
unlawful activity, the government "must assert a
substantial interest to be achieved by restrictions on
commercial speech," and any "limitation on
expression must be designed carefully to achieve the
State's goal" (Central Hudson Gas & Elec.
Corp. v Public Serv. Comm'n of N.Y., 447 U.S. 557,
563-564 ). The content-neutral provisions at issue in
this case are narrowly tailored to the substantial government
interest of clarifying a statute intended ...