Court Opinion

ID: 5489824
Source: CourtListenerOpinion
Date Created: 2022-01-10 02:25:50.773307+00
Date Added: 2024-06-11T08:33:44.670848
License: Public Domain

Fahey, J.
(dissenting). The distinction between the activities of an attorney collecting a debt on behalf of a client and an at*693torney engaging in “activities traditionally performed by debt collectors” (Administrative Code of City of NY § 20-489 [a] [5]) is, from a regulatory point of view, a distinction without a difference. These activities are part of the practice of law. The State has demonstrated its intent to exclusively occupy the field of the licensing of attorneys and the regulation of the practice of law. Unlike the majority, I conclude that Local Law No. 15 (2009) of City of New York regulates in that field and thus is preempted by state law pursuant to the doctrine of field preemption. I therefore dissent.
L
“Broadly speaking, 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” (DJL Rest. Corp. v City of New York, 96 NY2d 91, 95 [2001] [citations omitted]; see Albany Area Bldrs. Assn. v Town of Guilderland, 74 NY2d 372, 377 [1989]). “[I]n the absence of an express conflict, whether the local law is invalid as inconsistent with the State’s overriding interest turns on whether the State has preempted the entire field . . . and thus precluded any further regulation by localities” (Jancyn Mfg. Corp. v County of Suffolk, 71 NY2d 91, 98 [1987]).
“Where it is determined that 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” (id. at 97 [citations omitted]).
If a local law were permitted to operate in a field preempted by state law, the local law “would tend to inhibit the operation of the State’s general law and thereby thwart the operation of the State’s overriding policy concerns” (id.; see Incorporated Vil. of Nyack v Daytop Vil., 78 NY2d 500, 505 [1991]).
“The State Legislature may expressly articulate its intent to occupy a field, but it need not. It may also do so by implication” (DJL Rest. Corp., 96 NY2d at 95). As this Court recently recognized in People v Diack (24 NY3d 674 [2015]),
*694“[t]he doctrine of field preemption prohibits a municipality from exercising a police power ‘when the Legislature has restricted such an exercise by preempting the area of regulation’ (New York State Club Assn. v City of New York, 69 NY2d 211, 217 [1987], affd 487 US 1 [1988]; see Albany Area Bldrs. Assn., 74 NY2d at 377). Although field preemption may be ‘express’ as evidenced by the legislature’s stated directive, it may also ‘be implied from a declaration of State policy by the Legislature or from the fact that the Legislature has enacted a comprehensive and detailed regulatory scheme in a particular area’ (Consolidated Edison Co. of N.Y. v Town of Red Hook, 60 NY2d 99, 105 [1983] [citations omitted]). Intent to preempt the field may ‘be implied from the nature of the subject matter being regulated and the purpose and scope of the State legislative scheme, including the need for Statewide uniformity in a given area’ (Albany Area Bldrs. Assn., 74 NY2d at 377, citing Robin v Incorporated Vil. of Hempstead, 30 NY2d 347 [1972])” (Diack, 24 NY3d at 679).
This Court has determined that the State has intended to occupy an entire field of regulation, thus prohibiting any local government regulation in that field, in a range of fields, including: the identification, monitoring, and treatment of sex offenders (see Diack, 24 NY3d at 680-685); the review of area zoning variance applications (see Matter of Cohen v Board of Appeals of Vil. of Saddle Rock, 100 NY2d 395, 399-403 [2003]); highway funding (see Albany Area Bldrs. Assn., 74 NY2d at 377-379); the siting of major steam electric generating plants (see Consolidated Edison, 60 NY2d at 105-107); and the “regulation of the practice of medicine in general and the performance of abortions in particular” (Robin, 30 NY2d at 350).
Here, as framed in the Second Circuit’s first certified question to this Court, the relevant field is the State’s authority to regulate attorneys and the practice of law (see Eric M. Berman, P.C. v City of New York, 770 F3d 1002, 1007-1009 [2d Cir 2014]). I conclude that the State has reserved to itself the exclusive authority to regulate the licensing of attorneys and the practice of law within its borders.
With respect to the licensing of attorneys, Judiciary Law § 53 designates to this Court the authority to “adopt, amend, *695or rescind rules not inconsistent with the constitution or statutes of the state, regulating the admission of attorneys and counsellors at law, to practice in all the courts of record of the state” (id. § 53 [1]). Section 53 further requires this Court to “prescribe rules providing for a uniform system of examination of candidates for admission to practice as attorneys and counsellors” (id. § 53 [3]). Judiciary Law § 90 (2) gives the Supreme Court of the State “power and control over attorneys and ... all persons practicing or assuming to practice law,” and the Appellate Division the power to discipline attorneys. Judiciary Law article 15 contains multiple statutes governing the examination and admission of attorneys to the bar, the registration of attorneys, and the conduct of attorneys practicing within the state (see Judiciary Law § 460 et seq.). Statewide regulations contain the Court’s rules for the admission of attorneys and many other regulations governing the licensing and practice of attorneys (see e.g. 22 NYCRR part 520).
Moreover, with respect to the practice of law by attorneys admitted to practice in the state, the Judiciary Law contains many rules with which attorneys admitted to practice must comply (see e.g. Judiciary Law § 90; Judiciary Law art 15). In addition, every New York attorney must comply with the Rules of Professional Conduct, a comprehensive set of regulations governing the conduct of attorneys admitted to practice in the state (see 22 NYCRR part 1200).1
Furthermore, as we stated in Diack, this Court may infer field preemption “from the nature of the subject matter being regulated and the purpose and scope of the State legislative scheme, including the need for State-wide uniformity in a given area” (24 NY3d at 679 [internal quotation marks omitted]). Statewide uniformity in the field of the licensing of attorneys and the practice of law is of the utmost importance. Taken to *696its logical extreme, if this field were open for local government regulation, New York City could require its own bar exam for attorneys seeking to practice within its borders, or Buffalo could develop its own rules of professional conduct for attorneys practicing in that city. The need for statewide uniformity in this area is beyond cavil.
Inasmuch as the majority concludes that Local Law 15 “does not purport to regulate attorneys as such” (majority op at 691), the majority does not specifically address whether the State has demonstrated its intent to exclusively occupy the field of the licensing of attorneys and the regulation of the practice of law. I doubt, however, that the majority would disagree with the conclusion that the State has demonstrated its intent to exclusively occupy that field, inasmuch as the majority acknowledges that the “Judiciary Law confers broad authority upon the courts to regulate the practice of law” and “the courts may have preempted the field of regulating attorney misconduct” (majority op at 690, 692). Indeed, defendants concede that Judiciary Law § 90 “does authorize the courts to regulate the field of the practice of law” but insist that there is no state intent “to preclude localities from regulating in the distinct field of nonlegal debt-collection activities” (emphasis added). I part ways with the majority with respect to its conclusion that Local Law 15 regulates only nonlegal services rendered by attorneys and that it does not purport to regulate attorneys in their practice of law.
IL
Local Law 15 exempts from its reach “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” (Administrative Code of City of NY § 20-489 [a] [5]). This exemption, however, is immediately followed by an exception so expansive that it swallows the exemption: “any attorney-at-law or law firm or part thereof who regularly engages in activities traditionally performed by debt collectors” is required to obtain a license from the New York City Department of Consumer Affairs (DCA) before collecting debts from New York City residents and to comply with the law’s prohibited and required debt collection practices (id.). The law provides no guidance whatsoever on how the term “regularly” will be interpreted by DCA. With respect to the interpretation of “activities traditionally performed *697by debt collectors,” the following example is provided: “contacting a debtor through the mail or via telephone with the purpose of collecting a debt” (id.). “[0]ther activities as determined by rule of the commissioner” may also constitute activities traditionally performed by debt collectors (id.).
Defendants insist that Local Law 15 was not intended to target attorneys who, as part of their regular practice, represent clients in attempting to collect debts lawfully owed because the law does not apply when a licensed attorney “exercis[es] legal judgment on behalf of a client to determine whether a particular consumer owes a debt” and then takes actions in accordance with that exercise of legal judgment. Rather, defendants insist that Local Law 15 was meant to target only those attorneys who engage “in the nonlegal practices of debt collection agencies — such as high-volume collection calls, deployment of automated telephone calls, or mailing of routine dunning letters.”
Even if Local Law 15 was intended to regulate only those activities, however, the law, as written, is not narrowly tailored to capture only those activities within its reach. The language defendants ask the Court to read into the text of the law simply does not exist. Contacting a debtor through the mail or via telephone with the purpose of collecting a debt — the only example the law provides of “activities traditionally performed by debt collectors” (Administrative Code § 20-489 [a] [5]) — is, of course, an activity that attorneys who represent creditors generally perform on a daily basis. In addition, contacting a debtor through the mail or via telephone with the purpose of collecting a debt is not an activity “that may only be performed by a licensed attorney” (id.).
The sweeping breadth of the language of Local Law 15 compels me to disagree with defendants that this case is distinguishable from Roth v Turoff (124 AD2d 471 [1st Dept 1986], affg for reasons stated below 127 Misc 2d 998 [Sup Ct, Bronx County 1985]). Roth concerned a New York City law requiring the licensing of taxicab brokers that defined a taxicab broker “as one ‘who, for another . . . acts as an agent or intermediary in negotiating the purchase or sale of a taxicab’ ” (127 Misc 2d at 999, quoting former Administrative Code § 2325 [a]). Supreme Court held that “[t]aking this definition at face value it is clear that no attorney could possibly represent either the buyer or seller of a taxicab without first obtaining a license from the Commission and complying with the requirements of *698such licensing” (id.). Appearing to rely on field preemption principles, the court held that “the qualifications for admission, the rules governing conduct of attorneys, the proscriptions imposed with respect to practicing law without a license are and have traditionally been regulated by the State Legislature and the courts,” and, “[t]hat being so, no local legislature has the power to define new limitations on the practice of the law” (id. at 1000). The court further stated that “[i]f indeed there is need to impose the strictures embodied in the local law — as it affects attorneys — application for such change should be directed to the body empowered to do so; the State Legislature” (id.).
Local Law 15, by its plain terms, could be interpreted to apply to any attorney who regularly represents creditors in collecting debts, and, in the course of that representation, regularly engages in any activity that could be performed by someone other than a licensed attorney and also is “traditionally performed by debt collectors,” such as “contacting a debtor through the mail or via telephone with the purpose of collecting a debt” (Administrative Code § 20-489 [a] [5]). Any such attorney who neglects to obtain a license from DCA could be subject to a $100 fine each time he or she contacts a New York City debtor without a valid DCA license (see Administrative Code §§ 20-490; 20-494 [a]). In that respect, Local Law 15 purports to regulate the licensing of attorneys and the practice of law and is therefore preempted by state regulation. Defendants’ assertion that Roth is distinguishable because Local Law 15 targets attorneys who are not engaging in legal activities and are instead working solely as “debt collectors” is simply not supported by the plain language of the law (see Roth, 127 Misc 2d at 999 [“Nor can this court read into the local law the exemption argued for by petitioner. The language of the legislation is clear and unambiguous and this court is bound ‘to give effect to the plain meaning of the words used’ ”], quoting Eaton v New York City Conciliation & Appeals Bd., 56 NY2d 340, 345 [1982]).
Furthermore, as the Second Circuit noted,
“Local Law 15 could be read as not providing a clear basis for differentiating between attorneys who attempt to collect debts ‘solely through activities that may only be performed by a licensed attorney’ and those who attempt to collect debts by ‘regularly *699engaging] in activities traditionally performed by debt collectors.’ Similarly, it is not clear what standard to apply to an attorney who does both; nor is it entirely clear what are the debt collection ‘activities that may only be performed by a licensed attorney’ ” (770 F3d at 1007 n 2).
Defendants have provided no satisfactory response to allay these concerns. Local Law 15 provides the DCA Commissioner with the power to make rules and regulations to implement and enforce the law (see Administrative Code § 20-493). Presumably, DCA will decide whether any particular attorney is collecting a debt “solely through activities that may only be performed by a licensed attorney” or through “activities traditionally performed by debt collectors” (id. § 20-489 [a] [5]). The text of the law itself provides no assurances that DCA’s interpretation will not encroach upon the State’s exclusive authority to license attorneys and to regulate the practice of law. There are distinctions between the practice of law and conduct such as “making high volume collection calls at off-hours and sending boilerplate ‘dunning’ letters demanding payment without details of the source of the debt or the actual amount due” (majority op at 691); however, nothing in the text of Local Law 15 itself requires DCA to interpret the law to apply only to those activities.
m.
That the federal courts have been able to draw distinctions between the practice of law and debt collection activities does not save Local Law 15 from state preemption. The federal government, of course, is under no obligation to steer clear of regulating in a field that New York State has wholly occupied so as to prevent local regulation. Under the supremacy principles applicable to our system of government, if the federal courts’ interpretation of the federal Fair Debt Collection Practices Act (FDCPA) tangentially encroaches on New York State’s authority to regulate attorneys, New York State courts cannot declare the FDCPA to be invalid under a preemption analysis. As the District Court noted here, the same cannot be said for a local law that regulates in a field that the State has demonstrated its intent to exclusively occupy (see Eric M. Berman, P.C. v City of New York, 895 F Supp 2d 453, 473 [ED NY 2012] [“Unlike the New York City Council, the federal government is not obligated to draft its statutes so as to comport with New *700York law”]). Indeed, the United States Supreme Court has held that the FDCPA’s definition of “debt collector” applies to an attorney “who regularly, through litigation, tries to collect consumer debts” (Heintz v Jenkins, 514 US 291, 292 [1995] [internal quotation marks and emphasis omitted]).2 Thus, even an attorney “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” (Administrative Code § 20-489 [a] [5]), whom Local Law 15 purports to exempt from its reach, is generally required to comply with the federal FD-CPA.
Defendants’ reliance on other New York State statutes and regulations governing debt collection that may tangentially affect the practice of law is misplaced. General Business Law article 29-H prohibits creditors or their agents from engaging in certain abusive debt collection tactics and authorizes the Attorney General to enforce its provisions (see General Business Law §§ 601, 602 [2]). Recently-promulgated regulations from the State Department of Financial Services (DFS) also regulate debt collectors (see 23 NYCRR 1.1 et seq.).3 The State, however, may regulate attorneys and the practice of law in the context of debt collection in any manner it sees fit. Indeed, plaintiffs do not dispute that a bill with precisely the same text as Local Law 15, but passed by the State Legislature instead of the New York City Council, would be perfectly lawful. This is precisely the impact of the field preemption doctrine: the State may regulate in the field, but local governments may not.
Furthermore, the fact that attorneys are required to comply with other laws of general regulation, such as those contained within the Penal Law or the Executive Law, is immaterial. Setting aside the fact that these are state laws, attorneys obviously must comply with certain laws of general regulation, such as tax laws, laws governing business formation, and laws *701governing hiring and employment practices. A local law that affects an attorney’s business practices may or may not be preempted by state regulation, depending on the particular activities the local law at issue seeks to regulate, the state regulation of such activities in effect at the time, and the surrounding circumstances.4
Local Law 15, however, is not simply a law of general regulation with which attorneys and non-attorneys alike must comply. Rather, by its plain terms, Local Law 15 regulates the licensing of attorneys and the practice of law by requiring attorneys who regularly engage in traditional debt collection activities to obtain a DCA license and comply with its terms (see Eric M. Berman, P.C., 895 F Supp 2d at 472 [“(W)hile . . . there may well be some activities, like driving a taxi cab or operating a fruit stand, that are so unrelated to the practice of law that they may be regulated by municipalities, even if performed by an attorney, there can be no material factual dispute that the activities Local Law 15 seeks to regulate lie far from this line”]). Local Law 15 imposes additional licensing and practice obligations on certain attorneys that do not otherwise exist under state law (see Jancyn Mfg. Corp., 71 NY2d at 97).
The invalidation of Local Law 15 as applied to attorneys would not give New York attorneys carte blanche to threaten and intimidate New York City debtors. As noted above, attorneys are subject to the federal Fair Debt Collection Practices Act, the General Business Law, and, to the extent that they apply to attorneys, the recent DFS regulations. Moreover, the Rules of Professional Conduct contain the ethical standards and practices to which attorneys licensed to practice in this state must adhere. Those rules prohibit a lawyer from bringing a frivolous action, from knowingly making a false statement of fact or law to a third person, and from engaging in activities with no substantial purpose other than to embarrass or harm a third person (see Rules of Professional Conduct [22 NYCRR 1200.0] rules 3.1, 4.1, 4.4). Significantly, the rules also require attorneys to adequately supervise subordinate attorneys and nonlawyer employees, and hold attorneys responsible if those employees engage in a violation of the rules (see id. rules 5.1, 5.3). A lawyer is subject to the Rules of Profes*702sional Conduct even when engaging in activities that could be considered “nonlegal services” if the nonlegal services are not distinct from the legal services being provided by the attorney (see id. rule 5.7; see also Eric M. Berman, P.C., 895 F Supp 2d at 470 [“Not only do the courts possess the authority to regulate the nonlegal activities of attorneys once they are admitted to the bar, they may discipline attorneys for nonlegal activities conducted prior to their admission to the bar”], citing Matter of Wong, 275 AD2d 1, 5-6 [1st Dept 2000]).
I share the concern of the majority and the New York City Council that there exist in our state unscrupulous attorneys who bully debtors through harassing tactics, threatening rhetoric, and even outright lies. Those attorneys, although they undoubtedly constitute a small minority of lawyers attempting to collect debts on behalf of their clients, bring dishonor to the profession and should be prevented from preying on the State’s vulnerable debtors. It is the method by which they may be thwarted, however, that concerns us on this appeal. If the State finds the existing regulations applying to lawyers in the area of debt collection to be inadequate, the State is free to impose whatever licensing or practice requirements it wishes upon the attorneys admitted to practice in this state (see Roth, 127 Misc 2d at 1000). A local government, however, may not.
Finally, I agree with defendants that we should not address plaintiff’s alternative contention, which was not a question certified to this Court by the Second Circuit, that Local Law 15 is unconstitutionally vague. Inasmuch as plaintiff’s vagueness challenge was asserted under the federal constitution, it would be inappropriate for this Court to address that contention under the procedural posture of this case (see Rules of Ct of Appeals [22 NYCRR] § 500.27 [a]).
Accordingly, I would answer the first certified question in the affirmative insofar as it asks whether Local Law 15 constitutes an unlawful encroachment on the State’s authority to regulate attorneys, and I would not answer the second certified question as academic.
Judges Read, Pigott and Abdus-Salaam concur; Judge Fahey dissents in an opinion in which Judge Stein concurs; Judge Rivera taking no part.
Following certification of questions by the United States Court of Appeals for the Second Circuit and acceptance of the questions by this Court pursuant to section 500.27 of this *703Court’s Rules of Practice, and after hearing argument by counsel for the parties and consideration of the briefs and the record submitted, first certified question answered in the negative and the second certified question, as reformulated, answered in accordance with the opinion herein.

. It is not only statutes enacted by the State Legislature that may support a conclusion that state regulation has preempted a particular field. The legislature’s designation of authority to various branches of the government and state agencies is also relevant. For example, in Diack, this Court held that field preemption applied based not only on various state statutes, but also based upon legislation granting certain state agencies the authority to promulgate rules regarding the placement and housing of sex offenders (see Diack, 24 NY3d at 682-683). Similarly, this Court has recognized that in addition to “regulating] many aspects of the practice of law in this State,” the legislature has also granted to the judiciary certain powers to regulate the admission of attorneys and the practice of law (Forti v New York State Ethics Commn., 75 NY2d 596, 615 [1990]).

. The FDCPA was amended one year after Heintz to exempt “a formal pleading made in connection with a legal action” from certain rules regarding written communications with a debtor (15 USC § 1692e [11]). For other communications, however, the FDCPA applies to attorneys collecting debts on behalf of their clients (see Jerman v Carlisle, McNellie, Rini, Kramer & Ulrich, 559 US 573, 600 [2010] [“To the extent the FDCPA imposes some constraints on a lawyer’s advocacy on behalf of a client, it is hardly unique in our law”]).

. The DFS regulations contain specific exemptions for activities that generally fall within the ambit of litigation, including “collecting on or enforcing a money judgment” (23 NYCRR 1.1 [e] [7] [iii]).

. The majority cites Aponte v Raychuk (160 AD2d 636 [1st Dept 1990]) as an example of a case involving a local law that regulates an attorney’s nonlegal conduct (see majority op at 691). I note that Aponte is an Appellate Division case, and its reasoning has not been validated by this Court.