Daniel Patrick Moynihan U.S. Courthouse, Southern District of New York, at 500 Pearl St.
Daniel Patrick Moynihan U.S. Courthouse, Southern District of New York, at 500 Pearl St. (NYLJ/Rick Kopstein)

Claims by process servers that New York City violates their rights by enforcing license renewals and other record-keeping requirements without authority have been thrown out by a federal judge.

Southern District Judge Denise Cote (See Profile) dismissed the case brought against the city and officials at the Department of Consumer Affairs, which is responsible for the oversight of process servers and has the power to inspect their records, require a licensing exam and deny renewals.

In New York State Professional Process Servers Association v. City of New York, 14 Civ. 1266, the servers claimed that enforcement of the Administrative Code license enforcement provisions, §20-106(a), can only occur in criminal court. The law’s enforcement provision covers 32 classes of licenses for everything from auctioneers to debt collectors and laundries to locksmiths.

Parts of the statute call for criminal penalties for violations, including Section 106 (a), which allows fines of between $25 and $500, and a maximum of 15 days in jail.

The process servers claimed that criminal court was the only proper forum because the statute does not specifically authorize administrative adjudication of violations. Cote dismissed that argument as “groundless.”

“Plaintiffs have misread the clause ‘except as otherwise specifically provided’ in Section 106 (a),” Cote said, which “serves the limited purpose of referencing other criminal penalty provisions.” Its purpose, she said, was “to allow the City Council to impose different criminal penalties for violations of rules pertaining” to specific classes of licensees.

“The clause does not foreclose administrative or civil enforcement of process rules,” by the Department of Consumer Affairs, she said, for the “administrative code and chapter contain provisions expressly granting [the department] administrative as well as civil authority to enforce rules governing entities licensed under Title 20.”

Given that finding, the judge addressed the §1983 violations alleged by the plaintiffs, including that the Department of Consumer Affairs acts without authority in pursuing administrative enforcement without the protections of due process and fails to hold hearings on refusals to renew licenses.

The process servers also said being required to pass a test to get a license violates the Equal Protection Clause and that some code provisions are unconstitutionally vague and violate their right to fair notice.

“Plaintiffs’ procedural due process claim fails because they lack a protected interest in the renewal or a process server license due to [the department's] discretion in determining whether to grant a renewal application,” Cote said.

The judge noted that the City Council made it clear in §20-101 of the city code that the Department of Consumer Affairs’ power over licensing be “equitable flexible and efficient.”

The equal protection argument failed, she said, because “the process server license examination requirement implicates neither a fundamental right nor a suspect classification and therefore a rational basis review applies.” The city defendants survived that review, she found.

“[The defendants] contend that the City Council imposed an examination requirement on process servers because of the ‘pervasive problems’ in the service of process in New York City,” she said. “They point to a City Council Report of March 2, 2010, which details ‘an increasing prevalence of illegal ‘sewer service’—the deliberate failure to deliver the notification of court filing followed by false affidavit of successful delivery.”

So-called “sewer service” was named after the practice of throwing a complaint and summons into the sewer outside of a defendant’s home and then claiming to have effectuated service, leaving defendants unaware they are required to be in court.

The practice has led to lawsuits, including a 2009 class action in the Southern District against a lower Manhattan law firm, Mel Harris and Associates, and two other entities, alleging the fraudulent obtaining of more than 100,000 consumer debt default judgments for failure to appear.

Judge Denny Chin’s order certifying the class action in that case (NYLJ, Sept. 6, 2012) is being appealed before the U.S. Court of Appeals for the Second Circuit in Sykes v. Mel S. Harris and Associates, 13-2748.

Before Cote, the process servers’ vagueness challenge foundered as well. The servers had claimed that a statement of legislative intent in §20-101 that sought to maintain “honesty and fair dealing” by licensees was being used by the city to arbitrarily deny license renewals. They also charged as vague a requirement that they keep “legible records” as well as other record-keeping provisions, and the requirement that a licensee demonstrate “integrity and honesty in his or her process serving activities.”

But Cote said, “Plaintiffs’ facial challenges easily fail under the high standard applicable to such challenges.”

And she dismissed the RICO claim as well, noting that while the Second Circuit had yet to address the issue, other courts have held without hesitation that “a municipality is not capable of forming the requisite intent to support the underlying offense giving rise to a civil RICO action.”

Tracy Harkins of Mount Sinai represented the New York State Professional Process Servers Association. Walter Kretz of Scopetta Seiff Kretz & Abercrombie represented individual plaintiffs as well.

“This was a motion by the city directed solely to the pleadings, and Judge Cote decided the case on the merits without offering the plaintiffs any opportunity to present a case on the merits. We feel this violates federal procedural rules, so we will be appealing,” Harkins said.

Assistant Corporation Counsels Sherryl Neufeld, Mark Muschenheim and Jasmine Georges represented the city.