MEMORANDUM & ORDER
Nеw York City has been involved in regulating debt collection since at least 1984, when it began requiring debt collection agencies to obtain a municipal license in order to practice in the city. In March 2009, New York City Council passed Local Law 15, which, inter alia, amended the debt collection ordinance to cover debt buyers and attorneys engaging in debt collection activities. Plaintiffs contend that these amendments are contrary to New York state law, violate the Commerce and Contract Clauses of the United States Constitution, and render the debt collection ordinance unconstitutionally vague. Both plaintiffs and defendants have now moved for summary judgment. For the reasons set forth below, plaintiffs’ motion is GRANTED in part and DENIED in part, as is defendants’.
I. BACKGROUND
A. Legislative History
In 1984, New York City Council passed Local Law 65, which required debt collection agencies to obtain a license in order to practice in the city. In the prefatory legislative declaration, City Council stated that, “[wjhile the majority of those engaged in [the debt collection] business are honest and ethical in their dealings, there is a minority of unscrupulous collection agencies in operation that practice abusive tactics such as threatening delinquent debtors, or calling such people at outrageous times of the night.” N.Y. City Admin. Code § 20-488 (1984). In the Council’s view, “[t]hese actions constitute tactics which would shock the conscience of ordinary people.” Id. For this reason, Local Law 65 made it “unlawful for any person to act as a debt collection agency without first having obtained a license.” -Id. § 20-490. “Debt collection agency” was defined as “a person engaged in business the principal purpose of which is to regularly col
In December 2007, the Council introduced Int. 660, a bill to amend the debt collection ordinance. As originally proposed, the bill made two changes to the ordinance. First, it amended the definition of debt collection agency to include “a buyer of debt who refers such debt to another for collection or to an attorney-at-law for litigation in order to collect such debt.” (Decl. of Nicholas Ciapetta in Support of Cross Motion for Summary Judgment (“Ciapetta Decl”), Ex. D.) Second, the exclusion for attorneys was clarified to cover “any attorney-at-law or law firm collecting a debt in such capacity on behalf of and in the name of a client ... through legal activities such as the filing and prosecution of lawsuits to reduce debts to judgments,” but not “any attorney-at-law or law firm who regularly engages in activities traditionally associated with debt collection, including but not limited to, sending demand letters or making collection telephone calls.” (Id.) In other words, under the prоposed bill, “buyers of debt”— organizations that purchase debt from originating or other creditors and outsource debt collection to third-parties, including law firms — and attorneys or law firms regularly engaging in non-litigation debt collection activities would be required to apply for a debt collection license.
In hearings on the bill in February 2009 before the City Council’s Committee on Consumer Affairs, witnesses discussed the growth in the debt-buying industry, a shift particularly evident in the explosion of debt collection-related lawsuits brought by these organizations. Relying largely on a 2007 study by the Urban Justice Center (“UJC”), City Councilmembers, the Director of Legislative Affairs for the New York Department of Consumer Affairs, and representatives of various advocacy groups testified that approximately 90% of the more than 300,000 consumer credit collection actions being filed in Civil Court annually were brought by debt collection organizations that did not originate the debt at issue. (See, e.g., id., Ex. E, at 13 (oral testimony of Andrew Eiler, Director of Legislative Affairs for the Department of Consumer Affairs).) The same witnesses expressed concern that these organizations have different incentives than originating creditors. In the words of the Director of Legislative Affairs, for example, “[w]hen the debt has been sold for the purpose of collecting it, the person buying it doesn’t care about any ongoing relationship. The only thing he cares about is collecting the money.” (Id. at 43-44.) Thus, while “[t]he originating creditor might have reasons for dampening the extent to which he pursues the claims that he may have,” a debt buyer “does not have these inhibitions.” (Id. at 44.)
In addition to expressing continued concerns regarding the harassing practices that had motivated Local Law 65, many of the witnesses testified to the use of aggressive tactics by debt búyers and their lawyers in collection actions against vulnerable consumers.
Over the strenuous objections of representatives from the debt collection industry that Int. 660 would violate the federal Constitution and New York state law, witnesses testified that the proposed amendments were necessary to address these problems and bring previously unlicensed debt buyers and their agents under the licensing aegis of the City. In the words of one witness, debt buyers that contracted collection activities to third parties were “among the worst perpetrators of abusive collection practices against city residents.” (See id., Ex. E, at 107 (oral testimony of Janet Ray Kalson, Chair of the Civil Court Committee of New York Bar Association).) However, because many debt buyers outsourced actual collection to other organizations and employed law firms to pursue legal action, they arguably were not covered by Local Law 65’s definition of “debt collection agency.” (See id. at 5 (introductory remarks of Leroy Comrie, Chair of Committee on Consumer Affairs) (“[Djebt buyers claim that since they outsource the collection duties to other parties ... they [are] exempt from the licensing requirements.”).) Int. 660 accordingly was drafted to require these organizations, as well as law firms regularly engaging in debt collection activities, to obtain a license from the Department of Consumer Affairs. (See id. at 8 (oral testimony of Council-member Dan Garodnick).). Obtaining a license would also subject them to the Department’s investigatory and sanctioning authority. (See id. at 30 (Eiler oral testimony) (“The most important thing is that the department, with respect to licensees, has hearing authority and the commissioner has the authority to award restitution for damages that a consumer suffers
Following the February 2009 hearings, Int. 660 was amended as Int. 660-A. In March 2009, the Committee on Consumer Affairs published a report on the amended bill that echoed much of the testimony from consumer activists at the February hearings and extensively cited the UJC study.
In addition, the Report noted that fewer than one-third of debt buyers bringing claims against New York City debtors were licensed by the Department of Consumer Affairs. According to the Report, “[m]any debt buyers have claimed that they are immune to licensing requirements of the DCA since they outsource the actual collection duties to other parties, such as debt collection law firms.”
B. Local Law 15 and Associated Regulations
Following further amendments and hearings, on March 11, 2009, the Committee on Consumer Affairs approved what would become Local Law 15 by a vote of 4-0. The same day, the City Council voted unanimously to pass the law, which was signed on March 18, 2009 by Mayor Michael R. Bloomberg and became effective on July 16, 2009.
As enacted, Local Law 15 did not alter § 20-490, which requires debt collection agencies to obtain a Department of Consumer Affairs (“DCA”) license and comply with “all other applicable laws, rules and regulations”; § 20^91, which provides that licenses for debt collection agencies are valid for two years and require an annual fee of $75; or § 20-492, which provides, inter alia, that applicants for a license must file a DCA application. The law did amend § 20-489, which defines which entities are considered debt collection agencies. As amended, § 20-489 reads as follows, with the new language underlined and omitted language bracketed:
§ 20-489: “Debt collection agency” shall mean a person engaged in business the principal purpose of which is to regularly collect or attempt to collect debts owed or due or asserted to be owed or due to another and shall also include a buyer of delinquent debt who seeks to collect such debt either directly or through the services of another by, including but not limited to, initiating or using legal processes or other means to collect or attempt to collect suсh debt. The term does not include ...
(5) any attorney-at-law or law firm collecting a debt [as an attorney] 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, but not any attorney-at-law or law firm or part thereof who regularly engages in activities traditionally performed by debt collectors, including, but not limited to, contacting a debtor through the mail or via telephone with the purpose of collecting a debt or other activities as determined by rule of the commissioner ....
N.Y. City Admin. Code § 20-489 (2009). It is to these amendments to the definition of “debt collection agency,” bringing within its scope debt buyers and attorneys regularly engaging in activities traditionally performed by debt collectors, which plaintiffs’ suit is primarily addressed.
Local Law 15 also added two new sections, §§ 20-493.1 and 20-493.2, setting out required and prohibited collection practices. The new § 20^193.1 mandates — in addition to any practices required under any federal, state or local law — that a debt collection agency (a) provide, in any permitted communication with the consumer, (i) a call-back number to a phone that is answered by a natural person, (ii) the name of the agency, (iii) the originating creditor of the debt, (iv) the name of the person to call back, and (v) the amount of the debt at the time of the communication, as well as (b) confirm with the consumer, in writing within five business days, any debt payment schedule or settlement agreement reached regarding the debt. Id. § 20-493.1. The new § 20-493.2 forbids — beyond any practices prohibited under any federal, state, or other local law — a debt collection agency from (a) attempting to collect or contact a con
Finally, Local Law 15 also amended § 20-494, creating additional penalties for violations. As amended, § 20-494 reads as follows:
Any person who, after notice and hearing shall be found guilty of violating any provision of this subchapter, shall be punished in accordance with the provisions of chapter one of this title and shall be subject to a penalty of not less than seven hundred dollars nor more than one thousand dollars for each violation provided further, hoiuever, that any such person found guilty of having acted as a debt collection agency in violation of section 20-490 of this subchapter shall be subject to an additional penalty of one hundred dollars for each instance in which contact is made with a consumer in violation of such section.
Id. § 20-494 (new language underlined).
On April 24, 2010, the DCA promulgated regulations pursuant to Local Law 15. The regulations both amplify the requirement under § 20-493.1(a) that debt collectors communicating with debtors provide a call-back number to a phone answered by a natural person and clarify the documentation dеbt collection agencies are required to provide to debtors to comply with §§ 20-493.1(b), 20-493.2(a), and 20-493.2(b). See Rules of the City of New York, tit. 6, ch. 2 §§ 2-190, 2-191, 2-192, 2-194. The regulations also set out detailed record requirements for debt collection agencies to maintain for each debt that the agency attempts to collect and for each debtor the agency seeks to collect from, as well as record requirements relating to the agency’s operations and practices. See id. § 2-193.
C. Procedural History
On July 15, 2009, plaintiffs filed this lawsuit against the City of New York, New York City Council, the DCA, and Jonathan Mintz, in his official capacity as DCA Commissioner. Plaintiff Eric Berman P.C. (“Berman P.C.”), a New York professional service corporation with its principal place of business in New York, is a law firm engaged in the business of seeking to recover amounts due and owing on consumer debt portfolios held by debt buyers.
In their complaint, plaintiffs assert several challenges to New York City’s debt collection regulations. First, plaintiffs claim that these regulations are preempted under New York State law, both because New York State has demonstrated its intent to preempt the entire field of debt collection regulation — thereby assumedly rendering invalid all of New York City’s debt collection regulations — and because Local Law 15 is inconsistent with §§ 600, 601, and 602 of the New York General Business Law and §§53 and 90 of the New York Judiciary Law. Second, plaintiffs claim that the amendments violate the Commerce Clause of the United States Constitution because they have the practical effect of regulating commerce that is wholly extraterritorial to New York State and, in the alternative, because the burdens imposed by these amendments on interstate commerce clearly outweigh their putative local benefits. Third, plaintiffs claim that the amendments violate the Contract Clause of the United States Constitution, insofar as they substantially impair the contractual obligations between debt buyers and originating creditors, debt buyers and debtors, and debt buyers and third-party debt collectors and law firms that attempt to recover on debt portfolios owned by the debt buyers. Finally,, plaintiffs claim that the amendments violate the Due Process Clause of the United States Constitution, since the statutory phrases “solely through activities that may only be performed by a licensed attorney,” “regularly engages in activities traditionally performed by debt collectors,” and “other means to collect or attempt to collect such debt,” that have been added to § 20-489 are unconstitutionally vague. Accordingly, plaintiffs seek declaratory and injunctive relief as to the application to them of New York City’s dеbt collection regulations, as well as costs and attorneys’ fees.
II. DISCUSSION
A. Summary Judgment Standard
A motion for summary judgment is granted only if “the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(c); see also Celotex Corp. v. Catrett,
B. State Law Preemption Claims
In New York, as in other states, the lawmaking authority of a municipal corporation such as New York City, which is a political subdivision of the state, can be exercised only to the extent it has been delegated by the state. See Albany Area Builders Ass’n v. Town of Guilderland,
Plaintiffs argue that Local Law 15 violates both of these limitations on New York City’s police powers. In their view, New York State has created a comprehensive regulatory framework governing debt collection practices, thereby evincing the Legislature’s intent to preempt the entire field of debt collectiоn regulation. In the alternative, plaintiffs argue that Local Law 15 directly conflicts with New York General Business Law §§ 600, 601, and 602, as well as with New York Judiciary Law §§53 and 90. While the Court finds that plaintiffs’ field preemption and conflict preemption claims as to New York General Business Law §§ 600, 601 and 602 are without merit, it agrees with plaintiffs that Local Law 15’s amendments relating to attorneys are in direct conflict with New York Judiciary Law §§ 53 and 90.
1. Field Preemption
Debt collection practices are regulated at both the federal and state levels. The Fair Debt Collection Practices Act (“the FDCPA”) explicitly permits state regulation. See 15 U.S.C. § 1692n (“This sub-chapter does not annul, alter, or affect, or exempt any person subject to the provisions of this subchapter from complying with the laws of any State with respect to debt collection practices, except to the extent that those laws are inconsistent with any provision of this subchapter ....”); see also 28 U.S.C. § 3003(d) (noting that prescribed federal procedures for debt collection preempt state laws only to the extent that such laws are inconsistent with federal procedures). While the FDCPA is silent as to whether local regulation of debt collection is also permitted, the Supreme Court has held that substantively identical statutory language under other federal regulatory statutes does not preempt local regulation. See Wis. Pub. Intervenor v. Mortier,
Plaintiffs argue, however, that New York State has created a comprehensive regulatory framework governing debt collection practices, thereby rendering Local Law 15 — -and, assumedly, New York City’s entire regulatory regime governing debt collection — invalid. Under New York law, preemption of an entire regulatory field need not be express. Rather, “[t]he Legislature’s intent to so preempt a particular area can be inferred from a declaration of policy or from a comprehensive or detailed scheme in a given area.” Incorporated Village of Nyack v. Daytop Village, Inc., 78 N.Y.2d 500, 505,
Plaintiffs do not point to an express statement of preemption or a declaration of legislative policy to occupy the entire field of debt collection. Rather, they argue that New York State’s intent to occupy the fiеld can be inferred from what they claim to be the state’s comprehensive regulatory scheme governing debt collection practices, as set out in New York General Business Law §§ 600, 601, and 602. Under these provisions, “principal creditors” — defined as “any person, firm, corporation or organization to whom a consumer claim is owed, due or asserted to be due or owed, or any assignee for value of said person, firm, corporation or organization,” N.Y. Gen. Bus. Law § 600 — and their agents are prohibited from undertaking a narrow enumerated set of practices, including (1) simulating a law enforcement officer or representative of a New York governmental agency; (2) knowingly collecting, attempting to collect, or asserting any right to a collection fee, attorney’s fee, court cost or expense not justly due or legally chargeable against the debtor; (3) disclosing or threatening to disclose false information “affecting the debtor’s reputation for credit worthiness”; (4) communicating or threatening to communicate the nature of a consumer claim to the debtor’s employer prior to obtaining a final judgment against the debtor; (5) disclosing or threatening to disclose information concerning the existence of a debt known to be disputed by the debtor without disclosing that fact; (6) communicating with the debtor or any member of the debtor’s family or household in an abusive or harassing manner; (7) threatening any action which the principal creditor does not normally take in the usual course of business; (8) claiming a right, or attempting or threatening to enforce a right, if the right does not exist; (9) using a communication that falsely simulates legal or judicial process or otherwise gives the appearance of being authorized, issued or approved by the government or an attorney; and (10) failing to keep complete records concerning all information subpoenas sent by the creditor if it sends more than fifty such subpoenas per month, see id. § 601. Any violation of these provisions is a misdemeanor, and the New York Attorney General or the District Attorney of any county has the authority to bring an injunctive action to restrain or prevent such practices. See id. § 602.
Contrary to plaintiffs’ contention, these limited restrictions fall far short of situations in which the New York courts have found preemptory intent. See, e.g., Albany Area Builders Ass’n,
2. Conflict Preemption with New York General Business Law §§ 600, 601 and 602
In the alternative, plaintiffs argue that Local Law 15’s new requirements for debt collection practices, N.Y. City Admin. Code §§ 20-493.1, 20-493.2, are directly inconsistent with those set out in New York General Business Law §§ 600, 601, and 602. The Court again disagrees.
In New York, as noted earlier, a local government “may not exercise its police power by adopting a local law inconsistent with constitutional or general law.” N.Y. State Club Ass’n,
3. Conñict Preemption with New York Judiciary Law §§ 53 and 90
The Court agrees with plaintiffs, however, that Local Law 15 is in direct conflict with New York Judiciary Law §§ 53 and 90. As such, it exceeds the City of New York’s authority, and must be found invalid to the extent that it purports to regulate attorney conduct.
The admission of attorneys to the New York bar, as well as their supervision and regulation, is vested with the judiciary. Section 53 of the New York Judiciary Law provides, in relevant part, that the New York Court of Appeals “may from time to time adopt, amend, or rescind rules ... regulating the admission of attorneys and counsellors at law, to practice in all the courts of record of the state,” including making provisions “it shall deem proper for admission to practice,” and “preserib[ing] rules providing for a uniform system of examination.” N.Y. Jud. L. § 53(l)-(2). Most importantly for purposes of this action, § 90 provides, in relevant part:
The supreme court shall have power and control over attorneys and counsellorsat-law and all persons practicing or assuming to practice law, and the appellate division of the supreme court in each department is authorized to censure, suspend from practice or remove from office any attorney and counsellor-at-law admitted to practice who is guilty of professional misconduct, malpractice, fraud, deceit, crime or misdemeanor, or any conduct prejudicial to the administration of justice; and the appellate division of the supreme court is hereby authorized to revoke such admission for any misrepresentation or suppression of any information in connection with the application for admission to practice.
Id. § 90(2).
As the New York courts have recognized, the language of § 90 establishing that “[t]he supreme court shall have power and control over attorneys and counsellors-at-law and all persons practicing or assuming to practice law,” id., “broadly establishes judicial governance over the conduct of attorneys.” In re Wong,
In purporting to regulate attorneys and law firms that “regularly engage! ] in activities traditionally performed by debt collectors,” N.Y. City Admin. Code
Seeking to avoid this conclusion, defendants argue that attorneys who regularly seek to collect on debts on behalf of creditors are attorneys in name only: in reality, they claim, these attorneys are acting as debt collectors, and may be regulated as such. In defendants’ view, only when there is “an inherently legal component” to an attorney’s activities, or the activities are “inexorably intertwined” with the practice of law, is the supervision of these activities left to the courts. No such limitation on judicial authority, however, is contemplated under New York law. To the contrary, the New York courts can and have set out standards regulating the provision of nonlegal services by attorneys. Indeed, when attorneys are providing nonlegal services to clients, they may be held to the same professional standards as when providing legal services. See N.Y. State Unified Court System, Rules of Professional Conduct, Rule 5.7(a)(1) (stating that a lawyer or law firm that “provides nonlegal services to a person that are not distinct from legal services being provided to that person by the lawyer or law firm is subject to these Rules with respect to the provision of both legal and nonlegal services”); id. Rule 5.7(a)(2) (stating that a lawyer providing nonlegal services that are distinct from legal services being provided “is subject to these Rules with respect to the nonlegal services if the person receiving the services could reasonably believe that the nonlegal services are the subject of a client-lawyer relationship”). 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. See Wong,
In support of their argument, defendants analogize debt collection to driving a taxi cab: in their view, since collecting on a debt, just like driving a taxi cab, has no connection to the practice of law, New York City may require an attorney to obtain a debt collection license, just as it obviously may require the attorney to obtain a municipal taxi driver’s license. Supreme Court’s decision in Roth helps illustrate why this analogy is incorrect. In Roth, Supreme Court addressed whether New York City Council could require an attorney to obtain a license to act, not as a taxi driver, but as a taxi broker. In concluding that this requirement “impermissibly interfere[d] with an attorney’s right to practice law,”
The law defines a “taxicab broker” as one “who, for another ... acts as an agent or intermediary in negotiating the purchase or sale of a taxicab” (Administrative Code § 2325[a]). Taking 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 such licensing. Is it not a commonplace function of an attorney— in the sale and purchase of any property — real or personal — to participate in negotiations of all aspects of the prospective transaction including price, terms, security and a myriad of other issues between the parties? How could an attorney, not licensed by the Commission, but requested by a client to prepare a bill of sale and a security agreement in connection with the sale of a taxicab, do so without subjecting himself or herself to both civil and criminal penalties? It would appear that he or she could not.
Id.
The same is true of the tasks performed by debt collectors. Under Local Law 15, no attorney may regularly represent creditors seeking to collect debts without first obtaining a DCA license and complying with its requirements. These requirements, however, include limitations on activities that are commonplace functions of attorneys, such as communicating with ad
Therefore, while the Court agrees with defendants that 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. For similar reasons, Local Law 15 is also very far from the incidental regulations of attorney conduct that have been upheld by the New York courts. See, e.g., Forti v. N.Y. State Ethics Comm’n,
Finally, defendants note that several of the debt collection activities restricted by Local Law 15 — in particular, contacting a consumer about a debt on which the statute of limitations has run, or seeking to collect such a debt unless the debt collector first provides the consumer with certain information regarding his legal rights, see N.Y. City Admin. Code § 20-493.2(b); Rules of the City of New York, tit. 6, ch. 2 § 2-191 — are also prohibited by federal law. See 15 U.S.C. § 1692(e) (prohibiting debt collectors from threatening to take any action that cannot legally be taken);
C. Dormant Commerce Clause Challenge
Plaintiffs next argue that, by requiring out-of-state debt buyers that do not directly engage in any in-state collection activities to obtain a DCA license or else be subject to penalties, the amendments to § 20-489 and § 20-494 violate the Commerce Clause of the United States Constitution. For the same reason, plaintiffs argue that § 20-493.1 and § 20-493.2, which require out-of-state debt buyers to undertake certain required collection practices and forego certain prohibited practices or else be subject to monetary penalties, also violate the Commerce Clause. Defendants contest these claims. For the reasons discussed below, the Court denies summary judgment to both plaintiffs and defendants on the Commercе Clause claims.
Article I, Section 8, Clause 3 of the United States Constitution empowers Congress to “regulate commerce ... among the several States.” Although the Clause is phrased as an affirmative grant of congressional power, it is well-established that the Clause also contains a negative or “dormant” aspect that denies to the States “the power unjustifiably to discriminate against or burden the interstate flow of articles of commerce.” Or. Waste Sys., Inc. v. Dep’t of Envt’l Quality,
In subjecting to heightened scrutiny statutes that discriminate against interstate commerce or regulate wholly extraterritorial commerce, these cases follow the Supreme Court’s decisions in Healy and Brown-Forman Distillers Corp. v. New York State Liquor Authority,
Other Courts of Appeals have encountered similar confusion, see, e.g., Int’l Dairy Foods Ass’n v. Boggs,
The near-universal consensus among other circuits aside, in light of the different approaches followed in this circuit, it is not
1. Extraterritoriality
The prohibition on state and local laws regulating extraterritorial commerce has been developed in a line of Supreme Court cases stretching back to the 1930’s. See Healy,
Taken together, our cases concerning the extraterritorial effects of state economic regulation stand at a minimum for the following propositions: First, the ‘Commerce Clause ... precludes the application of a state statute to commerce that takes place wholly outside of the State’s borders, whether or not the commerce has effects within the State,’ Edgar,457 U.S. at 642-43 ,102 S.Ct. 2629 (plurality opinion); see also Brown-Forman,476 U.S. at 581-583 ,106 S.Ct. 2080 , and, specifically, a State may not adopt legislation that has the practical effect of establishing ‘a scale of prices for use in other states,’ Seelig,294 U.S. at 528 ,55 S.Ct. 497 . Second, a statute that directly controls cоmmerce occurring wholly outside the boundaries of a State exceeds the inherent limits of the enacting State’s authority and is invalid regardless of whether the statute’s extraterritorial reach was intended by the legislature. The critical inquiry is whether the practical effect of the regulation is to control conduct beyond the boundaries of the State. Brown-Forman,476 U.S. at 579 ,106 S.Ct. 2080 . Third, the practical effect of the statute must be evaluated not only by considering the consequences of the statute itself, but also by considering how the challenged statute may interact with the legitimate regulatory regimes of other States and what effect would arise if not one, but many or every, State adopted similar legislation. Generally speaking, the Commerce Clause protects against inconsistent legislation arising from the projection of one state regulatory regime into the jurisdiction of another State. Cf. CTS Corp.,481 U.S. at 88-89 ,107 S.Ct. 1637 . And, specifically, the Commerce Clause dictates that no State may force an out-of-state merchant to seek regulatory approval in one State before undertaking a transaction in another. Brown-Forman,476 U.S. at 582 ,106 S.Ct. 2080 .
Healy,
Even with Healy’s guidance, however, the boundaries of what constitutes wholly extraterritorial commerce are murky at best. Cf. Peter Felmly, Comment, Beyond the Reach of States: The Dormant Commerce Clause, Extraterritorial State Regulation, and the Concerns of Federalism, 55 Me. L. Rev. 467, 495 (2003) (noting that “the most difficult portion of the [extraterritoriality] analysis to unravel” is “when, under the blueprint the Supreme Court laid down in Healy, a state’s law has effects which occur ‘wholly outside’ the boundaries of the state”). Defendants assert that the core concerns underlying the Supreme Court’s line of extraterritoriality cases are attempts by a state to establish a scale of pricing affecting interstate commerce or to pass laws that smack of economic protectionism. (Defs’. Mem. of Law in Opp’n to Summ. J. 5.) But Healy’s demarcation of laws that will fall afoul of the dormant Commerce Clause clearly extends far beyond these concerns. See Healy,
In A.S. Goldmen & Co. v. N.J. Bureau of Securities, the Third Circuit also looked to the location of the transaction being regulated when determining whether the application of a state statute violated the dormant Commerce Clause. A.S. Gold-men was a securities broker-dealer in New Jersey; in early 1996, it filed registration statements with the Securities Exchange Commission and regulatory authorities in over a dozen states for an initial public offering of a Delaware technology corporation.
In the resulting declaratory judgment action, A.S. Goldmen argued that the regulator’s action, insofar as it blocked sales of the offering to individuals outside of New Jersey, unconstitutionally applied the New Jersey Blue Sky law to commerce occurring wholly outside the state; the regulator, by contrast, argued that the law had been constitutionally applied to commerce occurring entirely within the state. Id. at 786. The Third Circuit agreed that the key to the law’s constitutionality was whether the provisions of the law had been applied to transactions that had occurred within the state, see id. at 785-86 (noting that the constitutionality of the statute’s application depended “on the territorial scope of the transaction that the state law seeks to regulate”) (citing, inter alia, Hall v. Geiger-Jones Co.,
Also of relevance here, the court rejected the plaintiffs alternative argument: that the sales occurred in part within South Carolina because the subsidiary had advertised within the state. Id. at 488; see also 490-91 (quoting plaintiffs argument that, “[although [the subsidiary] is physically located in Georgia, it entered South Carolina through direct mailings and phonebook advertisements”). Noting that the Supreme Court has deemed extraterritorial “statutes that seize upon a company’s in-state commercial activities ... to regulate the company’s out-of-state conduct,” the court held that “there was every reason to conclude” that this proposed construction of the statute would violate the dormant Commerce Clause as well. Id. at 491. “Far better then,” the court determined, “to conclude that these sales took place where in fact they did take place: at [the subsidiary’s] lot in Georgia.” Id. at 492. In other words, South Carolina could not use the defendant’s in-state commercial activities as a hook to regulate its out-of-state conduct. Rather, the fact that the defendant’s subsidiary had “entered” South Carolina (as the plaintiff termed it) by advertising in-state gave the State no additional license under the dormant Commerce Clause to regulate transactions consummated wholly out of state. See id. at 491-92; cf. Star Scientific, Inc. v. Beales,
Midwest Title Loans, Inc. v. Ripley,
The Seventh Circuit upheld the district court’s decision. Reviewing the considerable body of literature targeting car title and other high cost, high risk loans for “trap[ping] borrowers in a cycle of debt,” the court acknowledged Indiana’s legitimate interest in regulating “predatory lending.”
While not always analyzed explicitly in these terms, decisions in other circuits are largely consistent with the line established in these cases, striking down statutes applying to transactions consummated out of state, but upholding statutes applying only to in-state transactions. See, e.g., Quik Payday,
Thus, following the line that has been established in these eases, the Court looks to where the transaction being regulated was consummated to determine whether the application of a law impermissibly regulates extraterritorial commerce. Cf. Regan, supra, at 1899 (noting that the extraterritoriality principle is concerned with “the location of the regulated behavior itself’). Quite simply, if the transaction is consummated out of state, a state may not regulate it without violating the dormant Commerce Clause.
a. Defendants’ Motion
Defendants argue that the application of Local Law 15 to out-of-state debt buyers that contract with third-party debt collectors and law firms to collect on debts owed by New York City consumers does not
As a preliminary matter, it is necessary to resolve at what point an out-of-state debt buyer like DBA becomes subject to New York City’s debt regulation regime. Plaintiffs argue that, under the amendments enacted by Local Law 15, DBA cannot even contract with a third-party debt collector or law firm to collect on a New York City debt without first obtaining a DCA license. Defendants, by contrast, argue that the Law does not apply until a debt buyer actually attempts to collect on a New York .City debt via a third-party debt collector or law firm. A plain reading of the ordinance supports defendants’ interpretation. Under the amended definition of “debt collection agency,” a debt buyer “who seeks to collect” a debt “either directly or through the services of another by, including but not limited to, initiating or using legal processes or other means to collect or attempt to collect such debt,” must obtain a DCA license. N.Y. City Admin. Code §§ 20-489, 20-490. By the code’s own terms, a debt buyer must “initiate or use legal processes” — not simply hire an attorney — to trigger the license requirement. Similarly, the statutory language requiring a debt buyer to obtain a license only at the point it “seeks to collect” a debt contemplates an affirmative step beyond simply hiring a third-party debt collector. Cf. Merriam-Webster’s Collegiate Dictionary 1285 (11th ed. 2008) (defining “to seek” as, inter alia, “to go in search of: look for,” “to ask for,” “to try to acquire or gain,” or “to make an attempt”). Beyond the plain legislative language, defendants’ reasonable interpretation of the law under which they function is entitled to deference. See In re Application of Burrito Factory, Inc.,
Defendants struggle to avoid this conclusion by arguing that, regardless of where these contracts are formed, they cannot be deemed wholly extraterritorial because they concern conduct that occurs wholly within the state. In defendants’ view, by attempting to collect on New York City debts via such contracts, a debt buyer like DBA “projects itself’ into New York, thereby rendering it subject to in-state regulations. (See Defs.’ Mem. of L. in Opp’n to Summ. J. at 5-6.). While defendants’ explanation of how a debt collector may “project” itself into a state via its contractual -relationships is creative, it is simply not the correct analysis to determine whether a regulation violates the dormant Commerce Clause. In arguing that New York City’s regulatory authority may properly be asserted on this basis, defendants are claiming that foreign debt buyers like DBA may be subject to licensing merely because counter-parties to their contracts perform their contractual obligations within the state. These in-state activities, however, are the consequence of transactions that are — at least, as plaintiffs assert regarding DBA’s contracts — consummated entirely out-of-state, and the Commerce Clause “precludes the application of a state statute to commerce that takes place wholly outside of the State’s borders, whether or not the commerce has effects within the State.” Edgar,
The Seventh Circuit’s decision in Ripley is instructive in this regard. As in this case, the government body in Ripley sought to regulate a corporation on the basis of, inter alia, out-of-state contracts under which the counter-party’s performance occurred in-state: while Midwest Title’s loan transactions were formed in Illinois, debtors could perform their contractual obligations — making principal and interest payments on the debts— from within Indiana. Nonetheless, the Seventh Circuit deemed Indiana’s attempt to license Midwest Title unconstitutional, based solely on where the company’s contracts with debtors came into existence. In the court’s words, the contracts were “made and executed in Illinois, and that is enough to show that the [application of the statute] violates the commerce clause.”
Defendants note that a principal may be held liable for the actions of its agents. Of course this is true. If a New York City debtor chooses to sue a debt collection organization or law firm that DBA has engaged to act on its behalf in a New York State court, then DBA, all else being equal, will be subject to the court’s jurisdiction and may be held liable for any wrongdoing. In fact, whether any wrongdoing has occurred might well be evaluated under New York law. Cf. Mills,
Under Local Law 15, out-of-state debt buyers that contract with third-party debt collectors or law firms outside the state to collect on New York City debts must still comply with these, far from innocuous, but rather extensive and burdensome regulations, face sanctions, see id. § 2(M94, or cease doing business in New York City. This extension of the DCA’s authority to these out-of-state debt buyers, based on contracts formed outside the state, has the practical effect of exporting New York’s domestic policies into other states. Cf. Brown-Forman,
Accordingly, to the extent that Local Law 15 regulates contracts formed entirely outside of the state, it violates the United States Constitution.
b. Plaintiffs’ motion
Nonetheless, lawsuits are not run in a factless vacuum. Here, plaintiffs simply have not provided sufficient evidence as to the particulars of DBA’s contracts with debt collectors and law firms to support summary judgment on their behalf on extraterritoriality grounds. In support of their motion, aside from the arguments made in the briefing papers, plaintiffs rely on a single conclusory statement in the declaration of the late Eric Berman. According to this averment, based on Berman’s personal knowledge as one of the company’s shareholders and officers, DBA:
purchases and takes assignment of consumer debt or debt portfolios ... pursuant to contracts entered into outside of the state of New York. DBA Holdings does not contact debtors directly, either in New York State, New York City or elsewhere. Rather, DBA Holdings enters into contracts outside of the State of New York with debt collectors and law firms, who in turn attempt to recover amounts due and owing on DBA Holdings’ consumer debt portfolios, including consumer debts owed by New York City debtors.
(Berman Decl. ¶ 3.) This statement is insufficient to support summary judgment.
Under Federal Rule of Civil Procedure 56, a party asserting that a fact cannot be genuinely disputed has the burden of supporting this assertion by “citing to particular parts of materials in the record, including ... affidavits or declarations,” or “showing that the materials cited do not establish the absence or presence of a genuine dispute, or that an adverse party cannot produce admissible evidence to support the fact.” Id. 56(c). Here, the relevant question requiring factual support is whether DBA’s contracts with debt collectors and law firms are extraterritorial or not. As indicated above, the answer to this question is extremely fact sensitive, resting on where the essential elements necessary for contract formation took place.
The record, however, is bereft of such evidence. As defendants point out, Berman’s bald assertion that DBA’s contracts with debt collectors and law firms are entered into “outside of the State of New York” does little more than restate the legal conclusion that these contracts are extraterritorial. As a legal conclusion, it cannot support summary judgment. See Schwapp v. Town of Avon,
In fact, even were it more robust, the declaration would be insufficient for summary judgment to be granted to plaintiffs. While the Court may accept uncontested statements in declarations and affidavits for their truth in summary judgment proceedings, see Weinstein v. Albright,
Because plaintiffs have failed to present adequate support for their assertion that DBA’s contracts with debt collectors and law firms are extraterritorial in all material respects, the Court denies their motion for summary judgment on these grounds. Cf. id. 56(e)(4) (giving the Court discretion to issue any appropriate order if a party fails to support an assertion of fact).
2. Pike Analysis
The attack on the City’s ordinance does not end there. In the alternative, plaintiffs argue that, even if Local Law 15 does not impermissibly regulate extraterritorial commerce, the burdens it imposes on interstate commerce clearly outweigh their putative local benefits. Defendants argue that the code provision does not impermissibly burden interstate commerce and that, even if it does, any burdens are out
Even if a law does not discriminate against interstate commerce or regulate wholly extraterritorial commerce, it may still violate the dormant Commerce Clause. As the Supreme Court said in Pike v. Bruce Church, Inc.,
[w]here the statute regulates even-handedly to effectuate a legitimate local public interest, and its effects on interstate commerce are only incidental, it will be upheld unless the burden imposed on such commerce is clearly excessive in relation to the putative local benefits. If a legitimate local purpose is found, then the question becomes one of degree. And the extent of the burden that will be tolerated will of course depend on the nature of the local interest involved, and on whether it could be promoted as well with a lesser impact on interstate activities.
Id. at 142,
The existence and extent of the burdens and benefits under the Pike analysis is a question to be determined by the finder of fact. See Town of Southold,
As evident in the requirement that any burdens on interstate commerce “clearly outweigh” the local benefits of a statute, the Pike analysis is a “permissive” one. See Town of Southold,
a. Defendants’ motion
Burdens
Defendants contest that Local Law 15 poses any incidental burden on interstate commerce. “[A]t a minimum,” for the law to have an incidental burden, it “must impose a burden on interstate commerce that is qualitatively or quantitatively different from that imposed on intrastate commerce.” Town of Southold,
As discussed above, under Local Law 15, out-of-state debt buyers that contract with third-party debt collectors or law firms to collect on New York City debts must obtain a DCA license and subject themselves to the DCA’s regulatory authority, even if these contracts are formed entirely outside the state. In so doing, Local Law 15 regulates wholly extraterritorial conduct. This in itself is sufficient to meet plaintiffs’ burden of demonstrating that the statute places some incidental burden on interstate commerce. See Town of Southold,
Plaintiffs also argue that Local Law 15 places another incidental burden on inter
Benefits
Defendants argue that any burden on interstate commerce is without a doubt clearly outweighed by Local Law 15’s benefits to New York City. In defendants’ view, the ordinance is necessary to address abusive debt collection practices — particularly, the explosion in debt collection suits brought on behalf of debt buyers — against vulnerable debtors by subjecting debt buyers engaged in debt collection in New York City, as well as the attorneys and law firms that bring suits on their behalf, to the DCA’s regulatory authority. Even according the City Council’s determination as to the benefits of Local Law 15 the deference it is due, the Court can hardly conclude that defendants are entitled to summary judgment.
Plaintiffs concede New York City’s interest in regulating debt collection practices. They contest, on the other hand, defendаnts’ claim that debt buyers are responsible for any abusive debt collection practices against vulnerable debtors — or, indeed, that any such abuses occur, or that any debtors in New York City are, in fact, “vulnerable.” A thorough review of the record reveals no evidence to support plaintiffs’ contention. During the City Council hearings on Int. 660, in response to the Councilmembers’ questions regarding the existence of abusive debt collection practices, representatives of the debt collection industry argued only that there is another side to this story: that debt avoidance is flourishing, that the number of consumer complaints regarding abusive practices is infinitesimal in comparison to the number of contacts debt collectors have with consumers, that plaintiffs’ attorneys seize on these allegations of abusive collection practices to extort payments from creditors, and that debtors often affirmatively decide not to contest debt collection lawsuits because they are aware that they owe their creditors, leading to default judgments. Not only do these statements fail to address the existence of abusive debt collection practices, there is no evidence in the record to substantiate their veracity. By contrast, there is considerable evidence in the record corroborating the existence of abusive debt collection practices, including the statistical evidence presented in the UJC Report and the testimony of multiple consumer protection and legal services organizations. On this record, even drawing all permissible factual inferences in plaintiffs’ favor, a reasonable fact-finder could not find that the abusive debt practices Local Law 15 is designed to curb do not exist.
At the same time, a reasonable factfinder might readily conclude that the purported benefits of Local Law 15 are entirely illusory. To the extent that Local Law 15 is intended to address the same harassing practices — such as “threatening delinquent debtors, or calling such people at outrageous times of the night,” N.Y. City Admin. Code § 20-488 — that originally
In addition to prohibiting these harassing communications with debtors, Local Law 15’s primary concern, as apparent from the record before the Court, is to address abuses in connection with and in the context of litigation pursued by attorneys and law firms on behalf of debt buyers. See, e.g., Ciapetta Deck, Ex. H. at 4-5 (setting out the concerns leading to passage of Local Law 15). But Local Law 15’s purported benefits in curbing such abusive litigation also appear entirely illusory. Again, New York City simply lacks the authority to regulate the practice of law. It also lacks the authority to regulate the rules of practice and procedure in the courts. To the contrary, the Civil Court in New York City is part of New York State’s Unified Court System. See N.Y. Const. Art. VI § 1(a) (establishing unified court system for New York, including Court of Appeals, the Appellate Division, Supreme Court, and the New York City Civil Court); see also N.Y. City Civ.Ct. Act § 102 (establishing New York City Civil Court and providing that it shall be part of the State’s united court system). The power to regulate the courts’ practice and procedure is vested with the State Legislature, in the first instance, see N.Y. Const. Art. VI § 30 (granting the Legislature “the same power to alter and regulate the jurisdiction and proceedings in law and in equity that it has heretofore exercised” and the authority to “delegate, in whole or in part, to a court, including the appellate
Pursuant to their authority to establish the rules governing practice and procedure, the Courts and the State Legislature have promulgated measures to address many of the concerns articulated as the rationale for Local Law 15, including lack of notice of lawsuits, see, e.g., N.Y. C.P.L.R. §§ 305, 306, 308, 312(a) (setting out service requirements for New York courts, including proof of service); N.Y. City Civ.Ct. Act §§ 400, 401, 403, 409 (same for New York City Civil Court); N.Y. Ct. R. § 208.6 (setting out form of summonses for New York City Civil Court), unfair default judgments, see, e.g., N.Y. C.P.L.R. § 3215 (setting out procedures and requirements to obtain default judgment in New York courts); N.Y. City Civ.Ct. Act § 1402 (same for New York City Civil Court); N.Y. C.P.L.R. § 317 (allowing defense of action following entry of judgment “upon a finding of the court that [defendant] did not personally receive notice of the summons in time to defend and has a meritorious defense”), and meritless litigation, see, e.g., N.Y. Ct. R. § 130-1.1(a) (requiring all papers served on another party or submitted to court to be signed by attorney, certifying that to the best of attorney’s knowledge, presentation of the paper and contentions therein are not frivolous); id. § 130-1.1 (providing for costs to be awarded for frivolous conduct), including litigation barred by the statute of limitations, see, e.g., N.Y. Gen. Bus. Law § 601 (prohibiting attempts to enforce legal rights against creditors if such rights do not exist).
In sum, drawing all permissible factual inferences in plaintiffs’ favor, as the Court is obliged to do in examining defendants’ motion for summary judgment, the benefits that have been ascribed to Local Law 15 do not clearly outweigh its burdens on interstate commerce. For this reason, defendants’ motion as to plaintiffs’ Pike claim must be denied.
b. Plaintiffs’motion
Notwithstanding the apparent illusoriness of the benefits claimed fоr Local Law 15, plaintiffs’ motion for summary judgment also must be denied. Defendants have asserted that, even though debt buyers do not directly contact consumers, subjecting debt buyers to DCA licensing and regulations will still help curb abusive communications initiated by third-party debt collectors acting on their behalf. Nothing prohibits New York City from adopting a “belt-and-suspenders” approach to regulation. Cf. McEvoy v. IEI Barge Servs.,
For this reason, plaintiffs’ motion is denied.
D. Contract Clause Challenge
Plaintiffs next argue that Local Law 15 violates the Contract Clause because it impairs contracts between (a) DBA and third-party debt collectors and law firms, (b) DBA and debtors, and (c) DBA and originating creditors. Because plaintiffs’ allegations do not state a viable claim under the Contract Clause, the Court grants defendants’ motion for summary judgment.
Article I, Section 10, Clause 1 of the United States Constitution declares that “[n]o State shall ... pass any ... Law ... impairing the Obligation of Contracts.” This facially absolute prohibition is “not to be read with literal exactness like a mathematical formula,” however.
In this vein, the Contract Clause is implicated only when a law “impairs” a contractual “obligation,” not when it merely impacts the contract in an incidental manner. See Exxon Corp. v. Eagerton,
Plaintiffs allege that three contractual relationships are impaired by Local Law 15: that between (a) DBA and third-party debt collectors and law firms, (b) DBA and debtors, and (c) DBA and originating creditors. In plaintiffs’ view, DBA’s contracts with third-party debt collectors and law firms are impaired because Local Law 15 requires DBA to obtain a license before entering into these contracts. Similarly, plaintiffs argue, DCA licensing and regulatory requirements impair DBA’s contracts with debtors because the requirements must be satisfied before DBA may engage in debt collection. Finally, plaintiffs allege that Local Law 15 impairs DBA’s contracts with originating creditors because it prevents DBA from stepping into the originators’ shoes. Specifically, plaintiffs submit that, when an originating creditor assigns its right to a debt to a debt buyer like DBA, it intends to assign an unencumbered right, meaning that the debt buyer’s rights and obligations mirror that of the creditor’s. Local Law 15, however, imposes additional requirements on the debt buyer that are not imposed on the original creditor.
Plaintiffs do not — as they must, even at this stage — identify any specific cоntractual obligations or point to specific contracts that are purportedly impaired by Local Law 15. Assuming arguendo the existence of such contracts, plaintiffs still fail to state a viable Contract Clause claim, as none of the burdens plaintiffs allege constitutes an unconstitutional impairment of a contractual obligation. The crux of plaintiffs’ allegations is that Local Law 15 imposes additional burdens that make performance of the contracts more onerous, and the contracts potentially less desirable and profitable as a result. While this may be the case, the law in no way prevents performance of a contractual obligation or extinguishes the parties’ available remedies for nonperformance; rather, the parties still may perform and enforce the
Under plaintiffs’ reasoning, any legislation that affected the manner of performance of a private contract or impacted the contract’s value could be challenged under the Contract Clause. If this were the case, parties could insulate themselves entirely from any future regulation merely by entering into a private contract. This is clearly not the law. See Stoneridge Apts., Co. v. Lindsay,
Because Local Law 15 does no more than incidentally affect DBA’s contractual agreements, without in any way preventing the performance of a contractual obligation or extinguishing available remedies for non-performance, plaintiffs fail to state a cognizable claim under the Contract Clause. Defendants’ motion for summary judgment as to this claim accordingly is granted.
E. Vagueness Challenge
Finally, plaintiffs claim that Local Law 15 is unconstitutionally vague under the Due Process Clause, both on its face and as applied to them. From their perspective, the amendments it enacted to the definition of “debt collection agency” — to include debt buyers that seek to collect debts using “legal processes or other means,” as well as attorneys or law firms that “regularly engage [ ] in activities traditionally performed by debt colleсtors,” but not attorneys or law firms collecting a debt on behalf of a client “solely through activities that may only be performed by a licensed attorney,” N.Y. City Admin. Code § 20-489 (emphasis added) — do not give “a person of ordinary intelligence a reasonable opportunity” to understand what conduct is being regulated. Thibodeau v. Portuondo,
To begin, it is doubtful that plaintiffs have standing to assert either their facial or as applied claim. “Courts generally disfavor facial vagueness challenges outside the context of the First Amendment.” Genco Importing, Inc. v. City of N.Y.,
For plaintiffs to have standing to bring their as-applied claim, the law must be unconstitutionally vague as applied to DBA. See L.A. Police Dep’t v. United Reporting Publ’g Corp.,
Even if plaintiffs have standing to bring their vagueness claim, their argument is without merit. Plaintiffs’ main contention appears to be that the phrase “other means” provides no guidance as to whether the mere act of entering into a contract with a third-party debt collector may constitute an attempt to collect a debt, and therefore require that the contracting party obtain a debt collection license. But this language does not exist in isolation; rather, “other means” is part of a non-exhaustive list providing definition to the phrase “seeks to collect.” As discussed above, the other entries in the list — “initi
III. CONCLUSION
For all the reasons discussed above, plaintiffs’ motion is GRANTED in part and DENIED in part, as is defendants’. On plaintiffs’ claims that New York State has preempted the entire field of debt collection regulation; that Local Law 15 is inconsistent with §§ 600, 601, and 602 of the New York General Business Law; that Local Law 15 violates the Contract Clause; and that Local Law 15’s phrase “using legal processes or other means” is unconstitutionally vague, the Court grants summary judgment to defendants and denies summary judgment to plaintiffs. On plaintiffs’ claim that Local Law 15 is inconsistent with §§ 53 and 90 of the New York Judiciary Law, the Court grants summary judgment to plaintiffs and denies summary judgment to defendants: the ordinance, along with its accompanying regulations, are without force and effect as applied to Berman P.C. and Katzen LLP.
Finally, on plaintiffs’ claims that Local Law 15 violates the Commerce Clause by regulating commerce that is wholly extraterritorial to New York State and by imposing burdens on interstate commerce that clearly outweigh the ordinance’s putative local benefits, the Court denies summary judgment to both plaintiffs and defendants. Genuine questions of material fact remain, on plaintiffs’ extraterritoriality claim, as to whether DBA’s contracts with third-party debt collectors and law firms are indeed formed entirely outside of New York and, on plaintiffs’ Pike claim, as to (a) the nature of any incidental burdens Local Law 15 places on interstate commerce, (b) the nature of any benefits advanced by Local Law 15, and (c) whether any such burdens clearly outweigh any such bеnefits. The parties are directed to
SO ORDERED.
Notes
. Plaintiffs dispute that any of the statements made during the February hearings as to any purported abusive practices on the part of debt collectors was true, that any abusive practices took place, and that any consumers contacted by debt collectors in NYC were, in fact, vulnerable.
. Plaintiffs dispute that the statements in the report are true or accurate “in any way” and that the UJC Study "in any way” provided an unbiased, true, or accurate representation of the state of debt collection in New York City.
. In Kuhne v. Cohen & Slamowitz, LLP,
. On November 15, 2010, plaintiffs’ counsel notified the Court that plaintiff Eric M. Berman had passed away. Following this notification, on January 10, 2011, plaintiffs advised the Court that they did not intend to move for substitution of Mr. Berman's estate in this lawsuit as Mr. Berman's successor in interest, and requested that the Court dismiss their claims insofar as they were asserted by the late Mr. Berman. Defendants have not contested this request. The Court agrees with plaintiffs that every cause of action asserted by Mr. Berman also has been asserted by one of more of remaining plaintiffs, and so plaintiffs' suit, as well as their motion for summary judgment, may proceed. See Fed.R.Civ.P. 25 ("After a party's death, if the right sought to be enforced survives only to or against the remaining parties, the action does not abate, but proceeds in favor of or against the remaining parties.”). Insofar as plaintiffs' claims were asserted by Mr. Berman, they are dismissed voluntarily. See Fed.R.Civ.P. 41(a)(2) (allowing for dismissal of claims by court order upon a plaintiff's request).
. It is undisputed that Katzen LLP "regularly seeks to recover amounts due and owing on consumer debt portfolios" held by debt buyers. (Defs.' Statement of Undisputed Material Facts Pursuant to Local Civ. R. 56.1 ¶ 50; Pis.’ Resp. to Defs.’ Statement Pursuant to Local Civ. R. 56.1 ¶ 50; Decl. of Mark H. Stein ¶ 2.)
. In setting out the standard for summary judgment, plaintiffs’ memorandum of law quotes Uryevick v. Rozzi,
. Plaintiffs do not allege that the additional restrictions on debt collection practices set out in Title 6, Chapter 5 of the Rules of the
. Federal regulation of attorneys is not so precluded. See Heintz v. Jenkins,
. Similarly, New York City is not free to regulate attorneys’ activities simply because they may also be performed by non-attorneys. Consequently, Local Law 15’s exception for those attorneys or law firms "collecting on 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,” N.Y. City Admin. Code § 20-489(a)(5), does not remedy New York’s intrusion into the preserve of the judiciary.
. In this regard, the authority of New York State to regulate attorney conduct is considerably greater than that of the City. See Forti, 75 N.Y.2d at 615,
. Other decisions have stated that a discriminatory statute may survive dormant Commerce Clause scrutiny only if it " 'advance[s] a legitimate local purpose that cannot be adequately served by reasonable nondiscriminatory alternatives/ ” Arnold’s Wines, Inc. v. Boyle,
. Reading Brown-Forman’s proscription against the "direct regulation” of “interstate” commerce in context, it is clear that the Court had in its sights the regulation of extraterrito
. In Town of Southold, the Circuit also noted that imposing “a regulatory requirement inconsistent with those of other states” constitutes another circumstance in which a statute may incidentally burden interstate commerce.
. Defendants also make too much of the "directly controls” language in Healy. See Healy,
. It is true that Healy’s distillation of the principles controlling extraterritoriality analysis under the dormant Commerce Clause has been roundly criticized by scholars. See, e.g., Florey, supra, at 1087, 1090 (noting that the scope of the extraterritoriality principlе as articulated by the Supreme Court is "so sweeping that most commentators have assumed that these cases cannot mean what they appear to say”); Jack L. Goldsmith & Alan O. Sykes, The Internet and the Dormant Commerce Clause, 110 Yale L.J. 785, 789-790,
. In Edgar, a plurality of the Supreme Court suggested that the boundary is similar to the familiar line demarcating the jurisdiction of a state’s courts. See
. In Dean Foods, the Seventh Circuit addressed whether a state may regulate a transaction consummated out of state when the bulk pf the preliminary negotiations to the contract occur in-state. The plaintiff was an Illinois milk processor with significant contacts in Wisconsin: it leased property in the state, had employees located there, mailed business solicitations to Wisconsin milk producers, and was authorized to do business in the state as a foreign corporation.
. The statute upheld in Quik Payday contained a provision stating that a loan would be deemed to have beеn made in Kansas if "the creditor induces the consumer who is a resident of this state to enter into the transaction by solicitation in this state by any means.”
. In Abrams, the New York statutory provision applied only to motor vehicles sold and registered in New York. See
. Indeed, as demonstrated by the Supreme Court's cases involving pricing restrictions, even the regulation of instate transactions may violate the dormant Commerce Clause if "the practical effect of the regulation is to control conduct beyond the boundaries of the State,” Healy,
. Plaintiffs claim that DBA’s contracts with debt originators to purchase New York City debts are also formed outside New York state. While neither party appears to argue that Local Law 15’s licensing requirement would
. Similarly, under New York law, a contract comes into existence with "an offer, acceptance, consideration, mutual assent and intent to be bound.” Register.com, Inc. v. Verio, Inc.,
. Defendants’ reliance on Silver v. Woolf,
. To put it a slightly different way, the State may regulate that portion of interstate com
. By the same token, if DBA engages a law firm to bring suit against a debtor in New York State court, it will be deemed to consent to the jurisdiction of the court over any coun
. Debt collectors are required to maintain a separate file for each debtor containing a copy of all communications with the debtor, a record of each payment received (including the date of payment, the method of payment, and the debt to which it is applied), a copy of any debt payment schedule or settlement agreement with the debtor, and — for debt buyers — details regarding the purchase of the debt (including the name and address of the debt seller, the date of the purchase, and the amount of the debt at the time of the purchase). See Rules of the City of New York, tit. 6, ch. 2 § 2-193(a). For “all consumers from whom it seeks to collect a debt,’’ the agency must keep a monthly log of all calls made (including the date, time and duration of each call; the number called; and the name of the person reached), recordings of complete conversations with all consumers or a randomly selected sample of at least 5% of all calls made or received by the agency, and a record of all cases filed in court to collect a debt (including the name of the consumer and originating creditor; the amount claimed; the case number; the date the case was filed; the name of the process server who served process; the date, location and method of service of process; the affidavit of service; the original copy of each contract with a process server for the service of process; copies of all documents involving traverse hearings relating to cases filed; and the disposition for each case filed). See id. § 2-193(b). Finally, each agency must keep records regarding its general operations and business practices, including a copy of all actions, proceedings or investigations by government agencies that resulted in the revocation or suspension of a license, the imposition of fines or restitution, a voluntary settlement, a court order, a criminal guilty plea or a conviction, as well as a copy of all policies, training manuals, and guides for employees or agents concerning collection activities. See id. § 2-193(c).
. At least two decisions in this Circuit have stated that there must be an actual conflict, not just a potential conflict, between the regulatory regimes of different states to pose a problem under the Dormant Commerce Clause. See Sorrell,
. Furthermore, even in the unlikely eventuality that no direct conflict among regulatory requirements occurred, if one regulatory body prohibited business practices permitted by others, or simply imposed a more onerous burden than others, these differing regulatory demands would still implicate the concerns against which the dormant Commerce Clause protects. See Mills,
. For much the same reasons, the statement in plaintiffs' complaint that "[t]he relationships between DBA Holdings and the debt collectors it engages to seek to recover on debts are governed by contracts that are entered into outside of N.Y. state,” is insufficient. (Compl. ¶ 53.) Even if this statement is construed as a factual assertion, rather than a conclusion of law, it is far too thin a reed to support summary judgment. Cf. S.K.I. Beer Corp. v. Baltika Brewery,
. In adopting amendments to the Administrative Code, the New York City Council, of course, does not exercise the plenary power of a state legislature. Without deciding that the acts of a municipal legislative body are entitled to the same deference accorded the enactments of a state legislature, analytically, these ordinances will be evaluated in a similar fashion.
. Several Second Circuit cases have also recognized an incidental burden on interstate commerce if a regulation has a disparate impact on nonlocal entities as compared to local entities. See Town of Southold,
.While there is a question of fact as to whether DBA’s contracts are, in fact, formed out of state, the relevant burden under Pike is that on interstate commerce as a whole, not the burdens on any one interstate firm. See Exxon Corp. v. Governor of Md.,
. As part of the application, a debt buyer must submit the following information (for the owner, if the debt buyer is a sole proprietorship; for all general partners, corporate officers, and shareholders owning 10% or more of the business applying for a license, if the debt buyer is a corporation or partnership; and for all members if the debt buyer is a limited liability company): (i) the name, social security number, address, and percent of company stock owned by these individuals; (ii) if any of these individuals (a) has previously been licensed by the DCA, (b) had a DCA license denied, suspended, or revoked, or (c)been an officer, director, shareholder, or partner of an entity licensed by the DCA, the name of the individual, the name and address of the licensed business, and the DCA license number; (iii) if any of these individuals (a) has ever been found guilty of a crime, offense, or violation, (b) has a criminal or civil charge pending against him, (c) has any DCA-issued Notice of Violation, Notice of Hearing, Summons, Padlock Order, or other order in effect or pending, (d) has had a court render a judgment against him or any business operated by him for activity related to the conduct of a business, or (e) has any judgment against him or any business operated by him that has not been paid in full for 30 days or more, a description of the relevant charge or offense, including, where relevant, the date of conviction, the nature of the incident, the persons involved, and the outcome. See N.Y. City Department of Consumer Affairs, Basic License Application (July 28, 2010), available at http://www.nyc.gov/html/dca/downloads/pdf/ apprem.pdf.
. Businesses incorporated outside of New York must obtain a "Certificate of Doing Business in Good Standing’’ from the Secretary of State in the state in which they are incorporated and file this Certificate with an application for "Authority to Conduct Business in New York” with the New York State Secretary of State. See N.Y. City Department of Consumer Affairs, Business Toolbox, Apply for a License, http://www.nyc.gov/html/dca/ html/licenses/122.shtml (last accessed May 26, 2012). The Court takes judicial notice of this website and the DCA Basic License Application. See Fed.R.Evid. 201(b) (allowing the Court to take judicial notice of facts “not subject to reasonable dispute” because they "can be accurately and readily determined from sources whose accuracy cannot reasonably be questioned”); see also United States v. Akinrosotu,
. Attempting to pursue time-barred litigation to collect on debts is also already prohibited by the federal government. See 15 U.S.C. § 1692(e) (prohibiting debt collectors from threatening to take any action that cannot legally be taken); id. § 1692(f)(1) (prohibiting the collection of any debt unless permitted by law).
. The Contract Clause thus protects different interests than those safeguarded by the dormant Commerce Clause. Whereas the Contract Clause is implicated in a narrow subset of situations where a law impairs an obligation created by an individual contract, see Antoni v. Greenhow,
. Plaintiffs are correct in this regard. As amended, § 20-489 excludes from the definition of debt collection agency:
(7) any person collecting or attempting to collect any debt owed or due or asserted to be owed or due another to the extent such activity (i) is incidental to a bona fide fiduciary obligation or a bona fide escrow agreement; (ii) concerns a debt which was originated by such person; (iii) concerns a debt which was not in default at the time it was obtained by such person as a secured party in a commercial credit transaction involving the creditor....
N.Y. City Admin. Code § 20-489 (2009) (emphasis added).
. In the same way, a plain reading of the phrase "seeks to collect” suggests an affirmative step beyond entering into a contractual arrangement. Cf. Merriam-Webster’s Collegiate Dictionary 1285 (11th ed.2008) (defining “to seek” as, inter alia, "to go in search of: look for,” "to ask for,” “to try to acquire or gain,” or “to make an attempt”).
. Plaintiffs argue that stricter scrutiny should apply because Local Law 15 threatens to inhibit the exercise of constitutionally protected rights; namely, the right to contract and the right to engage in interstate commerce. Even were the Court to accept plaintiffs' argument, the statutory language would likely survive heightened scrutiny. The Court, however, declines to adopt this view, which would eviscerate the "relaxed” vagueness test for economic regulations.