Judge upholds city laws protecting non-paying businesses

A federal judge swept away a legal challenge to a package of bills designed to protect retail tenants during the pandemic.

The lawsuit, filed by two small commercial landlords in July, argued that the City Council’s and Mayor Bill de Blasio’s Covid-19 protections for non-paying businesses deny landlords’ right to free speech and due process, as well as violate the contract clause of the Constitution.

However, United States District Judge Ronnie Abrams of the Southern District of New York disagreed, ruling that the laws are constitutional.

“Plaintiffs have expressed some legitimate concerns, and the Court recognizes the toll the pandemic has taken on them, in addition to their tenants, all New Yorkers, and millions more around the world,” Abrams wrote in her decision. “Nonetheless … the Court cannot conclude that these three challenged laws violate any of Plaintiffs’ constitutional rights.”

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The lawsuit challenged several pieces of legislation that were hastily passed in May as a means of protecting residential and commercial tenants who were struggling because of the pandemic.

Two of the laws prohibit landlords from harassing residential or commercial tenants out of a space, such as by changing the locks, if they have been affected by Covid — though the criteria was broadly defined, with essential workers, tenants diagnosed with Covid or those struggling financially all protected. Another law temporarily bars landlords from going after the personal assets of restaurant and store owners who owe rent.

Some City Council members voted against the bills, saying they interfered with private contracts. Concerns were raised upon the bills’ introduction that they were unconstitutional.

In her ruling, Abrams said that because landlords are not prohibited from sending out rent demands, their First Amendment rights are not infringed upon. Additionally, Abrams noted that the law preventing landlords from going after personal assets of store owners and restaurateurs who own rent — known as the guaranty law — is not a contract clause violation because it is “reasonable, necessary, and passed to advance a legitimate public interest.”

Stephen Younger of Patterson Belknap Webb & Tyler, the lead attorney for the plaintiffs, said his clients are deciding whether to appeal.

“In our view, these measures are only going to inflict more pain on the city’s economy because it basically shifts losses onto the backs of small landlords who just can’t afford these losses at these hard times,” said Younger.