Photo Courtesy of John McCarten/NY City Council
“This is a major victory for small business owners who need protection from landlords during this unprecedented time,” Speaker Johnson said.
By Forum Staff
The City Council recently won a legal challenge to several bills designed to protect residential and commercial tenants during the pandemic. The lawsuit was brought by landlords who argued that the three bills, which were part of a COVID-19 relief package for New Yorkers, violated their constitutional rights.
The District Court for the Southern District of New York rejected the property owners’ claim by ruling that the actions taken by the Council to combat COVID-19 and help New Yorkers were reasonable to balance the infringement of contractual rights versus public interest needs in the middle of this pandemic.
Judge Ronnie Abrams stated that “the Court cannot conclude that these three challenged laws violate any of Plaintiffs’ constitutional rights.” She granted the Council’s motion to dismiss the claims and denied the plaintiffs’ motion for a preliminary injunction.
Two of the laws, the “Residential Harassment Law” and the “Commercial Harassment Law,” prohibit landlords from threatening and harassing commercial or residential tenants affected by the COVID-19 pandemic. The third law, known as the “Guaranty Law,” prohibits enforcement of personal liability provisions in commercial leases and rental agreements involving certain COVID impacted tenants. The bills were passed on May 13, 2020.
“This is a major victory for small business owners who need protection from landlords during this unprecedented time. Restaurants and small businesses are the backbone of our economy, and they are struggling to keep afloat in this pandemic. They should not have to worry about harassment or the loss of their homes because of the economic hardships this virus has caused their businesses. It’s unfortunate that any landlord would try to fight our attempt to help small business owners, but we are thrilled that the court ruling allows us to continue to protect struggling New Yorkers during this difficult time,” said Council Speaker Corey Johnson.
“The legislation passed by the City Council represents the City’s dedication to the many small businesses, impacted by COVID-19, that are the backbone of New York City’s economy. Our businesses are hurting and these protections will allow them the opportunity to thrive in the future. I applaud the court’s ruling to uphold these vital laws,” said Councilwoman Adrienne Adams (D-Jamaica).
The first bill would cap the amount of commission a third-party delivery service is allowed to charge at 15% per order for delivery and 5% per order for all other types of charges. The second bill would prevent third-party delivery platforms from charging restaurants for telephone orders that did not result in a transaction. Members will also vote on a bill to suspend sidewalk cafe fees throughout New York City during the pandemic.
The Council also voted to protect commercial tenants against harassment as a result of being a COVID-19 impacted business. This legislation will make this harassment punishable by a civil penalty of $10,000 to $50,000. Another bill will temporarily suspend personal liability provisions in leases of COVID-19 impacted businesses. This will prevent commercial landlords from going after business owners’ homes.
The Council will also vote on legislation to protect residential tenants from harassment as a result of being impacted by COVID-19.
Finally, the Council voted on legislation to require the City to publish a list of licenses, permits, consents or registrations not covered by the renewal extension in Mayor Bill de Blasio’s Executive Order no. 107.
“Judge Abrams’ decision today is a legal victory for the thousands of restaurants and small businesses across New York City that are on the verge of closure and can seek protection from further loss and damages because of my law temporarily suspending personal liability provisions in commercial leases. It’s clear that this decision shows the law advances a legitimate public interest during this time of grave national emergency, and I am not only confident that the law will hold up to any additional appeals if they occur, but that my law will help save countless other businesses while we beat back the COVID-19 pandemic,” said Council Member Carlina Rivera.
“Harassment and retaliation against COVID-19 impacted tenants pose an urgent risk, and tenants must be protected against unscrupulous landlords during these extremely difficult and uncertain times. That is why I sponsored Local Law 56 and I am happy that Judge Abrams upheld it,” said Council Member Ritchie Torres.
Queens Councilman Francisco Moya added, “Mom and pop restaurants across New York City are being bled dry by billion-dollar tech companies. Unfortunately, that relationship isn’t unique to the pandemic. Exorbitant fees from third-party food delivery services threatened restaurants before the COVID-19 outbreak but like so many other issues, this crisis has amplified and expanded that inequity to devastating effects. My bill will provide restaurants with desperately needed relief and prevent tech giants from profiting off of a global crisis. By capping the fees third-party food apps can charge restaurants during declared states of emergency, restaurants can continue providing essential services while not putting themselves out of business in the process.”
“We’re extremely pleased that the Federal Court recognized the legality of this critically important new law, as we argued it should. In successfully defending this first in the nation COVID-19 relief bill, the City of New York saved thousands of businesses, tens of thousands of jobs, and provided sensible protections for small business owners while helping save them from personal financial ruin. We commend the de Blasio Administration, Speaker Johnson and Council Member Rivera for enacting and vigorously defending this pandemic protection law successfully,” said Andrew Rigie, Executive Director and Robert Bookman, Counsel, New York City Hospitality Alliance.