Court Dismisses Process Server Industry Suit Against New York City as "Groundless"

United States District Judge Denise Cote has dismissed all claims brought by the New York State Professional Process Servers Association, a process serving agency and an individual process server against the Department of Consumer Affairs (DCA), its attorneys and administrative law judges.

The lawsuit challenged DCA’s enforcement of Local Law 7 of 2010, which gave powerful tools to DCA to identify and investigate illegal process serving activities, including “sewer service” and made process server agencies legally responsible for oversight of their process servers. Many consumers do not know to complain about faulty service, or “sewer service,” which is why DCA engages in ongoing in-depth investigations of process servers to ensure they are complying with the law. DCA’s investigations determine if a process server committed sewer service, failed to properly keep records or failed to report traverse hearings, which are hearings to determine whether papers were properly served.

“As indicated by the judge’s dismissal of all charges, this lawsuit by the process server industry was completely without merit,” said DCA Commissioner Julie Menin. “The plaintiffs’ alleged claims were a transparent effort to intimidate administrative law judges and DCA attorneys to prevent them from enforcing laws designed to put an end to decades of sewer service. With these enforcement tools we are able to protect New Yorkers from having default decisions issued against them when they don’t even know they have been sued.”

Following extensive public hearings held by DCA and legislative hearings held by the City Council, the Council enacted Local 7 of 2010 to address a widespread problem of “sewer service.” Sewer service is a practice in which a process server fails to serve court papers to a defendant but signs a court affidavit swearing that the papers were served. Based on the false statement, a court may allow a debt collector or landlord to obtain a judgment against a defendant who has no knowledge of the case. That can result in garnishment of wages, frozen bank accounts, liens on property and impaired credit ratings. When sewer service leads to a frozen bank account, a consumer may be unable to pay rent or utilities or pay for food, medicine and other necessities. A judgment can also show up on credit reports, which makes it more difficult to find an apartment, get a job, and obtain credit.

Under Local Law 7 of 2010, process servers must now carry an electronic device that uses Global Positioning System (GPS) technology to track the location of the process server while serving; maintain a paper logbook and electronic record of all attempted services; pass an exam when they apply for or renew their license; obtain a surety bond to provide consumer restitution; and report traverse hearings about improper service to DCA. The GPS technology has greatly enhanced DCA’s ability to uncover sewer service by making it easier to establish the location process server on any given day in a matter of minutes. The increased recordkeeping requirements greatly assist the courts, who rely on the records in court proceedings to establish whether service was made.

The claims, which the decision called “groundless,” alleged that DCA and its employees deprived them of their constitutional rights and had violated the Racketeer Influence Corrupt Organizations Act by enforcing the process server licensing laws and rules in the administrative tribunal. The lawsuit was filed in response to the 316 subpoenas that DCA issued to process servers in December 2013 for GPS records to determine whether the process server is complying with all GPS-related rules. Under the law, the maximum fine is $1,000. DCA licenses 749 individual process servers and 121 process serving agencies.