In Street Vendor Project v. City of New York , an association of street vendors filed an Article 78 proceeding challenging a new fine schedule promulgated by the Environmental Control Board ("ECB"), which increased the penalties associated with violations of the New York City Health Code or Administrative Code from a maximum of $250 to $1,000.
The street vendors argued that the increase was arbitrary and capricious, excessive, violative of the United States and New York State Constitutions, and, adopted in violation of the City Administrative Procedure Act (CAPA) because the City failed to provide proper notice of its intent to implement the schedule.
The New York County Supreme Court found that the street vendors were unable to demonstrate that the plan was arbitrary or capricious. Nor was there any evidence that the new penalties were "grossly disproportionate" to the offenses in question, or that the fines were an unreasonable means of deterrence.
The court further noted that constitutional challenges to excessive fines "arise in an as-applied context, thus requiring, as a predicate for judicial review, 'the imposition, or immediately impending imposition, of a challenged punishment or fine.'" Since the street vendors had not yet incurred any penalties under the new fine schedule, their "claims were premature and factually insufficient."
Although the ECB failed to comply with CAPA, in that it omitted "any indication of its reasons or the rule's basis and purpose," and the schedule had not become effective as a result of that error, the Supreme Court noted that the defect was curable by a proper republication in the City Record.
On appeal, the Appellate Division, First Department, affirmed the lower court's decision. The AD1 agreed that the increased penalties were not arbitrary and capricious, since they "had a 'foundation in fact' in the comments from the Department of Consumer Affairs, the Health Department, a business improvement district, and a Soho resident."
The AD1 also reiterated that a fine is constitutionally excessive only if "grossly disproportional to the gravity of a defendant's offense." To assess disproportionality a court must weigh a number of factors, many of which deal with the unique factual particulars under examination. Thus, the AD1 held that while "[t]he present record does not permit such consideration … individual street vendors are free to raise such a challenge in future lawsuits where the facts of each case can be developed."
The AD1 also agreed that the published Statement of Basis and Purpose was defective, but pooh-poohed the vendors' argument that the defect could not be cured by republication. So, ultimately, while the street vendors couldn't get the penalties invalidated, they managed to delay the new schedule's imposition.
Should they be penalized for that?
For a copy of the Appellate Division's decision, please use this link: Street Vendor Project v. City of New York