Business & Consumer Affairs | 2024 NYS Legislative Agenda

Preserve New York’s Preeminence as a Leading Commercial Jurisdiction by Enacting the New York Emerging Technologies Amendments to the Uniform Commercial Code

New York commercial and financial law has unique respect for freedom of contract and strong protections for the negotiability of commercial instruments. This has long made New York the preferred U.S. jurisdiction for paper-based commercial and financial transactions; however, this is not the case for transactions involving digital assets. Enacting the New York Emerging Technologies Amendments[1] is necessary to preserve New York’s preeminence as a leading commercial jurisdiction by adapting New York’s Uniform Commercial Code (UCC) to recent and potential future developments in technology and related new methods of doing business. The amendments will promote and encourage technological and commercial advances that decrease transactional costs and enhance the efficiency, certainty and security of commercial and financial transactions governed by the New York UCC. The importance of these improvements to the New York UCC cannot be overstated. Technological and commercial advances that decrease transactional costs and enhance the efficiency, certainty and security of commercial and financial transactions are major factors that are considered when market participants are deciding whether to choose New York as the governing law and the jurisdiction to resolve disputes and whether businesses will decide to locate their businesses in New York.

The amendments will also help ensure New York’s leadership in commercial and financial progress and growth and will disincentivize migration of digital commerce to other jurisdictions which more clearly promote and encourage technological and commercial advances. The New York UCC has not been updated since 2014 and there have been many important advancements in technology since that time. New York is now in a position where it must act expeditiously to enact the New York Emerging Technologies Amendments. Eleven states have already enacted the Model UCC Amendments proposed by the Uniform Law Commission (ULC), and another 15 states and the District of Columbia have introduced bills covering the Model UCC Amendments. More states are expected to follow suit, and every time another state adopts the Model UCC Amendments, the more likely New York risks that market participants will prefer one of those states for transactions involving digital assets or even the law of other countries, such as England, which are rapidly reforming their commercial laws to accommodate emerging technologies and electronic transactions. It is therefore essential that New York adopt the New York Emerging Technologies Amendments this session. *City Bar Proposal*

– New for 2024 –

Enact the Consumer and Small Business Protection Act

The City Bar supports the Consumer and Small Business Protection Act (CSPA) (A.7138 AM Weinstein / S.795 Sen. Comrie). The CSPA would amend New York General Business Law § 349 (“GBL § 349”), which currently prohibits deceptive business acts and practices, to (1) expand conduct prohibited by the statute to include unfair and abusive business acts and practices; (2) eliminate the judicially imposed requirement of consumer-oriented conduct: (3) award reasonable attorney’s fees to a prevailing plaintiff; (4) define “person” broadly and codify current New York organizational and third-party standing; (5) permit class actions for actual, statutory and punitive damages; and (6) recognize standing for organizations that test products and services for compliance with GBL § 349. We support the CSPA because “time and again, lawyers practicing in this area see low-income individuals and small businesses sued for financial obligations resulting from unfair and abusive business conduct. By not broadly prohibiting [these] business practices, New York lags behind most states in protecting its consumers and small businesses.” Prohibitions in other states have been used to combat unfair terms in adhesion contracts, high-pressure sales tactics, charging unconscionable collection fees, and taking advantage of homeowners with poor credit. In addition to protecting New York’s most marginalized communities, the CSPA will protect small business owners, who, like consumers, are sometimes preyed upon. This will help to ensure a fairer marketplace for businesses large and small. In particular, the CSPA will increase the ability of non-profit organizations to hold businesses accountable for making misleading marketing representations regarding animal welfare, something of increasing concern to consumers.

Regulate the Use of Noncompete Agreements For Lower-Salary Employees

New York now stands alone as an outlier in trade secrets law. Federal law under the Defend Trade Secrets Act and the laws of 49 states under their versions of the Uniform Trade Secrets Act impose statutory requirements and restrictions on trade secrets issues—except in New York, the lone remaining common law jurisdiction in the country. New York has no statutory law generally concerning trade secrets or noncompete agreements. The City Bar proposes a limited—but important—change to New York’s unique status as a common law jurisdiction—namely, enactment of a statute to regulate the use of noncompete agreements as applied to lower-salary employees (as opposed to a complete ban on noncompetes) in order to ensure equity and fairness in employment markets while preserving New York’s traditional role as the nation’s commercial leader. More formal guidelines and standards are necessary to ensure fairness in the application of noncompete agreements that can have profound consequences for employees and for regulation of the employment market. *City Bar Proposal*

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