Among a wave of noteworthy results in this fall’s off-year elections, Zohran Mamdani’s selection as the next Mayor of New York City was perhaps the most closely watched and widely discussed. Though much of that commentary has focused on the new Mayor himself, the New York City Council appears poised to exert its own power as both a counterweight to and partner with the incoming Mamdani administration.
Most notably, new Council Speaker Julie Menin has indicated her intention to rely on the Council’s subpoena power to issue subpoenas to private parties for the first time as an element of a reinvigorated investigatory agenda to go after what she has called “bad actor corporations.” And key hires by Mayor Mamdani, including experienced public servants with significant experience investigating private industry, strongly suggest that corporate oversight will be a priority for his administration. As part of the Mayor’s transition effort, Lina Khan—former Chair of the Federal Trade Commission (“FTC”) (and congressional investigator)—reportedly is “scouring New York City’s laws to find dormant or underused mayoral authority that could allow” his administration to “take action in a hurry” with existing legal authorities.
As we’ve explored elsewhere, particularly in jurisdictions with unified government, state and local legislative investigations represent an emerging risk area for companies of all sizes. Like more familiar congressional investigations, these investigations offer ambitious politicians an opportunity to raise their public profile while meaningfully influencing the actions of public and private parties alike. And in many jurisdictions—as in New York State and New York City—state and local laws empower legislative and executive bodies with subpoena power, including the authority to compel production of internal documents and communications and demand testimony from executives and employees.
In New York City, Council Speaker Menin has emphasized her intention to rely on the Council’s longstanding investigatory tools to pursue inquiries targeting private parties. As she built support for her bid for Speaker, Menin criticized the Council for failing to “fully utilize its subpoena power when it comes to holding bad corporate actors accountable” and committed to ensuring that “the Council uses its subpoena power to protect the interests of all New Yorkers.” Stressing her desire to support Mayor Mamdani’s agenda, Menin has proclaimed, “I want to use every tool at our disposal to go after businesses that flout our laws and operate without proper scrutiny.”
If the Council moves to conduct inquiries designed to support the Mayor’s policy agenda, it will have ample investigative powers at its disposal. Under the New York City Charter, the City Council, as well as its standing and special committees, have broad authority to conduct investigations and oversight. Section 29 of the Charter permits the Council and its committees to investigate “any matters” within their jurisdiction “relating to the property, affairs, or government of the city or of any county within the city . . . or to the effectuation of . . . any laws relating to the city or to any county within the city.” To do so, the Charter empowers standing and special committees to compel witness testimony under oath, as well as the production of “books, accounts, papers and other evidence.”
Under the current Council Rules, the chairperson of any standing committee, upon a majority vote of the committee, “may sign a subpoena requiring a person to appear before the committee to be examined in reference to any matter within the scope of the inquiry or investigation being conducted by the committee or requiring the production of books, accounts, papers and other evidence relative to the inquiry.” Likewise, the Council Speaker is permitted to “sign a subpoena on behalf of a select committee or legislative panel.” Though the Council will likely adopt new rules early this year, these provisions have remained unchanged in recent years.
Once the Council issues a subpoena, New York law provides for the enforcement of non-judicial subpoenas—presumably including those issued by the New York City Council—through a petition to the state Supreme Court. (In New York, the “Supreme Court” is the name of the state trial court.) Upon finding that a subpoena is duly authorized, the court is directed to impose a $50 penalty and compel compliance through the imposition of damages. The court also is authorized to issue a warrant directing a sheriff to bring a recalcitrant witness before the body that issued the subpoena. Thereafter, continued defiance in the face of a court order may result in civil or criminal contempt penalties, which can include additional fines and even imprisonment.
Though the precise subjects of forthcoming Council investigations remain to be seen, the Mayor and Council have sent strong signals about the specific topics and industries that are likely to be in focus. Below we highlight some likely topics for forthcoming Council investigations, along with categories of private-sector entities likely to be targeted in those investigations. Businesses, organizations, and individuals affected by forthcoming oversight should begin preparing now.
- Affordability. More than any other issue, cost-of-living issues were central to Mayor Mamdani’s successful campaign. From rent to groceries and childcare to City buses, Mamdani has pledged to make New York City more affordable for families across the City. Recent reporting suggests that Mamdani will focus initially on executive actions to “drive down apartment rental fees and utility costs and compel businesses to be more transparent about pricing,” with Mamdani’s transition team—led by former FTC Chair Khan—eyeing a decades-old City ordinance prohibiting “unconscionable” business practices as a potential point of leverage for City regulators. In addition to utility companies, grocers and food delivery apps, real estate and rental companies, ride-sharing and other transportation services, and banks and other financial services companies should anticipate that Council inquiries could be coming.
- Algorithmic Pricing. As an outgrowth of broader affordability concerns, look for continued scrutiny of so-called algorithmic pricing in consumer products and services. In New York, a state law recently went into effect requiring food delivery apps to begin disclosing when they use algorithms to set prices. Around the same time, however, a widely covered analysis revealed that an AI-powered pricing tool reportedly led shoppers to pay sharply divergent prices for the same groceries, prompting a series of congressional inquiries. As the use of algorithmic pricing continues to expand, companies relying on such tools in New York City—even when not covered by the state disclosure law—should be prepared for potential inquiries from the Council.
- Labor Issues. A former regulatory attorney, Menin worked in the City’s Department of Consumer and Work Protection under Mayor Bill de Blasio and previously served as Chair of the Council’s Committee on Consumer and Worker Protection. In discussing her desire to expand the Council’s investigatory agenda, Menin has highlighted a desire to ensure that the City continues to attract new business while maintaining “some of the strongest worker protections in the country.” Much the same, in recent weeks, Mamdani—along with Senator Bernie Sanders—has thrown his support behind striking employees in the City, publicly pledging to hold corporations seen as hostile to employee organizing accountable. Likely targets for Council inquiries focused on labor issues include major New York City employers, from the food service and hospitality industries to delivery apps and other gig-economy companies.
Even for clients well-acquainted with investigations on Capitol Hill, the ability of state and local legislators to launch investigations of their own underscores the need to remain attentive to risks arising from inquiries outside of Washington. Particularly where a state or local inquiry touches on topics already under investigation at the federal level, it is essential to develop a coordinated response and a comprehensive strategy that takes into account all relevant inquiries.
In all instances, inquiries from state and local legislative committees can present meaningful legal and strategic challenges for the companies involved. Clients who receive a subpoena or similar request from a state or local legislative committee should consult experienced counsel for assistance navigating any rules specific to that jurisdiction, in order to craft a strategic and thoughtful response.
If you have any questions concerning the material discussed in this client alert, please contact the following members of our Election and Political Law and New York White Collar practices.
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