A federal judge has found that a provision of the New York City charter allowing police to conduct warrantless inspections of the city's pawn shops runs afoul of Fourth Amendment protections.

In a 56-page ruling, U.S. District Judge Margo Brodie of the Eastern District of New York also found that Gem Pawnbrokers, the plaintiff in the case, may proceed on its Monell claim that the city maintains a policy that violates constitutional protections against illegal search and seizure, and on its malicious prosecution claim.

Brodie's ruling is the latest development in a years-long legal battle between the pawn industry and the city over laws regarding searches and seizures from pawn brokers that has been waged in both state and federal courts.

Pawnbrokers and second-hand dealers are subject to a variety of state and local requirements to maintain and report certain transactional information, and New York City Charter §436 gives the New York City Police Department broad authority to question employees and inspect pawn shops and business records.

In 2010, the NYPD promulgated a policy encouraging pawn shops to use LeadsOnline, a database of transactions accessible by police. The city implemented Local Law 149 to require pawnbrokers to use LeadsOnline in 2013.

Gem Pawnbrokers, a New York City-based chain with 26 pawn shop in the area, was an early adopter of LeadsOnline, but discontinued use of the program in 2011. Afterward, the business alleges, police officers increased their presence at its stores and interactions with officers and Gem employees became increasingly hostile, with officers allegedly threatening them with arrest and business disruption.

Solo attorney Paul Solda, who represents Gem, said police often used pawn records to go on “fishing expeditions” for potential offenders and would threaten employees with arrest if they didn't open their safes to allow them to inspect items put up for collateral.

Gem filed suit in 2013 and, according to court papers, other pawn shop chains operating in the city testified that they were subjected to similar experiences as a means of coercing them into using LeadsOnline.

For example, a representative from Quick Cash USA, which has almost 20 locations in New York City, said the business saw a sharp increase in police visits, and that officers would threaten employees or order that jewelry be held. The representative said the NYPD's alleged harassment ceased after it began taking part in LeadsOnline.

With respect to Local Law 149, Brodie sided with the city, finding it does not infringe upon Fourth Amendment rights because it implemented a reporting scheme for information that is required by statute to be retained.

But, on the matter of §436 of the city charter, Brodie found for the plaintiff, ruling the provision does not provide an adequate substitute for a warrant and provides no limitation on the discretion of officers conducting inspections.

The judge also found that the plaintiffs have a reasonable expectation of privacy with regard to items pledged for collateral, but do not have such an expectation for transactional records. She also granted the city's motion for summary judgment to dismiss the plaintiff's equal protection claim, under which the business alleged it was the target of selective enforcement.

Solda said §436 of the city charter gives police the “unbridled” authority to shake down pawn shops. With Brodie allowing some of the claims to proceed, Solda said he may have the opportunity to seek damages.

“It's a systemic abrogation of duty and responsibility from the top down,” Solda said.

Assistant Corporation Counsel Diana Murray of the city's Law Department appeared for the city. A spokesman for the Law Department said in an email that Brodie's ruling is under review.