14 Civ. 2591 (S.D.N.Y.)

In March 2014, the Special Litigation Unit filed a class action lawsuit in the United States District Court for the Southern District of New York on behalf of thousands of New Yorkers targeted in a multimillion dollar debt collection scheme.  The suit, Mayfield v. Asta Funding, et. al, alleges that Palisades Collection of New Jersey and its law firm, Pressler & Pressler, aggressively used a strategy of improper litigation to wrongfully obtain and enforce millions of dollars of default judgments. Palisades Collection is a subsidiary of Asta Funding (NASDAQ: ASFI), one of the nation’s largest debt buyers.

The class action points to a number of fraudulent debt-collection practices, but focuses in particular on the defendants’ aggressive use of a mass litigation strategy that targeted approximately 60,000 New York residents, including many who are poor or working poor, over a two-year period, suing them to collect purchased debt by obtaining default judgments against them, and using those judgments to seize consumers’ wages, and other assets, often without ever notifying the alleged debtors of the lawsuits.

This lawsuit follows an identical one filed in May 2013, Bernhart v. Asta.  Defendants moved to compel arbitration and to dismiss in that suit, and Judge Patterson denied the motions. Shortly thereafter, Defendants offered the Named Plaintiffs monetary settlements, which they accepted, and their claims were dismissed with prejudice and the claims of the class without prejudice.  NYLAG filed Mayfield shortly thereafter.

Defendants moved again to compel arbitration and to dismiss. On March 31, 2015, Judge Preska, to whom the case had been transferred, denied all Defendants’ motions. The Asta defendants again offered the Named Plaintiffs money, which they accepted, and again their individual claims were dismissed and the class claims without prejudice.  The Pressler defendants did not settle any claims, and discovery is ongoing against them.

NYLAG Attorneys: Jane Greengold Stevens, Danielle Tarantolo, Julia Russell

Co-Counsel: Hughes Hubbard & Reed LLP

Relevant Links: