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Mayfield v. Asta Funding, Inc.

United States District Court for the Southern District of New York

March 30, 2015, Decided; March 31, 2015, Filed

14-CV-2591

Opinion

 [*690]  OPINION & ORDER

LORETTA A. PRESKA, Chief U.S.D.J.

I. INTRODUCTION

Plaintiffs Mayfield, Millien and Porter bring this action alleging that a debt-buying company, a law firm and associated individuals orchestrated a scheme fraudulently to obtain and enforce consumer debt judgments against them and thousands of similarly situated individuals in state court. Plaintiffs allege that Defendants brought consumer debt lawsuits against them without sufficient evidence to prove the debt, filed fraudulent affidavits in support of their claims, and engaged in "sewer service" so that Plaintiffs never received notice of the suits. When Plaintiffs failed to appear in court, Defendants obtained and enforced default judgments.

Plaintiffs sue on behalf of themselves and all others similarly situated, asserting claims under the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. §§ 1601, the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. §§ 1691, New York General Business Law ("GBL") § 349, and New York Judiciary Law § 487. Plaintiffs seek damages, injunctive relief and declaratory relief.

Defendants move to compel arbitration, strike class action allegations and dismiss various claims in the Complaint. For the reasons that follow, all [**3]  of Defendants' motions are denied.

 [*691]  II. BACKGROUND

The allegations in the Complaint are assumed to be true for the purposes of the motion to dismiss and are as follows:

A. The Parties

Plaintiffs Charlette Mayfield, Claude Millien and Ebony Porter (collectively, "Plaintiffs") allege that Defendants conspired fraudulently to obtain and enforce consumer debt judgments against them. (Compl. ¶¶ 3-4.) Between 2005 and 2007, each named Plaintiff was sued by Defendants in New York City Civil Court to collect on alleged defaulted AT&T Wireless accounts. (Id. r 171, 173, 235, 237, 299, 301.) Mayfield and Minim never had accounts with AT&T Wireless, and Porter did not owe any money to AT&T Wireless. (Id. ¶¶ 185, 248, 298, 312.)

None of the named Plaintiffs was notified of the actions until years after default judgments were entered against them. (Id. ¶¶ 169-171, 195, 211, 234-35, 256, 298-99, 322.) Millien and Porter only became aware of the judgments in 2013 when they learned their employers were garnishing their wages. (Id. ¶¶ 234, 298.) Plaintiffs bring this class action on behalf of all victims and potential victims of the alleged scheme—that is, all those who have been sued or may be sued by Defendants [**4]  in New York City Civil Court to collect alleged AT&T Wireless debts. (Id. ¶ 156.)

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95 F. Supp. 3d 685 *; 2015 U.S. Dist. LEXIS 43236 **

CHARLETTE MAYFIELD, CLAUDE MILLIEN, and EBONY PORTER, individually and on behalf of all persons similarly situated, Plaintiffs, -against- ASTA FUNDING, INC., ASTA JOHN/JANE DOES 1-20, PALISADES COLLECTION, LLC, GARY STERN, PALISADES COLLECTION JOHN/JANE DOES 1-20, PRESSLER & PRESSLER, LLP, RICHARD A. FRANKLIN, TIN-AN- A. WANG, MITCHELL E. ZIPKIN, CRAIG STILLER, and PRESSLER JOHN/JANE DOES 1-20, Defendants.

Subsequent History: Appeal dismissed without opinion by Mayfield v. Asta Funding, Inc., 2015 U.S. App. LEXIS 23217 (2d Cir., Oct. 5, 2015)

Related proceeding at Olajide v. Palisades Collection, LLC, 2016 U.S. Dist. LEXIS 48795 (S.D.N.Y., Apr. 12, 2016)

CORE TERMS

fraudulent, arbitration, Defendants', allegations, collection, mail, motion to dismiss, default judgment, enterprise, Wireless, contracts, lawsuits, predicate act, class action, consumers, deceptive, individual defendant, compel arbitration, debt collection, Associates, employees, practices, pleaded, consumer debt, garnished, damages, costs, wire, motion to compel arbitration, named plaintiff

Business & Corporate Compliance, Arbitration, Federal Arbitration Act, Arbitration Agreements, Orders to Compel Arbitration, Civil Procedure, Special Proceedings, Class Actions, Certification of Classes, Responses, Defenses, Demurrers & Objections, Motions to Strike, Contract Formation, Acceptance, Meeting of Minds, Antitrust & Trade Law, Private Actions, Racketeer Influenced & Corrupt Organizations, Claims, Claims, Fraud, Scope, Pleadings, Heightened Pleading Requirements, Fraud Claims, Consumer Protection, Deceptive & Unfair Trade Practices, State Regulation, Business & Corporate Law, Directors & Officers, Management Duties & Liabilities, Causes of Action, Banking Law, Fair Debt Collection, Unfair Practices, Liability for Violations