Medallion Lender Hits Brakes on Lawsuit Accusing Cabbie Union of Sabotage
A federal lawsuit that marked the latest salvo in a drawn-out battle between taxi medallion owners and a Minnesota-based lender has flamed out in a hurry.
Court documents show that financial firm O’Brien-Staley Partners/OSK “voluntarily dismissed” its lawsuit Monday against the New York Taxi Workers Alliance within days of filing the case — and hours after THE CITY reported on the case.
The two sides have been at odds for months over City Hall’s debt-relief plan for medallion owners, with OSK filing a federal lawsuit on May 24 that accused the 25,000-member union of taxi workers of “nonstop militant action unchecked by the rules that govern everyone else” which threatened to disrupt the firm’s payment plans with individual borrowers, legal documents say
But in court papers filed Monday in Brooklyn, the firm abruptly put an end to the case in which it sought at least $774,046 in damages and charged that NYTWA sought “to coerce [OSK] into restructuring its entire loan portfolio under the [debt relief] program — even where the individual borrower is currently paying as agreed or has a proven ability to pay.”
“We filed a suit to get NYTWA to stop its tortious interference,” Jerry O’Brien, the CEO of O’Brien-Staley Partners said in a statement to THE CITY. “It seems to us that NYTWA now understands it was wrong and has stopped.
“So we dropped the lawsuit but can refile if it happens again.” The suit had been originally filed last month in Manhattan federal court but was moved to Brooklyn federal on June 2.
O’Brien had previously said the taxi workers union had “crossed the line from public advocacy to tortious interference” and that a judge should tell the group to “stop — just stop.”
In spite of the lawsuit being dropped, the executive director of the NYTWA said “the struggle continues” for medallion owners who have been hit hard by competition from ride-hailing apps and the pandemic.
“It looks like OSK decided to ‘stop – just stop’ – with this baseless suit, that’s good,” Bhairavi Desai told THE CITY. “Now let’s stop the poverty and lifetime debt facing hundreds of their borrowers – that’s what’s really at stake here.”
On Again, Off Again
In March, OSK had accepted an invitation from Senate Majority Leader Chuck Schumer (D-NY) to sign on with the Taxi and Limousine Commision’s Supplemental Loan Deficiency Guaranty Program, which helps owners struggling with payments. The company also agreed that its servicers would not repossess medallions from owners who keep their loans in good standing with weekly payment plans.
The program, which was spurred by cabbies’ City Hall hunger strike in October and November, is designed to cap debt-service payments at $1,122 a month with the city guaranteeing the restructured loans.
OSK in March said that it would participate in the loan program when it becomes operational, but in court papers contended that it is “not fully funded, not fully documented and not operational.”
The Taxi and Limousine Commission said it has so far achieved $50 million of debt forgiveness for close to 300 medallion owners and that it is finalizing the loan guarantee portion of the plan, which would restructure loans up to $200,000 each with a $30,000 grant from the city.
“With the Medallion Relief Program, we are finally turning the tide on the taxi medallion debt crisis,” said a TLC spokesperson who did not want to be named. “We are continuing to encourage all lenders to participate so we can ensure that medallion owners in financial distress get real debt forgiveness.”
When Schumer brokered peace between the two sides, he credited reporting by THE CITY in February that highlighted the plight of medallion owners who were facing foreclosure on the pricey metal shields that allow cabbies to pick up street hails, but whose value has been falling for years.
The story revealed that more than 250 medallions were foreclosed on in the first three months after a previous debt-relief plan. TLC data shows there have been 281 foreclosures this year, with 31 last month.
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