NY federal appeals court OKs class for debt collection suits

AP News
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Posted: Feb 10, 2015 6:57 PM

NEW YORK (AP) — A federal appeals court in Manhattan says lawsuits aimed at stopping debt collectors from using fraudulent means to collect money can proceed on behalf of a larger class of potential victims.

The decision Tuesday by the 2nd U.S. Circuit Court of Appeals came on a 2-to-1 vote. Judge Dennis Jacobs dissented, saying class-action status will benefit lawyers but leave trivial benefits for consumers.

The case is being watched by consumer groups.

The lawsuits pertain to consumers who were subjected to nearly 50,000 default judgments from a New York City court during a three-year period. The lawsuits claims that a debt collection company, a law firm and a process-serving company created a "default judgment mill" that relied on fraud to obtain favorable court rulings.

Lawyers for defendants did not immediately comment.