A federal lawsuit has disrupted the fragile peace over a debt-relief deal for hundreds of financially strapped taxi medallion owners, months after Senate Majority Leader Chuck Schumer brokered the pact among the city, a group of cabbies and a holdout lender.

O’Brien-Staley Partners/OSK, whose taxi-industry investments include loans for the expensive metal badges that allow yellow cab drivers to pick up street hails, charged that the New York Taxi Workers Alliance “seeks to coerce” the firm into restructuring its entire loan portfolio — even in cases where borrowers are paying or have a proven ability to pay.

“Once NYTWA started advising companies in good standing to strategically default on their loans, everyone feels it crossed over a line from public advocacy to tortious interference,” Jerry O’Brien, the CEO of O’Brien-Staley Partners, said in a statement to THE CITY. “Rather than arguing in the press, we’ve asked a judge to instruct NYTWA to stop — just stop.”

The suit accuses the  taxi workers alliance of relying on “uncompromising militancy” and “nonstop militant action” to disrupt the Minnesota-based firm’s payment plans with individual borrowers whose already-shaky finances were slammed by the onset of the pandemic in 2020, when the number of taxi trips plummeted as the city largely shuttered.

“‘Uncompromising militancy’ and ‘nonstop militant action’ are not tools to disturb lawful transactions,” OSK said in the lawsuit filed June 2, according to court records.

“Well before the city announced its own medallion debt-relief initiative, [OSK] was working with individual driver-owners to facilitate payment based on each borrower’s unique circumstances,” the firm’s attorneys wrote in the suit initially filed on May 24 in Manhattan federal court, but moved to Brooklyn last week.

‘Crushing Debt’

The executive director of the taxi workers alliance said the suit was blowback against drivers who pushed for debt relief.

“This baseless lawsuit is an attempt to retaliate against drivers and their organization for fighting for — and winning — relief from a debt that’s led to suicides and abject poverty,” the TWA’s Bhairavi Desai told THE CITY. “We will continue to fight for our members with all our vigor and force. 

“All drivers deserve a life free of this crushing debt.”

The lawsuit, which seeks at least $774,046 in damages, is the latest twist in a long-running battle between OSK and the 25,000-member organization, which represents drivers for yellow taxis and green and black cars.

A cab driver calls on City Hall to do more to help relieve medallion debt, Oct. 20, 2021. Credit: Ben Fractenberg/THE CITY

OSK contends the taxi workers alliance “has no collective bargaining authority” and seeks to stop it from “encouraging, advising or otherwise inciting borrowers to strategically default under the terms of their contracts.”

Desai called the suit “meritless.”

In March, OSK had accepted an invitation from Schumer to take part in a Taxi and Limousine Commission debt-relief program that is designed to cap debt-service payments at $1,122 a month, with the city guaranteeing the restructured loan.

The earlier deal followed months of protests —- and a two week hunger strike at City Hall by medallion owners — until the city and the taxi workers alliance agreed in November to a debt-restructuring deal with Marblegate Asset Management, the largest holder of taxi medallion loans.

But O’Brien-Staley Partners/OSK held out of that pact until spring, saying at the time that it would participate in the program once it’s operational. The firm also pledged to halt private sales of repossessed medallions and to stop foreclosures on medallions held by owners who keep their loans in good standing.

Losing Ground

A February story in THE CITY — which Schumer credited with highlighting the plight of medallion owners facing foreclosure — revealed that 250 medallions were seized in the first three months after the November debt-restructuring plan deal, including 94 in January alone.

TLC data shows there have been 281 foreclosures this year, with 31 last month.

Medallions that once went for more than $1 million have for nearly a decade seen their value fall to a fraction of that because of the rise of app-based ride-hailing companies like Uber and Lyft.

In court papers, OSK says that, early in the pandemic, it temporarily set up six-month payment plans for “individual driver-owners with documented financial hardship,” initially charging them $100 a week in March 2020, a figure that, as of June 1, is up to $350 a week.

The firm says it had nothing with the city’s March 2022 restructuring deal with Marblegate Asset Management.

“To date, the program is not funded, not fully documented and not operational,” the lawsuit says.

The Taxi and Limousine Commission told THE CITY that the program has so far achieved $50 million of debt forgiveness and that it is finalizing the loan guaranty portion.