This site is for providing information concerning the class action against Northern Leasing Systems, Inc., and provide answers to a list of frequently asked questions.
Supreme Court of the State of New York
County of New York
Kevin PLUDEMAN, Chris Hanzsek d/b/a Hanzsek Audio, Sara Jane Hush, Ozark Mountain Granite & Tile Co. and Dennis E. Lauchman, on behalf of themselves and all others similarly situated, Plaintiffs, v. NORTHERN LEASING SYSTEMS, INC., Jay Cohen, Steven Bernardone, Rich Hahn, and Sara Krieger, Defendants. No. 101059/04.
BRIEF DESCRIPTION OF ALLEGATIONS AND PROCEEDINGS
This class action against Northern Leasing Systems, Inc., of New York City was commenced in 2004, asserting a fraudulent scheme to entrap small businesspersons fraudulently into equipment leases with undisclosed charges and onerous terms. Plaintiffs, small businesses from all over the country, assert that Northern Leasing deceptively sells these leases to small businessmen through what appears to be a standard form one page lease, complete with bank information, merger clause, signatures for both parties, and a personal guaranty. Thereafter, it routinely charges and collects much more than what is specified in the first page, and foists several other liabilities on the unsuspecting small businesses. When small businesses raise questions, Northern Leasing finally reveals the existence of 3 additional pages which make the lease irrevocable, onerous, and virtually indefinite. Routinely, these pages and their contents are never disclosed to the small businesses at the inception, and are not incorporated into the lease. Nevertheless, Northern Leasing saddles small businesses with all these terms and enforces them strictly. Moreover, Northern Leasing imposes charges which were never disclosed in the lease. The trial court upheld the claim for fraud and punitive damages, ruling that the "allegations address more than a private wrong contending that defendants engaged in a course of conduct throughout the United States with such wanton dishonesty as to imply a criminal indifference to civil obligations." On appeal, the the Appellate Division of the Supreme Court of New York has upheld the claims for fraud against Northern Leasing and its senior management, as well as the claim for breach of contract against Northern Leasing. In addition, the Court also held that "defendants' fraudulent motive and tortious conduct aimed at the public generally suffice to plead a claim for punitive damages under both the breach of contract and common-law fraud causes of action." The individual Defendants, i.e., senior management of Northern Leasing, appealed to the Court of Appeals (New York's highest court) seeking dismissal of the fraud claims against them. The United States Chamber of Commerce filed an Amicus brief in their support. However, the Court of Appeals affirmed the decision of the Appellate Division, and in a landmark ruling relaxing the pleading standards for fraud in New York, upheld the fraud claims against Northern Leasing's top management.
Meanwhile, the trial court denied class certification.
After the Appellate Division modified the trial court's order
to reinstate the claim for breach of contract, Plaintiffs
renewed their motion for class certification. The trial court
then certified the class for the claim that Northern Leasing
breached its contract with class members. The Appellate
Division modified the class certification order to expand the
class for that claim, as requested by Plaintiffs, and rejected
Northern Leasing's appeal. Meanwhile, the trial court
granted partial summary judgment holding Northern Leasing
liable to the class for breach of contract. Further, the
trial court severed the claims, granted declaratory judgment
to the Plaintiffs, and entered a permanent injunction
restraining Northern Leasing from enforcing the remaining
three pages of the lease. However, the Appellate
Division reversed the grant of summary judgment. Based
upon that reversal, the Court decertified the class, and
vacated the permanent injunction. However, the Appellate
Division reversed that decision to decertify the class, Pludeman
v. Northern Leasing Systems, Inc. The case is
slated for trial in September 2013.