STEWART DALZELL, District Judge.
We consider here defendants' motion to dismiss plaintiff Jennifer W. Levy-Tatum's complaint. This case involves a disputed private education loan taken out by Levy-Tatum's daughter, with Levy-Tatum listed as the co-signer. Levy-Tatum alleges that the defendants, Navient Solutions, Inc.
We have jurisdiction over Levy-Tatum's federal law claims pursuant to 28 U.S.C. § 1331 and supplemental jurisdiction over her state law claims pursuant to 28 U.S.C. § 1367.
For the reasons explained below, we will dismiss the entire complaint with prejudice as to defendant Sallie Mae Bank, dismiss Counts I, IV, and V with prejudice as to defendant Navient, and dismiss Counts II, III, and VI without prejudice as to defendant Navient.
A defendant moving to dismiss under Fed. R. Civ. P. 12(b)(6) bears the burden of proving that the plaintiff has failed to state a claim for relief.
As the Supreme Court stresses, "the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions. Threadbare recitals of the elements of a cause of action ... do not suffice."
In the wake of
We recite the facts as they appear in the complaint.
On August 15, 2014, Levy-Tatum received a letter from Sallie Mae
Prior to moving to Georgia in May of 2014 for a teaching job, Victoria Tatum lived in Pennsylvania with her mother.
In October of 2014, Levy-Tatum opened mail addressed to Victoria regarding Sallie Mae's split into two separate companies — defendant Sallie Mae Bank and defendant Navient.
Soon thereafter, Navient mailed Levy-Tatum (at her request) a copy of the Promissory Note and loan application.
In response, Navient sent Levy-Tatum a letter with an identity theft affidavit because she "alleged that someone used [her] identity without [her] knowledge or consent to obtain a student loan serviced by Navient."
Levy-Tatum also refused to complete and return the seven-page identity theft affidavit because she found it unduly burdensome and believed that Navient "was attempting to switch the burden of proof" to her.
Navient sent Levy-Tatum another letter with yet another copy of the identity theft affidavit.
The parties continued to fruitlessly exchange letters. Levy-Tatum wrote to Navient, again asserting that she had not alleged identity theft, but rather did not recall signing the documents electronically, and refusing to make payments on the loan until Navient proved that she signed the documents electronically.
Levy-Tatum again wrote to Navient reiterating her claim that it, and not she, had alleged identity theft, demanding verification of her electronic signature, and asking Navient to "desist making harassing phone calls to [her] and instead respond directly to [her] letters."
The exchange of letters continued. Navient wrote that it had updated Levy-Tatum's credit report to reflect the disputed loan, that it would continue to consider Levy-Tatum responsible for the loan until she completed the identity theft affidavit, and that its investigation confirmed that the information it provided to consumer reporting agencies regarding the loan was valid.
Navient wrote again, explaining that co-signers "are presented with a series of knowledge-based identity questions designed to prevent identity theft" and enclosing the loan application, Promissory Note, loan approval letter, and final disclosure statement for the loan, sent to Levy-Tatum on October 8, 2011.
More letters ensued.
On April 16, 2015, Wells Fargo Bank informed Levy-Tatum that it had reduced her credit limit from $10,000.00 to $1,600.00 based on information it received from Experian.
Levy-Tatum also claims that she "has received numerous collection calls from various Navient representatives since August 2014 at her home and at her place of business."
Defendants seek to dismiss all six causes of action in Levy-Tatum's complaint. They argue that Counts I and IV fail because there is no private right of action under either the E-Sign Act or Pennsylvania's Electronic Transactions Act. Def. Mem. at 6. Defendants argue that Count II is meritless because the FDCPA applies only to debt collectors and Levy-Tatum's allegations that she has been "harassed" are conclusory.
To determine whether there is a private right of action under a federal law, we begin with the plain language of the statute.
We must determine whether the statute manifests an intent to create both a private right and "also a private remedy. Statutory intent on this latter point is determinative. Without it, a cause of action does not exist and courts may not create one, no matter how desirable that might be as a policy matter, or how compatible with the statute."
The E-Sign Act establishes that with respect to transactions in or affecting interstate commerce, signatures and contracts cannot be denied legal effect, validity, or enforceability solely because they are in electronic form. 15 U.S.C. § 7001(a)(1)-(2). While we need not rehearse the E-Sign Act in its entirety, suffice it to say it contains
We therefore find that the E-Sign Act does not create a private right or remedy, either expressly or by implication. We will dismiss Count I of Levy-Tatum's complaint with prejudice, since amendment would be futile in light of this holding.
Defendants argue that Count II of Levy-Tatum's complaint is meritless because the FDCPA only applies to debt collectors and Levy-Tatum's assertions that Navient has harassed her are conclusory. Def. Mem. at 9-10. Levy-Tatum responds that Navient is a debt collector and that her complaint includes factual allegations regarding Navient's harassment. Pl. Resp. in Opp. at 14-15, 17.
The FDCPA defines a "debt collector" as "any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another." 15 U.S.C. § 1692a(6). But the term "debt collector" does not include "any person collecting or attempting to collect any debt owed or due or asserted to be owed or due another to the extent such activity ... concerns a debt which was not in default at the time it was obtained by such person." 15 U.S.C. § 1692a(6)(F)(iii).
Defendants explain that on May 1, 2014, SLM Corporation, known to consumers as Sallie Mae, went through a corporate reorganization, creating (1) a restructured SLM Corporation, which continued operating as a separate publicly traded company and included Sallie Mae Bank, and (2) Navient Corporation, of which defendant Navient Solutions, Inc. is a subsidiary. Def. Mem. at 16-17. We take judicial notice of these facts.
Victoria Tatum took out the loan in question from the lender Sallie Mae in August of 2011. Compl. ¶¶ 11-19 & Ex. C. For the summer of 2014, Victoria paid to place her loan in forbearance.
Notably, Levy-Tatum's complaint fails to include
We will therefore dismiss Count II of Levy-Tatum's complaint with prejudice as to Sallie Mae Bank and without prejudice as to Navient.
In Count III of her complaint, Levy-Tatum alleges that Navient violated the FCRA when it "willfully and intentionally reported the Loan to the credit bureaus as being in default under Plaintiff's name, causing Plaintiff's credit to be damaged, and causing Wells Fargo Bank to reduce Plaintiff's credit limit," even though Navient knew that the information was unproven and disputed and it had not been able to show that the electronic signature on the loan was authentic. Compl. ¶¶ 168, 170-71. Defendants argue that Levy-Tatum's FCRA claim fails because she (1) only claims that she cannot recall whether she co-signed for the loan, and so cannot argue that Navient failed to investigate when she refused to complete an identity theft affidavit, and (2) failed to initiate a proper investigation or dispute with Experian. Def. Mem. at 15.
Furnishers of information to credit reporting agencies have an obligation to provide complete and accurate information in the first instance, but the FCRA explicitly precludes private suits for failure to comply and reserves enforcement of that specific statutory duty to federal and state officials.
But consumers bringing suit under Section 1681s-2(b) must first go through credit reporting agencies:
Levy-Tatum alleges in her complaint that she initiated an investigation with Experian on April 30, 2015. Compl. ¶ 80. Experian then informed Levy-Tatum that the disputed Navient item would remain.
We will dismiss Count III of Levy-Tatum's complaint with prejudice as to Sallie Mae Bank and without prejudice as to Navient.
We next consider PAETA. To determine whether a Pennsylvania statute grants a private right of action, courts must consider whether (1) the plaintiff is one of the class for whose especial benefit the statute was enacted, (2) there is an indication of legislative intent, explicit or implicit, to create or deny a remedy, and (3) implying such a remedy for the plaintiff is consistent with the legislative scheme's underlying purposes.
In the legislative findings preamble to PAETA, the General Assembly found and declared that (1) electronic commerce was rapidly expanding, (2) uniformity among state laws recognizing the validity and enforceability of electronic signatures, records, and writings was important to the continued expansion of electronic commerce, and (3) the rights of consumers under existing laws should be protected and preserved. 73 P.S. § 2260.102. Like the E-Sign Act, PAETA requires that parties consent to conducting transactions by electronic means, but does not
Levy-Tatum points to no language in the statute, nor were we able to find any such language, suggesting that she was of the class for whose especial benefit the statute was enacted. Nor could we find any language indicating legislative intent to create any remedy. PAETA is concerned with commerce generally, not consumers in particular, and is meant to affirm the validity and enforceability of electronic signatures and transactions. Although the General Assembly's legislative findings mention consumers' rights, it is in the specific context of such rights under
We therefore find that there is no express or implied private right of action under PAETA. This legislative scheme, like the E-Sign Act, establishes the validity of electronic signatures, but does not provide consumers, or Levy-Tatum, with a private right of action. We will dismiss Count IV with prejudice as to both Sallie Mae Bank and Navient, since amendment by Levy-Tatum would be futile in light of this holding.
Defendants argue that Levy-Tatum fails to state a claim in Counts V and VI of her complaint because there is no private right of action under the FCEUA, she has not pled an ascertainable loss to ground a claim under the UTPCPL, any claims for credit reporting harm are preempted by the FCRA, and her claim does not fall within the catchall provision of the UTPCPL. Def. Mem. at 11-14. Levy-Tatum argues that the defendants are liable for violations of the FCEUA for trying to force her to allege identity theft and complete an identity theft affidavit, claiming that she co-signed the loan without showing that they had authenticated her electronic signature, and communicating credit information "which it knew was unproven and disputed" to credit reporting agencies. Compl. ¶ 196. We consider Counts V and VI in turn.
The FCEUA establishes that it "shall constitute an unfair or deceptive debt collection act or practice under this act if a debt collector violates any of the provisions" of the FDCPA. 73 P.S. § 2270.4(a). To the extent that we have found Levy-Tatum has failed to state a claim under the FDCPA, then any claim she might have under 73 P.S. § 2270.4(a) necessarily fails. The FCEUA, however, also establishes rules for creditors, setting forth what constitutes unfair or deceptive acts or practices, including "any conduct the natural consequence of which is to harass, oppress or abuse any person in connection with the collection of a debt." 73 P.S. § 2270.4(b)(4). The FCEUA makes clear that if "a debt collector
To maintain a private right of action under the UTPCPL, a plaintiff must demonstrate that she suffered an ascertainable loss of money or property as a result of the defendant's prohibited conduct.
While Levy-Tatum alleges in her complaint that Navient's phone calls were frequent enough and late enough at night to constitute harassment, Compl. ¶¶ 92-103, she notably does not allege any ascertainable loss of money or property as a result of such harassment. The FCEUA prohibits harassing conduct by creditors, but plaintiffs must use the UTPCPL to allege violations of the FCEUA. Because Levy-Tatum must use the UTPCPL to bring her FCEUA claim, she must also satisfy the UTPCPL's pleading requirement regarding ascertainable loss.
Levy-Tatum also pleads in her complaint that as a result of Navient reporting the disputed loan to Experian, Wells Fargo Bank reduced her credit limit from $10,000.00 to $1,600.00.
The FCRA precludes the imposition of requirements or prohibitions under state law with respect to subject matter regulated under 15 U.S.C. § 1681s-2, relating to the responsibilities of persons who furnish information to consumer reporting agencies. 15 U.S.C. § 1681t(b)(1)((F). Section 1681s-2 prohibits furnishers of information from reporting information known to be inaccurate or that they have reasonable cause to believe is inaccurate. 15 U.S.C. § 1681s-2(a)(1)(A). Section 1681s-2 also defines "reasonable cause to believe that the information is inaccurate," duties to correct and update information, duties to provide notice of disputes, duties upon notice of identity-theft related information, and other duties. 15 U.S.C. § 1681s-2(a)-(d).
Since Section 1681t(b)(1)(F) prohibits states from imposing requirements with respect to the subject matter regulated under Section 1681s-2, which broadly regulates the conduct of furnishers of information to consumer reporting agencies, the FCRA preempts any claim under Pennsylvania's FCEUA, as brought through the UTPCPL, based upon conduct related to furnishing information to a credit reporting agency.
As Levy-Tatum's FCEUA claim must be brought via the UTPCPL's remedial provision, the UTPCPL's requirements for pleading ascertainable loss apply. As the only plausibly ascertainable loss pled by Levy-Tatum is the reduction of her credit limit by Wells Fargo Bank — and again, we do not opine on whether this actually constitutes an ascertainable loss within the meaning of the UTPCPL — we must look to what prohibited conduct allegedly caused that alleged ascertainable loss. As Levy-Tatum pleads that Navient's reporting of the disputed loan caused the reduction in her credit limit, we must consider whether such conduct is regulated by the FCRA. The FCRA precludes state law requirements or prohibitions regarding conduct regulated by the FCRA with respect to those who furnish information to credit reporting agencies. As Navient's conduct was in the nature of furnishing information to Experian, Levy-Tatum's state law action complaining of that conduct is precluded by the FCRA itself. The FCRA therefore preempts Levy-Tatum's only plausible claim from the FCEUA, as necessarily brought via the UTPCPL's remedial provision.
We therefore find that Levy-Tatum fails to state a claim under the FCEUA because her claim, as mediated by the pleading requirements of the UTPCPL, is preempted by the FCRA. We will therefore dismiss Count V with prejudice as to both Sallie Mae Bank and Navient.
We next consider whether Levy-Tatum has otherwise stated a claim under the UTPCPL in Count VI. Levy-Tatum alleges that defendants are liable for violations of the UTPCPL for using inappropriate security procedures to ensure that the electronic signature on the loan was Levy-Tatum's, for attempting to shift the burden of proof to her by demanding that she complete an identity theft affidavit, for attempting to coerce her into assuming the loan using the identity theft affidavit, for reporting "unproven and disputed" credit information to the credit bureaus, and for damaging Levy-Tatum's credit rating by reporting the loan without noting that it was disputed. Compl. ¶¶ 207-10.
As explained above, the FCRA preempts all state law claims asserted against furnishers of information to credit reporting agencies regarding all subject matter regulated under Section 1681s-2.
Levy-Tatum does not explain how these two allegations fall within the UTPCPL's definitions of "unfair methods of competition" or "unfair or deceptive acts or practices." 73 P.S. § 201-2(4). The UTPCPL does contain a catchall provision, defining "[e]ngaging in any other fraudulent or deceptive conduct which creates a likelihood of confusion or of misunderstanding" as an unfair method of competition or unfair or deceptive act or practice. 73 P.S. § 201-2(4)(xxi). This catchall provision seems to embody common law fraud, but our Court of Appeals has recently predicted that, if called to decide the issue, the Pennsylvania Supreme Court would not require a plaintiff to plead or prove all the elements of common law fraud if she alleged only deceptive conduct.
Levy-Tatum fails to plead a plausible claim to relief under the UTPCPL's catchall provision because she does not plead sufficient factual matter, accepted as true, to demonstrate any deceptive conduct by Navient. Levy-Tatum does not plead that Navient's allegedly inappropriate security measures to ensure that electronic signatures are authentic involve deceptive conduct or conduct meant to mislead, nor how she herself was misled or deceived by Navient's practices in this regard. Nor does she plead that there was any deception or intent to mislead in Navient's attempts to have her complete an identity theft affidavit. While Levy-Tatum asserts that Navient is attempting to shift some burden of proof to her, that is not deceptive or misleading conduct, but rather a straightforward procedure for trying to ferret out identity theft or fraud. Levy-Tatum's beliefs and averments that being asked to fill out the identity theft affidavit was unfair, or burdensome, does not make Navient's conduct deceptive or misleading within the meaning of the UTPCPL. Navient has been exquisitely clear, as documented by Levy-Tatum's own exhibits, that if she did not believe that she had been the one to affix her electronic signature to Victoria Tatum's loan, Navient could only assist her if she filled out such an affidavit. There is nothing deceptive or misleading in such statements or conduct. Levy-Tatum also fails to plead any ascertainable loss caused by this allegedly prohibited conduct.
As Levy-Tatum fails to plead a plausible claim to relief under the UTPCPL's catchall provision, we will dismiss Count VI with prejudice as to Sallie Mae Bank and without prejudice as to Navient.
We have taken judicial notice of the fact that defendant Navient, formerly known as Sallie Mae, is not the same entity as Sallie Mae Bank. Levy-Tatum's complaint fails to allege any wrongdoing by the entity Sallie Mae Bank, as her complaint's allegations are entirely concerned with Navient's conduct since it became Navient or when it was known as Sallie Mae. We will therefore dismiss the entire complaint with prejudice as to defendant Sallie Mae Bank.
In her response in opposition to defendants' motion to dismiss, Levy-Tatum includes a prayer for relief under the Declaratory Judgment Act, 28 U.S.C. § 2201(a). Pl. Resp. in Opp. at 25. As the defendants point out, Levy-Tatum's complaint does not contain a separate cause of action under the Declaratory Judgment Act, but it does include, in its prayer for relief, a request for "appropriate declaratory relief regarding the predatory lending practices" of the defendants.
Levy-Tatum's complaint fails to state a claim upon which relief can be granted. Counts I and IV fail because the E-Sign Act and PAETA do not create private rights of action. Count II fails because Levy-Tatum has failed to allege facts, accepted as true, pleading that Navient is a debt collector within the meaning of the FDCPA. Count III fails because Levy-Tatum fails to allege facts, accepted as true, pleading that Navient failed to conduct a reasonable investigation after learning of Levy-Tatum's dispute from Experian. Count V fails because Levy-Tatum's FCEUA claim, which can only be brought through the UTPCPL, is preempted by the FCRA. Count VI fails because Levy-Tatum fails to allege facts, accepted as true, that demonstrate Navient has engaged in deceptive or misleading practices or that she suffered an ascertainable loss.
We will dismiss Counts I, IV, and V with prejudice as to both Navient and Sallie Mae Bank, as amendment would be futile. Although we will also dismiss Counts II, III, and VI with prejudice as to Sallie Mae Bank, we will dismiss them without prejudice as to Navient. An appropriate Order follows.
Fed. R. Civ. P. 8(d)(3) permits inconsistent claims or defenses, and courts have construed that rule to permit inconsistencies in both legal and factual allegations.
While we cannot treat Levy-Tatum's belated denial of co-signing for the loan as an amendment to her complaint, we may consider her complaint as pleading neither that she did or did not cosign for the loan, but rather that she cannot recall whether she did. For purposes of the motion to dismiss, we accept that factual allegation of non-recollection as true. Still, we remind all parties and attorneys of their duties of reasonable inquiry.
Levy-Tatum draws our attention to the U.S. Department of Education's Standards for Electronic Signatures in Electronic Student Loan Transactions (Apr. 30, 2001) (revised as of July 25, 2001).
