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Wednesday, May 1, 2024

Navient makes move against Pa. AG's lawsuit, says he lacks authority to assert federal claims

Federal Court
Joshshapiro

Shapiro

SCRANTON, Pa. (Legal Newsline) – The nation’s largest student loan servicer is asking a federal judge to throw out the “pointless” lawsuit filed by Pennsylvania Attorney General Josh Shapiro.

Navient called the lawsuit that, as well as a “copycat,” years ago, when Shapiro filed it in conjunction with a similar case by the federal Consumer Financial Protection Bureau. On Sept. 18, it filed its motion for judgment on the pleadings.

The company is accused of steering troubled borrowers toward forbearance rather than suggesting income-driven repayment. The U.S. Court of Appeals for the Third Circuit has asked federal judge Robert Mariani, who is also presiding over the CFPB’s case, to “conduct a closer, allegation-by-allegation, assessment” of Shapiro’s complaint.

“Navient did not remotely represent that it would disclose IDR to every single borrower during every single telephone call regardless of the borrower’s circumstances and irrespective of what the borrower told Navient,” the motion says.

“Instead, the Company’s website (which is incorporated by reference in the complaint, but selectively quoted) represented that Navient ‘can help you find an option that fits your budget, simplifies payment, and minimizes your total interest cost’ and ‘can help you by identifying options and solutions, so you can make the right decision for your situation.”

The statements were true and Navient lived up to them, the motion says. The site even provided borrowers with information about IDR, the company says.

It is asking Mariani to throw out seven of the nine claims in Shapiro’s case.  Four of those claims arise under the federal Consumer Financial Protection Act of 2010, which delegated certain authorities to state AGs like Shapiro.

But Navient says the CFPA is unconstitutional because of a recent U.S. Supreme Court ruling that found the Consumer Financial Protection Bureau’s structure, established by the CFPA, created a director who didn’t have to answer to the President.

Seila Law now makes clear that any such delegation of federal law enforcement authority to Presidentially unaccountable State officials violates the Constitution,” the motion says.

The Seila Law decision is also in the spotlight in the CFPB’s case against Navient.

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