SCRANTON, Pa. (Legal Newsline) – The nation’s largest student loan servicer wants an appeals court to review a ruling against it, as it continues its fight against the Consumer Financial Protection Bureau.
Navient Corporation wants a halt to the lawsuit, filed in 2017, so that the U.S. Court of Appeals for the Third Circuit can delve into Pennsylvania federal judge Robert Mariani’s decision that allowed the CFPB to pursue the case.
Navient had asked Mariani to grant it summary judgment in light of the U.S. Supreme Court’s 2020 ruling in Seila Law that found the CFPB was unconstitutionally structured.
Following the SCOTUS ruling, the CFPB ratified its decision to sue Navient but Navient argued that ratification shouldn’t be allowed.
“Navient’s assertion that the CFPB ‘never had constitutional authority to bring this action’ is belied by Seila’s implicit finding that the CFPB always had the authority to act, despite the Supreme Court’s finding that the removal protection was unconstitutional,” Mariani wrote.
“The Supreme Court left the agency, and its ability to act, intact, and specifically found that ‘The provisions of the Dodd-Frank Act bearing on the CFPB’s structure and duties remain fully operative without the offending tenure restriction.”
It would not be right to let all the targets of CFPB actions off the hook because of the Seila ruling, Mariani wrote.
Navient still has another pending motion for judgment that refutes the CFPB’s allegation. On Jan. 21, it asked Mariani to certify his denial of summary judgment so that the company could immediately appeal it.
“The question at issue is clearly controlling. If the Third Circuit were to reverse the Court’s determination that equitable tolling applies, this action is timebarred; the decision would require dismissal of the entire case,” Karin Dryhurst of Wilmer Cutler wrote.
“Further, as evident from the Court’s order, the question does not hinge on the resolution of any disputed factual questions. Nor would it require the appellate court to wade into a voluminous factual record. Whether an agency’s unconstitutional structure justifies equitable tolling is precisely the type of controlling legal issue where interlocutory review is warranted.”
The lawsuit claims Navient pushes forbearance, in which payments are suspended as interest continues to grow, on students struggling to pay back loans.
The company has claimed it is an effort to regulate its practices through litigation and actual education agencies – and not the CFPB, which tracks financial institutions – should be in charge of any changes.
Navient is armed with a former CFPB lawyer who will testify against the agency, much to CFPB’s dismay.
Navient’s first motion for summary judgment, which is still pending, seeks judgment on 11 claims. It complains that the feds are attempting to impose new regulations through its litigation against Navient rather than going through a proper rulemaking procedure.
Part of that change would be requiring servicers to go through a question-and-answer process designed by the CFPB.
“(T)he CFPB seeks instead to discourage access to a federal prescribed benefit – forbearance – in favor of its preferred option, IDR,” the motion says.