SCRANTON, Pa. (Legal Newsline) – Navient’s defense in a lawsuit brought by a federal agency is headed down a detour, as the company has successfully asked to appeal a recent decision.
As a result of Pennsylvania federal judge Robert Mariani’s Feb. 26 ruling, Navient, the nation’s largest student loan processor, can ask the U.S. Court of Appeals for the Third Circuit to throw out the Consumer Financial Protection Bureau’s lawsuit.
The CFPB 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.
In January, Mariani denied Navient’s motion for summary judgment that sought to take advantage of a 2020 U.S. Supreme Court ruling that found the CFPB was unconstitutionally structured because its director could not be fired without cause.
Navient’s motion for summary judgment made these two arguments:
-The CFPB was unconstitutionally structured in 2017 when the case was filed, so the suit should be thrown out; and
-The CFPB’s decision to ratify the lawsuit, done after the SCOTUS ruling, was done past the statute of limitations for bringing the case.
Mariani ruled the CFPB’s active pursuit of the case from 2017 to the SCOTUS ruling suspended the statute of limitations. The Third Circuit will now consider that issue because Mariani has certified his order for interlocutory appeal.
“The court finds that the issue of whether an agency’s constitutional defect warrants equitable tolling is serious to the conduct of this litigation in both a practical and legal sense,” Mariani wrote in his most recent decision.
“Should the Third Circuit find that equitable tolling is unavailable to save the CFPB’s action from dismissal where the ratification comes after the statute of limitations has run, this action would be subject to dismissal.”
Navient still has another pending motion for judgment that refutes the CFPB’s allegations. 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.