SCRANTON, Pa. (Legal Newsline) – Though the federal judge hearing a long-running case against the nation’s largest student loan servicer said it could, the U.S. Court of Appeals has ruled that Navient may not appeal a ruling that rejects one of its arguments for judgment.
Navient has been fighting the federal Consumer Finance Protection Bureau in Pennsylvania federal court since 2017, rejecting allegations that its workers pushed struggling borrowers toward forbearance (in which payments are suspended while interest continues to grow).
Navient wanted to use last year’s U.S. Supreme Court decision that found the CFPB’s structure unconstitutional because its director could not be removed without cause. If the CFPB was unconstitutional when the lawsuit against Navient was filed, the company argued, the lawsuit must be unconstitutional too.
Judge Robert Mariani rejected that claim but ruled in February Navient could pursue an appeal to the Third Circuit. On July 12, the appellate court declined to take up the issue.
As a result, a stay on the case will be lifted and Navient’s other motion for summary judgment will become its focal point.
Navient’s rejected 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.
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, (income-driven repayment),” the motion says.
Navient is armed with a former CFPB lawyer who will testify against the agency, much to CFPB’s dismay.