Hunt v. Sallie Mae, Inc.

Filing 53

OPINION and ORDER: Defendant's motion to dismiss 49 is granted and this case is dismissed with prejudice. All other pending motions are denied as moot. See formal order. Signed on 2/23/2014 by Chief Judge Ann L. Aiken. (rh) Modified to add "opinion and" to docket entry on 2/25/2014 (ljb).

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF OREGON

JEFFREY LEE HUNT,
Case No.
Plaintiff,

v.
SALLIE MAE, INC.,
Defendant.
Michael Fuller
Olsen Daines, PC
PO Box 2316
Portland, Oregon 97208
Attorney for plaintiff
James M. Barrett
Daniel L. Boyer
Ogletree, Deakins, Nash, Smoak & Stewart, P.C.
222 SW Columbia Street, Suite 1500
Portland, Oregon 97201

Page 1 - OPINION AND ORDER

OPINION AND ORDER
6:13-cv-00500-AA

Bonnie L. Martin, admitted pro hac vice
Ogletree, Deakins, Nash, Smoak & Stewart, P.C.
111 Monument Circle, Suite 4600
Indianapolis, Indiana 46204
Attorneys for defendant
AIKEN, Chief Judge:
Plaintiff Jeffrey Lee Hunt filed a second amended complaint
("SAC") against defendant Sallie Mae, Inc., alleging a violation of
the Oregon Unlawful Debt Collection Practices Act ("OUDCPA"), Or.
Rev. Stat. §§ 646.639-646.656, and a common law claim for invasion
of privacy based on an intrusion upon seclusion.
to

dismiss

under

discussed below,

Fed.

R.

Civ.

P.

12 (b) (6).

Defendant moves
For

the

reasons

defendant's motion is granted and this case is

dismissed.
BACKGROUND
On

May

6,

2010,

plaintiff

executed

Stafford/Ford Loan Application and Master
"Promissory Note")

for

student

Federal Direct Loan Program.
2.

Federal

Direct

Promissory Note

(the

loans under the William D.

Ford

Def.'s Mem. in Supp. of Mot. Dismiss

Under the terms of the Promissory

repay the loans,

a

Not~,

plaintiff agreed to

plus interest and other charges and fees.

Id.

Defendant is the loan servicer for plaintiff's loans.
Beginning

stopped making

his

student loan payments to defendant and defaulted on his loans.

SAC

~~

9-10.

sometime

in

2011,

plaintiff

Plaintiff hired an attorney to represent him with regard

to his student loan debt and provided notice to defendant of the

Page 2 - OPINION AND ORDER

representation.

Id.

at~~

11-12.

Plaintiff alleges defendant then

began to harass him by calling, writing, and emailing him multiple
times a day attempting to collect on the loans.

Id. at

~~

13-14.

Plaintiff alleges he repeatedly told defendant it was harassing him
and requested defendant stop contacting him directly, but defendant
continued.

Id.

at~~

16-17.

On March 22, 2013, plaintiff filed this action.

~

Id. at

24.

Plaintiff alleges after defendant received notice of this lawsuit,
it continued to harass him and also contacted his mother and a
relative in attempt to collect from him.
10,

2013,

Plaintiff

Id. at

~~

On May

25-30.

plaintiff filed an amended complaint.

Id.

at

alleges

him

and

defendant

continued

to

harass

~

31.
also

contacted his son and daughter multiple times in further attempts
to collect on the loans.

Id.

at

~~

On June 2 4 ,

32-33.

2 0 13,

plaintiff filed a motion for preliminary injunction which this
Court denied as moot, accepting defendant's representation that it
had

ceased

all

contact

with

plaintiff.

This

Court,

however,

granted plaintiff leave to file a renewed motion for preliminary
injunction, should defendant reinitiate contact with plaintiff or
his family during this case.
On

December

2,

2013,

plaintiff

filed

his

SAC

alleging

a

violation of the OUDCPA and a common law claim for invasion of
privacy based on an intrusion upon seclusion.

Page 3 - OPINION AND ORDER

Id.

at

~~

41-52.

Defendant moves to dismiss plaintiff's SAC on the grounds that both
of plaintiff's claims are preempted.

Def.'s Mot. Dismiss 2.

STANDARD OF REVIEW

Where the plaintiff "fails to state a claim upon which relief
can be granted," the court must dismiss the action.
P. 12 (b) (6).

Fed. R. Civ.

To survive a motion to dismiss, the complaint must

allege "enough facts to state a claim to relief that is plausible
on its

face."

(2007).

Bell Atl.

Corp.

v.

Twombly,

550

For purposes of a motion to dismiss,

U.S.

544,

570

the complaint is

liberally construed in favor of the plaintiff and its allegations
are taken as true.
1983).

Rosen v. Walters, 719 F.2d 1422, 1424 (9th Cir.

Bare assertions, however, that amount to nothing more than

a "formulaic recitation of the elements" of a claim "are conclusory
and not entitled to be assumed true."
662,

681

(2009).

Ashcroft v. Iqbal, 556 U.S.

Rather, to state a plausible claim for relief,

the complaint "must contain sufficient allegations of underlying
facts" to support its legal conclusions.

Starr v. Baca, 652 F.3d

1202, 1216 (9th Cir. 2011).
DISCUSSION

The
1001 1155,

Higher
was

Education
passed

"to

Act
keep

("HEA")
the

of

1965,

college

door

20

U.S.C.

open

to

students of ability, regardless of socioeconomic background."
v. SLM Corp., 593 F.3d 936, 938 (9th Cir. 2010)
omitted).

§§

all
Chae

(internal quotation

The HEA established the Guaranteed Student Loan ("GSL")

Page 4 - OPINION AND ORDER

program, 20 U.S.C.

§§

1071-1084-4, later renamed the Federal Family

Education Loan Program ("FFELP").

Id. at 938 n.1

Education Amendments of 1992, Pub. L. No. 102-325,

(citing Higher

§

411(a) (1), 106

Stat. 448, 510 (1992)).
Under the
Education

(the

FFELP,

the

Secretary of the

"Secretary")

is

authorized

U.S.
to

Department
prescribe

of

such

regulations as may be necessary to carry out the purposes of the
Act, including regulations applicable to third party servicers.
U.S.C.

§

1082 (a) (1).

promulgated 34 C.F.R.

Under
§

this

682.411,

authority,

the

20

Secretary

a detailed regulatory framework

which requires a lender to exercise due diligence

when a student

borrower becomes delinquent, by performing a series of collection
efforts

including written notices

682.411(c)-(h).
state law,

and telephone

calls.

Id.

§

The regulation specifically states it preempts any

including state statutes, regulations,

or rules, that

would conflict with or hinder satisfaction of the requirements or
frustrate the purposes of the regulation.

Id.

§

682.411 (o) (1).

Congress has amended the HEA over the years to create new
student loan programs, including the William D. Ford Federal Direct
Loan Program

("Direct Loan Program"),

Direct

are

Loans

subject

benefits as FFELP loans. 1

1

to
Id.

the
§

20 U.S.C.

same

terms,

1087e(a) (1).

§§

1087a-1087j.

conditions,

The Secretary is

Defendant asserts and plaintiff does not dispute that
plaintiff's Direct Loans are subject to 34 C.F.R. § 682.411.
Page 5 - OPINION AND ORDER

and

also authorized to contract with third-party servicers to service
Direct Loans.

Id.

§

1087f.

Education Reconciliation Act
152,

As

part

("HCERA")

of the

of 2010,

Health Care
Pub. L. No.

I.

111-

2201-2213, 124 Stat. 1029, 1074-81, Congress discontinued

§§

the issuance of new FFELP loans after June 30, 2010.
§

and

See 20 U.S.C.

1071 (d).
Preliminary Matter
To support

its motion to dismiss,

defendant

requests this

Court take judicial notice of a redacted copy of the Promissory
Note executed by plaintiff for his Direct Loans.

Def. 's Mem. in

Supp. of Mot. Dismiss at Ex. 1.
Review of a Rule 12(b) (6) motion is generally limited to the
complaint.
However,

a

integral

to

undisputed.
1998).

U.S.

v.

court
the

Ritchie,

342 F.3d 903,

can consider extrinsic
plaintiff's

claims

and

907

(9th Cir.

documents
their

2003).

if they are

authenticity

is

Parrino v. FHP, Inc., 146 F.3d 699, 706 n.4 (9th Cir.

Under the Federal Rules of Evidence, a "judicially noticed

fact must be one not subject to reasonable dispute in that it is
either (1) generally known within the territorial jurisdiction of
the trial court or (2) capable of accurate and ready determination
by

resort

questioned."

to

sources

whose

accuracy

cannot

reasonably

be

Fed. R. Evid. 201; see also Ritchie, 342 F.3d at 909.

Facts subject to judicial notice may be considered on a motion to

Page 6 - OPINION AND ORDER

dismiss.

Mullis v. U.S. Bankruptcy Ct., 828 F.2d 1385, 1388 (9th

Cir. 1987).
The facts contained in the Promissory Note are generally known
to the parties, its authenticity and accuracy "cannot reasonably be
questioned," and it is integral to plaintiff's claims.

Therefore,

the Court takes judicial notice of the Promissory Note.
II.

Oregon Unlawful Debt Collection Practices Act Claim
Defendant argues plaintiff's OUDCPA claim is preempted by the

HEA based on Brannan v. United Student Aid Funds,

Inc.,

94 F.3d

1260 (9th Cir. 1996).

Def.'s Mem. in Supp. of Mot. Dismiss at 7-

10.

Ninth Circuit held the HEA preempts

In Brannan,

OUDCPA.

the

Brannan, 94 F.3d at 1266.

the

The court reached this decision

by looking to the Secretary's official notice of interpretation for
34 C.F.R.
In

his

682.411.

§

Id. at 1263-64 (citing 55 Fed. Reg. 40120).

interpretation,

the

Secretary

concluded

student

loan

regulations governing pre-litigation collection activity preempt
all

inconsistent
Id.

regulations.

state
at

law,
1263

including
(citing

55

case

law,

statutes,

Fed.

Reg.

at

and

40120-21).

According to the Secretary, state law is inconsistent with student
loan

regulations

burdens"
servicers.
found

the

on

when

it

would

pre-litigation
Id.

"prohibit,

collection

restrict,

activity

(quoting 55 Fed. Reg. at 40121).

Secretary's

interpretation

to

be

capricious, or manifestly contrary to the HEA.

Page 7 - OPINION AND ORDER

by

or

impose

third-party

The Ninth Circuit
neither

arbitrary,

Id. at 1264-65.

In turning to Oregon law, the Ninth Circuit found that while
the HEA and its regulations establish what a loan collector must do
in order to show due diligence,

the OUDCPA consists entirely of

restrictions and prohibitions on collection activity.
(internal citations omitted).

As a result, the court held the HEA

and its regulations preempt the OUDCPA.

Id.

The court explained

that based on the Secretary's interpretation,
defaulter

in

Id. at 1266

Oregon believes

a

if a student loan

third-party debt

collector

has

engaged in unfair pre-litigation collection activity, her remedy
lies in the federal Fair Debt Collection Practices Act, 15 U.S.C.
§§

1692-1692o,

not in the OUDCPA.

Id.

(citing 55 Fed.

Reg.

at

40121) .
Plaintiff argues his OUDCPA claim is not preempted because
Brannan

is

limited

to

"pre-litigation"

collection

activities

whereas the allegations in his SAC all relate to "post-litigation"
collection activities by defendant after plaintiff initiated this
lawsuit.

Pl.'s

Resp.

in

Opp.

to

Def.'s

Mot.

Dismiss

Plaintiff's interpretation of Brannan is incorrect.

3-4.

In fact, the

Secretary first interpreted the regulations requiring a lender to
conduct pre-litigation activities.

55 Fed.

Reg.

at 40121.

The

regulations require lenders to make a number of direct contacts
with

the

borrower,

at

specified

intervals,

using

particular

warnings to attempt to persuade the borrower to repay the loan.
Id.

(internal citations omitted) .

Page 8 - OPINION AND ORDER

The regulations also require

lenders to use skip-tracing if necessary.
omitted).

Id.

(internal citations

The Secretary explained these provisions preempt state

laws that "prohibit, restrict, or impose burdens" on completion of
this sequence of contacts.

Id.

The Secretary next interpreted the regulations requiring a
lender to initiate litigation and enforce a
defaulting borrower.
The

Id. at 40122

Secretary explained that

judgment against a

(internal citations omitted).

because

these

regulations

do

not

dictate the manner in which the lender must conduct the litigation
or enforce a judgment, these regulations do not preempt state law.
Id.

However, the Secretary explained the regulations would preempt

state laws, if any exist, that would conflict with the requirement
that a lender initiate suit and attempt to enforce a judgment.
The

meaning

of

"pre-litigation"

in

the

Id.

Secretary's

interpretation refers to collection activity the lender must engage
in prior to the lender initiating a lawsuit against the borrower.
Plaintiff cites no authority for the principle that when a borrower
initiates a lawsuit against the lender, as here, the lender may not
continue to engage in these activities.

As a result,

based on

Brannan, plaintiff's OUDCPA claim is preempted by the HEA.
III. Invasion of Privacy Claim
Defendant

next

argues

plaintiff's

common

law

claim

for

invasion of privacy based on an intrusion upon seclusion is also
preempted by the HEA.

Def.'s Mem. in Supp. of Mot. Dismiss at 10-

Page 9 - OPINION AND ORDER

11.

Oregon recognizes the tort of invasion of privacy based on an

intrusion upon seclusion.
P.2d 307, 310 (1996).
an

intentional

Mauri v. Smith, 324 Or. 476, 482-83, 929

To state a claim plaintiff must prove: "(1)

intrusion,

physical

or

otherwise,

( 2)

upon

the

plaintiff's solitude or seclusion or private affairs or concerns,
(3) which would be highly offensive to a reasonable person."
In

Brannan,

the

only

Oregon

law

preempted by the HEA was the OUDCPA.

the

Ninth

Brannan,

Circuit

Id.
held

94 F.3d at 1266.

However, the court stated "preemption includes any State law that
would hinder or prohibit any activity" taken by third-party debt
collectors prior to
40121)

litigation.

(emphasis in original).

Id.

(quoting

55

Fed.

Reg.

In addition to the OUDCPA,

at
the

Ninth Circuit has held California business, contract, and consumer
protection laws are preempted by the HEA.

See Chae,

593 F.3d at

950.
This Court notes other Circuits have declined to find the HEA
so broadly preempts state law claims.

See Cliff v. Payco Gen. Am.

Credits, Inc., 363 F. 3d 1113, 1129 (11th Cir. 2004)
court

did

not

engage

in

a

(" [T]he Brannan

provision-by-provision

preemption

analysis; instead, it viewed the Oregon statute broadly, concluded
that the statute consists entirely of restrictions and prohibitions
on

collection

activity,

and

held

that

the

entire

statute

is

preempted."); Coll. Loan Corp. v. SLM Corp., 396 F.3d 588, 599 (4th
Cir. 2005)

("[T]he existence of the Secretary's exclusive authority

Page 10 - OPINION AND ORDER

to enforce the HEA and its regulations does not,

standing alone,

mandate the conclusion that a state law claim which relies on HEA
violations

for

support

'obstructs'

the

federal

scheme.")

Nevertheless this Court finds Brannan controlling in this Circuit.
Based on the Ninth Circuit's broad preemption finding in Brannan,
plaintiff's claim for invasion of privacy based on an intrusion
upon seclusion is also preempted by the HEA.
CONCLUSION

Defendant's motion to dismiss
case is dismissed with prejudice.

(doc.

49)

is GRANTED and this

All other pending motions are

denied as moot.
IT IS SO ORDERED.
Dated this

c23 tlJ
day

of February 2014.

Ann Aiken
United States District Judge

Page 11 - OPINION AND ORDER