Hassert, Tom v. Navient Solutions, Inc.
Filing
30
Transmission of Notice of Appeal, Order, Judgment and Docket Sheet to Seventh Circuit Court of Appeals re: 28 Notice of Appeal, (Attachments: # 1 Order, # 2 Judgment, # 3 Docket Sheet) (lak)
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF WISCONSIN
THOMAS HASSERT,
Plaintiff,
v.
NAVIENT SOLUTIONS, INC.,
OPINION & ORDER
16-cv-243-jdp
Defendant.
Plaintiff Thomas Hassert took out student loans under the Federal Family Education
Loan (FFEL) program. He has filed suit against defendant Navient Solutions, Inc., alleging
that Navient called his cell phone using an autodialer to collect payment on the FFEL loans,
in violation of the Telephone Consumer Protection Act (TCPA), 47 U.S.C. § 227(b)(1).
Dkt. 15. Navient now moves to dismiss Hassert’s complaint, contending that a 2015
amendment excepts Navient’s alleged calls from the TCPA. Dkt. 16. Because FFEL loans are
debts guaranteed by the United States subject to the 2015 amendment’s exception, the
TCPA does not prohibit Navient’s alleged calls to Hassert, and Hassert’s complaint does not
state a claim for relief. The court will grant Navient’s motion and dismiss this case.
ALLEGATIONS OF FACT
The court begins with some historical background. Congress created the FFEL
program as part of the Higher Education Act of 1965. Under the FFEL program, lenders
make loans to students, and the loans are insured by guaranty agencies and reinsured under
guaranty agreements with the U.S. Department of Education. This means that when the
student borrower defaults on the loan and the lender tries but fails to recover the debt, the
guaranty agency will purchase the loan from the lender and then recover its losses under the
guaranty agreement with the Department of Education. Bible v. United Student Aid Funds, Inc.,
799 F.3d 633, 640-41 (7th Cir. 2015) (citing 20 U.S.C. § 1078).
The facts specific to this case are from Hassert’s amended complaint, Dkt. 15, and the
court accepts them as true for the purpose of deciding this motion. Zahn v. N. Am. Power &
Gas, LLC, 815 F.3d 1082, 1087 (7th Cir. 2016). In 2003, Hassert took out FFEL loans from
Superior Community Credit. The loans were guaranteed by Great Lakes Higher Education
Guaranty Corporation. Sometime later, Navient started servicing the loans. Navient called
Hassert’s cell phone using an autodialer to collect payment on the FFEL loans. On December
9, 2015, Hassert told Navient over the phone and in an email to stop calling him on his cell
phone, but Navient continued. It called Hassert at least twice in March 2016 and at least
once after April 27, 2016.
ANALYSIS
To survive a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), a
complaint must allege facts sufficient to state a plausible claim for relief. Firestone Fin. Corp. v.
Meyer, 796 F.3d 822, 826-27 (7th Cir. 2015). The court is not bound to accept alleged legal
conclusions. Id.
Hassert attempts to bring a claim under the TCPA, which Congress passed to protect
individuals’ privacy rights while allowing “legitimate telemarketing practices.” 47 U.S.C.
§ 227. The TCPA prohibits, among other things, calling cell phones using an autodialer.
Hassert’s complaint states a claim for relief under the original version of the TCPA. But in
2015, Congress amended the TCPA so that it prohibits autodialed calls to cell phones except
2
when the “call is made solely to collect a debt owed to or guaranteed by the United States.”
Bipartisan Budget Act of 2015, Pub. L. 114-74, § 301. Navient contends that all FFEL loans
are debts “owed to or guaranteed by the United States” because the U.S. Department of
Education is ultimately responsible to the lenders of FFEL loans, so Navient’s calls to Hassert
to service his FFEL loans, which occurred after the 2015 TCPA amendment, are not
prohibited by the TCPA. To determine whether Hassert’s complaint states a claim for relief,
the court must determine whether his FFEL loans are debts “owed to or guaranteed by the
United States.”
The statute governing the FFEL program, 20 U.S.C. § 1078, generally refers to the
“insurance program” under which the guaranty agencies insure loans made by lenders to
student borrowers. The statute refers to the “guaranty agreements” under which the
Department of Education will repay the guaranty agencies for their losses. Thus, under the
plain language of the statute, federally guaranteed student loans are debts that are ultimately
guaranteed by the United States, through the Department of Education. This appears to
doom Hassert’s TCPA claim.
Hassert argues that a Federal Communications Commission order implementing the
2015 TCPA amendment compels a different result. See In the Matter of Rules and
Regulations Implementing the Telephone Consumer Protection Act of 1991, 31 FCC Rcd.
9074 (2016). In this order, the FCC considered the meaning of the term “owed to or
guaranteed by the United States.” The FCC did not settle on a definition of the term, which
depends on the context in which it is used. Id. at 9082-83. But it did conclude that for
purposes of the TCPA the term does not include debts that are merely insured by the United
States. Id. at n.54. Under the Hobbs Act, the FCC’s orders relating to the TCPA are binding
3
on this court. CE Design, Ltd. v. Prism Business Media, Inc., 606 F.3d 443, 446-50 (7th Cir.
2010) (citing 28 U.S.C. § 2342(1) and 47 U.S.C. § 402(a)). Thus, the TCPA prohibits
autodialed calls made to collect debts that are merely insured by, but not guaranteed by, the
United States. Id.
But this point does not carry the day for Hassert, who would have to show that the
Department of Education is a mere insurer of FFEL student debt, and not a guarantor.
Although the role of insurer and guarantor are similar, and the terms are sometimes used
almost interchangeably, the role of the Department of Education is generally described in the
pertinent statute as that of guarantor. See, e.g., 20 U.S.C. § 1078(c)(2)(C) (describing “any
loan insured under the loan insurance program as may be guaranteed by” the Department of
Education). Likewise in Department of Education regulations concerning the FFEL program.
See, e.g., 34 C.F.R. § 682.100(b)(2) (stating that the department “guarantees lenders against
losses” on loans made under the “Federal Insured Student Loan” program, which is among
the loan programs that the department refers to as “Federal Guaranteed Student Loan”
programs). And also likewise with courts describing the FFEL program. See, e.g., Bible, 799
F.3d at 640 (“Because of the reinsurance commitment, the federal government serves as the
ultimate guarantor on each loan.”).
Hassert also argues that the FCC order saves his claim by narrowing the scope of the
2015 TCPA amendment to calls made to collect on only those debts “currently” owed to or
guaranteed by the United States. Hassert argues that because he alleges Great Lakes Higher
Education Guaranty Corporation is the guarantor of his FFEL loans, the Department of
Education does not currently guarantee the debt. But in its order, the FCC made clear that the
modifier “currently” is meant to exclude (1) debts that have been satisfied and (2) debts for
4
which the United States has transferred the right to repayment to a third party. See 31 FCC
Rcd. 9074, 9083. Under the FCC’s definition, Hassert’s loans are currently guaranteed by the
United States, even if Great Lakes Higher Education Guaranty Corporation has not yet
turned to the Department of Education for payment.
The court concludes that the Department of Education is a guarantor of Hassert’s
FFEL loan. Because FFEL loans are debts “guaranteed by the United States,” calls made to
collect these debts are not prohibited by the TCPA after the 2015 amendments. Hassert’s
complaint does not state a claim for relief under the TCPA.
Hassert asks that the court allow him the opportunity to amend his complaint to
correct any deficiencies. But Hassert has not explained how any amendment could cure the
fundamental flaw in his complaint. And Hassert has already had a chance to do so: Navient
asserted a defense based on the 2015 amendment of the TCPA, Dkt. 10 (fourteenth
affirmative defense), after which Hassert filed his amended complaint, Dkt. 15. As a result of
the 2015 amendments, the autodialed calls about which Hassert complains are simply
beyond the reach of the TCPA.
The court will deny leave to amend when the amendment would be futile, as it
appears to be here. See Runnion ex rel. Runnion v. Girl Scouts of Greater Chicago & Nw. Ind., 786
F.3d 510, 520 (7th Cir. 2015).
5
ORDER
IT IS ORDERED that defendant’s motion is granted and this case is dismissed with
prejudice.
Entered January 5, 2017.
BY THE COURT:
/s/
________________________________________
JAMES D. PETERSON
District Judge
6
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?