Golden v. Pa. Higher Educ. Assistance Agency
| Docket Number | 22-MC-01899 (HG) |
| Decision Date | 10 August 2022 |
| Parties | TASHANNA B. GOLDEN, Plaintiff-Appellee, v. PENNSYLVANIA HIGHER EDUCATION ASSISTANCE AGENCY, Defendant-Appellant. |
| Court | U.S. District Court — Eastern District of New York |
Defendant Pennsylvania Higher Education Assistance Agency (“PHEAA”) has filed a motion for leave to appeal a discovery order issued in an adversary proceeding pending before Judge Elizabeth Stong of the United States Bankruptcy Court for the Eastern District of New York (the “Bankruptcy Court”), on June 13, 2022, following the Bankruptcy Court's oral ruling during a hearing on May 23, 2022. ECF No. 1 at 94, 117.[1] For the reasons set forth below, the Court exercises its discretion under 28 U.S.C § 158(a)(3) and declines to hear PHEAA's appeal of the Bankruptcy Court's interlocutory order. The Court therefore dismisses PHEAA's appeal and denies as moot PHEAA's accompanying motion to stay its discovery obligations pending appeal. ECF No. 4 at 1-2.
In February 2016, Plaintiff filed a voluntary petition for relief under Chapter 7 of the Bankruptcy Code in the United States Bankruptcy Court for the Eastern District of New York. Bankr. ECF No. 32 ¶ 39.[2] At that time, Plaintiff was the borrower on various loans that she entered into to finance her attendance at the University of Pennsylvania Law School in the mid-2000s. Id. ¶¶ 27-40. The Bankruptcy Court issued a discharge order in Plaintiff's bankruptcy proceeding on August 3, 2016. Id. ¶ 42. Plaintiff commenced the underlying adversary proceeding in the Bankruptcy Court in January 2017, alleging that Defendants continued attempting to collect certain of her student loans, even though Plaintiff alleges those loans had been discharged. Id. ¶ 44-45. Plaintiff alleges that the collection efforts undertaken by Defendants violate 11 U.S.C. § 524 and are punishable by civil contempt pursuant to 11 U.S.C. § 105. Id. ¶¶ 72-76.
In the adversary proceeding, Plaintiff seeks to assert these claims not only on behalf of herself, but also on behalf of a class of similarly situated borrowers of certain types of student loans. Id. ¶¶ 55-58. Accordingly, on July 13, 2020, Plaintiff filed a motion for class certification pursuant to Rule 7023 of the Federal Rules of Bankruptcy Procedure and Rule 23 of the Federal Rules of Civil Procedure. See Bankr. ECF No. 255. Plaintiff's motion, which is still pending in the Bankruptcy Court, seeks to certify the following class:
Individuals who received private loans owned, held, or serviced by Defendants which were not within the cost of attendance at Title IV institutions as defined in 26 U.S.C § 221(d); who obtained bankruptcy discharges after October 17, 2005; who were subsequently subjected to Defendants' acts to collect on the loans; and who have not reaffirmed their loans.
Id. at 6. Plaintiff's definition of the class excludes various people affiliated with Defendants Plaintiff's counsel, and Bankruptcy Judge Stong, as well as “any debtors who have validly reaffirmed their debts to Defendants or whose debts were expressly held to be non-dischargeable.” Id. at 6-7.
Plaintiff's definition of the putative class includes only individuals who received “private loans . . . which were not within the cost of attendance at Title IV institutions as defined in 26 U.S.C. § 221(d),” see Id. at 6 because Section 523(a)(8) of the Bankruptcy Code specifically defines the “categories of educational debt that cannot be discharged in bankruptcy absent a showing of undue hardship.” Homaidan v. Sallie Mae, Inc., 3 F.4th 595, 600 (2d Cir. 2021) (citing 11 U.S.C. § 523(a)(8)). These discharge exceptions are “confined to those plainly expressed in the Bankruptcy Code,” and a “creditor bears the burden of establishing that a debt is excepted from discharge.” Id. (internal quotation marks omitted). The Bankruptcy Code therefore establishes “that three categories of educational debt cannot be discharged in bankruptcy: (1) loans and benefit overpayments backed by the government or a nonprofit; (2) obligations to repay funds received as an educational benefit, scholarship, or stipend; and (3) qualified private educational loans.” Id. at 601 (citing 11 U.S.C. § 523(a)(8)). The “qualified private educational loans” encompassed by this third discharge exception include private loans only if they fall “within the cost of attendance at th[e] institution as defined by Internal Revenue Code Section 221(d).” In re Homaidan, 640 B.R. 810, 848 (Bankr. E.D.N.Y. 2022); DiDonato v. GC Servs. Ltd. P'ship, No. 20-cv-2154, 2021 WL 4219504, at *2 (S.D.N.Y. Sept. 16, 2021) (discussing definition of “qualified education loan” used in discharge exception established by 11 U.S.C. § 523(a)(8)).
On June 29, 2021, Defendants filed separate oppositions to Plaintiff's motion for class certification. See Bankr. ECF Nos. 398-407. In its opposition, PHEAA argued that Plaintiff failed to satisfy several of the class certification requirements in Rule 23, including the requirement “that the proposed class be ‘so numerous that joinder of all members is impracticable.'” See Bankr. ECF No. 398 at 59 (quoting Fed.R.Civ.P. 23(a)(1)). Other Defendants similarly challenged Plaintiff's proof on the numerosity requirement. See Bankr. ECF No. 406 at 37.
Plaintiff filed her reply brief in further support of her motion for class certification on September 2, 2021. See Bankr. ECF No. 418. However, both Plaintiff and Defendants, including PHEAA, continued to engage in additional discovery related to class certification after the briefing on Plaintiff's motion was nominally complete. After Plaintiff's reply brief was filed, Defendants asked the Bankruptcy Court for permission: (i) to conduct an additional deposition of Plaintiff's expert regarding opinions relied on in Plaintiff's reply brief, and (ii) to file a sur-reply in further opposition to Plaintiff's motion for class certification. See Bankr. ECF No. 421. The Bankruptcy Court discussed that request with the parties during a conference on September 29, 2021, and ultimately adopted a stipulation allowing those requests. See Bankr. ECF No. 436.
During that same conference, Plaintiff's counsel raised the issue of needing additional discovery that he believed was responsive to arguments that PHEAA and other Defendants made in opposition to Plaintiff's motion for class certification. Bankr. ECF No. 456 at 16:16-19:8. The Bankruptcy Court directed Plaintiff to serve a supplemental discovery request specifying exactly what information Plaintiff was seeking. Id. at 54:8-56:4. Although Plaintiff's counsel made at least one comment during that early stage that the requested discovery was unnecessary “to proceed on the motions that are on your docket,” see Id. at 56:1-12, the Bankruptcy Court made several comments suggesting that the discovery might potentially prove relevant to Plaintiff's pending motion for class certification. See Id. at 20:8-23 (indicating that the discovery “will inform the Court's determination on the various motions”); see Id. at 50:16-23 ().
Plaintiff served supplemental discovery requests pursuant to the Bankruptcy Court's instruction, see ECF No. 8-3, and the Bankruptcy Court discussed Defendants' objections to that discovery during a conference on November 18, 2021, before Plaintiff made a formal motion to compel the discovery. See Bankr. ECF No. 475. During that conference, the Bankruptcy Court reiterated that it considered the information addressed by Plaintiff's requested discovery to be relevant to class certification. See Id. at 28:17-29:17.[3]
Ultimately, Plaintiff made a motion to compel the discovery, and the Bankruptcy Court held two hearings on Plaintiff's motion on February 2 and May 23, 2022. At the end of the first hearing, the Bankruptcy Court instructed Plaintiff “to supplement the record with a description of how each of these categories of discovery requested relates to a disputed matter before the Court on the question of class certification [and] not the merits of the underlying claims.” Bankr. ECF No. 462 at 107:13-19. When giving this instruction, the Bankruptcy Court made clear that it would consider additional information related to the issue of class certification even though the parties' briefing on that motion was nominally complete and had been “filed a long time ago.” Id. at 108:3-14. The Bankruptcy Court emphasized its desire to allow whatever discovery was necessary to “permit the Court to have the record I need to make a good decision that I realize is an extraordinarily important decision in the case.” Id. at 110:24-111:4. Plaintiff filed the supplemental information requested by the Bankruptcy Court, see Bankr. ECF No. 471, and each Defendant filed an opposition to Plaintiff's arguments therein. See Bankr. ECF Nos. 477-480.
Based on the parties' numerous briefs and court appearances the Bankruptcy Court granted Plaintiff's motion to compel with respect to two discovery requests in an order dated June 13, 2022. See Bankr. ECF No. 501. Those requests asked Defendants, for each loan made to a person who received a bankruptcy discharge within the putative class period, to “[i]dentify the lender, originator, servicer or guarantor other than You” and “[w]hether the loan was originated or funded by a nonprofit or governmental entity.” ECF No. 1 at 88-89. The Bankruptcy Court concluded that the information sought by these discovery requests was relevant to whether Plaintiff's putative class could satisfy the numerosity requirement of Rule 23 because, as...
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