Lee v. Board of Higher Ed. in City of New York
| Decision Date | 21 November 1979 |
| Docket Number | No. 78 Civ. 5250-CSH.,78 Civ. 5250-CSH. |
| Citation | 1 BR 781 |
| Parties | Raymond LEE, Individually and on behalf of all others similarly situated, Plaintiffs, v. The BOARD OF HIGHER EDUCATION IN the CITY OF NEW YORK; Robert J. Kibbee, Individually and in his capacity as Chancellor of the City University of New York; Mary P. Bass, Individually and in her capacity as General Counsel and Vice Chancellor for Legal Affairs of the City University of New York, Defendants. |
| Court | U.S. District Court — Southern District of New York |
Carol Kellermann, The Legal Aid Society, New York City, for plaintiffs.
Pamela McGovern Gaskins, Asst. Corp. Counsel, Law Dept., New York City, for defendants.
This putative class action arises out of the following undisputed facts: In 1971 the named plaintiff, Raymond Lee, borrowed $500 in the form of a National Direct Student Loan (NDSL)1 to help defray his expenses for attendance at City College, which is part of City University of New York (CUNY). In 1973, Mr. Lee withdrew from school, after completing 32 credits, and commenced repayment of the loan. In 1975, after having paid all but $107 of the loan, Mr. Lee lost his job. He gained employment once again six months later, but in the interim period of unemployment, he incurred debts of several thousand dollars. In February 1978, Mr. Lee filed a bankruptcy petition, listing liabilities of over $2,000, including the outstanding balance on his student loan. In May 1978, Mr. Lee received a discharge in bankruptcy of all dischargeable debts listed in his petition, including the balance of the City College loan. In June 1978, Mr. Lee was accepted as a B.A. candidate at New York Theological Institute. The Institute agreed to give Mr. Lee advanced standing for the 32 credits he had completed at City College, provided that Mr. Lee produce a transcript of the course work he had completed. Pursuant to CUNY's policy of denying transcripts to individuals who have defaulted on payment of student loans obtained from CUNY notwithstanding their discharge in bankruptcy, Mr. Lee was advised in a letter from the General Counsel and Vice Chancellor for Legal Affairs of City University that his record would not be released. In the face of such a policy, Mr. Lee was faced with the prospect of repeating 32 credits of work already completed in order to qualify for the B.A. degree from the New York Theological Institute.
Plaintiff commenced this action, seeking certification of a class, pursuant to Rule 23, Fed.R.Civ.P., consisting of all persons to whom the Board of Higher Education in the City of New York has refused to provide copies of their college records as a consequence of their failure to repay student loans obtained from CUNY despite the discharge of these loans in bankruptcy. The plaintiff also seeks, pursuant to Fed.R. Civ.P. 56 and 65, summary judgment enjoining the enforcement, operation and execution of the defendant's policy on the ground that it violates the supremacy clause, Art. VI, cl. 2, of the United States Constitution, and the equal protection and due process clauses of the Fourteenth Amendment. For the following reasons, this Court has determined that the relief so requested should be granted.
In order to reach a determination on the issues in this case, it is important, as a preliminary matter, to have an understanding of the changing law on the subject of the dischargeability of student loans.
Recently Congress has enacted a special statute, limiting the conditions under which student loans may be discharged in bankruptcy. Education Amendments of 1976, § 439A, 20 U.S.C. § 1087-3 (1976) (repealed Pub.L. 95-598, Title III, § 317, Nov. 6, 1978, 92 Stat. 2678) (current version in 11 U.S.C.A. § 523(a)(8) (1979 Supp.) (effective Oct. 1, 1979)).2 Prior to September 30, 1977, the effective date of the 1976 amendments, educational loans were classified along with most other debts and ordinarily were discharged in bankruptcy. Recognizing the problem of widespread abuse of discharges of student loans, Congress enacted the Education Amendments of 1976, which applied to bankruptcy proceedings commencing on or after September 30, 1977. It excepted federally insured or guaranteed student loans from discharge unless a situation of "undue hardship" presented itself, or unless the loan had been in arrears for a minimum of five years. The new bankruptcy law, which applies to bankruptcy proceedings commencing on or after October 1, 1979, adopted this approach and expanded on it: it excepts from discharge any debt to a governmental unit as well as to a nonprofit institution of higher education for an educational loan unless the loan has been outstanding for five years or unless excepting the debt from discharge will impose an "undue hardship."
In this case, plaintiff seeks certification, pursuant to Fed.R.Civ.P. 23(a), and either 23(b)(2) or 23(b)(1)(A), of the class of persons to whom the Board of Higher Education of CUNY has refused to provide copies of their college records as a consequence of their failure to repay educational loans obtained from CUNY despite the discharge of these loans in bankruptcy. Plaintiff's Brief at 1-2.
It should be noted that what is crucial to this litigation and what qualifies a person for membership in the purported class, inter alia, is final discharge of his or her educational loan by a bankruptcy court, as of the time of entry of this order or subsequent thereto. The bankruptcy courts naturally will be applying the requisite aforementioned statutory provisions; any denial of a discharge of a student loan will be contested in the context of a bankruptcy proceeding. Therefore, membership in this putative class requires the entry by a bankruptcy court of a final discharge of a student loan along with a refusal by CUNY to release college records as a consequence of the failure to repay the discharged loan.
The defendants' principal contention is that certification under Rule 23(b)(2) should be denied, since it is unnecessary to maintain a class action in cases in which declaratory or injunctive relief is sought because of the alleged facial unconstitutionality of a federal or state practice. Although this rule obtains in some circuits, see, e.g., Ihrke v. Northern States Power Co., 459 F.2d 566, 572 (8th Cir. 1972), vacated on other grounds and remanded with instructions to dismiss as moot, 409 U.S. 815, 93 S.Ct. 66, 34 L.Ed.2d 72 (1972), the rule appears to be otherwise in the Second Circuit.
Defendants' reliance on Galvan v. Levine, 490 F.2d 1255, 1261-62 (2d Cir. 1973), cert. denied, 417 U.S. 936, 94 S.Ct. 2652, 41 L.Ed.2d 240 (1974) is misplaced. In Galvan, the plaintiffs challenged the constitutionality of certain policies of the New York State Industrial Commission with respect to eligibility requirements for unemployment insurance. The Court denied plaintiffs' motion for class certification under Rule 23(b)(2), reasoning that since the judgment would run to the benefit not only of the named plaintiffs but also to others similarly situated, class action designation would be "largely a formality." Id. at 1261. In Galvan, however, the state "made clear that it understands the judgment to bind it with respect to all claimants"; further, before entry of judgment in the case, the state withdrew the challenged policy and stated it did not intend to reinstate the policy. Ibid. The defendant's affirmative representation that it would apply any resulting judgment uniformly to all those similarly situated appeared to play a substantial part in the Second Circuit's holding that the denial of class certification was not an abuse of discretion.
In Davis v. Smith, 607 F.2d 535 (2d Cir. 1978), the court enjoined defendants from implementing regulations that conflicted with the Social Security Act, but denied plaintiff's motion for class action certification. The Davis court, expanding upon the holding in Galvan, said:
Id. at 540 (emphasis added).3
In Hurley v. Ward, 584 F.2d 609 (2d Cir. 1978), the court, issuing a preliminary injunction prohibiting anal and genital searches without probable cause of plaintiff inmate but denying certification of a class consisting of all inmates of a New York State correctional facility, clarified the issue of whether, absent a showing of need, the district court may or must deny certification. The Hurley court said:
Id. at 611 (footnote omitted).
The distillation of this Second Circuit authority would appear to be that where state authorities commit themselves in the litigation to apply a resulting judgment uniformly, or where they affirmatively concede the identity of the issues as to all potential class litigants, there is no practical necessity for a class certification. Conversely, in the absence of...
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