Pele v. Pa. Higher Educ. Assistance Agency

• Decision Date: 07 October 2014
• Docket Number: No. 1:13cv1531 JCC/TRJ.,1:13cv1531 JCC/TRJ.
• Court: U.S. District Court — Eastern District of Virginia
• Parties: Lee PELE, Plaintiff, v. PENNSYLVANIA HIGHER EDUCATION ASSISTANCE AGENCY, d/b/a American Education Services, Defendant.

53 F.Supp.3d 857

Lee PELE, Plaintiff
v.
PENNSYLVANIA HIGHER EDUCATION ASSISTANCE AGENCY, d/b/a American Education Services, Defendant.

No. 1:13cv1531 JCC/TRJ.

United States District Court, E.D. Virginia, Alexandria Division.

Signed Oct. 7, 2014.

53 F.Supp.3d 859

Alexander Hugo Blankingship, III, Thomas Bryan Christiano, Blankingship & Christiano PC, Reston, VA, for Plaintiff.

Jill Marie Degraffenreid, Erin Pence Thompson, Hunton & Williams, McLean, VA, William Edward Potts, Jr., Hunton & Williams LLP, Washington, DC, for Defendant.

MEMORANDUM OPINION

JAMES C. CACHERIS, District Judge.

The Court must decide whether the Pennsylvania Higher Education Assistance Agency (“Defendant” or “PHEAA”) is an “arm of the state” of Pennsylvania, such that it would enjoy immunity from suit under the Eleventh Amendment to the Constitution. Now before the Court is PHEAA's Motion for Summary Judgment on that affirmative defense of immunity, [Dkt. 57], and Plaintiff Lee Pele's (“Plaintiff” or “Pele”) cross-motion for Partial Summary Judgment, [Dkt. 68]. For the following reasons, the Court holds that PHEAA is an arm of the state of Pennsylvania and entitled to immunity under the Eleventh Amendment. Therefore, the Court will grant PHEAA's Motion for Summary Judgment.

53 F.Supp.3d 860

I. Background

A. Factual Background

This case arises out of alleged violations of the Fair Credit Reporting Act (“FCRA”), 15 U.S.C. § 1681 et seq. Pele, a resident and citizen of Virginia, alleges that he received federal student loans that were serviced by PHEAA, a company that furnishes information to consumer reporting agencies as contemplated by FCRA. (Am. Compl. [Dkt. 8] ¶¶ 1–3.) Pele claims that PHEAA listed defaulted student loans on his credit file that “he never authorized, initiated, received the proceeds [from] or guaranteed.” (Id. ¶¶ 5, 6.) Consequently, Pele received phone calls from debt collector Windham Professionals (“Windham”) seeking over $137,000 in defaulted student loans. (Id. ¶ 7.) Pele maintained that he “did not initiate, guaranty, or receive any benefit” from these loans. (Id. ) Pele sent credit dispute letters to credit reporting agencies TransUnion, Equifax, and Experian. (Id. ¶ 14.) In response, the credit reporting agencies sent four Automated Credit Dispute Verifications (“ACDV”) to PHEAA. (Id. ¶¶ 21–23.) PHEAA responded to all four ACDVs “by modifying, but not deleting, the information from Mr. Pele's credit file.” (Id. ¶ 24.) Pele alleges that as a result, “PHEAA continued to attribute debts to Mr. Pele to the credit reporting agencies.” (Id. )

B. Procedural Background

Pele filed the original complaint in this matter on December 13, 2013, [Dkt. 1], and filed an amended complaint as a matter of right under the federal rules on February 3, 2014 [Dkt. 8]. PHEAA moved to dismiss the amended complaint, arguing that PHEAA is an arm of the Commonwealth of Pennsylvania (“Commonwealth” or “State”) and entitled to immunity under the Eleventh Amendment. [Dkt. 12] The Court addressed this question by applying the Fourth Circuit's nonexclusive four-factor test. (Mem. Op. [Dkt. 18] at 8–21 (citing Md. Stadium Auth. v. Ellerbe Becket Inc., 407 F.3d 255 (4th Cir.2005) ); see also U.S. ex rel. Oberg v. Pa. Higher Educ. Assistance Agency, 745 F.3d 131 (4th Cir.2014) (“Oberg II ”).) This Court concluded that PHEAA did not meet its burden of showing an entitlement to Eleventh Amendment immunity “at this stage,” (Mem. Op. at 21.), and denied the motion to dismiss, (Order Denying Mot. to Dismiss [Dkt. 19] ).

On August 21, 2014, PHEAA filed its Motion for Summary Judgment [Dkt. 57] and accompanying brief in support [Dkt. 58]. Before filing an opposition brief, Pele filed his own cross-motion for Partial Summary Judgment [Dkt. 68] on PHEAA's sovereign immunity affirmative defense, and on five other affirmative defenses asserted by PHEAA, with an accompanying brief in support [Dkt. 69] on September 4, 2014. Both parties timely filed opposition [Dkts. 77, 86] and reply briefs [Dkt. 84, 89]. The Court entertained oral argument on September 25, 2014. Having been fully briefed and argued, the motions are now before the Court.

II. Standard of Review

“The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a) ; see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247–48, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) ; Evans v. Techs. Applications & Serv., Co., 80 F.3d 954, 958–59 (4th Cir.1996) (citations omitted). When moving for summary judgment on an affirmative defense, such as sovereign immunity under the Eleventh Amendment, the defendant “must conclusively establish all essential elements of that defense.” Ray Commc'ns, Inc. v. Clear Channel

53 F.Supp.3d 861

Commc'ns, Inc., 673 F.3d 294, 299 (4th Cir.2012) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 331, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) ). If the affirmative defense is supported by sufficient evidence, the burden then shifts to the plaintiff, who must “come forward with specific facts showing that there is a genuine issue for trial.” Ray Commc'ns, Inc., 673 F.3d at 299 (citations and quotation marks omitted).

The absence or presence of a genuine dispute as to any material fact must be supported either by “citing to particular parts of materials in the record ... or showing that the materials cited do not establish the absence or presence of a genuine dispute.” Fed.R.Civ.P. 56(c)(1)(A)-(B). While the Court “must draw any inferences in the light most favorable to the non-movant,” Brock v. Entre Computer Ctrs., 933 F.2d 1253, 1259 (4th Cir.1991) (citations omitted), the non-movant “cannot create a genuine issue of material fact through mere speculation or the building of one inference upon another.” Beale v. Hardy, 769 F.2d 213, 214 (4th Cir.1985) ; see also Anderson, 477 U.S. at 248–52, 106 S.Ct. 2505 (finding the very existence of a scintilla of evidence or of unsubstantiated conclusory allegations insufficient to avoid summary judgment). Rather, a genuine issue exists when there is sufficient evidence on which a reasonable jury could return a verdict in favor of the non-moving party. Id.

Specifically in this Court, on summary judgment, the parties are required to list the undisputed material facts. E.D. Va. Local Civil Rule 56(B). “In determining a motion for summary judgment, the Court may assume that facts identified by the moving party in its listing of material facts are admitted, unless such a fact is controverted in the statement of genuine issues filed in opposition to the motion.” Id. Similarly, “[i]f a party fails to properly support an assertion of fact or fails to properly address another party's assertion of fact as required by Rule 56(c), the court may consider the fact undisputed for purposes of the motion.” Fed.R.Civ.P. 56(e)(2). Where there is conflicting evidence, the court must credit the evidence of both sides and acknowledge that there is a genuine issue of material fact that cannot be resolved by summary judgment. See Tolan v. Cotton, ––– U.S. ––––, 134 S.Ct. 1861, 1868–69, 188 L.Ed.2d 895 (2014) (“By weighing the evidence and reaching factual inferences contrary to [the non-movant's] competent evidence, the court below neglected to adhere to the fundamental principle that at the summary judgment stage, reasonable inferences should be drawn in favor of the nonmoving party.”)

III. Analysis

PHEAA argues that it is entitled to judgment as a matter of law because Pele's claims are barred by Eleventh Amendment immunity. The analysis begins just as it did for PHEAA's motion to dismiss. The Eleventh Amendment to the United States Constitution provides: “The Judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another State, or by Citizens or Subjects of any Foreign State.” U.S. Const. amend. XI. Accordingly, a state is only subject to suit in federal court if (1) the state unambiguously consents to that suit or (2) Congress, acting under powers granted to it in section five of the Fourteenth Amendment, has clearly abrogated the state's immunity.See Seminole Tribe of Fla. v. Florida, 517 U.S. 44, 54–55, 116 S.Ct. 1114, 134 L.Ed.2d 252 (1996). Relevant to this matter, “it is well settled that this protection extends also to ‘state

53 F.Supp.3d 862

agents and state instrumentalities' ... or stated otherwise to ‘arm[s] of the State.’ ” Cash v. Granville Cnty. Bd. of Educ., 242 F.3d 219, 222 (4th Cir.2001) (citations omitted).

It is undisputed that PHEAA has not waived sovereign immunity and that Congress has not abrogated the state's immunity. Rather, PHEAA contends that after discovery, the evidence shows that there is no genuine issue as to any material fact, and that PHEAA is entitled to judgment as a matter of law because it is an...