Russ v. U.S. Dept. Of Educ., 8:17CV198

Citation364 F.Supp.3d 1009
Decision Date27 June 2018
Docket Number8:17CV198
Parties Lisa RUSS, Plaintiff, v. UNITED STATES DEPARTMENT OF EDUCATION, and Great Lakes Higher Education Corporation and Affiliates, Defendants.
CourtUnited States District Courts. 8th Circuit. United States District Court of Nebraska

Aaron F. Smeall, Clay M. Rogers, Danielle M. Dring, Smith, Slusky Law Firm, Omaha, NE, for Plaintiff.

Lynnett M. Wagner, U.S. Attorney's Office, Omaha, NE, for Defendants.


Joseph F. Bataillon, Senior United States District Judge

This matter is before the Court on the Defendants' motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(6) and Fed. R. Civ. P. 12(b)(1). Filing No. 43 and Filing No. 46. This case involves an action brought generally under the Consumer Credit Protection Act ("CCPA")1 as well as the Administrative Procedures Act ("APA"), 5 U.S.C. § 701. Plaintiff Lisa Russ ("Russ") requests judicial review of the Secretary of Education's final decision that she is responsible for consolidated student loan debt. She asserts this debt was the result of identity theft. Russ asserts that the United States Department of Education ("the Department") fraudulently and improperly denied her identify theft claim, as well as fraudulently determined that she is obligated to pay her student loan. Defendants contend that Russ's complaint should be dismissed, for failure to state a claim for which relief can be granted as the fraud claim lacks sufficient specificity, and that the case should be dismissed for lack of subject-matter jurisdiction due to the Department's sovereign immunity.


Lisa Russ was married to Kevin W. Russ in 1994.2 In either 1995 or 1996, Lisa Russ and Kevin Russ consolidated their undergraduate student loans. In 2000, they divorced. Under their divorce decree, Kevin Russ was responsible for the consolidated student loans totaling approximately $ 55,000—$ 25,000 of which belonged to Lisa Russ. During her divorce proceedings, Lisa Russ applied for and received student loans for a master's degree program. Sometime after her divorce Lisa Russ received a past due notice from a student loan servicer, Great Lakes Higher Education Corporation and Affiliates ("Great Lakes"). The notice showed a balance for the spousal consolidation loan exceeding $ 121,000.

Russ inquired with both Great Lakes and the Department regarding the past due loan. Great Lakes told Russ that the loan account information was accessible on and that if the website did not list the loan, then she was not responsible for it. did not list the $ 121,000 loan. She also contacted the Department, providing the loan identification number Great Lakes had given her. Based on this identification number, the only loan records the Department possessed were from her master's degree program. Later, Russ attempted to refinance some loans but was unsuccessful due to her poor credit report based on the delinquent student loans. She alleges that Great Lakes and the Department are responsible for these negative reports on her credit.

After subsequent inquiries into Great Lakes' loan document records by Russ, it provided her with a 1999 promissory note and a 2012 unemployment request. Russ further alleges that these forms are fraudulent and that her identity was stolen. In January 2016, she filed an identity theft report with the Saunders County Sheriff's Department, which sent a subpoena to Great Lakes in February 2016. By September 2016, Great Lakes had yet to respond. She also contacted the Department, which issued a final decision on March 22, 2017, denying Russ's identity theft claim.

On August 22, 2017, Russ filed an amended complaint alleging her inability to obtain loan refinancing due to her damaged credit because of Defendants' failure to clarify her loan obligations. Accordingly, she claims defendants violated the CCPA, including FDCPA and FCRA subchapters, by continuing to seek loan collection payments in error. Moreover, she claims Defendants acted fraudulently by denying her identity theft claim, alleging the Department's denial is incorrect. As a result, Russ is requesting judicial review of the Department's final decision to deny her identity theft claim; injunctive relief enjoining Defendants from proceeding on the Department's decision; declaratory relief that she is not obligated to Great Lakes; declaratory relief that Great Lakes is civilly liable for its CCPA violations; declaratory relief that Defendants were negligent pursuant to 15 U.S.C. § 1681o ; declaratory relief that Defendants acted fraudulently; restoration of her credit; and attorney's fees, costs, and litigation expenses. The Department filed a motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(1) for lack of subject-matter jurisdiction and both Defendants filed a motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(6) for failure to state a claim for which relief can be granted. The parties have filed briefs in support, Filing No. 45 and Filing No. 48 and in opposition, Filing No. 51.

A. Fed. R. Civ. P. 12(b)(6)

Under the Federal Rules, a complaint must contain "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2) ; Bell Atlantic Corp. v. Twombly , 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). "Specific facts are not necessary; the statement need only ‘give the defendant fair notice of what the ... claim is and the grounds upon which it rests.’ " Erickson v. Pardus , 551 U.S. 89, 93, 127 S.Ct. 2197, 167 L.Ed.2d 1081 (2007) (quoting Twombly , 550 U.S. at 555, 127 S.Ct. 1955 ). In order to survive a motion to dismiss under, Fed. R. Civ. P. 12(b)(6), the plaintiff's obligation to provide the grounds for his entitlement to relief necessitates that the complaint contain "more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Twombly , 550 U.S. at 555, 127 S.Ct. 1955.

Determining whether a complaint states a plausible claim for relief is "a context specific task" that requires the court "to draw on its judicial experience and common sense." Ashcroft v. Iqbal , 556 U.S. 662, 679, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). Under Twombly , a court considering a motion to dismiss may begin by identifying pleadings that, because they are no more than conclusions, are not entitled to the assumption of truth. Id. Although legal conclusions "can provide the framework of a complaint, they must be supported by factual allegations." Id. Courts follow a "two-pronged approach" to evaluate Rule 12(b)(6) challenges. Id. First, a court divides the allegations between factual and legal allegations; factual allegations should be accepted as true, but legal allegations should be disregarded. Id. Second, the factual allegations must be parsed for facial plausibility. Id.

"A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. at 678, 129 S.Ct. 1937 (stating that the plausibility standard does not require a probability, but asks for more than a sheer possibility that a defendant has acted unlawfully.). The court must find enough factual matter (taken as true) to suggest that discovery will reveal evidence of the elements of the claim. Twombly , 550 U.S. at 558, 556, 127 S.Ct. 1955. When the allegations in a complaint, however true, could not raise a claim of entitlement to relief, the complaint should be dismissed for failure to state a claim under Fed. R. Civ. P. 12(b)(6). Twombly , 550 U.S. at 558, 127 S.Ct. 1955 ; Iqbal , 556 U.S. at 679, 129 S.Ct. 1937.

B. Fed. R. Civ. P. 12(b)(1)

Jurisdiction is a threshold issue for this Court. See Steel Co. v. Citizens for a Better Env't , 523 U.S. 83, 94-96, 118 S.Ct. 1003, 140 L.Ed.2d 210 (1998) ; see also Arbaugh v. Y & H Corp. , 546 U.S. 500, 507, 126 S.Ct. 1235, 163 L.Ed.2d 1097 (2006) ("The objection that a federal court lacks subject-matter jurisdiction ... may be raised by a party, or by a court on its own initiative, at any stage in the litigation, even after trial and the entry of judgment."). The party seeking to invoke federal jurisdiction carries the burden of proof on that issue. See DaimlerChrysler Corp. v. Cuno , 547 U.S. 332, 342, 126 S.Ct. 1854, 164 L.Ed.2d 589 (2006) ; V S Ltd. P'ship v. Dep't of Hous. & Urban Dev. , 235 F.3d 1109, 1112 (8th Cir. 2000).

A complaint can be challenged under Fed. R. Civ. P. 12(b)(1) either "on its face or on the factual truthfulness of its averments." Titus v. Sullivan , 4 F.3d 590, 593 (8th Cir. 1993). "In a facial challenge to jurisdiction, all of the factual allegations concerning jurisdiction are presumed to be true and the motion is successful if the plaintiff fails to allege an element necessary for subject-matter jurisdiction." Id. In a factual attack on the jurisdictional allegations of the complaint, however, the court can consider competent evidence such as affidavits, deposition testimony, and the like in order to determine the factual dispute. Id. In reviewing a pleading, the court may generally consider documents attached to it. Brown v. Green Tree Servicing LLC , 820 F.3d 371, 373 (8th Cir. 2016) (regarding mortgage and notice); Great Plains Trust Co. v. Union Pac. R.R. , 492 F.3d 986, 990 (8th Cir. 2007) (stating the court may consider documents attached to the complaint and matters of public and administrative record referenced in the complaint); see also Fed. R. Civ. P. 10(c) ("A copy of a written instrument that is an exhibit to a pleading is a part of the pleading for all purposes.").


The Department argues that this Court does not have subject-matter jurisdiction over the Plaintiff's CCPA claims3 because the United States has not waived its sovereign immunity for such claims, and therefore, these claims should be dismissed. Filing No. 48, at 4. This Court agrees.

The United States is immune...

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