Stephens v. Navient Solutions Inc.
| Decision Date | 16 November 2016 |
| Docket Number | No. 14 C 1528,14 C 1528 |
| Parties | JEANINE STEPHENS, Plaintiff, v. NAVIENT SOLUTIONS INC., f/k/a Sallie Mae, Inc., Defendants. |
| Court | U.S. District Court — Northern District of Illinois |
MEMORANDUM OPINION AND ORDER
Plaintiff Jeanine Stephens filed a pro se state court complaint against a loan servicer, Navient Solutions, Inc., for attempting to enforce a loan that Stephens claim was was a product of allegedly mishandling an identity theft. Stephens had taken out a student loan from Sallie Mae, Inc. (Navient's predecessor) while she was a student from 1999-2001. She asserts that her loan was paid off in full by 2004. Navient, however, asserts that Stephens took out two other loans in 2004: tuition loans for $25,000 and $5,000. Stephens denies taking out these two loans, but Navient declared a default on both of them in 2009 and reported negative information to the credit bureaus. Stephens filed her complaint against Navient in 2014, asserting that Navient defamed her, enabled identity theft, and reported false information to credit bureaus. Navient removed the case to this court.
Counsel has agreed to represent Stephens and, on her behalf, filed an amended containing a single count of negligence. The parties conducted discovery and Navient filed a motion for summary judgment, arguing that there is no evidence of identity theft and that Stephens acknowledged the legitimacy of the loans in two bankruptcy proceedings. Before ruling on the motion, the court requested briefs from the parties to determine whether it had subject matter jurisdiction. For the reasons below, this matter is remanded to the state court.
Plaintiff Jeanine Stephens alleges Defendant Navient Solutions, Inc. (formerly Sallie Mae, Inc.), has erroneously attributed student loans to her that she did not negotiate, and subsequently reported those loans as unpaid to credit reporting agencies. Stephens filed a state court complaint pro se in February, 2014 alleging the following (quoted verbatim):
(Compl., Ex. 1 to Notice of Removal [1-1]). She sought $3,000 in damages. (Id.) Navient timely removed the case and filed a motion for a more definite statement of Stephens' claims [7]. Through counsel, Stephens filed an amended complaint (Am. Compl., Ex. to Mot. to Amend [13]), in which she alleges that Navient had a duty to "exercise reasonable and ordinary care in the servicing of loans, recordkeeping and related functions" (id. at ¶ 9), but it breached that duty when it "repeatedly placed student loans on Plaintiff's account, making it appear that Plaintiff had taken out unpaid student loans; . . . reported loans as being unpaid by Plaintiff; . . . [and] repeatedly placed new loans . . . under Plaintiff's Sallie Mae account number." (Id. at ¶ 10.) Stephens averred damages to her credit, mental state, and employment opportunities proximately caused by Navient's "negligent acts." (Id. at ¶ 11.) The amended complaint demanded $60,000 in compensatory damages, attorneys' fees, and other appropriate relief. (Id., Prayer for Relief.) After Navient filed its answer [26] and the parties conducted discovery, Navient filed a motion for summary judgment [33].
In reviewing the motion, the court noted a concern about its jurisdiction, and asked the parties to submit supplemental briefs on the issue. Order, Sept. 29, 2015 [44]. Each party submitted a memorandum of law, and the parties agree that the court has jurisdiction on thebases of an underlying federal question, 28 U.S.C. § 1331, and diversity, 28 U.S.C. § 1332. Pl.'s Mem. with Regard to Ct.'s Jurisdiction Under 28 U.S.C. 1331 and 1332 [45] [hereinafter Pl.'s Br.]; Navient Solutions Inc.'s Mem. Regarding Jurisdiction [46] [hereinafter Def.'s Br.].
Despite that agreement, it is the court's responsibility to hear only those cases over which it has jurisdiction. Hukic v. Aurora Loan Servs., 588 F.3d 420, 427 (7th Cir. 2009). The court concludes that there is no substantial federal question posed by Stephens' allegations in her amended complaint. Further, though the parties are diverse in citizenship, the amount in controversy requirement is not satisfied. Therefore, the matter is remanded to state court.
Federal district courts have jurisdiction "of all civil actions arising under the Constitution, laws, or treaties of the United States." 28 U.S.C. § 1331. Except as otherwise expressly provided by law, any civil case may be removed to the appropriate district court if the district court would have had original jurisdiction over the matter. 28 U.S.C. § 1441(a). Whether removal was proper is determined by "looking at the complaint as it existed at the time the petition for removal was filed." Gossmeyer v. McDonald, 128 F.3d 481, 487 (7th Cir. 1997) (emphasis in original). Allegations in the complaint are taken as true for the purposes of a jurisdictional inquiry. Scanlan v. Eisenberg, 669 F.3d 838, 841 (7th Cir. 2012).
Navient removed the case because Stephens' claims appeared to arise under the laws of the United States (Notice of Removal ¶ 2), or at least presented a substantial federal question. (Id. at ¶¶ 4-5.) Stephens did not object to this interpretation of her claims, including after she had the benefit of counsel. The court agrees with the parties that the original complaint may fairly be construed as presenting causes of action under the Fair Credit Reporting Act ("FCRA"), 15 U.S.C. § 1681, et seq. In order to provide Stephens' complaint with the liberal interpretation due to it as a pro se request for relief, the court must interpret it to include the most viable legal claims that the facts alleged can support. See Norfleet v. Walker,684 F.3d 688, 690 (7th Cir. 2012). Here, at least one of the allegations - that Navient "failed to validate accounts that were believed to be obtained through identity theft" - is most defensibly a claim under 15 U.S.C. § 1681s-2(b). Accordingly, removal was proper.
Stephens' amended complaint presents a different picture. The parties argue that a substantial question of federal law nevertheless remains, but the court is less certain. True, even where federal law does not create a cause of action, there is a "special and small category" of cases where a federal question looms large enough in a state law claim to confer subject matter jurisdiction. Empire Healthchoice Assurance, Inc. v. McVeigh, 547 U.S. 677, 699 (2006). A state law claim poses a federal question where the "federal issue is: (1) necessarily raised, (2) actually disputed, (3) substantial, and (4) capable of resolution in federal court without disrupting the federal-state balance approved by Congress." Gunn v. Minton, 133 S. Ct. 1059, 1065 (2013). Federal question jurisdiction will lie where the case particularly "turns" on the resolution of a federal question of law. See Evergreen Square of Cudahy v. Wisconsin Hous. & Econ. Dev. Auth., 776 F.3d 463, 467 (7th Cir. 2015); see also Grable & Sons Metal Prods., Inc. v. Darue Eng'g & Mfg., 545 U.S. 308, 314-15 (2005) (). On the other hand, where resolution of the matter is "fact-bound and situation-specific," the case is best left to the state court. Empire Healthchoice, 547 U.S. at 701. For that reason, the fact "[t]hat some standards of care used in tort litigation come from federal law does not make a tort claim one 'arising under' federal law." Bennett v. Sw. Airlines Co., 484 F.3d 907, 912 (7th Cir. 2007); see also Gunn, 133 S. Ct. at 1066-68 ( that legal malpractice claim, though it would create a that relied on federal patent law, did not state a substantial federal question).
The amended complaint, like the original one, does not reference any federal law on its face. The duty that Stephens claims that Navient owed her is "reasonable and ordinary care in the servicing of loans, recordkeeping and related functions." (Am. Compl. ¶ 9.) Navientpurportedly breached that duty by erroneously holding Stephens responsible for student loans and reporting those loans to credit bureaus as unpaid. (Id. at ¶ 10.) Stephens requests only damages provided by Illinois common law, and does not expressly seek any statutory remedy or punitive damages. (Id., Prayer for Relief.)
Both parties believe that this version of the complaint implicates a sufficiently substantial federal issue. Stephens asserts that the allegations fall under the purview of the FCRA. (Pl.'s Br. 1.) Navient agrees that "the entire cause of action" is primarily based on improper reporting, which is governed by the FCRA (Def.'s Br. 2,) but acknowledges that the amended complaint limits Stephens' claims to negligence. (See Def.'s Br. 3.)
As the court understands things, the parties argue that Stephens' allegations are "governed by" or "within the purview of" the FCRA, meaning that Stephens' claim rests on the FCRA as the relevant standard of care; that is, Stephens effectively alleges negligence per se. Whatever merit this argument may have, it is difficult to divine this theory from the amended complaint. Again, the complaint references no duty other than "reasonable and ordinary care." (Am. Compl. ¶ 9.) Further, Stephens does not mention the FCRA or the existence of any federal law in her allegations that Navient breached that duty. (Id. at ¶ 10.) Given that the FCRA was the basis of the removal (Notice of Removal ¶ 5), and that Stephens had the benefit of counsel at the...
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