United States District Court, E.D. Virginia, Alexandria Division
For Lee Pele, Plaintiff: Alexander Hugo Blankingship, III, LEAD ATTORNEY, Blankingship & Christiano PC, Reston, VA.
For Pennsylvania Higher Educationn Assistance Agency, doing business as American Education Services, Defendant: Jill Marie deGraffenreid, LEAD ATTORNEY, Hunton & Williams, McLean, VA.
James C. Cacheris, UNITED STATES DISTRICT COURT JUDGE.
This matter is before the Court on Defendant Pennsylvania Higher Education Assistance Agency's (" Defendant" or " PHEAA" ) Motion to Dismiss based on Eleventh Amendment. [Dkt. 12.] For the following reasons the Court will deny Defendant's Motion to Dismiss.
This case arises out of alleged violations of the Fair Credit Reporting Act (" FCRA" ), 15 U.S.C. § 1681 et seq.
A. Factual Background
Plaintiff Lee Pele (" Plaintiff" or " Pele" ) is a resident and citizen of the Commonwealth of Virginia. (Am. Compl. ¶ 2.) Defendant PHEAA is a student loan servicing company that furnishes information to consumer reporting agencies as contemplated by the FCRA, 15 U.S.C. § 1681s-2(a-b). (Am. Compl. ¶ ¶ 1, 3.)
Pele alleges that he received federal student loans issued under the Federal Family Education Loan Program (" FFELP" ), 20 U.S.C. § § 1071-1087.4. (Am. Compl. ¶ ¶ 1, 5, 6.) Pele is a " person" and " consumer" as defined by the FCRA at 15 U.S.C. § 1681a(b) and (c). (Am. Compl. ¶ 2.) Pele alleges that PHEAA acted as the loan servicer for his student loans.
Pele alleges that PHEAA placed on his credit file defaulted student loans that " he never authorized, initiated, received the proceeds or guaranteed." (Am. Compl. ¶ ¶ 5, 6.) In February 2013, Pele began receiving collection calls from a debt collector called Windham Professionals (" Windham" ) seeking to collect over $137,000.00 in defaulted student loans. (Am. Compl. ¶ 7.) According to Windham's collector, Pele had been a co-signer on the loans at issue. (Am. Compl. ¶ 8.) Pele did not initiate, guaranty or receive any benefit from these loans. (Am. Compl. ¶ 7.)
On March 19, 2013, Pele sent credit dispute letters to the credit reporting agencies TransUnion, Equifax and Experian. (Am. Compl. ¶ 14.) As a result of these letters, four Automated Credit Dispute Verifications (" ACDV" ) were sent to PHEAA by the credit reporting agencies. (Am. Compl. ¶ 21.) On April 5, 2012, PHEAA responded to all four ACDVs " by modifying, but not deleting, the information" from Plaintiff's credit file. (Am. Compl. ¶ 24.) Plaintiff alleges that PHEAA " continued to attribute the debts to Mr. Pele to the credit reporting agencies." ( Id. )
Plaintiff alleges that Defendant has both negligently and willfully violated the FCRA in its response to the ACDVs. (Am. Compl. ¶ 25.) First, Plaintiff alleges that PHEAA has no procedure in place to investigate a consumer's claim of identity theft. ( Id. ) Second, Plaintiff alleges that PHEAA did not properly train its employees
on investigating identity theft disputes or with FCRA compliance. ( Id. )
According to the Amended Complaint, the Commonwealth of Pennsylvania established PHEAA in order to aid in the establishment of student loans for its residents. (Am. Compl. ¶ 40.) PHEAA's enabling statute, 24 P.S. § 5104, sets out the power of PHEAA's board of directors. (Am. Compl. ¶ 41.) PHEAA also operates under the trade names American Education Services (" AES" ) and Fed. Loan Servicing (" FLS" ). (Am Compl. ¶ 42.) AES and FLS compete nationally for work servicing and collecting on student loans made in states other than Pennsylvania, and by the federal government for residents of states other than Pennsylvania. ( Id. )
PHEAA entered into contracts with the credit reporting agencies (" CRA" ) Experian, TransUnion and Equifax. According to Plaintiff, in order to submit credit-reporting data to the reporting agencies, PHEAA was obligated to agree that it would abide by the FCRA and the rules and regulations of the CRAs. (Am. Compl. ¶ 43.)
B. Procedural Background
On December 13, 2013, Plaintiff filed his Complaint against PHEAA, alleging violations of the FCRA. [Dkt. 1.] On January 13, 2014, Defendant filed its Motion to Dismiss Based on Eleventh Amendment and accompanying memorandum. [Dkts. 4-5.] On February 2, 2014, Plaintiff filed his Amended Complaint. [Dkt. 8.] In light of the Amended Complaint, on February 6, 2014, the Court denied as moot Defendant's Motion to Dismiss. [Dkt. 9.]
On February 21, 2014, Defendant filed its Motion to Dismiss the Amended Complaint and accompanying memorandum. [Dkts. 12-13.] Plaintiff filed his opposition on March 7, 2014. [Dkt. 15.] ...