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Riel v. Navient Solutions Inc

United States District Court, E.D. Wisconsin

January 17, 2017

DANNEL RIEL and CHERIE BINGENHEIMER, Plaintiffs,
v.
NAVIENT SOLUTIONS INC., Defendant.

          ORDER

          J.P. Stadtmueller U.S. District Judge.

         1. INTRODUCTION

         On November 1, 2016, the defendant Navient Solutions Inc. (“Navient”) filed a motion to dismiss the plaintiffs Dannel Riel (“Riel”) and Cherie Bingenheimer's (“Bingenheimer”) (collectively, “Plaintiffs”) complaint along with a brief in support of the motion. (Motion, Docket #5; Brief in Support, Docket #6). Plaintiffs filed a brief in opposition on November 22, 2016. (Docket #13). Navient submitted a reply in support of its motion on December 6, 2016. (Docket #15). The motion is fully briefed and, for the reasons explained below, it will be granted in part and denied in part.

         2. STANDARD OF REVIEW

         Navient has moved to dismiss Plaintiffs' complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). This rule provides for dismissal of complaints which fail to state a viable claim for relief. Fed.R.Civ.P. 12(b)(6). To state a viable claim, a complaint must provide “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). In other words, the complaint must give “fair notice of what the . . . claim is and the grounds upon which it rests.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (citation omitted). The allegations must “plausibly suggest that the plaintiff has a right to relief, raising that possibility above a speculative level[.]” Kubiak v. City of Chicago, 810 F.3d 476, 480 (7th Cir. 2016) (citation omitted).

         In reviewing Plaintiffs' complaint, the Court is required to “accept as true all of the well-pleaded facts in the complaint and draw all reasonable inferences in [their] favor[.]” Id. at 480-81. However, a complaint that offers “labels and conclusions” or “a formulaic recitation of the elements of a cause of action will not do.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 555). The Court must identify allegations “that, because they are no more than conclusions, are not entitled to the assumption of truth.” Id. at 679.

         3.THE COMPLAINT

         Accepting the truth of Plaintiffs' well-pleaded allegations and drawing all reasonable inferences in their favor, the relevant facts are as follows. Riel took out a number of student loans to pay for school. The loans were initially serviced by Sallie Mae, but that company created Navient and apparently transferred servicing duties to Navient.

         Riel was unable to find gainful employment sufficient to repay the loans and went into default in June 2015. Plaintiffs believe that Navient referred some of the loans to third-party collectors while retaining others to collect on its own. Navient began calling Riel's home phone in August 2015. Plaintiffs note that Riel's wife, Bingenheimer, worked from home and needed to use the phone frequently as part of her work.

         At that time, Riel retained his current counsel. Prior to the calling campaign, Riel had attempted to deal with Navient and its collectors himself without success. Feeling stressed by the repeated calls from Navient and the other collectors, Riel asked his lawyer to handle the contacts (and he apparently agreed to do so). Riel told each of the collectors that he had hired a lawyer and wanted all contacts to go through him.

         In the evening of September 3, 2015, Riel gave Navient his lawyer's contact information and asked that it cease calling him at home. Navient's operator seemed to not be listening while Riel made these statements. It attempted to call him again early the next morning, but reached Bingenheimer, interrupting her work. The calls continued throughout the fall of 2015, coming repeatedly and potentially using different numbers to mask Navient's identity.[1]

         Navient also called Riel's parents at least one time in 2014, and continuing through 2015 and 2016. Riel never gave Navient permission to call his parents and never gave it their phone number. These calls came several times per week, and each time they picked up a call, Riel's parents would inform Navient that Riel did not live there. Navient would respond that it knew Riel was living with his parents and that they were trying to hide him. In one particular call, Navient told Riel's mother that she owed student loans and that her home might be sold if she did not pay.

         Plaintiffs assert two causes of action. They first allege violations of the Wisconsin Consumer Act (“WCA”) for Navient's unconscionable conduct, though they do not cite a particular provision of the law which was violated. Plaintiffs claim that Navient's above-described conduct unfairly takes advantage of customers like them, especially in light of Navient's substantial resources and financial acumen compared to that of the average borrower. They contend that Navient's harassment was aimed at placing undue stress on borrowers such that they would make payments on the student loans to the detriment of their other financial obligations. As a result, Plaintiffs pray for the Court to declare Riel's student loans void and order Navient to cease any related credit reporting activity.

         Plaintiffs' second cause of action, also pursuant to the WCA, alleges that Navient engaged in illegal collection practices in violation of Wis.Stat. § 427.104(1). These included calling Riel's parents, disclosing the existence of his loans to them, asserting that Riel's mother owed a debt to Navient, ignoring Riel's request that it contact his counsel alone, and harassing Plaintiffs with repeated calls using disguised phone numbers. Plaintiffs claim that Navient's actions caused them mental and emotional suffering. Bingenheimer further contends that she lost her job because Navient's calls continually interrupted her work. Plaintiffs do not explicitly pray for compensatory damages, but they do request punitive damages.

         4. ANALYSIS

         Navient seeks dismissal of different portions of the complaint for different reasons, and in sum requests that the entire action be dismissed. It argues that the first cause of action must be dismissed because the applicable statute, Wis.Stat. § 425.107, provides no independent right of action, and even if it did, Plaintiffs fail to state a viable claim thereunder. Next, Navient contends that all of the first cause of action, and three of the four subparts of the second, are preempted by federal law, namely the Higher Education Act (“HEA”) and its attendant regulations. The Court will address each of Plaintiffs' causes of action in turn.

         4.1 First Cause of ...


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