Opinion ID: 75914
Heading Depth: 3
Heading Rank: 1

Heading: The HEA Claim.

Text: 17 Defendants move to dismiss Count I, which purports to assert a cause of action pursuant to Section 428(H) of the HEA, 20 U.S.C. § 1078-8, which authorizes federally insured Unsubsidized Stafford loans for borrowers who meet certain eligibility requirements. Plaintiffs contend that Defendants violated 20 U.S.C. § 1078-8 by failing to disclose information about Stafford Loans after Plaintiffs were turned down for Plus Loans. 6 18 Plaintiffs concede that the HEA does not expressly confer a private right of action, as the HEA only provides for a suit brought by or against the Secretary of Education. 20 U.S.C. § 1082(a)(2). Indeed, the HEA provides an enforcement scheme which gives the Secretary of Education wide-ranging regulatory authority to enforce the provisions of the HEA. See 20 U.S.C. §§ 1070(b), 1071, 1082, 1094; 34 C.F.R. §§ 5668.84-.98. 19 Although the Eleventh Circuit has not addressed whether a private right of action exists under the HEA, it is important to note at the outset that nearly every court to consider the issue in the last twenty-five years has determined that there is no express or implied private right of action to enforce any of the HEA's provisions. See, e.g., Labickas v. Arkansas State University, 78 F.3d 333, 334 (8th Cir.1996); Parks School of Business v. Symington, 51 F.3d 1480, 1485 (9th Cir. 1995); L'ggrke v. Benkula, 966 F.2d 1346, 1348 (10th Cir.1992); Bartels v. Alabama Commercial College, 918 F.Supp. 1565, 1573 (S.D.Ga.1995); New York Institute of Dietetics, Inc. v. Great Lakes Higher Education Corp., [No. 94-CIV-4858, 1995 WL 562189 (S.D.N.Y. Sept.21, 1995)], Moy v. Adelphi Institute, Inc., 866 F.Supp. 696, 705 (E.D.N.Y.1994); Jackson v. Culinary School of Washington, 788 F.Supp. 1233, 1256-60 (D.D.C.1992), remanded on other grounds, 27 F.3d 573 (D.C.Cir.1994), vacated on other grounds, 515 U.S. 1139, 115 S.Ct. 2573, 132 L.Ed.2d 824 (1995); Keams v. Tempe Technical Institute, Inc., 807 F.Supp. 569, 570 (D.Ariz.1992), reversed on other grounds, 39 F.3d 222 (9th Cir.1994); Hudson v. Academy of Court Reporting, 746 F.Supp. 718, 721 (S.D.Ohio 1990); St. Mary of the Plains College v. Higher Education Loan Program of Kansas, Inc., 724 F.Supp. 803, 806-07 (D.Kan.1989); Graham v. Security Savings and Loan, 125 F.R.D. 687, 693 (N.D.Md.1989); aff'd sub nom Veal v. First American Savings Bank, 914 F.2d 909 (7th Cir.1990). Although these decisions provide persuasive precedent for declining to imply a private right of action, the Court will nevertheless conduct its own analysis to determine whether Congress intended to provide Plaintiffs with a private remedy for violations of the HEA. 20 B. The Cort v. Ash Test and Whether An Implied Private Right of Action Exists Under the HEA . 21 As mentioned above, Plaintiffs concede that the HEA does not provide an express private right of action. As such, the burden rests with Plaintiffs to establish that an implied private right of action exists. See, e.g., Bartels, 918 F.Supp. at 1573. 22 In Cort v. Ash, 422 U.S. 66, 95 S.Ct. 2080, 45 L.Ed.2d 26 (1975), the Supreme Court articulated a four-part test for determining whether to imply a private cause of action in a statute not expressly providing for one. See id., 422 U.S. at 78, 95 S.Ct. 2080. The four factors relevant to determining congressional intent to create a private remedy are: 23 (1) whether plaintiffs constitute one of the class for whose especial benefit the statute was enacted; 24 (2) whether there is any indication of legislative intent, explicit or implicit, either to create a remedy or to deny one; 25 (3) whether inferring a private right of action would be consistent with the underlying purposes of the legislative scheme; and 26 (4) whether the cause of action is traditionally relegated to state law ... so that it would be inappropriate to infer a cause of action based solely on federal law. 27 Id. 28 The Supreme Court has subsequently explained that the critical focus of the inquiry is the second Cort factor, and whether Congress intended to create a private right of action. Four years after Cort v. Ash, the Supreme Court cautioned the judiciary to exercise restraint in implying a private right of action, and required that affirmative evidence of congressional intent to create a private remedy must exist. See Touche Ross & Co. v. Redington, 442 U.S. 560, 578, 99 S.Ct. 2479, 61 L.Ed.2d 82 (1979). 7 29 Plaintiffs argue that application of the Cort test to the facts of this case reveals that Congress intended to provide Plaintiffs with a private remedy under the HEA. The Court disagrees. 30
31 Plaintiffs concentrate their argument on pointing to legislative history revealing that Congress enacted the HEA to benefit students. Clearly, Congress intended for the HEA to benefit students. See 20 U.S.C. § 1071(a)(1)(B) (Title IV of HEA enacted in part to provide student loans to those who would not otherwise have access to funds); Parks, 51 F.3d at 1484. Jackson, 788 F.Supp. at 1257 (citing H.R. 1086, 94th Cong., 2d Sess. 5 (1976)). 32 However, the inquiry does not end there, as Plaintiffs gloss over the fact that they are not students. Plaintiffs are the parents of college-bound high school students, and have failed to point to any provision in the statutory text or legislative history of the HEA indicating that Congress enacted the HEA to benefit the parents of college-bound students. Without more, the Court cannot find that Plaintiff-parents constitute one of the class for whose especial benefit the [IIHEA] was enacted. Cort, 422 U.S. at 78, 95 S.Ct. 2080. 33 2. There is No Explicit or Implicit Indication of Legislative Intent to Create a Private Right of Action . 34 Moreover, even if Plaintiffs satisfied the first Cort factor, Plaintiffs fail to satisfy the second and most important of the Cort factors, as they have failed to provide any indication that Congress intended to allow students (or their parents) to sue under the HEA. As one court has noted, Congress' desire to enact the HEA to benefit students by making educational opportunities available to them is not tantamount to an expression of legislative intent in favor of equipping students with a private right of action against ... participants in the [federal student loan] program. Jackson, 788 F.Supp. at 1257. 8 35 a. The Statutory Text and Structure of the HEA Does Not Indicate Congressional Intent to Create A Private Right of Action. 36 Where, as here, a statute provides administrative remedies, there is a presumption that Congress did not intend to create a private right of action, but rather provided precisely the remedies it considered appropriate. See, e.g., Transamerica Mortgage Advisors v. Lewis, 444 U.S. 11, 19-20, 100 S.Ct. 242, 62 L.Ed.2d 146 (1979) (explaining that when a statute expressly provides for a particular means of enforcement, courts should be cautious in reading additional enforcement mechanisms into the statute). 37 In enacting the HEA, Congress expressly provided a detailed regulatory scheme which confers on the Secretary of Education the exclusive authority to monitor and enforce the provisions of the HEA. 9 In addition, Congress specifically considered the possibility that lenders may not comply with provisions of the HEA, and established enforcement mechanisms whereby the Secretary of Education can monitor and sanction non-compliance. See, e.g., 20 U.S.C. §§ 1082(g), 1082(h); 34 C.F.R. §§ 668.81-.97, § 682.413(c). For instance, Congress authorized the Secretary of Education to impose civil penalties, and to limit, suspend, or terminate a lender's participation in the federal student loan program. 20 U.S.C. § 1082(g)(1), § 1082(h). Congress also authorized the Secretary of Education to take action to stop the issuance of guaranty commitments and the payments of interest benefits to the lender. See 20 U.S.C. § 1082(j). 38 Plaintiffs argue that this Court should create a private remedy because the HEA's enforcement scheme is inadequate. 10 However, it is not up to this Court to create a statutory remedy based on the notion that Congress could have done a better job of legislating the statutory scheme. As the Supreme Court has made clear, [t]he federal judiciary will not engraft a remedy on a statute, no matter how salutary, that Congress did not intend to provide. California v. Sierra Club, 451 U.S. 287, 297, 101 S.Ct. 1775, 68 L.Ed.2d 101 (1981). 39 In view of the detailed enforcement scheme contemplated by Congress, the Court finds that the statutory text and structure of the HEA does not evidence an intent to create a private right of action in favor of parents or students. See, e.g., Labickas, 78 F.3d at 334 (holding that Congress did not intend to create a private right of action under the HEA, after considering the broad enforcement authority granted to the Secretary of Education); Parks, 51 F.3d at 1485 (same). 40 b. The HEA's Legislative History Does Not Indicate Congressional Intent to Create a Private Right of Action. 41 Plaintiffs argue that Congress considered the issue of litigation against lenders and that Congress intended the courts to determine the actions of the lenders and the schools with respect to student loans and their defaults. Plaintiff's Memorandum, at 9-10 (D.E.41). In support, Plaintiffs contend that a House provision to protect lenders from claims against them, which was not enacted, somehow indicates Congress' intent to create a private right of action. See Conf. Rep. No. 102-630, p. 508, reprinted in 1992 U.S.C.C.A.N. 334, 623. In that Report, Congress left to the Courts the question of whether a student borrower should be able to raise the school's fraud or other misconduct as a defense to the student's loans. Id. This issue, however, does not indicate an intention by Congress to create a cause of action to enforce the provisions of the HEA. 42 Plaintiffs next argue that this Court should follow the doctrine set forth in De Jesus Chavez v. LTV Aerospace Corp., 412 F.Supp. 4 (N.D.Tex.1976), the only district court decision to conclude that a student had a private right of action under the HEA. 43 In De Jesus Chavez, the district court reasoned that a private right of action existed under the HEA because there was no indication that Congress intended to deny a private right of action. Specifically, the district court found that [n]either the language of the statute nor the legislative history shows an explicit congressional purpose to deny the plaintiff her cause of action. Id. 412 F.Supp. at 7 (emphasis supplied). Thus, the district court concluded that the second factor in a Cort v. Ash analysis is answered by the undisputed finding that Congress made no explicit attempt to deny jurisdiction. Id. (emphasis supplied). 44 The Court does not find DeJesus Chavez persuasive, as that decision predates the Supreme Court's ruling in Touche Ross & Co. v. Redington, which requires some affirmative evidence of congressional intent to create a private right of action, and not just a lack of congressional intent to deny a cause of action. Redington, 442 U.S. at 568, 99 S.Ct. 2479. Indeed, after Redington, no court has adopted the reasoning of DeJesus Chavez. 45 Thus, the Court finds that the HEA's legislative history is completely silent with respect to the issue of Congress' intent to create a right to sue for violations of the HEA. See Parks, 51 F.3d at 1484; St. Mary of the Plains, 724 F.Supp. at 807. 46 3. A Private Right of Action Would Not Be Consistent With the HEA's Legislative Purpose. 47 The specific purposes of the HEA are to enable the Secretary of Education to (1) encourage lenders to make student loans; (2) provide student loans to those would not otherwise have access to funds; (3) pay a portion of the interest on student loans; and (4) guarantee lenders against losses. See 20 U.S.C. § 1071(a)(1)(A)-(D). 48 Given these specific purposes, the Court is not persuaded that implying a cause of action in favor of parents or students would be consistent with the purposes of the HEA and Congress' desire to encourage lenders to make loans. See Keams, 807 F.Supp. 569, 579-80 (D.Ariz.1992) (Allowing student borrowers to sue lenders and accrediting agencies likely will not further these specific purposes.). 11 49 A private right of action would also not be consistent with the enforcement scheme provided by Congress, as it would run counter to Congress' express purpose of providing the Secretary of Education with exclusive enforcement authority to remedy violations of the HEA. See L'ggrke, 966 F.2d at 1348; Parks, 51 F.3d at 1485. 50 In conclusion, after reviewing the parties' submissions, the statutory text and purpose of the HEA, the structure of the enforcement scheme, the pertinent legislative history, and the relevant case law, the Court finds that Plaintiffs have failed to satisfy the Cort v. Ash test. 12 Accordingly, because the Court finds that the HEA does not confer a private right of action in favor of Plaintiffs, Defendants' motion to dismiss Count I must be granted. 51