Opinion ID: 672838
Heading Depth: 4
Heading Rank: 1

Heading: D.C.Code Secs. 28-3807, 28-3809

Text: 22 Whether appellants may use D.C. Consumer Credit Protection Act Sec. 28-3807 and Sec. 28-3809 as mechanisms for asserting defenses against lenders, guaranty agencies, and the Secretary is a question that requires in-depth preemption analysis. It is useful here to provide a thumbnail sketch of the law of preemption. The Supreme Court's preemption analysis has followed three tracks. 11 First, Congress may preempt state law explicitly in the text of its statute (express preemption). See English v. General Elec. Co., 496 U.S. 72, 78, 110 S.Ct. 2270, 2274-75, 110 L.Ed.2d 65 (1990). Preemption is fundamentally a question of congressional intent, see Schneidewind v. ANR Pipeline Co., 485 U.S. 293, 299, 108 S.Ct. 1145, 1150, 99 L.Ed.2d 316 (1988), and when Congress has made its intent known through explicit statutory language, the courts' task is a simple one. Second, in the absence of express statutory language, Congress may preempt state regulation of a field that it intended the federal government to occupy exclusively (field preemption). See Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 230, 67 S.Ct. 1146, 1152, 91 L.Ed. 1447 (1947). Third, even when Congress has apparently left room for state regulation in the field, state law is preempted to the extent that it actually conflicts with federal law (conflict preemption). The Supreme Court has found an actual conflict where compliance with both federal and state regulations is a physical impossibility for one engaged in interstate commerce, Florida Lime & Avocado Growers, Inc. v. Paul, 373 U.S. 132, 142-43, 83 S.Ct. 1210, 1217, 10 L.Ed.2d 248 (1963), and where state law stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress, Hines v. Davidowitz, 312 U.S. 52, 67, 61 S.Ct. 399, 404, 85 L.Ed. 581 (1941). 23 In this case the express and field preemption questions may easily be resolved in appellants' favor. Although Congress addressed the issue of preemption in the HEA, specifically displacing state disclosure laws, 20 U.S.C. Sec. 1099, usury laws, 20 U.S.C. Sec. 1078(d), statutes of limitation, 20 U.S.C. Sec. 1091a, and infancy defenses, 20 U.S.C. Sec. 1091a, it did not expressly preempt state consumer defenses. The field preemption argument is similarly untenable. In Cipollone v. Liggett Group, Inc., --- U.S. ----, 112 S.Ct. 2608, 120 L.Ed.2d 407 (1992), the Supreme Court stated that [w]hen Congress has considered the issue of pre-emption and has included in the enacted legislation a provision explicitly addressing that issue, and when that provision provides a reliable indicium of congressional intent with respect to state authority, there is no need to infer congressional intent to preempt state laws from the substantive provisions of the legislation. Id. at ----, 112 S.Ct. at 2618 (citations and internal quotation marks omitted). Writing for the majority, Justice Stevens reasoned that this was a variant of the familiar principle expressio unius est exclusio alterius: Congress' enactment of a provision defining the pre-emptive reach of a statute implies that matters beyond that reach are not pre-empted. Id. 12 Because Congress carved out particular contexts in which the HEA has preemptive effect, the conclusion is virtually inescapable that Congress did not intend to give the HEA preemptive effect in every context. 13 24 Resolution of the express and field preemption questions, however, does not take appellants far enough. The crux of the preemption question in this case is a complicated inquiry into whether the D.C. provisions actually conflict with federal law. Unlike the field preemption question, which turns solely on an interpretation of the federal statute, the conflict preemption analysis that necessarily follows is fraught with uncertainty. So far as the record before us shows, appellants are domiciled in Virginia, Florida, Maryland, Arkansas, Utah, Kentucky, and Georgia, among other places, as well as the District of Columbia. The primary lenders and guaranty agencies in this suit are based in Virginia, Ohio, Nebraska, Wisconsin, and Texas. The Culinary School is--obviously--in the District of Columbia, and most if not all of the students appear to have signed their loan applications at the school. Lenders approved the loan applications at their respective branches outside of the District of Columbia, however, after receiving guarantees from the guaranty agencies. Taking all of these factors into consideration, we find ourselves unable to say with confidence that D.C. law will apply in any future coercive action brought by the declaratory judgment defendants. In light of this uncertainty, we refuse to undertake the highly speculative inquiry into whether D.C. law, which may or may not apply in a future coercive action, actually conflicts with the HEA. To do so would smack uncomfortably of an advisory opinion. 25 Our conclusion is driven by several factors. First, it is far from clear at this point how many, if any, of the possible coercive suits brought by appellees will be in the District of Columbia courts. Second, whether suits are brought in the District or elsewhere, it is difficult to predict what substantive laws will apply. As to suits brought outside the District, we have no way of knowing what choice of law rules will obtain. See, e.g., EUGENE F. SCOLES & PETER HAY, CONFLICT OF LAWS Secs. 18.13-21 (1984) (describing diverse conflict of laws approaches employed by the states in contracts cases, including lex locus contractus, governmental interest analysis, and the Second Restatement's flexible center-of-gravity approach). 14 Even as to those appellants domiciled in the District of Columbia (against whom suits will likely be brought in the District), we cannot be sure that D.C. law will apply, given that the loan agreements were approved outside of the District and contained express choice of law clauses specifying non-D.C. law. Third, state laws are by no means uniform in their extension of consumer-protective defenses to this sphere. See generally Ralph J. Rohner, Holder in Due Course in Consumer Transactions: Requiem, Revival, or Reformation?, 60 CORNELL L.REV. 503, 523 (1975) (observing that there is little consistency in the specific statutory criteria by which states have implemented policies of retaining borrower defenses where lenders act in concert with sellers). Thus, for example, several states with interests in this case, like Virginia, Texas, Nebraska, and Ohio, appear to have no state provisions analogous to the D.C.Code provisions at issue. 15 Adding these factors up, we have a classic case in which effort on our part to parse the D.C.Code provisions and to engage in conflict preemption analysis may serve no useful purpose. Hanes Corp. v. Millard, 531 F.2d 585, 592 (D.C.Cir.1976) (citing BORCHARD, supra, at 307). As such, we find it inadvisable, to say the least, to grant declaratory relief. 16 26