Pennsylvania v. Navient Corp. (354 F. Supp. 3d 529, 2018)

Robert D. Mariani, United States District Judge

I. INTRODUCTION AND PROCEDURAL HISTORY

Through this lawsuit, the Commonwealth of Pennsylvania (the "Plaintiff" or "Commonwealth") seeks to hold Navient Corporation and Navient Solutions, LLC, (collectively, "Defendants" or "Navient") liable for conduct that has allegedly harmed student loan borrowers in Pennsylvania, as well as student loan borrowers nationwide. Specifically, the Commonwealth contends that Navient has committed a variety of unfair, deceptive, and abusive practices in connection with the origination and servicing of student loans in violation of the Consumer Financial Protection Act ("CFPA"), 12 U.S.C. § 5536, and the Pennsylvania Unfair Trade Practices and Consumer Protection Law ("CPL"), 73 Pa Stat. and Cons. Stat. Ann. § 201-1, et seq. (Doc. 1). The Commonwealth's case is similar to a parallel action before the Court involving the Consumer Financial Protection Bureau ("CFPB") and Navient, CFPB v. Navient Corp. , No. 17-cv-101 (M.D. Pa. filed Jan. 18, 2017) (hereinafter, the "CFPB-Navient matter"), and references to the Court's previous ruling on Navient's Motion to Dismiss the CFPB's Complaint are made in the body of this Opinion. Mem. Op., CFPB v. Navient Corp. , No. 17-cv-101, 2017 WL 3380530 (M.D. Pa. filed Aug. 4, 2017), ECF No. 57.

The Commonwealth filed its Complaint on October 5, 2017. (Id. ) On December 5, 2017, Navient filed a Motion to Dismiss the Commonwealth's Complaint Under Rule 12(b)(6) for failure to state a claim upon which relief can be granted (the "Motion"). (Doc. 16). Navient submitted its Memorandum of Law in Support of its Motion to Dismiss on December 22, 2017 (Navient's "Brief in Support"). (Doc. 24). The Commonwealth responded on February 2, 2018 with its Memorandum of Law in Support of its Opposition to Navient's Motion to Dismiss (the Commonwealth's "Opposition"). (Doc. 25). Navient submitted a reply brief in response to the Commonwealth's Opposition on March 5, 2018 (Navient's "Reply"). (Doc. 26).

Since fully briefing the Motion, the parties have submitted several Notices of Supplemental Authority to the Court pursuant to Local Rule 7.36. On March 13, 2018, Navient filed a Notice of Supplemental Authority informing the Court of published notice from the Department of Education ("ED") on ED's position on " Federal Preemption and State Regulation of [ED]'s Federal Student Loan Programs and Federal Student Loan Servicers," 83 Fed. Reg. 10619 (Mar. 12, 2018). (Doc. 27). The Commonwealth followed by filing Notices of Supplemental Authority on June 28, 2018 (Doc. 33) and July 12, 2018 (Doc. 34), informing the Court of recent court decisions in the Middle District of Florida, Daniel v. Navient Sols., LLC , 328 F.Supp.3d 1319 (M.D. Fla. 2018), and the Circuit Court of Cook County, Illinois, People v. Navient Corp. , No. 17 CH 761 (Ill. Cir. Ct. July 10, 2018), involving disputes regarding Navient's student loan-related practices. Most recently, Navient filed a Notice of Supplemental Authority on September 25, 2018 informing the Court of a recent court decision in the Northern District of Florida, Lawson-Ross v. Great Lakes Higher Educ. Corp. , No. 1:17-CV-253, 2018 WL 5621872 (N.D. Fla. Sept. 20, 2018), involving claims against a federal student loan servicer.

The Motion is ripe for decision. For the reasons stated below, the Court will deny Navient's Motion to Dismiss in its entirety.

II. FACTUAL ALLEGATIONS

A. BACKGROUND

The Commonwealth's Complaint (Doc. 1) alleges the following facts which, for the purposes of resolving Navient's Motion, the Court takes as true:

Defendants were or currently are in the business of originating, marketing, servicing, and collecting federal and private student loans. (Id. ¶ 2). "Defendants Navient Corporation and Navient Solutions, LLC have two corporate predecessors: a parent company (SLM Corporation) and a subsidiary (Sallie Mae, Inc.)." (Id. ¶ 19). "In April 2014, Defendants Navient Corporation and Navient Solutions, LLC assumed the liabilities of their predecessors, SLM Corporation and Sallie Mae, Inc." (Id. ¶ 21). Defendant Navient Corporation shares corporate officers with Defendant Navient Solutions, LLC, and controls and directs the hiring of employees at Navient Solutions, LLC, which is a subsidiary of Navient Corporation. (Id. ¶¶ 22-23). Defendant "Navient Corporation often makes no meaningful distinction between Navient Corporation and its subsidiaries," and "consented to, has knowledge of, has materially participated in, and/or has controlled the activities of Navient Solutions, LLC with respect to the conduct alleged in [the] Complaint." (Id. ¶¶ 24-25).

The conduct alleged in the Complaint involves Navient's origination and servicing of federal and private student loans, some of which occurred at Navient's corporate predecessors before the transfer of corporate liabilities in 2014. (Id. ¶¶ 4, 45-172). Federal student loans offer features distinct from other loan products, most notably, the availability of repayment options that are tied to the borrower's income. (Id. ¶ 28). "Until approximately 1994, federal student loans were originated and funded by private lenders such as Defendants, and guaranty agencies insured those funds, which were reinsured by the government pursuant to the Federal Family Education Loan Program (FFELP)." (Id. ¶ 30). Starting in 1994, the federal government also began lending directly to borrowers through the Direct Loan Program, and ceased the FFELP program in 2010. (Id. ¶¶ 31-32). Whether a federal student loan was originated through the FFELP or Direct Loan Program, the servicing of federal student loans is handled by private entities like Navient. (Id. 33). "Federal student loan servicers handle a multitude of issues for borrowers, including: collecting payments, providing repayment options to borrowers, facilitating the loan's payoff, and collecting on delinquent loans." (Id. ¶ 35).

Unlike federal student loans, private student loans are not guaranteed by the government and are issued "based on the lender's assessment of the borrower's creditworthiness/likelihood of repaying the loan." (Id. ¶ 39). They are often more expensive than federal student loans, with higher interest rates, and often require cosigners who are "equally responsible for the payments on the loan." (Id. ¶¶ 40-41). They do not offer standard repayment plan options, such as the income-driven repayment options provided by federal student loans, which can prevent borrowers from defaulting on their loans and suffering serious financial consequences. (Id. ¶¶ 42-43).

B. NAVIENT'S LOAN ORIGINATION-RELATED CONDUCT

"As far back as the year 2004," Navient's corporate predecessors "originated both FFELP and private student loans nationwide, including in Pennsylvania." (Doc. 1 ¶ 45). The lending landscape for student loan originators has changed over the years: until about 2007, when federal regulations changed, many schools "maintained a list of 'preferred lenders' to provide guidance to students who had to choose between the different lenders offering federal and private student loans." (Id. ¶¶ 49-50). Preferred lenders "typically received in aggregate up to 90% of the loans taken out by the institution's students and their parents, giving the preferred lender exclusive or near-exclusive access to a school's population of borrowers." (Id. ¶ 52). Navient "sought to establish [itself] at the top of preferred lending lists in order to obtain" this exclusive access, and created custom packages of loans to market to schools to obtain their business. (Id. ¶¶ 52-53). "These packages consisted of a variety of loan products including: FFELP loans; private loans for borrowers who qualified for [Navient's] standard private student loan products (prime loans); and private loans for borrowers who were ineligible for [Navient's] standard private student loan products (subprime loans)." (Id. ¶ 54). Both schools and Navient had a motivation to include private loans as part of a package deal, because more students could obtain financing to attend school and because it meant Navient could obtain a greater volume of FFELP loans, which were a larger part of the market and were lower risk for Navient due to a 100% federal government guarantee. (Id. ¶¶ 55-56). In general, private student loans were also more lucrative for Navient, because of their higher interest rates. (Id. ¶ 57). However, subprime loans, which suffered from high levels of default and were not profitable for Navient, were merely included in the loan packages as a marketing tool to gain access to schools' preferred lender lists. (Id. ¶ 58). Internal communications evidence Navient's motivation to use subprime loans as a tool to win prime and FFELP business, despite the poor performance of the subprime loan portfolio:

In February 2007, Defendants internally described their subprime lending strategy and implications as follows: "Current Strategy is Working: - Use subprime to win school deals and secure FFELP and standard private volume - View economics on an all-in basis[ ]"; ... [and] [o]ne of Defendants' January 17, 2007 emails entitled "Subprime Lending workgroup meeting attachments," describes one of Defendants' subprime loan programs as "the baited hook to gain [FFELP] volume."

(Id. ¶¶ 64, 67).

Navient's desire to obtain access to preferred lender lists and the associated benefit of increased FFELP and prime loan volume led it to loosen its credit standards downward and lend to borrowers who attended schools with low graduation rates (less than 50%, in some instances). (Id. ¶¶ 74-76). Navient pursued subprime loan borrowers despite the likelihood that some or many of these borrowers would not graduate and would be unable to repay their student loans; these borrowers were responsible for a large percentage of Navient's "credit losses." (Id. ¶¶ 77-78, 82-83, 85). As Navient's loan originations grew rapidly from 2000 to 2006, much of the increase was due to growth in subprime loan originations to risky borrowers who attended for-profit or non-profit schools with less than 50% graduation rates, with FICO scores of 640 or less, and who were charged high interest rates. (Id. ¶¶ 80-81). Within these particularly risky loan cohorts, "in every year from 2000 to 2007, between 68% and 87% of ... [l]oans defaulted." (Id. ¶¶ 81-82). Borrowers who took out subprime student loans with Navient "were not told, and had no idea, that they were far more likely to default than pay back their loans." (Id. ¶ 84). Additionally, these borrowers were not told about steps that Navient took to insulate itself from the credit risk of defaults, including "credit enhancement" or "recourse" arrangements, in which schools agreed to accept some of the default risk of the subprime loans. (Id. ¶¶ 88-92). The Commonwealth asserts that subprime borrowers were harmed by Navient's loan origination-related conduct, including by having to delay starting a family, save for a down payment on a house, or start their own business "and actually apply the education for which they borrowed." (Id. ¶ 87).

C. NAVIENT'S LOAN SERVICING-RELATED CONDUCT

1. ALLEGED FORBEARANCE STEERING

As noted above, federal student loans come with certain protections for borrowers that are not standard features of private student loans. (Doc. 1 ¶¶ 28, 42-43, 97-103). One of these protections is income-driven repayment ("IDR") plans, which are linked to borrowers' income and family size, and are intended to make monthly payments more affordable (sometimes $0 per month) and sometimes offer interest payment benefits, depending on the type of federal student loan. (Id. ¶¶ 96-100). Borrowers enrolled in IDR plans can also obtain loan forgiveness if they enroll in the plans and make qualifying payments for 20-25 years "for most IDR plans or 10 years of qualifying payments while working full time for certain employers, under the Public Service Loan Forgiveness (PSLF) program." (Id. ¶ 101).

"Federal student loans are generally also eligible for forbearance , which is a short-term, temporary postponement of payment. With forbearance, a borrower experiencing financial hardship or illness may be able to stop making payments or reduce his or her monthly payment for a defined period of time, which can be multiple consecutive months. Borrowers may be entitled to multiple forbearances over the course of a loan, up to 36 months in total." (Id. ¶ 103) (emphasis in the Commonwealth's Complaint). Forbearance is generally only appropriate for borrowers facing temporary financial hardship, due to the "accumulation of unpaid interest and the addition of that unpaid interest to the principal balance": "[Navient's] website states that forbearance is appropriate for borrowers 'who have a problem making on-time payments due to a temporary financial difficulty.' " (Id. ¶¶ 104-05) (emphasis in the Commonwealth's Complaint). IDR plans are usually a better option for borrowers. (Id. ¶ 107).

Despite this, the Commonwealth alleges that since at least July 2011, Navient affirmatively steered borrowers facing long-term financial hardship into forbearance rather than exploring more appropriate IDR options. (Id. ¶¶ 109-10). Navient took this course of action despite telling borrowers to contact it to obtain help in evaluating repayment options, placing statements on its website that included:

• "If you're experiencing problems making your loans payments, please contact us. Our representatives can help you by identifying options and solutions, so you can make the right decision for your situation."

• "We can help you find an option that fits your budget, simplifies payment, and minimizes your total interest cost."

(Id. ¶ 108). The Commonwealth alleges that Navient's motivation in steering borrowers to forbearance rather than evaluating IDR options is rooted in a desire to cut down on lengthy customer-service interactions and processing of forms, which are more likely when enrolling a borrower in an IDR plan versus a forbearance. (Id. ¶¶ 110-16).

"Between January 2010 and March 2015, the number of borrowers that Defendants enrolled in forbearance has generally exceeded the number of borrowers enrolled in IDR repayment plans." (Id. ¶ 117). Navient steered borrowers having problems making a payment on their loans into voluntary forbearance rather than advising them about IDR plans; "many of those borrowers would have likely qualified for a $0 payment in an IDR plan." (Id. ¶ 118). "Defendants also enrolled many borrowers in multiple consecutive forbearances, even though they had clearly demonstrated a long-term inability to repay their loans, rather than the short-term financial hardship appropriate for forbearances." (Id. ¶ 121). Hundreds of thousands of borrowers were enrolled in extended periods of forbearance lasting two or three years, or more. (Id. ¶ 123).

"Because Defendants placed IDR borrowers into forbearance before ultimately enrolling them in IDR plans with a $0 payment, the borrowers had delayed access to the benefits of IDR and were negatively impacted by consequences of forbearance, including the addition of interest to the principal and lost months that would have otherwise counted toward forgiveness. This may have been avoided had Defendants enrolled borrowers in IDR initially." (Id. ¶ 120).

2. ALLEGED INCOME RECERTIFICATION FAILURES

Borrowers enrolled in IDR plans for their federal student loans must recertify their income and family size every twelve months, as an IDR payment is only valid for that period of time. (Doc. 1 ¶ 131). Borrowers will suffer negative consequences if they do not timely recertify their IDR payment, including: an increased monthly payment; the addition of unpaid, accrued interest to the loan principal; the potential loss of an interest subsidy for subsidized federal loans; and delayed progress towards loan forgiveness. (Id. ¶ 132).

The Commonwealth alleges that Navient, in issuing notices to borrowers regarding their IDR plans, did not advise borrowers of the negative consequences of failing to submit timely, complete, and correct recertifications to renew borrowers' IDR plans. (Id. ¶¶ 134-45). For example, in the "initial disclosure notice" provided to borrowers enrolled in an IDR plan, Navient did not include a specific renewal deadline or advise of negative consequences for failing to timely meet recertification requirements. (Id. ¶¶ 133-34). "From at least January 1, 2010 until December 2012, Defendants' annual renewal notices for IDR plans sent through U.S. mail" did not include a specific renewal deadline or advise borrowers of negative consequences for failing to timely meet recertification requirements, instead providing vague and incomplete information. (Id. ¶¶ 135-39).

Navient's electronic annual renewal notices (sent to most of Navient's federal loan borrowers, as they had consented to receiving electronic communications) required borrowers to log into Navient's website to view the full renewal notice, and the email containing the link to Navient's website did not provide information regarding the purpose of the notice. (Id. ¶¶ 140-41). Navient tracked the number of borrowers who clicked on hyperlinks in Navient emails sent to them, and so "knew or should have known that many borrowers did not view the electronic renewal notices." (Id. ¶ 144). "Between at least July 2011 and March 2015, the percentage of borrowers who did not timely renew their enrollment in IDR plans regularly exceeded 60%." (Id. ¶ 145). Starting in March 2015, Navient "made several enhancements" to their email renewal notices, and the renewal rate for IDR plans "has more than doubled." (Id. ¶ 146).

3. ALLEGED COSIGNER RELEASE MISREPRESENTATIONS

"A cosigner is generally necessary for a borrower to obtain a private student loan, or to obtain that loan with more favorable terms. Once a borrower enters repayment on his/her private student loan with Defendants, he/she generally can apply to release the cosigner from the loan after meeting certain eligibility criteria." (Doc. 1 ¶ 149). "Since at least January 2010, one of the eligibility criteria that Defendants have required private student loan borrowers to meet before they can apply to release a cosigner is that the borrower must make a minimum number of consecutive, on-time payments consisting of both principal and interest." (Id. ¶ 150) (emphasis in the Commonwealth's Complaint). Depending on the time period (prior or subsequent to January 21, 2014), Navient has required borrowers to make a varying number of "consecutive, on-time principal and interest payments before applying for cosigner release," but Navient has failed "to specifically define for borrowers 'consecutive' or 'on-time' payments." (Id. ¶ 151). This has led to confusion for borrowers who have made monthly payments on their loans that are in excess of what they owe. (Id. ¶¶ 152-161).

In particular, borrowers who have made payments in excess of the amount due for a given month that have been a multiple of their monthly payment (e.g., paying $300 when the monthly payment is $100), have been marked in a "paid ahead" status for following months for their "multiplier overpayment." (Id. ¶¶ 152-53). Navient has told borrowers in "paid ahead" status in any given month that the amount due for that month is $0, but until at least mid-2015, if those borrowers did not make a payment during that month, Navient treated the "lack of payment by a borrower in response to a $0 bill as a failure to make a 'consecutive, on-time principal and interest payment' that month" and reset the borrower's progress towards cosigner release to zero months. (Id. ¶¶ 154-56). "Nothing on Defendants' billing statement, their website, nor any other borrower-facing document advised borrowers that making no payment in response to a $0 bill could impact their eligibility for cosigner release." (Id. ¶ 158). The Commonwealth asserts that after discovery, the evidence will show that delayed cosigner release caused by this confusion has negatively impacted borrowers. (Id. ¶ 159).

4. ALLEGED PAYMENT PROCESSING ERRORS

"One of Defendants' primary responsibilities as a student loan servicer is to process payments made by borrowers on their student loan accounts. Defendants, however, do not have adequate processes and procedures in place to sufficiently address certain errors they make in the processing of payments they receive or to prevent errors from recurring." (Doc. 1 ¶ 162). These errors have included errors in the allocation of payments, or how a payment is distributed across multiple loans, and application of payments, or how a payment is applied to a specific loan or loans. (Id. ¶¶ 163-72). "Since at least July 2011, many borrowers and cosigners, primarily those who pay by mailing a check or through an external bill payment system, have complained that Defendants misallocated or misapplied submitted payments." (Id. ¶ 165). "One source for payment processing errors appears to be Defendants' default payment allocation methodology which Defendants did not disclose on any billing statement, promissory note, or printed or online resource available to borrowers." (Id. ¶ 166). "Because Defendants did not make their default allocation methodologies clear or public until at least late 2013, prior to that time, borrowers generally had no way of knowing in advance how Defendants might allocate payments." (Id. ¶ 167).

Because of issues with Navient's mail reading equipment, Navient has not always properly detected and applied written instructions placed by borrowers on their paper checks. (Id. ¶ 168). "Many borrowers and cosigners have complained that a payment processing error was not an isolated event, but rather that the same payment processing error recurred time and again, even after they contacted Defendants to correct the error." (Id. ¶ 170). Navient has not systematically categorized or tracked many borrower inquiries regarding payment processing errors that were not escalated to supervisors, and has not identified or fixed underlying issues surrounding such errors, leading to some borrowers facing the same errors in numerous months. (Id. ¶¶ 170-71). These errors "have resulted in: (1) borrowers and cosigners incurring improper late fees and increased interest charges, and (2) the furnishing of inaccurate negative information to consumer reporting agencies." (Id. ¶ 169).

III. STANDARD OF REVIEW

A complaint must be dismissed under Federal Rule of Civil Procedure 12(b)(6) if it does not allege "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009).

"While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Twombly , 550 U.S. at 555, 127 S.Ct. 1955 (internal citations, alterations, and quotations marks omitted). A court "take[s] as true all the factual allegations in the Complaint and the reasonable inferences that can be drawn from those facts, but ... disregard[s] legal conclusions and threadbare recitals of the elements of a cause of action, supported by mere conclusory statements." Ethypharm S.A. France v. Abbott Labs. , 707 F.3d 223, 231 n.14 (3d Cir. 2013) (internal citation, alteration, and quotation marks omitted). Thus, "the presumption of truth attaches only to those allegations for which there is sufficient 'factual matter' to render them 'plausible on [their] face.' " Schuchardt v. President of the U.S. , 839 F.3d 336, 347 (3d Cir. 2016) (alteration in original) (quoting Iqbal , 556 U.S. at 679, 129 S.Ct. 1937 ). "Conclusory assertions of fact and legal conclusions are not entitled to the same presumption." Id.

"Although the plausibility standard 'does not impose a probability requirement,' it does require a pleading to show 'more than a sheer possibility that a defendant has acted unlawfully.' " Connelly v. Lane Constr. Corp. , 809 F.3d 780, 786 (3d Cir. 2016) (internal citation omitted) (first quoting Twombly , 550 U.S. at 556, 127 S.Ct. 1955 ; then quoting Iqbal , 556 U.S. at 678, 129 S.Ct. 1937 ). "The plausibility determination is 'a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.' " Id. at 786-87 (quoting Iqbal , 556 U.S. at 679, 129 S.Ct. 1937 ).

However, even "if a complaint is subject to Rule 12(b)(6) dismissal, a district court must permit a curative amendment unless such an amendment would be inequitable or futile." Phillips v. Cty. of Allegheny , 515 F.3d 224, 245 (3d Cir. 2008).

[E]ven when plaintiff does not seek leave to amend his complaint after a defendant moves to dismiss it, unless the district court finds that amendment would be inequitable or futile, the court must inform the plaintiff that he or she has leave to amend the complaint within a set period of time.

Id.

IV. ANALYSIS

Navient raises numerous arguments in seeking to dismiss the Commonwealth's Complaint for failure to state a claim under Fed. R. Civ. P. 12(b)(6). Navient's first two sets of arguments are based on preclusion and preemption theories. First, Navient contends that a proper reading of the CFPA bars the Commonwealth from bringing a "copycat" action under the CFPA where the CFPB has already filed a similar lawsuit alleging identical claims under the CFPA (Counts III, V, VII, & IX). Next, Navient argues that certain federal laws, the Higher Education Act ("HEA"), 20 U.S.C. § 1001 et seq. , and the Truth in Lending Act ("TILA"), 15 U.S.C. § 1601 et seq. , preempt the Commonwealth's loan origination, forbearance steering, and recertification conduct claims brought under the CPL (Counts I, II, & IV). Finally, Navient asserts a litany of arguments against most of the Commonwealth's claims to contend that the Commonwealth has failed to state a claim upon which relief can be granted (Counts l-V, VIII-IX). The Court will address each set of arguments in turn.

A. THE CFPA AND STATE "COPYCAT" ACTIONS (COUNTS III, V, VII, & IX)

Navient begins its attack on the Commonwealth's Complaint by arguing that "the Commonwealth's complaint is an unauthorized 'copycat' lawsuit." (Doc. 24 at 1). This argument is specifically focused on the Commonwealth's CFPA claims, which Navient asserts impermissibly "parrot allegations from a materially indistinguishable lawsuit filed by the Consumer Financial Protection Bureau ("CFPB") nearly a year ago." (Id. ) While Navient agrees that the CFPA allows a state to file a civil action under the statute, 12 U.S.C. § 5552(a) , it argues that the text and structure of the remainder of § 5552 should lead the Court to conclude that § 5552(a) does not permit a state to bring an action "where, as here, the CFPB itself has been pursuing materially indistinguishable claims against Navient for more than nine months." (Id. at 9-10). Navient's complex statutory interpretation argument relies on "three features of the statute":

(1) "the CFPA's pre-suit notice provisions, which condition state-initiated CFPA claims on the [state] AG 'provid[ing] a copy of the complete complaint to be filed and written notice describing such action or proceeding to the Bureau,' " 12 U.S.C. § 5552(b)(1)(A) ; see also § 5552(b)(1)(C) (describing what should be included in the written notice, including "the alleged facts underlying the proceeding and whether there may be a need to coordinate the prosecution of the proceeding so as not to interfere with any action, including any rulemaking, undertaken by the Bureau, a prudential regulator, or another Federal agency");

(2) "the statute's intervention provisions, which authorize the CFPB to intervene as a party-plaintiff in any state-initiated CFPA litigation," 12 U.S.C. § 5552(b)(2)(A) ; and

(3) "the lack of statutory authorization for state intervention in pending CFPB cases."

(Doc. 24 at 10-14). Essentially, Navient argues that that the CFPA does not make sense if a court allows what it characterizes as a "copycat" lawsuit. "Pre-suit notice" from a state AG is irrelevant if the CFPB is conducting its own identical lawsuit, (id. at 11), and allowing intervention by the CFPB in a state-initiated CFPA case would be prohibited by the traditional "rule that a single-party plaintiff cannot simultaneously maintain two actions against the same defendant(s)," (id. at 12). And it argues that congressional intent to exclude a "copycat" action is shown because Congress did not specifically authorize a state to intervene in a pending CFPB case, when it has provided for a state right of intervention in other federal statutes. (Id. at 13-14). Navient closes its line of argument with a policy-based argument that allowing "copycat" lawsuits would burden courts and risk inconsistent rulings, which would work against what it says is an avowed purpose of the CFPA, to "enforce Federal consumer financial law consistently. " (Id. at 14 (citing 12 U.S.C. § 5511(a) (emphasis added in Navient's Brief in Support) ).

The Commonwealth responds in its Opposition by affirmatively arguing that the "plain and unambiguous meaning" of § 5552 permits concurrent state claims, and that if Congress had wanted to explicitly preclude concurrent state claims, it would have done so. (Doc. 25 at 4). In making this argument, the Commonwealth references two other sections of the CFPA: 12 U.S.C. § 5514(c)(3)(B)(i), which prohibits either the FTC or CFPB from filing an action if the other agency has already filed an action based on the same legal claims; and 12 U.S.C. § 5515(c)(3), which provides "backup enforcement" authority for the federal banking regulators over "very large" depository institutions if the CFPB does not use its primary enforcement authority. (Doc. 25 at 5). The Commonwealth also cites other federal consumer protection statutes to "exemplify Congress' ability to authorize state enforcement and prohibit concurrent state claims when it so intends." (Id. ) And the Commonwealth emphasizes that "Navient cannot point to any court that has blocked concurrent CFPA claims," and cites to a case in the District of New Mexico where a federal court allowed a state AG to "pursue CFPA claims based on the same underlying conduct of a previously-filed CFPB consent order," New Mexico ex rel. King v. Capital One Bank (USA) N.A. , 980 F.Supp.2d 1314 (D.N.M. 2013). (Id. at 6 & n.4).

The Commonwealth also responds to Navient's CFPA statutory interpretation arguments by arguing that Navient "misses the point of the notice provision" of the CFPA; that the "intervention provision" in the CFPA does not imply that the CFPA prohibits concurrent state claims, because similar provisions also exist in other statutes that prohibit or allow concurrent state actions; and that "the CFPA's omission of an unconditional state intervention right has no bearing on whether states may file concurrent claims." (Id. at 7-9). Finally, in response to Navient's argument that allowing concurrent state lawsuits will burden the courts, the Commonwealth states that "[d]ismissing Pennsylvania's CFPA claims would not appreciably reduce the scope of this case because the CPL counts rely on similar underlying facts as the CFPA claims," and that the risk that the CFPB will drop its lawsuit makes it important to allow the Commonwealth to continue its case in order to protect consumers. (Id. at 9-10).

Navient argues in its Reply that the Commonwealth's reliance on the provisions in the CFPA that prohibit federal regulators from engaging in concurrent actions is misplaced because those provisions are solely focused on federal agencies and the division of enforcement responsibility "among federal agencies with otherwise-concurrent enforcement jurisdiction in a post-CFPB world" which it asserts was one of the purposes of the CFPA. (Doc. 26 at 1-2). Instead, § 5552, it contends, exists only to allow states to step in if the CFPB is not acting, and Navient cites the legislative history of the provision, which Navient argues establishes that Congress was focused on situations when "federal regulators are not 'asleep at the switch.' " (Doc. 26 at 2). Navient also counters the Commonwealth's citation to other federal statutes which explicitly prohibit concurrent state actions by questioning the application of the Russello presumption, Russello v. United States , 464 U.S. 16, 23, 104 S.Ct. 296, 78 L.Ed.2d 17 (1983), of ascribing meaning to congressional silence because Navient asserts that other textual and contextual evidence here point to congressional intent. (Doc. 26 at 3). Navient further argues that the Commonwealth's responses to its statutory interpretation arguments are deficient, and, in reply, mainly restates or rephrases arguments it presented in its Brief in Support. (Id. at 3-5). Navient sums up its position as "one that makes sense of the whole" CFPA, "preserves a meaningful role for state-initiated claims," and "avoids unnecessary follow-on litigation." (Id. at 6).

While Navient's arguments are creative, they do not convince the Court that the CFPA prohibits concurrent state enforcement actions. Following Navient's position would require the Court to accept an amalgam of tenuous postulates regarding several provisions of the CFPA and a strained reading of the plain text of the statute.

The Court begins its analysis with an examination of the statutory language in 12 U.S.C. § 5552, as required by basic principles of statutory interpretation:

As with all questions of statutory interpretation, we first turn to the statutory language "to determine whether the language at issue has a plain and unambiguous meaning with regard to the particular dispute in the case." Marshak v. Treadwell , 240 F.3d 184, 192 (3d Cir. 2001) (citations and internal quotation marks omitted). We discern "[t]he plainness or ambiguity of statutory language ... by reference to the language itself, the specific context in which that language is used, and the broader context of the statute as a whole." Id. (citations and internal quotation marks omitted). Where "the statutory meaning is clear, our inquiry is at an end." Ki Se Lee v. Ashcroft , 368 F.3d 218, 222 (3d Cir. 2004) ; Marshak , 240 F.3d at 192.

Gordon v. Wawa, Inc. , 388 F.3d 78, 81 (3d Cir. 2004).

The Court notes that there is no relevant case law on the interpretive task presented here with respect to § 5552, perhaps due to the relatively short history of the CFPA, and so the Court writes on a blank slate. To start, the "language itself" of § 5552(a)(1) is unambiguous: it authorizes a state attorney general or equivalent state official to "bring a civil action in the name of such State in any district court of the United States in that State or in State court located in that State and that has jurisdiction over the defendant" to enforce the CFPA or regulations issued under the CFPA. 12 U.S.C. § 5552(a)(1). The text of § 5552(a)(1) does not contain a bar on a concurrent state enforcement under the CFPA, nor is such a bar contained in any other provision of § 5552 or the remainder of the CFPA.

However, finding ambiguity in otherwise clear statutory language, Navient refers to what it claims is the problematic operation of other provisions of § 5552 in the event of a concurrent state enforcement action: the pre-suit notice provision in § 5552(b)(1)(A) and the intervention provision in § 5552(b)(2). (Doc. 24 at 10-13). Considered separately or in tandem, neither provision renders any part of § 5552 superfluous or contradictory in the event of a concurrent state enforcement action under the CFPA. See Tatis v. Allied Interstate, LLC , 882 F.3d 422, 429 (3d Cir. 2018) (noting that in interpreting statutory language, the task is "to give effect, if possible, to every clause and word of a statute," and avoid the result of surplusage) (quoting Duncan v. Walker , 533 U.S. 167, 174, 121 S.Ct. 2120, 150 L.Ed.2d 251 (2001) ).

The pre-suit notice provision in § 5552(b)(1)(A) merely requires a state to notify the CFPB "[b]efore initiating any action in a court or other administrative or regulatory proceeding" under the CFPA or a regulation promulgated under the CFPA. 12 U.S.C. § 5552(b)(1)(A). This provision is not rendered meaningless in the event the CFPB already has its own action underway against the same defendant. A state seeking to bring a concurrent action may have a different litigation strategy than the CFPB, even if it alleges the same or similar claims in its own case. In that case, the notice would provide the CFPB with an opportunity to advise the state, perhaps with lessons learned from its own experience in its concurrent action. More importantly, as the Commonwealth points out in its Opposition, § 5552(b)(1)(C), which specifies the minimum contents of the written notice a state must provide to the CFPB before initiating an action, contains language which explicitly contemplates that the CFPB may already have its own action underway: "[the written notice should describe] whether there may be a need to coordinate the prosecution of the proceeding so as not to interfere with any action , including any rulemaking, undertaken by the Bureau , a prudential regulator, or another Federal agency." 12 U.S.C. § 5552(b)(1)(C)(iii) (emphasis added).

The intervention provision in § 5552(b)(2) also does not suggest that concurrent state enforcement actions are barred by the CFPA. This provision permits, but does not require, the CFPB to intervene in an action brought by a state under the CFPA or a regulation promulgated under the CFPA. 12 U.S.C. § 5552(b)(2)(A) ("In any action described in [ § 5552(b)(1) ], the Bureau may -(A) intervene in the action as a party") (emphasis added). Indeed, in its rulemaking proceedings establishing the specific requirements of the state notice procedure, 12 C.F.R. § 1082.1, the CFPB acknowledges that its intervention power is discretionary and may be subject to certain limits:

Section 1042(b)(2) of the Dodd-Frank Act authorizes the Bureau to intervene in any action brought by a State Official pursuant to the authority granted to the State under section 1042(a) of the Dodd-Frank Act. The Bureau reserves the right to intervene or otherwise participate in any action where it lawfully may do so , whether under section 1042(b)(2) of the Dodd-Frank Act or under another provision of law (including the Federal Rules of Civil Procedure). As a result, the Bureau declines to amend the Interim Final Rule as recommended and will determine which actions are appropriate for intervention on a case-by-case basis.

State Official Notification Rule, 77 Fed. Reg. 39,112, 39,114 (June 29, 2012) (emphasis added) (refusing to amend interim rule to provide specific standards for when intervention would be appropriate). Thus, Navient is mistaken when it argues that the application of this provision in the event of a concurrent state action would make the CFPB run afoul of the "rule that a single party-plaintiff cannot simultaneously maintain two actions against the same defendant(s)." (Doc. 24 at 12).

Navient's reliance on this single-party plaintiff "rule" is also based on a misreading and misapplication of the relevant case law in Walton v. Eaton Corp. , 563 F.2d 66, 70 (3d Cir. 1977) (en banc). Walton involved a plaintiff who filed an employment discrimination suit in the Eastern District of Pennsylvania. Id. at 69. The first complaint filed by the plaintiff expressly waived the right to a jury trial. Id. at 70. One year after the filing of the first complaint, rather than amending the first complaint, the plaintiff's new counsel filed a new complaint against the same defendant, which was nearly indistinguishable from the first complaint. Id. In the second complaint, unlike the first, the plaintiff sought a jury trial and compensatory damages and included allegations of "emotional and mental injury." Id. The district court, sua sponte , consolidated the two actions, and later found for the defendant after a bench trial. Id. at 68-70. The Third Circuit noted that the plaintiff "had no right to maintain two separate actions involving the same subject matter at the same time in the same court and against the same defendant." Id. at 70 (citing United States v. Haytian Republic , 154 U.S. 118, 123-24, 14 S.Ct. 992, 38 L.Ed. 930 (1894) ). However, the Third Circuit noted that the district court's decision to consolidate the plaintiff's two actions was not objectionable, and that it also could have avoided a conflict between the actions by dismissing the second complaint without prejudice or staying proceedings in the second action until after the first action was decided. Id. at 70-71. The primary concern of the court appeared to be "insur[ing] that the plaintiff does not use the incorrect procedure of filing duplicative complaints for the purpose of circumventing the rules pertaining to the amendment of complaints, Fed. R. Civ. Proc. 15, and demand for trial by jury, Fed. R. Civ. Proc. 38." Id. at 71. The factual circumstances at play in Walton do not present themselves here. And, in fact, Walton cuts against Navient's position that there is an irreconcilable conflict between the CFPA's intervention provision and the "single-party plaintiff" bar because the Third Circuit indicated that consolidation can be an appropriate solution to avoid violating the "single-party plaintiff" bar. Id.

Navient's other contentions in support of its "copycat" argument also do not persuade the Court to disregard the plain text of § 5552(a)(1) and its approach permitting concurrent state CFPA lawsuits. Navient cites to no on-point case law in support of its argument that Congress would have inserted express language into the CFPA to permit state intervention in ongoing CFPB cases. More importantly, Navient fails to clearly explain how such an argument has relevance here, as the Commonwealth is not seeking to intervene in the CFPB's case, but rather, is seeking to use its own authority under § 5552(a)(1), which by its plain language explicitly authorizes states to bring their own actions under the CFPA. Thus, contrary to Navient's argument, the existence of other statutes which establish the right of a state to intervene in a federal case, such as 28 U.S.C. § 2403(b), which allows a non-party state to intervene in a case if the constitutionality of a state statute is called into question, has no bearing on the Commonwealth's ability to bring its own case under a statute which explicitly grants the Commonwealth the right to bring its action.

Finally, Navient's policy argument that permitting "copycat" lawsuits creates burdens for courts and risks inconsistent rulings on issues of federal consumer financial law also does not contravene the plain text of § 5552(a)(1). Navient cites to the CFPA's statement of the purpose of the CFPB in 12 U.S.C. § 5511(a) in support of this argument:

(a) Purpose

The Bureau shall seek to implement and, where applicable, enforce Federal consumer financial law consistently for the purpose of ensuring that all consumers have access to markets for consumer financial products and services and that markets for consumer financial products and services are fair, transparent, and competitive.

Notably absent from any part of § 5511(a) or the rest of § 5511 is any indication that enforcing "Federal consumer financial law consistently" precludes a state from bringing its own action under the CFPA. While the federal courts are indeed inundated with cases, adjudicating this case is a burden the Court is required to assume, absent a recognized statutory or procedural basis that precludes the Commonwealth from bringing its action.

The Court is bolstered in its rejection of Navient's arguments and in its understanding of the plain meaning of § 5552(a)(1) by the presence of other sections of the CFPA which clearly bar concurrent enforcement of the statute in other situations, but which is absent in § 5552. As the Commonwealth notes, 12 U.S.C. § 5514(c)(3)(B)(i) prohibits either the FTC or CFPB from filing an action if the other agency has already filed an action based on the same legal claims, and 12 U.S.C. § 5515(c)(3) provides "backup enforcement" authority for the federal banking regulators over "very large" depository institutions if the CFPB does not use its primary enforcement authority. (Doc. 25 at 5). By contrast, another provision of the CFPA, 12 U.S.C. § 5538(b), provides for a state right of action to enforce mortgage rules promulgated by the CFPB, but contains an explicit prohibition on concurrent actions by states when the CFPB has already initiated its own action against a party. 12 U.S.C. § 5538(b)(6). Here, applying the canon of statutory interpretation highlighted in Russello , 464 U.S. at 23, 104 S.Ct. 296, is particularly appropriate, especially when the plain text of § 5552(a)(1) is unambiguous in granting a state a right to bring an enforcement action under the CFPA as are the other sections of the CFPA that bar concurrent enforcement actions. See also Port Authority Trans-Hudson Corp. v. Sec'y., United States Dep't of Labor , 776 F.3d 157, 164-65 (3d Cir. 2015) (finding that Russello presumption would apply when two provisions of a statute "are sufficiently distinct" and also when the context of the statute indicates "careful draftsmanship") (citations omitted).

In sum, the plain meaning of § 5552(a)(1) and the CFPA support the Commonwealth's position that it can maintain its concurrent CFPA claims against Navient. To rule otherwise would require the Court to rewrite the CFPA to achieve Navient's desired outcome. The Court cannot undertake such a task.

B. FEDERAL PREEMPTION UNDER THE HEA AND TILA (COUNTS I, II, & IV)

Navient's next set of arguments employ preemption doctrine against some of the Commonwealth's state law claims under the CPL. Navient first contends that the Higher Education Act ("HEA") preempts the Commonwealth's loan servicing claims (Counts II & IV), and further argues that the Truth in Lending Act ("TILA") preempts the origination claims (Count I).

"The Supremacy Clause of the United States Constitution, U.S. Const. art. VI, cl. 2, invalidates state law that 'interferes with or is contrary to federal law.' " Farina v. Nokia Inc. , 625 F.3d 97, 115 (3d Cir. 2010) (quoting Free v. Bland , 369 U.S. 663, 666, 82 S.Ct. 1089, 8 L.Ed.2d 180 (1962) ). The Third Circuit, in Farina , summarized federal preemption doctrine:

Federal law can preempt state law in three ways: (1) express preemption, (2) field preemption, and (3) conflict preemption. Hillsborough Cty. v. Automated Med. Labs., Inc. , 471 U.S. 707, 713, 105 S.Ct. 2371, 85 L.Ed.2d 714 (1985). Express preemption applies where Congress, through a statute's express language, declares its intent to displace state law. Id. Field preemption applies where "the federal interest is so dominant that the federal system will be assumed to preclude enforcement of state laws on the same subject." Id. (internal quotation marks omitted). Conflict preemption nullifies state law inasmuch as it conflicts with federal law, either where compliance with both laws is impossible or where state law erects an "obstacle to the accomplishment and execution of the full purposes and objectives of Congress." Id. (internal quotation marks omitted).

Farina , 625 F.3d at 115. In evaluating a preemption challenge, courts are guided by the "intent of Congress[, which] is the 'ultimate touchstone.' " Id. (quoting Medtronic, Inc. v. Lohr , 518 U.S. 470, 485-86, 116 S.Ct. 2240, 135 L.Ed.2d 700 (1996) (further noting that courts should look to the "structure and purpose of the statute as a whole, as revealed not only in the text, but through the reviewing court's reasoned understanding of the way in which Congress intended the statute and its surrounding regulatory scheme to affect business, consumers, and the law") ). And courts also start with an assumption that Congress did not intend to displace state law (the "presumption against preemption"), especially in cases where the affected field is within the traditional police power of the state. Farina , 625 F.3d at 116 (quoting Lohr , 518 U.S. at 485, 116 S.Ct. 2240 ("[B]ecause the States are independent sovereigns in our federal system, we have long presumed that Congress does not cavalierly pre-empt state-law causes of action.") ). As consumer protection is within the traditional police power of the state, the Court will apply the presumption against preemption in analyzing Navient's preemption arguments against the Commonwealth's CPL claims. See In re Nortel Networks, Inc. , 669 F.3d 128, 137-38 (3d Cir. 2011) (noting, in considering the police power exception to an automatic bankruptcy stay under 11 U.S.C. § 362(b)(4), that consumer protection is part of governmental police powers); In re Burns , No. 5-BK-07-50140 RNO, 2008 WL 3246244, at *3-4 (Bankr. M.D. Pa. Aug. 7, 2008) (finding the same, in considering a CPL action brought by the Commonwealth).

1. THE HEA (COUNTS II & IV)

Navient argues that the Commonwealth's state law loan servicing claims under the CPL regarding Navient's forbearance steering (Count II) and income-driven repayment plan recertification practices (Count IV) are preempted by the HEA. Navient contends that these claims are essentially that Navient made improper disclosures, and that the HEA expressly bars state law disclosure claims, citing 20 U.S.C. § 1098g. (Doc. 24 at 15-19). Navient also argues that the claims are conflict preempted by the HEA because the HEA establishes "clear, uniform standards" for federal loan programs, and allowing state consumer protection lawsuits would threaten the uniformity and efficiency of federal student lending. (Id. at 19-20). For both arguments, Navient relies heavily on a Ninth Circuit case, Chae v. SLM Corp. , 593 F.3d 936 (9th Cir. 2010), which found that certain class action claims brought under California state consumer protection law were expressly preempted by § 1098g of the HEA and that other state law claims were conflict preempted by the HEA. (Doc. 24 at 16-20); Chae , 593 F.3d at 942-43, 947-50.

The Commonwealth responds that the Court should apply the "presumption against preemption" with respect to the CPL and accept the reading of § 1098g that disfavors preemption. (Doc. 25 at 12). The Commonwealth argues that its loan servicing claims are distinct from loan origination claims, and were not brought in an attempt to impose state law disclosure requirements, citing Genna v. Sallie Mae, Inc. , No. 11-cv-7371, 2012 WL 1339482 (S.D.N.Y. Apr. 17, 2012) in support of its argument that express preemption should not apply. (Doc. 25 at 12-16). The Commonwealth focuses much of its rebuttal on Navient's reliance on Chae , contending that Chae is distinguishable from the present matter because " Chae dealt with 'billing statements, coupon books, and standardized forms' that 'complied with federal regulations governing such instruments.' " (Id. at 13-14 (quoting Genna , 2012 WL 1339482, at *8 ) ). The Commonwealth further asserts, "the primary concept arising out of Chae -that a misrepresentation claim is merely the converse of a disclosure claim and, therefore, subject to preemption-is based upon an incomplete reading" of Cipollone v. Liggett Group, Inc. , 505 U.S. 504, 112 S.Ct. 2608, 120 L.Ed.2d 407 (1992). (Doc. 25 at 14-15). The Commonwealth also argues that the legislative history of the HEA suggests that § 1098g was intended to exempt federal student loans from TILA requirements. (Id. at 16). Finally, the Commonwealth asserts that the HEA does not conflict preempt its CPL loan servicing claims, arguing against the adoption of the "uniformity" preemption rationale from Chae , citing other sections of the HEA that expressly preempt certain types of state laws to contend that "Congress intentionally did not preempt state law generally, or in respects other than those it addressed," and citing other cases where it contends that "[o]ther courts have not reached Chae 's conclusion that the goal of the HEA uniformity conflicts with the application of state law." (Id. at 17-20). The Commonwealth closes by stating it "does not seek a specific disclosure regimen that would conflict with the HEA; it merely seeks compliance with the CPL." (Id. at 20-21).

Navient replies that the Court should not apply any "presumption against preemption" here because "Congress made its intent to preempt state law clear[,]" it is improper to apply such a presumption to "state laws seeking to regulate federal programs[,]" and there is nothing in the cases that the Commonwealth cites to suggest that § 1098g applies only to "standardized forms." (Doc. 26 at 7-10). Navient also challenges the Commonwealth's reliance on Genna and cites another case that found express preemption of similar claims at issue in the present matter, Nelson v. Great Lakes Educ. Loan Servs., Inc. , No. 3:17-CV-00183, 2017 WL 6501919 (S.D. Ill. Dec. 19, 2017). (Doc. 26 at 9-11). Navient further attacks the Commonwealth's use of Cipollone , arguing that the "portions invoked by the Commonwealth were joined only by four Justices-and expressly rejected by five [,]" (Doc. 26 at 11-12 (emphasis in Navient's Reply) ), and that the Commonwealth's resort to the legislative history of § 1098g is not only inappropriate, but incorrect, as the Commonwealth cited the Senate Report that applies to the wrong section of the statute (id. at 12-13). Finally, Navient responds to the Commonwealth's conflict preemption rebuttal by arguing there can be "implied preemption of claims that fall outside the scope of an express preemption clause" and emphasizing that the objective of the HEA is to establish "clear, uniform standards" and "ensure the stability in the loan program," and that those "objectives would be jeopardized if lenders and servicers are subjected 'to lawsuits under fifty separate sets of laws and court systems.' " (Id. at 14). Navient closes that "the only way a servicer or originator could comply with the CPL, as construed by the Commonwealth, would be to make additional disclosures" that are not required by the HEA, and so the CPL claims conflict with the objectives of the HEA. (Id. at 16).

The Court will address Navient's HEA express preemption arguments first before turning to Navient's conflict preemption arguments. Despite the complexity of the parties' preemption arguments, the express preemption clause from the HEA that is at the crux of the express preemption dispute is relatively simple:

§ 1098g. Exemption from State disclosure requirements

Loans made, insured, or guaranteed pursuant to a program authorized by Title IV of the Higher Education Act of 1965 ( 20 U.S.C. § 1070 et seq. ) shall not be subject to any disclosure requirements of any State law.

20 U.S.C. § 1098g. The parties' dispute thus hinges on the meaning of "any disclosure requirements of any State law." Navient would have the Court take an expansive view of the phrase, whereas the Commonwealth urges a more restrained application based on its reading of the statute and preemption case law.

The Court finds that Navient's suggested interpretation of Section 1098g goes too far: the phrase "any disclosure requirements of any State law" does not apply to the sort of claims alleged by the Commonwealth here under the CPL, which are allegations of unfair and deceptive conduct related to forbearance steering and recertification. The HEA and its associated regulations only require that particular disclosures are to be made in the delivery of federal student loans and generally prescribes how those disclosures should be made. See, e.g. , 20 U.S.C. § 1083 (disclosure requirements for FFELP loans). It does not preempt the enforcement of a statute of general applicability under a state's traditional police power, here, the Commonwealth's state consumer protection law, the CPL, which proscribes unfair and deceptive acts or practices in commerce. Cf. Poskin v. TD Banknorth, N.A. , 687 F.Supp.2d 530, 555-57 (W.D. Pa. 2009) (absent direct conflict, CPL is not preempted under by the National Bank Act, as it is "a law of general applicability, and not targeted directly at banking or lending"); Mwantembe v. TD Bank, N.A. , 669 F.Supp.2d 545, 553 (E.D. Pa. 2009) (CPL not preempted by National Bank Act or OCC regulations in case involving gift cards as "[t]he duty to refrain from deceptive and misleading conduct is imposed on all businesses").

To further explain the Court's reasoning, it is necessary for the Court to address the central cases cited by the parties in their briefs and supplementary submissions to the Court, particularly Chae v. SLM Corp. , 593 F.3d 936 (9th Cir. 2010). Chae was a class action against one of Navient's corporate predecessors, Sallie Mae, regarding FFELP loans issued and serviced by the company. Id. at 940-41. The plaintiffs brought claims under state law, including California state consumer protection law (the California Unfair Competition Law, Cal. Bus. & Prof. Code § 17200, and the California Consumer Legal Remedies Act, Cal. Civ. Code § 1770(a) ), and for breach of contract, breach of the implied covenant of good faith and fair dealing, and unjust enrichment. Id. Three specific practices were challenged by the plaintiffs: (1) Sallie Mae's method of interest calculation; (2) the assessment of late fees; and (3) the method of setting the first repayment date on a federal Consolidation or PLUS loan. Id. The United States filed a motion to intervene and argued that the HEA preempted plaintiffs' state law claims. Id. at 941. The district court granted the motion to intervene, and granted summary judgment for Sallie Mae, holding that all of the plaintiffs' claims were preempted by the HEA. The Ninth Circuit agreed and ruled that Section 1098g of the HEA expressly preempted the California state consumer protection law claims regarding the method of interest calculation and the method of setting the first repayment date, finding that "[a]t bottom, the plaintiff's misrepresentation claims are improper-disclosure claims." Id. at 942. The Ninth Circuit noted that plaintiffs' allegations focused on billing statements, coupon books, and standardized loan applications that were allegedly misleading, and that "[i]n this context, the state-law prohibition on misrepresenting a business practice 'is merely the converse' of a state-law requirement that alternate disclosures be made". Id. at 942-43 (quoting Cipollone , 505 U.S. at 527, 112 S.Ct. 2608 ). However, the Ninth Circuit also concluded that the plaintiffs' other claims, including those for the "use of fraudulent and deceptive practices apart from the billing statements," were not expressly preempted by Section 1098g. 593 F.3d at 943.

Neither Chae , nor any of the other cases cited by the parties as to Section 1098g, including those cited by Navient that adopt the reasoning in Chae to find express preemption of claims against loan servicers under Section 1098g, are binding on this Court. Regardless, the Court finds that the Commonwealth's allegations in this case are distinct from those ruled preempted by the Ninth Circuit in Chae , which were wholly centered on the alleged deficiencies in what were essentially highly prescribed standardized forms, rather than the affirmative misconduct alleged in the instant matter. Similarly, Linsley v. FMS Investment Corp. , No. 11-cv-961, 2012 WL 1309840 (D. Conn. April 17, 2012), involved claims und