No. 15-0524 – Karen Adams v. Pennsylvania Higher Education Assistance Agency
FILED
June 3, 2016
released at 3:00 p.m.
RORY L. PERRY II, CLERK
Chief Justice Ketchum, concurring, in part, and dissenting in part: SUPREME COURT OF APPEALS
OF WEST VIRGINIA
I agree with the result in this case. I disagree with the majority’s
conclusion that a portion of the plaintiff’s claim was not barred by federal preemption.
In my opinion, there is complete preemption of the West Virginia
Consumer Credit & Protection Act, W.Va. Code § 46A-1-1 et seq. [1974] (“WVCCPA”),
by the regulations of the Federal Family Education Loan Program, 20 U.S.C. §§ 1071 to
1087-4 (“FFELP”). The Ninth Circuit addressed whether the FFELP preempted
Oregon’s unlawful debt collection statute in Brannan v. United Student Aid Funds, Inc.,
94 F.3d 1260, 1264-65 (9th Cir. 1996). The Ninth Circuit concluded that the Oregon
statue was preempted by federal law, reasoning that:
If student loan guarantors were exposed to liability
under fifty different sets of statutes, regulations and case law,
conducting diligent pre-litigation collection activity could be
an extremely uncertain and risky enterprise. Exposure to
liability under state law would provide a significant
disincentive to pursue loan collection, and the cost advantages
gained by concentrating [FFELP] loan collection in a
centrally-administered system would be lost. Preemption does
deprive some defaulters of the ability to receive damages
under state law; however, the congressional purpose in
enacting the [FFELP] was not to make it easier for defaulters
to get money from loan collectors, but to protect the millions
of students who would suffer irremediable loss if Congress
had to shut down the [FFELP] program.
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Similarly, the Northern District of West Virginia concluded that the
WVCCPA is completely preempted by the FFELP. In Seals v. Nat’l Student Loan
Program, 2004 WL 3314948 (Aug. 16, 2004, N.D. W.Va.), the court noted that:
The Secretary of Education has published an
interpretation of this specific issue. In this interpretation, the
Secretary states that the Guaranteed Student Loan (“GSL”)
regulations, enacted under the HEA [Higher Education Act],
were intended “to preempt contrary or inconsistent state law
to the extent necessary to permit compliance with the Federal
regulations.” Stafford Loan, Supplemental Loan for Students,
PLUS, and Consolidation Loan Programs, 55 Fed.Reg.
40120 (Oct. 1, 1990). The Secretary further explains that
state law is inconsistent with the GSL regulations when it
“would prohibit, restrict, or impose burdens” on the pre-
litigation collection efforts of third parties. Id. at 40121.
Consequently, any state law is preempted that “would hinder
or prohibit any activity” taken by these third parties prior to
litigation. Id.
I agree with the Ninth Circuit and with the Northern District Court’s ruling
in Seals. Therefore, I dissent to the majority’s conclusion that part of the plaintiff’s claim
was not barred by federal preemption.
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