522 F.Supp.3d 107
M.D. Penn.2021Background
- CFPB filed an 11‑count enforcement complaint against Navient on Jan. 18, 2017 alleging CFPA, FDCPA, and FCRA/Reg V violations.
- In Seila Law (2020) the Supreme Court held the CFPB Director’s for‑cause removal protection unconstitutional but severable, creating a question whether actions filed while that protection existed were valid.
- Navient moved for judgment on the pleadings arguing Seila Law rendered the CFPB’s 2017 suit unauthorized and that any later ratification (by a removable‑at‑will director) cannot revive claims after the statute of limitations lapsed.
- CFPB Director Kraninger ratified the 2017 filing on July 9, 2020 (after limitations had run); the district court held earlier that, absent equitable relief, ratification would fail but applied equitable tolling to save the action.
- Navient moved for interlocutory certification under 28 U.S.C. § 1292(b) on whether an agency’s constitutional defect can justify equitable tolling to permit post‑limitations ratification; the court granted certification and stayed the case pending appeal.
Issues
| Issue | Plaintiff's Argument (CFPB) | Defendant's Argument (Navient) | Held |
|---|---|---|---|
| Whether equitable tolling can permit a valid ratification performed after the statute of limitations expired when an agency’s structural defect was only later declared unconstitutional | Equitable tolling is available here because Seila Law did not eliminate the CFPB’s authority in 2017; alternatively, the Third Circuit could validate ratification without tolling | Seila Law rendered the 2017 filing unauthorized; post‑limitations ratification cannot revive time‑barred claims and equitable tolling is not warranted for a constitutional defect | Court concluded the question is a controlling legal issue and certified it for interlocutory appeal; the court had earlier applied equitable tolling but now certified that legal question to the Third Circuit |
| Whether interlocutory certification under §1292(b) is appropriate | Certification is unnecessary because settled equitable‑tolling principles apply to the facts | Certification warranted because the question is novel, controlling, and may avoid needless trial and nationwide implications | Court found all three §1292(b) elements met and certified the specified question |
| Whether the appeal will materially advance termination of litigation (warranting a stay) | Opposes stay, noting pending cross‑motions for summary judgment that might obviate trial | A reversal would be dispositive and eliminate need for costly trial and further discovery | Court granted a stay pending appeal because reversal would dispose of the entire case and conserve resources |
| Whether the issue is of national significance | Limited applicability, only few Third Circuit cases | The question is already pending in multiple circuits and could affect many federal‑agency ratification scenarios nationwide | Court held the issue has nationwide significance and merits appellate resolution |
Key Cases Cited
- Seila Law LLC v. Consumer Financial Protection Bureau, 140 S. Ct. 2183 (2020) (SCOTUS: CFPB Director’s for‑cause removal protection unconstitutional but severable)
- Federal Election Comm’n v. NRA Political Victory Fund, 513 U.S. 88 (1994) (ratification requires that the ratifier have power to do the act at time of ratification)
- Advanced Disposal Servs. East, Inc. v. NLRB, 820 F.3d 592 (3d Cir. 2016) (ratifier must have authority at ratification date to cure prior defect)
- Katz v. Carte Blanche Corp., 496 F.2d 747 (3d Cir. 1974) (purposes and standards for §1292(b) interlocutory certification)
- Landis v. North American Co., 299 U.S. 248 (1936) (district courts have inherent power to stay proceedings to manage dockets)
- Nken v. Holder, 556 U.S. 418 (2009) (stay is discretionary and requires balancing competing interests)
- FTC v. Wyndham Worldwide Corp., 799 F.3d 236 (3d Cir. 2015) (discusses what makes a question 'controlling' for interlocutory review)
- Reese v. BP Exploration (Alaska) Inc., 643 F.3d 681 (9th Cir. 2011) (novel legal questions may provide substantial grounds for difference of opinion)