Dawson, Meredith v. Great Lakes Educational Loan Services, Inc., 3:15-cv-00475

Background

Plaintiff Meredith Dawson and a certified class comprise federal student-loan borrowers whose loans were serviced by Great Lakes Educational Loan Services, Inc. (GLELSI) and who received B‑9 forbearances; the class covers loans serviced by GLELSI from 2006 to present.
At issue: GLELSI capitalized accrued interest both before (pre‑forbearance) and during (intra‑forbearance) B‑9 forbearances, increasing principal and future interest; defendants concede the capitalizations were errors (programming errors and regulatory misunderstanding).
Dawson alleged RICO mail/wire‑fraud claims and Wisconsin state common‑law claims for negligence and negligent misrepresentation; the court previously certified the class on liability and reserved damages certification.
Defendants moved for summary judgment; the court granted summary judgment on all RICO claims and dismissed individual defendants Lentz and Walker, but denied summary judgment on the state‑law claims against GLELSI and GLHEC.
The court held that federal preemption and immunity defenses (intergovernmental and Yearsley) fail as presented and that remediation evidence offered by defendants is presently insufficient to show the class was made whole.
The court certified damages for class treatment (eliminated earlier subclasses), ordered further proceedings (damages discovery, expert work, Daubert challenges), and denied Dawson’s motion for sanctions.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Procedural denial of summary judgment for rule violations	Defendants’ proposed facts violated court rules and warranted automatic denial	Court has discretion; violations do not require automatic denial	Denied — court disregarded improper facts and reached merits
Whether GLELSI (person) conducted affairs of GLHEC (enterprise) under §1962(c)	GLELSI’s actions in servicing loans show it conducted parent’s affairs	Parent/subsidiary affiliation alone insufficient; no evidence subsidiary controlled parent	Granted for defendants — plaintiff failed to show distinctness/control required for RICO
Whether Jill Leitl conducted GLELSI’s affairs under §1962(c)	Leitl as COO/CSO directed servicing practices and compliance interactions	Allegations show involvement in corrections, not direction of fraudulent scheme	Denied for plaintiff — no evidence Leitl directed or controlled alleged fraud
Whether GLELSI conducted Department of Education’s affairs under §1962(c)	(Raised later) GLELSI allegedly directed DOE via servicing role	New theory not pleaded; cannot raise new RICO claim at summary judgment	Denied — new claim waived and lacks evidence of control
Preemption of state‑law negligence/misrepresentation claims by HEA	State claims enforce federal standards against servicers	HEA/DOE oversight and uniformity require preemption or exclusive federal remedy	Denied — presumption against preemption, HEA does not clearly preempt these state tort claims (state claims here complement federal standards)
Whether class has damages given defendants’ remediation projects	Class suffered harm from capitalization; remediation evidence is defendant’s burden to prove class made whole	Remediations fixed accounts; damages resolved individually; precludes class damages	Court: remediation evidence is presently conclusory; damages calculable class‑wide; certified damages for class treatment
Sanctions under Rule 11	Defendants made false/misleading statements and used inadmissible evidence	Statements were sloppy shorthand; record corrected; no sanctionable intent	Denied — corrections made and no basis for Rule 11 sanctions

Key Cases Cited

Bucklew v. Hawkins, Ash, Baptie & Co., LLP, 329 F.3d 923 (7th Cir. 2003) (parent/subsidiary affiliation insufficient for RICO distinctness absent control)
Emery v. American Gen. Fin., Inc., 134 F.3d 1321 (7th Cir. 1998) (substantial control of parent by subsidiary required to treat them as separate under RICO)
Fitzgerald v. Chrysler Corp., 116 F.3d 225 (7th Cir. 1997) (person must control enterprise to establish §1962(c) liability)
Reves v. Ernst & Young, 507 U.S. 170 (U.S. 1993) (to ‘‘conduct or participate’’ in enterprise affairs requires part in directing those affairs)
Roppo v. Travelers Commercial Ins. Co., 869 F.3d 568 (7th Cir. 2017) (standard for participating in operation or management of an enterprise)
Nelson v. Great Lakes Educ. Loan Servs., Inc., 928 F.3d 639 (7th Cir. 2019) (HEA does not categorically preempt state‑law consumer claims; state remedies can complement federal standards)
Chae v. SLM Corp., 593 F.3d 936 (9th Cir. 2010) (HEA uniformity rationale supporting preemption in certain administrative‑mechanics contexts)
Bible v. United Student Aid Funds, Inc., 799 F.3d 633 (7th Cir. 2015) (state law claims that enforce rather than alter HEA standards are not preempted)
Buckman Co. v. Plaintiff’s Legal Comm., 531 U.S. 341 (U.S. 2001) (state tort claims preempted where they would interfere with federal regulatory scheme policing fraud against federal agency)
Arizona v. United States, 567 U.S. 387 (U.S. 2012) (conflict‑preemption principles and when state enforcement methods conflict with federal).