Pottetti v. Educational Credit Management Corporation
2:19-cv-04479
E.D.N.YSep 22, 2020Background
- Pro se plaintiff William Pottetti sued Educational Credit Management Corporation (ECMC) after ECMC began administratively garnishing 15% of his wages in December 2018, allegedly without notice.
- Pottetti's amended complaint asserted violations of the Fourteenth and Fifth Amendment due process, the Higher Education Act (HEA), the Fair Debt Collection Practices Act (FDCPA), the Fair Credit Reporting Act (FCRA), and the Uniform Commercial Code (UCC).
- ECMC moved to dismiss; the Court ordered supplemental briefing on due process, FCRA, and UCC claims. Pottetti did not file the supplemental response.
- ECMC represented it suspended garnishment in September 2019; the Court granted a preliminary injunction but preserved merits briefing.
- The Court dismissed all federal claims on the merits and declined supplemental jurisdiction over the state-law UCC claim (dismissing it without prejudice). The Court denied further leave to amend as futile.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether ECMC's wage garnishment violated procedural due process/state-action | Pottetti: garnishment occurred without notice or opportunity to be heard, violating the Fifth and Fourteenth Amendments | ECMC: although authorized by federal statute, its actions are private, not state action | Court: dismissed due process claim — plaintiff failed to plead that ECMC’s conduct was fairly attributable to the State (no close nexus/governmental function alleged) |
| Whether HEA §1095a procedures give plaintiff a private cause of action | Pottetti: HEA notice/hearing rights were violated | ECMC: HEA enforcement is reserved to the Secretary of Education; no private right alleged | Court: dismissed HEA claim — HEA provides no private right; plaintiff did not pursue administrative remedies or name Secretary |
| Whether ECMC is a “debt collector” under the FDCPA | Pottetti: characterized ECMC as a collection agency and alleged abusive collection | ECMC: acts as creditor/guaranty agency collecting on its own loans, not an FDCPA debt collector | Court: dismissed FDCPA claim — plaintiff failed to plead facts showing statutory “debt collector” status (and exceptions apply) |
| Whether ECMC violated the FCRA by furnishing inaccurate information or failing to investigate | Pottetti: alleged debt validation/reporting problems and asserted FCRA violations | ECMC: no allegation that it reported to CRAs or received CRA dispute notices | Court: dismissed FCRA claim — plaintiff did not allege furnishing to CRAs or notice from a CRA, nor causal harm from reporting |
| Validity of UCC-based state-law claim and jurisdictional disposition | Pottetti: argued garnishment violated UCC (no agreement) | ECMC: merits not reached once federal claims dismissed | Court: declined supplemental jurisdiction over UCC claim and dismissed it without prejudice; no further amendment allowed on federal claims as futile |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (pleading standard requiring plausible factual allegations)
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) (plausibility pleading framework)
- Lugar v. Edmondson Oil Co., Inc., 457 U.S. 922 (1982) (two-part test for state action)
- Am. Mfrs. Mut. Ins. Co. v. Sullivan, 526 U.S. 40 (1999) (state action requires conduct fairly attributable to the State)
- Edmonson v. Leesville Concrete Co., Inc., 500 U.S. 614 (1991) (factors relevant to governmental character of private action)
- Grogan v. Blooming Grove Volunteer Ambulance Corps, 768 F.3d 259 (2d Cir. 2014) (state-action nexus analysis)
- Maguire v. Citicorp Retail Servs., Inc., 147 F.3d 232 (2d Cir. 1998) (creditors generally are not FDCPA debt collectors)
- Goldstein v. Hutton, Ingram, Yuzek, Gainen, Carroll & Bertolotti, 374 F.3d 56 (2d Cir. 2004) (alternative predicates for debt-collector status)