The opinion
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
LESROY E. BROWNE, on behalf of
himself and those similarly situated,
Plaintiff,
Civ. No. 21-11871 (KM) (JSA)
v.
OPINION
NATIONAL COLLEGIATE
STUDENT LOAN TRUST; and
JOHN DOES 1 to 15,
Defendants.
KEVIN MCNULTY, U.S.D.J.:
In 2007, Lesroy E. Browne cosigned a student loan from JP Morgan
Chase. That loan was paid in full in 2020. At some point before the loan was
repaid, it was transferred from the originator to a trust. Browne now brings a
putative class action against National Collegiate Student Loan Trust (“NCSLT”).
He seeks a declaration that the Trust to which his loan was assigned was not
licensed to collect debts in New Jersey and thus that his loan payments for
several years should be refunded, and treble damages paid. Defendants now
move to dismiss Browne’s claims, arguing that he lacks standing and fails to
state a claim upon which relief may be granted. For the following reasons,
defendants’ motion to dismiss is GRANTED.
I. BACKGROUND
In 2007, Lesroy E. Browne cosigned the student loan of Evandey Browne.
(Compl. ¶ 23.)1 That loan was issued by JP Morgan Chase Bank. (Id.) At some
1 Certain citations to the record are abbreviated as follows:
DE = docket entry number in this case
Compl. = Complaint (DE 1-1)
Mot. = Defendants’ brief in support of their motion to dismiss (DE 16)
point around 2017, the loan was assigned to a National Collegiate Student
Loan Trust (NCSLT 2007-1). Upon being informed of the assignment, Browne
duly continued to make payments to the Trust until the loan was paid in full in
2020. (Id. ¶ 25–26.) NCSLT, named as a defendant, is portrayed as some sort of
umbrella organization; plaintiff served process on 16 different individual Trusts
thereunder. (DE 1-1 at 20–40.) Defendants claim that the Trusts are “Delaware
statutory trusts formed for the narrow purpose of acquiring and servicing
student loans and issuing notes pursuant to an indenture” and that they do
not do any business themselves, but act only through limited agents and
contractors. (Mot. at 4.) The various Trusts are named after the year that they
were formed; thus, for example, Browne made loan payments to NCSLT 2007-
1, formed in 2007. (Id. at 5.) The Trusts are not licensed under New Jersey’s
Consumer Finance Licensing Act (“CFLA”). (Compl. ¶ 1.)
The complaint contains three interrelated Counts. First, plaintiff seeks a
declaratory judgment that defendants violated the CFLA by collecting debts in
New Jersey without a license. (Compl. ¶ 51–56.) Then, based on the premise
that the Trusts were subject to licensure requirements, Count 2 alleges that
the Trusts violated the CFA by collecting debts without being properly licensed.
(Id. ¶ 67–73.) Finally, Count 3 alleges that the Trusts were unjustly enriched by
the payments of Browne (and other putative class members), and must
disgorge those payments. (Id. ¶ 74–81.)
Plaintiff filed this putative class action in New Jersey Superior Court,
Law Division, Hudson County, on April 21, 2021. (Compl.) On May 27, 2021,
defendants removed the case to this court. (DE 1.) On July 30, 2021,
defendants moved jointly to dismiss. (DE 14, 16.) Plaintiff filed a brief in
opposition (DE 25) and defendants filed a reply (DE 29). This motion is now
fully briefed and ripe for decision.
Opp. = Plaintiff’s brief in opposition to the motion to dismiss (DE 25)
II. STANDARD OF REVIEW
Federal Rule of Civil Procedure 8(a) does not require that a pleading
contain detailed factual allegations, but it must assert “more than labels and
conclusions.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). The
allegations must raise a claimant’s right to relief above a speculative level, so
that a claim is “plausible on its face.” Id. at 570. That standard is met when
“factual content [] 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 (2009). Rule 12(b)(6) provides for the dismissal of a complaint if it fails to
state a claim. The defendant bears the burden to show that no claim has been
stated. Davis v. Wells Fargo, 824 F.3d 333, 349 (3d Cir. 2016). I accept facts in
the complaint as true and draw reasonable inferences in the plaintiff’s favor.
Morrow v. Balaski, 719 F.3d 160, 165 (3d Cir. 2013) (en banc).
Jurisdiction must be established as a threshold matter. Steel Co. v.
Citizens for a Better Env’t, 523 U.S. 83 (1998). A motion to dismiss for lack of
standing, properly considered as one under Rule 12(b)(1), may be brought, like
the one here, as a facial challenge. See Lincoln Ben. Life Co. v. AEI Life, LLC,
800 F.3d 99, 105 (3d Cir. 2015). Where the motion challenges jurisdiction on
the face of the complaint, the court only considers the allegations of the
complaint and documents referred to therein, construed in the light most
favorable to the plaintiff, as on a Rule 12(b)(6) motion. Gould Elecs., Inc. v.
United States, 220 F.3d 169, 176 (3d Cir. 2000) (citing Mortensen v. First Fed.
Sav. & Loan Ass’n, 549 F.2d 884, 891 (3d Cir. 1977)).
III. DISCUSSION
a. Standing
Article III of the Constitution requires that a plaintiff have standing to
assert his or her claims. See Lujan v. Defenders of Wildlife, 504 U.S. 555, 560
(1992). To prove standing, a plaintiff must establish
(1) an injury-in-fact, which is an invasion of a legally protected
interest that is (a) concrete and particularized, and (b) actual or
imminent, not conjectural or hypothetical; (2) a causal connection
between the injury and the conduct complained of; and (3) that it
must be likely, as opposed to merely speculative, that the injury
will be redressed by a favorable decision.
Winer Family Tr. v. Queen, 503 F.3d 319, 325 (3d Cir. 2007) (citing Danvers
Motor Co., Inc. v. Ford Motor Co., 432 F.3d 286, 290-91 (3d Cir. 2005)); see
Lujan, 504 U.S. at 560–61. In Lujan, the Court stated that to suffer an “injury-
in-fact” a plaintiff must show that he or she suffered “an invasion of a legally
protected interest” that is “concrete and particularized” and “actual or
imminent, not conjectural or hypothetical.” Lujan, 504 U.S. at 560 (internal
quotation marks omitted).
In two recent cases, the Supreme Court discussed the concrete-injury
requirement. First, in Spokeo Inc. v. Robins, the Court held that the plaintiff
had not suffered a concrete injury under the Fair Credit Reporting Act when
Spokeo, a credit reporting service, reported false information about Robins. 578
U.S. 330, 333 (2016). The Court allowed that “concrete” is not the same as
“tangible,” and that Congress has the power to “identify[] and elevat[e]
intangible harms” to de facto injuries that provide standing. Id. at 341. The
Court held, however, that “Article III standing requires a concrete injury even in
the context of a statutory violation.” For that reason, “Robins could not, for
example, allege a bare procedural violation, divorced from any concrete harm,
and satisfy the injury-in-fact requirement of Article III.”2 Id.
This year, in TransUnion LLC v. Ramirez, another case based on the Fair
Credit Reporting Act, the Court distinguished between (a) a bare claim that a
credit report was inaccurate and (b) a claim that an inaccurate report had been
transmitted to third parties. Only (b), the Court held, gave rise to a claim of
concrete harm sufficient to confer standing. 141 S. Ct. 2190, 2200 (2021). The
2 The Court in Spokeo did note that a risk of concrete harm may be enough to
confer standing, but that not all inaccuracies present a material risk of harm. The
Court gave in dictum the example of an incorrect zip code as something that could not
cause any risk of harm. Id. at 342. Someone’s zip code might, however, suggest their
economic status, and could realistically create the risk of a loan denial. See id. at 353
(Ginsburg, J., dissenting).
Court reiterated that though “Congress may ‘elevate’ harms that ‘exist’ in the
real world before Congress recognized them to actionable legal status, it may
not simply enact an injury into existence, using its lawmaking power to
transform something that is not remotely harmful into something that is.” Id.
at 2204 (quoting Hagy v. Demers & Adams, 882 F.3d 616, 622 (6th Cir. 2018)).
The Court went on to state “[o]nly those plaintiffs who have been concretely
harmed by a defendant’s statutory violation may sue that private defendant
over that violation in federal court.” Id. at 2205 (emphasis in original). As the
Court repeated, “No concrete harm, no standing.” Id. at 2200, 2214. Simple
enough to say, though perhaps not always so easy to apply.
Here, Browne claims that as soon as his loan was assigned to NCSLT
2007-1, “the credit accounts became void and unenforceable,” because NCSLT
2007-1 was not licensed under the CFLA. (Compl. ¶ 1, 33.) Browne seeks a
declaratory judgment that NCSLT 2007-1 was required to be licensed under the
CFLA. (Id. ¶ 51–66.) Because NCSLT 2007-1 lacked a license, plaintiff argues,
the Trust’s continued attempts to collect on the loan by, e.g., directing Browne
to pay NCSLT 2007-1 rather than JP Morgan Chase, were illegal and
constituted “unconscionable commercial practices” under the New Jersey
Consumer Fraud Act (“CFA”). It also follows, he argues, that NCSLT 2007-1
was unjustly enriched by the loan payments he made. (Id. ¶ 60, 72, 78.)
Standing is lacking. Browne has not alleged that he suffered any
concrete harm, or any risk of concrete harm.3 All he has alleged is that at some
point while paying back the student loan, he began to pay NCSLT 2007-1
rather than JP Morgan Chase.4 He does not allege that this change caused him
3 I also find that the CFLA does not provide for a private right of action, as
discussed below.
4 The parties argue over who the proper defendants are because the named
defendant “National Collegiate Student Loan Trust” does not exist. (Mot. at 3–4; Opp.
at 23–24.) I do not hold plaintiff’s confusion against him, as the structure of the trusts
is certainly opaque, and I will construe the case as being brought against the 16
individual trusts, who were individually served. Assuming that the trusts are
independent legal entities, Browne can only bring his own claim against the specific
to pay a single penny more than he would otherwise have paid, or that it
delayed his repayment of the loan, or that it harmed his credit rating, or that it
even caused him distress, confusion, or wasted time. If JP Morgan Chase had
kept the loan on its own books until it was paid off, plaintiff would have paid
back the exact same amount of money and finished paying off the loan at the
exact same time, and he would occupy the very same status with respect to the
loan that he occupies today. NCSLT 2007-1’s non-licensure, in this context, is
exactly the type of “bare procedural violation” that does not confer standing
without evidence of concrete harm. Spokeo, 578 U.S. at 341. Because Browne
has not suffered any concrete harm, this case cannot proceed in federal court
and must be dismissed on jurisdictional grounds for lack of standing.
b. CFLA
In the alternative, however, and because the standing-based dismissal is
without prejudice to amendment, I briefly discuss some aspects of the merits
for the guidance of the parties.
Browne asserts that there is conflicting authority on whether the CFLA
provides a private right of action.5 Defendants cite three cases from this district
asserting that the CFLA does not confer a private right of action. (Mot. at 9
(citing MacDonald v. CashCall, Inc, 2017 WL 1536427, at *11 (D.N.J. Apr. 28,
2017), aff’d, 883 F.3d 220 (3d Cir. 2018); Jubelt v. United N. Bankers, Ltd.,
2015 WL 3970227, at *14 (D.N.J. June 30, 2015); Veras v. LVNV Funding, LLC,
2014 WL 1050512, at *8 (D.N.J. Mar. 17, 2014)).) See also North v. Portfolio
Recover Associates, LLC, 2021 WL 4398650, at *3 (D.N.J. Sept. 24, 2021). Like
the other judges who have examined this question, I find convincing Judge
trust that held his loan. He would have no standing to sue or cause of action against
the other trusts, with which he did not interact in any manner.
5 If not, then Browne is not entitled to a declaratory judgment: “[I]t is well settled
that parties cannot bring a declaratory judgment action under a statute when there is
no private right of action under that statute.” Excel Pharmacy Servs., LLC v. Liberty
Mut. Ins. Co., 825 F. App’x 65, 70 (3d Cir. 2020).
Kugler’s thorough analysis in Veras of why a private right of action should not
be implied in the CFLA. 2014 WL 1050512 at *7–*9.
Because I hold that the CFLA does not confer a private right of action,
the first Count for a declaratory judgment under the CFLA, even if standing
could be found, would not state a claim.6 The merits of the entire case depend
on whether Browne can prevail on Count 1—i.e., obtain a declaratory judgment
holding that NCSLT 2007-1 violated the CFLA by virtue of its failure to be
licensed. The merits of the other two Counts would stand, or in this case fall,
with those of Count 1.
IV. CONCLUSION
For the reasons set forth above, defendant’s motion to dismiss (DE 14) is
GRANTED for lack of standing, without prejudice. A separate order will issue.
Dated: December 22, 2021
/s/ Kevin McNulty
___________________________________
Hon. Kevin McNulty
United States District Judge
6 Browne cites several cases from this district suggesting an indirect route to a
cause of action. Those cases held that plaintiffs were able to state claims under the
federal Fair Debt Collection Practices Act (“FDCPA”) based on collection activities of
debt collectors who were not licensed under the CFLA. (Opp. at 12 (citing, e.g.,
Tompkins v. Selip & Stylianou, LLP, 2019 WL 522143, at *2 (D.N.J. Feb. 11, 2019)).) In
those cases, it was the FDCPA, not the CFLA, that provided standing and a private
right of action. No cause of action under the FDCPA has been pled here. I therefore do
not address whether the logic that allowed the CFLA/FDCPA cases to survive a motion
to dismiss could also apply to a CFLA/CFA claim, if one were pled.