Commonwealth of Pennsylvania v. Navient Corp

PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

No. 19-2116

COMMONWEALTH OF PENNSYLVANIA

v.

NAVIENT CORP; NAVIENT SOLUTIONS LLC

Appellants

Appeal from the United States District Court

for the Middle District of Pennsylvania

(D.C. Civil Action No. 3-17-cv-01814)

District Judge: Honorable Robert D. Mariani

Argued March 11, 2020

Before: McKEE, AMBRO, and PHIPPS, Circuit Judges

(Opinion filed: July 27, 2020)

Daniel T. Brier

Myers Brier & Kelly

425 Spruce Street, Suite 200

Scranton, PA 18503

James P. Brown

Jennifer Levy

Patrick Brown

Mike Kilgarriff

Kirkland & Ellis

1301 Pennsylvania Avenue, N.W.

Washington, DC 20004

Michael Shumsky (Argued)

Hyman Phelps & McNamara

700 Thirteenth Street, N.W., Suite 1200

Washington, DC 20005

Counsel for Appellants

Josh Shapiro

Attorney General State of Pennsylvania

Howard G. Hopkirk (Argued)

Senior Deputy Attorney General

Jesse F. Harvey

Chief Deputy Attorney General

John Abel

Senior Deputy Attorney General

Jill T. Ambrose

Deputy Attorney General

Office of the Attorney General of Pennsylvania

Strawberry Square

Harrisburg, PA 17120

Nicholas Smyth

Senior Deputy Attorney General

Office of Attorney General of Pennsylvania

2

1251 Waterfront Place, Mezzanine Level

Pittsburgh, PA 15222

Counsel for Appellee

Mary McLeod

General Counsel

John Coleman

Deputy General Counsel

Steven Y. Bressler

Assistant General Counsel

Lawrence Demille-Wagman

Senior Litigation Counsel

Christopher Deal (Argued)

Consumer Financial Protection Bureau

1700 G Street, N.W.

Washington, DC 20552

Counsel for Amicus Appellee

Consumer Financial Protection Bureau

Faith E. Gay

Maria Ginzburg

Yelena Konanova

Margaret Larkin

Ryan W. Allison

Selendy & Gay

1290 Avenue of the Americas, 17th Floor

New York, NY 10104

Mark Richard

Phillips, Richard & Rind, P.A.

9360 S.W., 72nd Street, Suite 283

3

Miami, FL 33173

Counsel for Amicus Appellee

American Federation of Teachers

Letitia James

Attorney General State of New York

Barbara D. Underwood

Solicitor General

Steven C. Wu

Deputy Solicitor General

Ester Murdukhayeva

Assistant Solicitor General of Counsel

Office of Attorney General of New York

28 Liberty Street, 23rd Floor

New York, NY 10005

Counsel for Amicus Appellee

State of New York

Jon Greenbaum

Lawyers’ Committee for Civil Rights Under Law

1500 K Street, N.W., Suite 900

Washington, DC 20005

Counsel for Amicus Appellee

Lawyers Committee for Civil Rights Under Law

Benjamin J. Roesch

Jensen Morse Baker

1809 Seventh Avenue, Suite 410

Seattle, WA 98101

4

Counsel for Amicus Appellees

Student Borrower Protection Center; Seniorlaw

Center; Center for Responsible Lending; New Jersey

Citizen Action; Lawyers Committee for Civil Rights

Under Law; Community Legal Services of

Philadelphia

OPINION OF THE COURT

AMBRO, Circuit Judge

We decide two issues in this appeal: first, whether the

Commonwealth of Pennsylvania may bring a parallel

enforcement action against Navient Corporation and Navient

Solutions, LLC (together, “Navient”) under the Consumer

Financial Protection Act of 2010 (the “Consumer Protection

Act”), codified in relevant part at 12 U.S.C. § 5552, after the

Consumer Financial Protection Bureau (the “Bureau”) has

filed suit; and second, whether and to what extent the federal

Higher Education Act of 1965 (the “Education Act”), 20

U.S.C. § 1001 et seq., preempts the Commonwealth’s loan-

servicing claims under its Unfair Trade Practices and

Consumer Protection Law (the “PA Protection Law”), 73 Pa.

Cons. Stat. §§ 201-1 to 201-9.3.

We hold that the plain language of the Consumer

Protection Act permits the Commonwealth’s concurrent

action. And we follow our sister Circuits in holding that

although the preemption provision of the Education Act

preempts claims based on failures to disclose information as

required by the statute, it does not preempt claims based on

affirmative misrepresentations. See Lawson-Ross v. Great

5

Lakes Higher Educ. Corp., 955 F.3d 908, 911 (11th Cir. 2020);

Nelson v. Great Lakes Educ. Loan Servs., Inc., 928 F.3d 639,

642 (7th Cir. 2019). Cf. Chae v. SLM Corp., 593 F.3d 936 (9th

Cir. 2010). As the Commonwealth’s claims under the PA

Protection Law based on affirmative misrepresentations and

misconduct are not preempted, we affirm the District Court’s

denial of Navient’s motion to dismiss.

I. BACKGROUND

A. Statutory and Regulatory Background

Congress enacted the Education Act in order “to keep

the college door open to all students of ability, regardless of

socioeconomic background.” Bible v. United Student Aid

Funds, Inc., 799 F.3d 633, 640 (7th Cir. 2015) (citation

omitted). To that end, the Act established two federal student

loan programs that are designed to help every student afford

the college or trade school of his or her choice: (i) the Direct

Loan Program, under which the Department of Education (the

“DOE”) lends federal taxpayer dollars directly to student

borrowers, see 20 U.S.C. § 1087a et seq.; and (ii) the Federal

Family Education Loan Program (the “Indirect Loan

Program”), under which the federal Government guarantees

privately funded loans to student borrowers, see 20 U.S.C.

§ 1071 et seq.

The federal Government does not directly administer

these loan programs. The DOE contracts with third parties like

Navient to administer and service loans under the Direct Loan

Program and imposes contractual requirements that govern

what servicers may do when acting on the DOE’s behalf. For

both Direct Loan Program and Indirect Loan Program loans,

the DOE has promulgated comprehensive regulations that

control the student loan process, including the types of charges

that are permitted, see 34 C.F.R. § 682.202; the kinds of

6

repayment plans that are available, see §§ 682.209, 685.208;

and the ways in which those plans can be restructured, see

§§ 682.210–11, 685.204–05.

Federal student loans are eligible for several types of

deferred payment plans to help borrowers avoid defaulting.

Servicers may grant a “forbearance” to borrowers having

financial trouble during the repayment period. This “permit[s]

the temporary cessation of payments, allowing an extension of

time for making payments, or temporarily accepting smaller

payments than previously were scheduled.” § 682.211(a)(1).

The DOE’s regulations specify the circumstances under which

a loan servicer may offer forbearance. See, e.g.,

§§ 682.211(a)(2), 685.205. Borrowers who enter forbearance

face significant costs, such as, among other things, having their

monthly payments increase due to accumulated unpaid

interest.

DOE regulations dictate how loan issuers and servicers

must communicate with borrowers about forbearance. Lenders

and servicers must make extensive disclosures, including those

related to fees and repayment options, at many stages of a

loan’s lifecycle: “before disbursement,” 20 U.S.C. § 1083(a);

“before repayment,” § 1083(b); “during repayment,”

§ 1083(e); to “a borrower having difficulty making payments,”

§ 1083(e)(2); and to “a borrower who is 60 days delinquent in

making payments on a loan,” § 1083(e)(3). Before placing

borrowers into forbearance, loan servicers must disclose its

terms, including that deferred interest will be capitalized. See

§§ 1083(a)(6)(B), 1083(e)(2); see also § 1087e(p); 34 C.F.R.

§ 682.211. Servicers must repeat that disclosure within 30

days of granting forbearance and must disclose every 180 days

during the forbearance period. See §§ 1083(b), 1087e(p); 34

C.F.R. § 682.211(e)(2).

7

In addition to forbearance, loan servicers offer an array

of alternate repayment plans, referred to as Income-Driven

Repayment (“IDR”) plans, when borrowers encounter

difficulties during the repayment period, each with varying

qualification requirements and repayment provisions plans.

Borrowers who enter an IDR plan do not defer payments

entirely but instead adjust their monthly payments. To qualify

for IDR, borrowers must fill out a federal application, submit

supporting documents, and then recertify their income and

family size annually. 34 C.F.R. §§ 682.215(e), 685.221(e).

As with forbearance, federal law details what, when,

and how loan servicers must communicate with borrowers

regarding the availability of IDR. See 20 U.S.C. § 1087e(p);

34 C.F.R. § 682.205(e). Once repayment begins, if “a

borrower . . . has notified the lender that the borrower is having

difficulty making payments,” the servicer must provide a

written disclosure “in simple and understandable terms” that

details both the expected costs associated with forbearance if

the borrower chooses that option, and instructions for seeking

IDR if a student borrower seeks an alternative to forbearance.

20 U.S.C. § 1083(e)(2) (Indirect Loan Program); see also

§ 1087e(p) (Direct Loan Program). 1

1

In addition, among other disclosures, federal law requires

lenders and loan servicers to disclose: the availability of IDR

when the loan is disbursed and before repayment begins,

§§ 1083(a)(11), (b)(6); 34 C.F.R. § 682.205(a)(2)(xii) (Indirect

Loan Program); § 1087e(p) (Direct Loan Program); the

availability of, and procedures for enrolling in, IDR before

repayment begins, 20 U.S.C. § 1077(a)(2)(H); 34 C.F.R.

§ 682.205(e) (Indirect Loan Program); 20 U.S.C.

§§ 1087e(d)(1)(D)–(E), 1087e(p) (Direct Loan Program); and

the specified information regarding IDR on every statement

8

DOE regulations also require that loan servicers provide

oral disclosures regarding forbearance and IDR at other times.

When a defaulted borrower orally requests a forbearance, the

servicer must “orally review with the borrower the terms and

conditions of the forbearance, including the consequences of

interest capitalization, and all other repayment options

available to the borrower,” and must send a written notice with

similar information. 34 C.F.R. §§ 682.211(d)(iii),

685.205(a)(8). DOE regulations do not require federal loan

servicers to disclose the availability of IDR on each phone call.

Federal law does require that multiple written or electronic

notices and disclosures be provided to borrowers, including

with each bill or statement. 20 U.S.C. §§ 1083(e)(1) (Indirect

Loan Program), 1087e(p) (Direct Loan Program).

The Education Act grants the DOE broad discretion to

regulate these loan programs, see, e.g., § 1082(a)(1), and

expressly requires the DOE to “prescribe standardized forms

and procedures regarding” deferments, forbearance, and

servicing, § 1082(I)(1)(D)–(F). These standardized procedures

must “include all aspects of the loan process,” § 1082(I)(2)(A),

“be designed to minimize administrative costs and burdens,”

id., and standardize and simplify procedures related to

servicing, § 1082(I)(3)(A). 2

sent to the borrower, including “a reminder that the borrower

has the option to change repayment plans,” and a link to the

DOE’s IDR website, 20 U.S.C. § 1083(e)(1)(I); 34 C.F.R.

§ 682.205(a)(3)(ix) (Indirect Loan Program); § 1087e(p)

(Direct Loan Program).

2

In the last decade, the federal Government considered

steps to promote awareness of IDR. For example, a 2012

Presidential Memorandum noted that “too few borrowers are

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B. Navient’s Conduct

1. Loan-Originating Related Conduct

Navient has been “engaged in trade and commerce by

offering, selling, marketing and promoting student loans to

borrowers and by servicing and collecting on borrowers’

student loans.” App. 105.3 From 2004 until 2014, Navient’s

predecessors also were engaged in that business. 4

aware of the options available to them to help manage their

student loan debt, including reducing their monthly payment

through [IDR] . . . .” See The White House, June 7, 2012

Memorandum on Improving Repayment Options for Federal

Student Loan Borrowers, 77 Fed. Reg. 35,241 (June 13, 2012),

https://tinyurl.com/y5o39q4z. In July 2016, the DOE proposed

that federal regulations should be amended to require that

federal loan servicers employ “staff who receive enhanced

training related to repayment and forgiveness options,” and

who in turn would (A) “assess the borrower’s long-term and

short-term financial situation and consider all available

information about the borrower’s income and family size,” and

(B) “discuss the concept of [IDR] plans” with struggling

borrowers. DOE, Policy Direction on Federal Student Loan

Servicing (July 20, 2016), https://tinyurl.com/yxnkrava. In

2017, however, the DOE decided not to implement the

proposed regulatory changes. See Letter from Secretary of

Education re Student Loan Servicer Recompete (Apr. 11,

2017), https://tinyurl.com/y2v2m8uq.

3

The alleged facts recounted herein are drawn from the

Commonwealth’s complaint.

10

Until 2007, many school financial aid offices

maintained a preferred lenders list to give students guidance in

choosing between different lenders. Navient attempted to

place itself at the top of those lists to obtain access to schools’

potential borrowers. Navient marketed custom loan packages

to schools, including Indirect Loan Program loans, private

loans for borrowers who qualified for Navient’s standard

private student loan products (“prime loans”), and private loans

for students who did not qualify for standard private student

loans (“subprime loans”). This benefited schools by

maximizing enrollment and Navient by giving it a greater share

of the market.

Subprime loans typically had high variable interest rates

and high origination fees. Student borrowers who took out

subprime loans were not informed that the loans were part of a

subprime lending program and had a high likelihood of default.

Navient internally described this strategy as “Current Strategy

is Working: ––Use subprime to win school deals and secure

[Indirect Loan Program] and standard private volume––View

economics on an all-in basis.” App. 119. A 2007 internal

email describes one of Navient’s subprime loan programs as

“the baited hook to gain [Indirect Loan Program] volume.”

App. 119.

Navient allegedly loosened its required credit criteria so

that subprime borrowers could qualify without knowing the

4

In 2014, Navient assumed the liabilities of its

predecessors—SLM Corporation and Sallie Mae, Inc.—and

took over their student loan servicing and debt collection

business. The action against Navient includes conduct by

those predecessors. For convenience, we refer to Navient,

rather than its predecessors, during the time periods the latter

entities were involved.

11

true risk of default. Between 2000 and 2006 there was a

substantial increase in the number of high-risk subprime loans

made by Navient to students attending schools with a less than

a 50% graduation rate and to students with credit scores of less

than 640. From 2000 to 2007, between 68% and 87% of

Navient’s high-risk loans defaulted. 5

2. Loan Servicing-Related Conduct

a. Navient Allegedly Steered

Borrowers into Forbearance.

Navient allegedly has encouraged borrowers repeatedly

to communicate with its representatives for assistance, only to

steer them into forbearance rather than more affordable

alternatives like IDR plans. The Commonwealth argues that

this was done because enrolling a borrower in forbearance can

be completed in a few minutes without paperwork, while

enrolling in an IDR plan requires the submission of paperwork

5

In their Amicus Curiae brief, New York and its joining

States allege widespread abuses by servicers like Navient that

have harmed millions of borrowers by impeding their access to

IDR plans and public-service loan-forgiveness programs. For

example, an investigation by Illinois into Navient found that it

routinely steered consumers into forbearances rather than IDR

plans. California alleges that Navient misled struggling

borrowers about the amount needed to bring their accounts

current and induced them into making unnecessarily high

payments. California, Washington, and Mississippi have sued

Navient for these and other deceptive practices. The Attorneys

General for Colorado, Kansas, Oregon, New Jersey, New

York, and the District of Columbia have also issued civil

investigative demands to Navient. Amicus Curiae Br. for

States of New York et al. 7–13.

12

and annual recertification, and Navient representatives were

compensated based on average call time. Hence enrolling

borrowers in IDR plans was costly.

Navient allegedly enrolled many borrowers into

multiple consecutive forbearances even though they had

demonstrated a long-term inability to repay their loans. For

instance, between January 2010 and March 2015, Navient

enrolled more than 1.5 million borrowers in multiple

consecutive forbearances instead of helping them enroll in an

IDR plan. During the same time period, the number of

borrowers that Navient enrolled in forbearance generally

exceeded the number of borrowers enrolled in IDR plans.

Navient representatives would sometimes place borrowers in

voluntary forbearance even though they would have qualified

for $0 per month payments in an IDR plan. Navient also

unnecessarily placed borrowers in forbearance before

ultimately placing them in an IDR plan. The majority of IDR

plan participants were enrolled in forbearance for more than

three months before ultimately being enrolled in an IDR plan.

This resulted in borrowers being adversely affected by the

addition of interest to the loan’s principal and losing credit for

months that would have been counted toward loan

forgiveness. 6

6

Amici Curiae the Student Borrower Protection Center and

joining organizations state that approximately 43 million

people owe over $1.4 trillion on their federal student loans.

Amici argue that “the consequences of servicers’ misconduct

can be catastrophic for struggling borrowers’ . . . lives.”

Amicus Curiae Br. for Student Borrowers Protection Center et

al. 2–3. They further contend that older borrowers, facing

limited and declining income and less access to technology,

and borrowers of color (who are over-represented in the

13

b. Issues with Recertification of

IDR Plans

Between July 2011 and March 2015, more than 60% of

Navient’s borrowers who enrolled in IDR plans failed timely

to renew their enrollment. From January 2010 to December

2012, Navient’s annual renewal notices for IDR plans (sent via

U.S. mail) allegedly did not provide notice of the actual date

by which renewal applications had to be submitted. The

notices stated that the IDR period would expire in

“approximately 90 days” and that the “renewal process may

take at least 30 days” to complete. App. 139. The

Commonwealth alleges that the notices failed to advise

borrowers of the negative consequences of submitting an

student bodies of predatory for-profit schools), are

disproportionately affected by servicer misconduct. Id. at 3–4.

It thus “systematically strips wealth from . . . communities

which are already economically disadvantaged.” Id. at 18.

Amicus Curiae the American Federation of Teachers

(“AFT”) argues that Navient’s alleged schemes have especially

affected the long-term cost of student loans for public servants,

like AFT members, many of whom would be on track for the

Public Student Loan Forgiveness program (the “Loan

Forgiveness Program”), but who were steered into forbearance

by Navient. “Congress created the [Loan Forgiveness

Program] in 2007, promising to forgive the complete balance

of federal student loan debt for any public employee who

makes 120 on-time payments on a qualifying repayment plan.”

Amicus Curiae Br. for AFT at 5. Yet, as a result of servicers’

misconduct, public employees steered into forbearance by

servicers made fewer qualifying payments even as unpaid

interest accumulated on their account. Id. at 7–16.

14

untimely or incomplete application and of having a break in

their enrollment in an IDR plan (including an immediate

increase in monthly payments, accrued interest being added to

their loan principal, loss of interest subsidies, and delays in

loan forgiveness).

Between mid-2010 and March 2015, some borrowers

had to log into an electronic portal using their username and

password to view the notices. Seventy-five percent of

Navient’s federal loan borrowers agreed to receive electronic

communications. Borrowers were sent an e-mail with a

hyperlink to Navient’s website. However, the e-mail did not

provide any indication of the purpose of the notice.

c. Misrepresentations Related to

Cosigner Releases

A cosigner is generally required for a borrower to obtain

a private student loan. After a borrower begins repayment, he

or she can usually apply to release the cosigner after meeting

eligibility criteria. As of January 2010, one of the eligibility

criteria is that the borrower makes a minimum number of

“consecutive, on-time payments.” When a borrower makes

multiple payments at one time, Navient applies the payment

for the current month and then places the borrower in a “paid

ahead” status for subsequent months. App. 144. The borrower

is then sent a bill for $0 for the subsequent months covered by

the excess payment. However, until mid-2015, Navient

allegedly treated these “non-payments” as a failure to make

consecutive payments, reset the clock, and considered the

consecutive on-time monthly payments as being zero. This

increased the number of consecutive payments necessary to

release a cosigner. Nothing on Navient’s website, billing

statements, or other documents provided to borrowers

indicated that that the clock would be reset.

15

d. Repeated Payment Processing

Errors

The Commonwealth alleges that, since at least 2011,

many borrowers have complained that Navient has

misallocated or misapplied submitted payments, resulting in

borrowers and cosigners being improperly charged late fees

and increased interest charges, and in inaccurate negative

information being furnished to consumer reporting agencies.

Many borrowers have complained that, even after getting

Navient to correct an error, the same payment-processing

errors occurred repeatedly. Navient has allegedly failed to

correct these recurring problems.

C. Procedural History

In October 2017, the Commonwealth filed a complaint

against Navient alleging its actions in originating and servicing

student loans constitute unfair, deceptive, and abusive

practices in violation of both the Consumer Protection Act and

the PA Protection Law. The complaint contained nine counts:

Count I under the PA Protection Law for unfairly and

deceptively originating risky, expensive loans, which had a

high likelihood of default, among other unlawful conduct;

Count II under the PA Protection Law for steering borrowers

suffering long-term financial hardship into costly

forbearances; Count III under the Consumer Protection Act for

steering borrowers suffering long-term financial hardship into

costly forbearances; Count IV under the PA Protection Law for

loan servicing failures related to recertification of IDR plans;

Count V under the Consumer Protection Act for loan servicing

failures related to recertification of IDR plans; Count VI under

the PA Protection Law for misrepresentations relating to

cosigner releases; Count VII under the Consumer Protection

Act for misrepresentations relating to cosigner releases; Count

VIII under the PA Protection Law for repeated payment-

16

processing errors; and Count IX under the Consumer

Protection Act for repeated payment-processing errors.

Nine months before the Commonwealth filed its suit, in

January 2017, the Bureau, the State of Illinois, and the State of

Washington filed similar lawsuits alleging, among other

things, that Navient failed to disclose adequately the

availability of IDR programs to federal student loan borrowers.

See Compl., Consumer Fin. Prot. Bureau v. Navient Corp., et

al., No. 17-cv-101, 2017 WL 191446 (M.D. Pa., filed Jan. 18,

2017); Compl., Illinois v. Navient Corp., et al., No. 2017-CH-

00761, 2017 WL 374522 (Ill. Cir. Ct., filed Jan. 18, 2017);

Compl., Washington v. Navient Corp., et al., No. 17-2-01115-

1 SEA (Wash. Super. Ct., filed Jan. 18, 2017). Navient alleges

that the Commonwealth’s claims are “a virtual cut-and-paste

of the [Bureau]’s . . . . complaint.” Navient Br. 21. It admits

that the Commonwealth’s complaint differs in that it

challenges (A) the pre-2007 loan origination practices of

Navient’s corporate predecessor (Count I), and (B) Navient’s

alleged “fail[ure] to disclose a date certain by which a borrower

must submit materials to recertify an [IDR] plan,” App. 155–

56 (Count IV); Navient Br. 22.

In December 2017, Navient filed a motion to dismiss

the complaint for failure to state a claim. The District Court

denied the motion in its entirety. Pennsylvania v. Navient

Corp., 354 F. Supp. 3d 529 (M.D. Pa. 2018). First, it rejected

Navient’s argument that the Consumer Protection Act

precluded a concurrent lawsuit by Pennsylvania, and it held

that Section 5552(a)(1) of the Consumer Protection Act, 12

U.S.C. § 5552(a)(1), unambiguously confers a right on state

attorneys general to file suit to enforce the Consumer

Protection Act, and that there is nothing in the Act that would

bar a parallel state action. Id. at 543–47. Second, the Court

rejected Navient’s preemption argument and concluded that

the Commonwealth’s claims survived under both express-

17

preemption and conflict-preemption principles. It held that the

Commonwealth’s claims were not an attempt to impose

disclosure requirements on Navient, but were instead distinct

allegations of unfair and deceptive business practices brought

pursuant to Pennsylvania’s traditional state police powers. Id.

at 548–52. It then ruled that conflict preemption did not apply

because uniformity was not an express goal of Congress in

enacting the Education Act and, even if it were, this goal is not

defeated by allowing the Commonwealth to enforce its

consumer protection laws. Id. at 553.

The District Court certified to us three questions of law

for interlocutory appeal under 28 U.S.C. § 1292(b), see

Pennsylvania v. Navient Corp., No. 17-cv-1814, 2019 WL

1052014 (M.D. Pa. Mar. 5, 2019), and we granted permission

to appeal two of them, specifically: (1) whether the

Commonwealth may bring a parallel enforcement action under

the Consumer Protection Act after the Bureau has filed suit;

and (2) whether the Education Act preempts the

Commonwealth’s loan-servicing claims under the PA

Protection Law.

II. DISCUSSION 7

A. The Consumer Protection Act Permits

Concurrent State Claims.

Navient argues that that Consumer Protection Act does

not allow the state attorney general to bring a “copycat” claim

7

The District Court had jurisdiction under 28 U.S.C.

§§ 1331 and 1367. We have appellate jurisdiction pursuant to

28 U.S.C. § 1292(b), as we certified two questions of law for

interlocutory appeal. “When reviewing an interlocutory appeal

under 28 U.S.C. § 1292(b), we exercise plenary review over

the question certified.” Barbato v. Greystone All., LLC, 916

18

“on behalf of the same borrowers, against the same defendants,

for the same alleged conduct.” Navient Br. 25. Navient

acknowledges that the Consumer Protection Act expressly

permits state attorneys general to file Consumer Protection Act

claims, but argues that they may only do so where the Bureau

itself has not filed a lawsuit. To support this interpretation,

Navient cites the Consumer Protection Act’s requirement that

state attorneys general notify the Bureau before filing those

claims and its grant of authority for the Bureau to intervene in

states’ lawsuits.

1. The Plain Meaning of the Consumer

Protection Act Permits State

Concurrent Actions.

The plain language of the Consumer Protection Act

permits state concurrent actions. Section 5552 provides that

“the attorney general . . . of any State may bring a civil action

. . . to enforce provisions of this title . . . and to secure remedies

under provisions of this title or remedies otherwise provided

under other law.” 12 U.S.C. § 5552(a)(1). Courts typically do

not look beyond statutory language where the meaning is clear.

Valansi v. Ashcroft, 278 F.3d 203, 209 (3d Cir. 2002). They

“may look behind a statute only when the plain meaning

produces a result that is not just unwise but is clearly absurd.”

In re Visteon Corp., 612 F.3d 219, 220 (3d Cir. 2010) (citation

and internal quotation omitted). Here the plain meaning of

F.3d 260, 264 (3d Cir. 2019) (citation omitted). In reviewing

a motion to dismiss, we likewise review any legal

determinations anew and presume that a complaint’s factual

allegations are true. See James v. City of Wilkes-Barre, 700

F.3d 675, 679 (3d Cir. 2012).

19

§ 5552 is that the Pennsylvania attorney general may bring an

action to enforce the Consumer Protection Act.

Other provisions of the Consumer Protection Act do

expressly prohibit concurrent claims, but not § 5552. Thus,

under the canon of statutory construction announced in

Russello v. United States, 464 U.S. 16 (1983), “[w]here

Congress includes particular language in one section of a

statute but omits it in another section of the same Act, it is

generally presumed that Congress acts intentionally and

purposely in the disparate inclusion or exclusion.” Id. at 23

(citation omitted). Three other provisions of the Consumer

Protection Act prohibit concurrent claims. Section 5514

prohibits the FTC or the Bureau from filing a civil action

against a defendant if the other agency has previously filed an

action against the same defendant based on the same

“provision of law” and “any violation alleged in the

complaint.” 12 U.S.C. § 5514(c)(3)(B)(i). Section 5515 grants

the Bureau primary enforcement authority over “very large”

depository institutions and provides “[b]ackup enforcement”

for the other federal bank regulators to act if the Bureau does

not. § 5515(c)(3). And § 5538 provides for a state’s right of

action to enforce mortgage rules promulgated by the Bureau,

but contains an explicit bar on concurrent actions by states

when the Bureau has already filed its own action against a

party. § 5538(b)(6).

Thus, even if the language of § 5552(a)(1) were

ambiguous—and it is not—a court should presume that

Congress’s omission of an explicit prohibition against

concurrent claims from § 5552(a)(1) was intentional because

Congress explicitly prohibited concurrent claims in three

nearby sections of the statute.

20

2. The Consumer Protection Act’s Pre-

Suit Notice Requirement

Navient correctly points out that after initially granting

state attorneys general a right to file Consumer Protection Act

claims in § 5552(a), the Consumer Protection Act subjects that

general grant of authority to a limitation: it provides that

“[b]efore initiating any action,” the relevant state attorney

general “shall timely provide a copy of the complete complaint

to be filed and written notice describing such action or

proceeding to the Bureau.” 12 U.S.C. § 5552(b)(1)(A). In

addition to requiring the state attorney general to detail “the

alleged facts underlying the proceeding,” § 5552(b)(1)(C)(ii),

the statute requires that official to address “whether there may

be a need to coordinate the prosecution of the proceeding so as

not to interfere with any action, including any rulemaking,

undertaken by the Bureau,” § 5552(b)(1)(C)(iii) (emphasis

added).

Navient would have us stretch too far the meaning of

this pre-suit notice requirement. It argues that state-sponsored

Consumer Protection Act claims are intended solely to address

factual allegations and legal theories of which the Bureau is not

aware or which are not already subject to a pending Bureau

lawsuit. It suggests that in § 5552(b)(1)(C)(iii) “any action”

refers only to rulemaking and not to other judicial proceedings.

This fails. If Congress had intended to limit the phrase “action”

in § 5552(b)(1)(C)(iii) to mean only “rulemaking,” it could

have drafted a simpler provision. Reading “action” to mean

“rulemaking” only would render the words “any action,

including” mere surplusage. Cf. United States v. Miller, 527

F.3d 54, 62–63 (3d Cir. 2008).

Moreover, the word “including” “is frequently, if not

generally, used as a word of extension or enlargement rather

than as one of limitation or enumeration.” In re Fed. Mogul-

21

Global, Inc., 348 F.3d 390, 401 (3d Cir. 2003) (citation

omitted). And Congress twice used the phrase “any action” in

a manner that includes litigation in a nearby provision: (1) in

the pre-suit notice provision itself, § 5552(b)(1)(A) (“[b]efore

initiating any action in court”), and (2) in § 5531(a) (the Bureau

“may take any action authorized under part E”).

Navient also argues that § 5552(b)(1)’s notice

requirement would be superfluous if parallel actions were

allowed because if the Bureau files a suit, then it knows the

underlying facts such that there is no need for notice. This too

fails. First, there are many ways in which a parallel state action

could interfere with the Bureau’s suit and require coordination.

For example, there could be conflicting discovery schedules,

conflicting legal theories, or competing settlement offers. And

even if there is no conflict between the actions, the Bureau

benefits from the notice requirement because it could use the

information to identify additional victims or wrongs, to

coordinate strategies with the state, or alternatively to drop

certain counts from its own complaint because the issues will

be adequately addressed by the state. Amicus Curiae Br. of the

Bureau 19–20.

Thus, the Consumer Protection Act’s pre-suit notice

requirement does not negate the statute’s express authorization

of parallel state actions. 8

8

Navient also relies on a not relevant out-of-circuit

district court case, Navajo Nation v. Wells Fargo & Co., 344

F. Supp. 3d 1292 (D.N.M. 2018), where the Court dismissed

Consumer Protection Act claims filed by a tribal government

when the Bureau had already settled similar claims. Navajo

Nation is distinguishable because it was dismissed as res

judicata. Id. at 1308. Nothing in it suggests an implied

22

3. The Consumer Protection Act’s

Intervention Provision

Navient does correctly point out that the Bureau is

authorized to intervene as a party-plaintiff in any state-filed

Consumer Protection Act litigation. 12 U.S.C.

§ 5552(b)(2)(A). It argues that the intervention provision

demonstrates that Congress intended to prevent concurrent

state claims. Yet it fails to cite any case law supporting that,

where a statute allows third-party intervention, concurrent

claims are barred. And indeed, Congress has enacted

numerous statutes that authorize state enforcement while

limiting concurrent claims in some way and numerous statutes

that authorize state enforcement without limiting concurrent

claims. Compare 15 U.S.C. § 6103(d) with 49 U.S.C. § 14711.

That the Consumer Protection Act allows for the Bureau to

intervene does not clearly decide whether concurrent claims

are permitted.

Navient further asserts that allowing concurrent claims

would also run headlong into the rule against claim-splitting—

the longstanding bar against having a single party-plaintiff

simultaneously maintain two actions against the same

defendant. See, e.g., Walton v. Eaton Corp., 563 F.2d 66, 70

(3d Cir. 1977) (en banc). However, cases like Walton are

distinguishable. There, a single plaintiff filed two separate

employment lawsuits based on the same underlying facts, in

the same court, against the same defendant. Id. at 69–70. In

contrast, Pennsylvania and the Bureau are two separate

plaintiffs with two different lawsuits. Pennsylvania’s lawsuit

prohibition on concurrent claims under the Consumer

Protection Act.

23

is intended to protect the public from and remediate violations

of both Pennsylvania and federal laws. 9

4. Judicial Resources

Navient also argues that allowing Pennsylvania’s

concurrent claims will be a waste of judicial resources because

they, “by definition, cannot achieve anything that the

[Bureau’s] own lawsuit cannot achieve, no matter how well the

state litigates its . . . claims.” Navient Br. at 49. This argument

falters for at least three reasons. First, even if the Bureau

litigates this case through trial and obtains a judgment, it is

possible that Pennsylvania could still achieve outcomes

beyond what the Bureau achieves. For example, the

Commonwealth could find witnesses and facts that persuade

the court to order relief beyond that obtained by the Bureau.

Second, Pennsylvania and other states have a fundamental

right to protect their citizens and prevent harmful conduct from

occurring in their jurisdictions. The interests of the states and

the Bureau may not always be completely aligned. And third,

states may be able to pick up slack when the federal

9

The parties also dispute whether the Commonwealth

and Bureau actions can be consolidated and the significance of

that possibility. Navient argues that given the nine-month gap

in the bringing of the cases and the vast disparity in the

respective procedural postures, it would be impossible to

consolidate these cases, and at best one action could be stayed

until the other is resolved, at which point most issues in one

suit would be resolved by prior decisions in the other case.

This argument is a distraction. Navient can only speculate as

to what will happen if both actions proceed. It is not clear to

what extent issue preclusion will apply. Moreover, that this

particular case may not be suitable for consolidation does not

change the plain meaning of the statute.

24

Government fails to enforce and regulate. If the Bureau were

under pressure to settle or withdraw its lawsuit, 10 states would

still be free to protect the rights of consumers in their states.

The District Court correctly rejected Navient’s

argument that allowing concurrent claims would overburden

the courts, because although “federal courts are indeed

inundated with cases, adjudicating this case is a burden the

Court is required to assume, absent a recognized statutory or

procedural basis that precludes the Commonwealth from

bringing its action.” Navient, 354 F. Supp. 3d at 546.

Accordingly, we hold that the clear statutory language

of the Consumer Protection Act permits concurrent state

claims, for nothing in the statutory framework suggests

otherwise. 11

10

Indeed, Navient’s CEO has lobbied the Bureau to

drop its lawsuit. “Navient CEO Met with CFPB as Company

Seeks to End Lawsuit,” Politico, June 28, 2018,

https://www.politico.com/newsletters/morning-

education/2018/06/28/kennedy-resignation-could-spark-

changes-to-affirmative-action-266608.

11

Navient also raises several constitutional arguments

not raised before the District Court that go far beyond the

questions certified by us for interlocutory appeal. The

Commonwealth correctly points out that Navient cannot bring

a freestanding constitutional challenge for the first time in this

interlocutory appeal. See Metro. Edison Co. v. Pa. Pub. Util.

Comm’n, 767 F.3d 335, 352 (3d Cir. 2014) (stating that an

issue not raised in the district court is waived unless manifest

injustice would result). We accordingly do not address its

constitutional arguments at this stage.

25

B. The Education Act Does Not Preempt the

Commonwealth’s Claims Under the PA

Protection Law.

Navient claims that Section 1098g of the Education Act

both expressly and impliedly preempts the Commonwealth’s

state-law claims. We disagree and follow our sister Circuits in

holding that the Education Act expressly preempts only claims

based on failures of disclosure, not claims based on affirmative

misrepresentations, and that no other preemption principles bar

the Commonwealth’s claims. See Lawson-Ross, 955 F.3d at

911; Nelson, 928 F.3d at 648.

1. Preemption and the

Presumption Against

Preemption

The Supremacy Clause of the Constitution, U.S. Const.

art. VI, cl. 2, invalidates any state law that “interferes with or

is contrary to federal law[.]” Free v. Bland, 369 U.S. 663, 666

(1962). While not “rigidly distinct” categories, there are three

classes of preemption: (1) express preemption, (2) conflict

preemption, and (3) field preemption. Va. Uranium, Inc. v.

Warren, 139 S. Ct. 1894, 1901 (2019) (quoting Crosby v. Nat’l

Foreign Trade Council, 530 U.S. 363, 372 n.6 (2000));

Hillsborough Cnty. v. Automated Med. Labs., Inc., 471 U.S.

707, 713 (1985).

Express preemption applies where Congress explicitly

preempts state law in the statutory language. See Cipollone v.

Liggett Grp., Inc., 505 U.S. 504, 516 (1992). Conflict

preemption occurs “when a state law conflicts with federal law

such that compliance with both state and federal regulations is

impossible, or when a challenged state law stands as an

obstacle to the accomplishment and execution of the full

purposes and objectives of a federal law.” Id. (internal

26

citations and quotations omitted). Field preemption focuses on

when Congress does not expressly preempt state law but where

“‘federal law leaves no room for state regulation and that

Congress had a clear and manifest intent to supersede state law’

in that field.” Sikkelee v. Precision Airmotive Corp., 822 F.3d

680, 688 (3d Cir. 2016) (citation omitted). “Where Congress

expresses an intent to occupy an entire field, States are

foreclosed from adopting any regulation in that area, regardless

of whether that action is consistent with federal standards.” Id.

Each mode of preemption serves the same underlying function:

“Congress enacts a law that imposes restrictions or confers

rights on private actors; a state law confers rights or imposes

restrictions that conflict with the federal law; and therefore the

federal law takes precedence and the state law is preempted.”

Murphy v. Nat’l Coll. Athletic Ass’n, 138 S. Ct. 1461, 1480

(2018).

“In every preemption case, our inquiry is guided by two

principles. First, the intent of Congress is the ‘ultimate

touchstone’ of preemption analysis.” Farina v. Nokia Inc., 625

F.3d 97, 115 (3d Cir. 2010) (quoting Medtronic, Inc. v. Lohr,

518 U.S. 470, 485 (1996)). In discerning congressional intent,

we look to the “structure and purpose of the statute as a whole,

as revealed not only in the text, but through the . . . way in

which Congress intended the statute and its surrounding

regulatory scheme to affect business, consumers, and the law.”

Lohr, 518 U.S. at 486 (internal citation omitted). “Second, we

‘start[ ] with the basic assumption that Congress did not intend

to displace state law.’” Farina, 625 F.3d at 116 (quoting

Maryland v. Louisiana, 451 U.S. 725, 746 (1981)). “[B]ecause

the States are independent sovereigns in our federal system, we

have long presumed that Congress does not cavalierly pre-

empt state-law causes of action.” Lohr, 518 U.S. at 485. The

presumption applies with particular force when the state is

exercising its police power. Id.

27

2. Section 1098g Does Not Expressly

Preempt the Commonwealth’s Claims

Under the PA Protection Law.

Section 1098g provides that “[l]oans made, insured, or

guaranteed pursuant to a program authorized by Title IV of the

Higher Education Act . . . shall not be subject to any disclosure

requirements of any State law.” 20 U.S.C. § 1098g (emphases

added).

Navient suggests we begin and end our inquiry with this

language. It argues that Counts II and IV of the

Commonwealth’s Complaint fall squarely within § 1098g’s

prohibition because they target the sufficiency of the

disclosures Navient allegedly made to borrowers and expressly

fault it for failing to make “disclosures” or provide “notice”

that state law required Navient to provide. See App. 152

(Count II) (alleging Navient violated the PA Protection Law

because “[i]n phone calls[] [it] failed to meaningfully disclose

. . . that the federal [G]overnment offers IDR plans”); App. 156

(Count IV) (alleging Navient violated the PA Protection Law

because it “[f]ailed to disclose a date certain by which a

borrower must submit materials to recertify an [IDR] plan,”

and “[f]ailed to adequately notify borrowers . . . of the

existence of the renewal notice”).

The language of § 1098g is indeed broad and

unqualified; it expressly preempts “any” state claim premised

on “any” disclosure requirement imposed by state law

regarding such loans. However, as noted above, “the presence

of an express preemption provision does not end the inquiry.

While it means we need not inquire whether Congress intended

to preempt some state law, we still must examine congressional

intent as to the scope of the preemption provision.” Farina,

625 F.3d at 118. To identify the domain expressly preempted

by Congress, we read “the words of a statute . . . in their context

28

and with a view to their place in the overall statutory scheme.”

Home Depot U. S. A., Inc. v. Jackson, 139 S. Ct. 1743, 1748

(2019) (citation and internal quotation marks omitted).

Here, we are persuaded by the Eleventh and Seventh

Circuits’ recent statements on the scope of the Education Act’s

express preemption provision. In Lawson-Ross, borrowers

brought suit under Florida’s Consumer Collection Practices

Act against their federal student loan provider for making

affirmative misrepresentations about their eligibility for the

Public Student Loan Forgiveness program (the “Loan

Forgiveness Program”). 955 F.3d at 911. In determining what

domain is expressly preempted by the Education Act, the

Eleventh Circuit explained,

Section 1098g concerns ‘disclosure

requirements,’ but the [Education Act] does not

define ‘disclosure requirements’ or ‘disclosure.’

The [Education Act] does, however, identify the

disclosures it requires. Viewed in its statutory

context, then, the term ‘disclosure requirements’

refers to the [Education Act]’s requirements that

certain information be communicated to

borrowers during the various stages of a loan, as

laid out in § 1083 of the statute. Thus, the

domain § 1098g preempts is the type of

disclosures to borrowers that § 1083 requires.

Id. at 917 (citing 20 U.S.C. §§ 1083(a), (b), (e)). The Court

concluded “that the precise language Congress used in § 1098g

preempts only state law that imposes disclosure requirements;

state law causes of action arising out of affirmative

misrepresentations a servicer voluntarily made that did not

concern the subject matter of required disclosures impose no

disclosure requirements.” Id. (internal quotation marks

omitted).

29

The servicer in Lawson-Ross, like Navient here, argued

that borrowers’ affirmative misrepresentation claims were

actually based on a failure to disclose correct information. The

Court rejected this characterization of the claims. It saw “no

allegation that [the servicer] failed to provide them with any

information that it had a legal obligation to disclose. Rather,

the [b]orrowers alleged that when [the servicer] chose to

provide them with information it was not required to disclose

. . . it gave false information.” Id. at 918. The Court found

“support for this distinction between an affirmative

misrepresentation and a failure to disclose in the law of torts.

To succeed on a failure-to-disclose claim, the plaintiff must

establish that there was a duty to speak and the duty was

breached.” Id. at 918 (citing Chiarella v. United States, 445

U.S. 222, 228 (1980)). “In contrast, a claim alleging an

affirmative misrepresentation does not rely on a duty to

disclose.” Id. The borrowers’ claims about the servicer’s

misrepresentations about their eligibility for the Loan

Forgiveness Program were thus not preempted. Id. at 919-20.

Similarly, the Seventh Circuit in Nelson held that

§ 1098g does not expressly preempt state consumer protection

laws to the extent they target affirmative misrepresentations

rather than failures to disclose required information. 928 F.3d

at 647–50. There a borrower’s state-law consumer protection

and tort claims alleged that her federal student loan servicer

made affirmative misrepresentations while counseling her on

her repayment plan options. The Court concluded her claims

were not expressly preempted, explaining that

[w]e recognize that it would be possible to apply

state consumer protection laws to impose

additional disclosure requirements on loan

servicers of federally insured student loans.

Such applications would be preempted under

§ 1098g . . . . But that result is not necessary or

30

inherent in [the borrower’s] claims, at least to the

extent she alleges affirmative

misrepresentations. We cannot say on the

pleadings that all of [the borrower’s] claims are

preempted by § 1098g. On remand, the district

court may need to use jury instructions and other

tools to allow [the borrower] to proceed on her

claims of affirmative misrepresentations while

ensuring that the case does not become a vehicle

for state law to impose new disclosure

requirements.

Id. at 650 (internal citation omitted). The Court explained that

“[t]he common law tort of fraud ordinarily requires a

deliberately false statement of material fact. . . . An omission

or failure to disclose, on the other hand, will not support a

common law fraud claim but may be actionable as constructive

fraud or fraudulent concealment. . . .” Id. at 649 (internal

citations omitted). Because the borrower alleged that the

servicer “said something false that it was not required to say,”

the Court concluded that the claim did not imply a disclosure

requirement. Id. at 649.

Both Nelson and Lawson-Ross built on a distinction first

drawn by the Ninth Circuit in Chae, 593 F.3d 936, wherein

plaintiffs brought claims under California’s consumer

protection statute and accused Sallie Mae of both

“misrepresent[ation]” and “improper . . . disclosure” of

information to borrowers about federal student loans. 593 F.3d

at 942–43. The Court held that the plaintiffs’ attempt to assert

claims under California law regarding certain billing

statements and coupon books was expressly preempted by

§ 1098g of the Education Act, but the plaintiffs were not barred

from pursuing claims regarding other fraudulent and deceptive

practices. Id. at 943. The Court made clear, however, that

plaintiffs could not simply “relabel[]” their preempted

31

disclosure claims as misrepresentation claims. Id. at 943

(citation omitted).

We follow these well-reasoned decisions and adopt the

distinction between affirmative misrepresentation and failure

to disclosure information as required by the Education Act.

Section 1098g does not expressly preempt claims to the extent

they are alleging affirmative misrepresentations rather than

failures of disclosure.

Turning to our case, we are not convinced that all, or

even most, of the Commonwealth’s claims are based on

failures of disclosure. The Commonwealth’s core allegations

with respect to Counts II and IV are that Navient improperly

steered consumers into costly forbearances and made

misrepresentations to consumers regarding the recertification

of their IDR plans. This included misrepresenting to

consumers that Navient would inform them of the date by

which they needed to renew and misrepresenting the

consequences of failing to renew. To the extent the

Commonwealth faults Navient for failing to disclose or notify

borrowers of certain information, it does so only because

Navient’s failure to disclose certain information furthered the

affirmative misrepresentations Navient voluntarily chose to

make. For example, the Commonwealth alleges:

• Navient’s website misrepresented to borrowers that its

representatives would help them “make the right

decision for [their] situation” and “find an option

that . . . minimizes [their] total interest cost.” App. 130.

• Navient misrepresented to a consumer “that her only

option for loan assistance was a forbearance, despite the

fact that she qualified for an IDR plan.” App. 135.

32

• Navient gave false information about public service

loan forgiveness to one borrower, causing the borrower

to lose out on seven years of payments that could have

been applied to this forgiveness program but were not.

App. 136.

• Navient repeatedly enrolled a consumer in forbearance

various times over eleven years, allowing nearly

$27,000 in interest to accrue, despite his later eligibility

for an IDR plan. App. 136–37.

• Navient told a consumer enrolled in IDR who was

having trouble making payments that “forbearance was

his only option” when, in fact, “continuing his IDR plan

would have been a better option for him in the long

term.” App. 137.

• In a notice to borrowers, Navient misrepresented that it

would notify the borrowers when their IDR plan was up

for renewal and, at that time, it would provide the

borrower with a date to submit a new application. Yet

the notices it sent did not include this date. App. 138–

39.

• In a notice to borrowers, Navient misrepresented that

the only consequence of providing incorrect or

incomplete information during the IDR renewal process

would be a delay in renewal when, in fact, providing

incorrect or incomplete information resulted in financial

harm to borrowers. App. 140.

• Navient told a consumer that it would send him an

annual renewal reminder when, in fact, it did not. App.

142.

33

To the extent these allegations hold Navient accountable

for its affirmative misconduct, they are not preempted. The

Commonwealth cannot fault Navient for failing to provide

consumers with more information about IDR plans or

recertification, but it can fault Navient for providing

misinformation.

Navient attempts to distinguish our case from Nelson by

arguing that, unlike the voluntary and excessive statements

there, some of the alleged misstatements it posted were

required by federal law to appear on its website. Specifically,

the Commonwealth alleges that Navient made the following

statements on its website regarding its ability to help

borrowers:

• “If you’re experiencing problems making your loans

[sic] payments, please contact us. Our representatives

can help you by identifying options and solutions, so

you can make the right decision for your situation.”

• “We can help you find an option that fits your budget,

simplifies payment, and minimizes your total interest

cost.”

App. 130. The Nelson Court held nearly identical statements

were indeed affirmative misrepresentations not preempted by

§ 1098g because the servicer made those statements

voluntarily when it could have just remained silent or told the

truth. See Nelson, 928 F.3d at 649–50; see id. at 641–42 (“[o]ur

trained experts work on your behalf” and “[y]ou don’t have to

pay for student loan services or advice,” as “[o]ur expert

representatives . . . understand all of your options”).

Navient does not actually cite to any provision of law

that would have required it to misrepresent to borrowers that it

will help them “make the right decision for [their] situation” or

34

help them “minimize[] [their] total interest cost.” The

provisions it cites are off point. Section 1083 of the Education

Act merely requires that lenders include on a “bill or statement

. . . the lender’s or loan servicer’s address and toll-free phone

number for payment and billing error purposes” and “a link to

the appropriate page of [the DOE’s] website to obtain a more

detailed description of the repayment plans . . . .” 20 U.S.C.

§ 1083(e)(1)(H) & (I). It does not say what statements Navient

must make on its website. Navient went beyond providing

addresses, telephone numbers, and links while affirmatively

representing that it would help borrowers make the “right”

decisions and “minimize” their interest payments.

All this to say that the District Court correctly

concluded that the Commonwealth’s complaint alleges

Navient made numerous affirmative misrepresentations, and

claims based thereon are not expressly preempted by the

Education Act. It is possible that on remand (especially if

Navient again moves for dismissal) the District Court may

need to conduct a closer, allegation-by-allegation, assessment

of which claims in the Commonwealth’s complaint are based

on affirmative misrepresentations and which are possibly

based on failures of disclosure. It would need to do so in the

first instance in accord with this opinion and Pennsylvania law.

Lawson-Ross, 955 F.3d at 911, and Nelson, 928 F.3d at 648,

also provide guidance. 12

12

The District Court may also need to consider whether

the Commonwealth alleges any material omissions, and if so,

whether those claims would be preempted by § 1098g. While

Lawson-Ross, 955 F.3d at 911, and Nelson, 928 F.3d at 648,

provide insight into the distinction between an affirmative

misrepresentation on one end, and a failure to disclose on the

other, they do not discuss where the line is between the latter

35

and a material omission. If, for example, a Navient

representative told a borrower that her “best option” for

resolving loan repayment issues was forbearance but failed to

mention a more appropriate IDR plan, is the failure to mention

the IDR plan a material omission or an affirmative

misrepresentation? If the former, is it also expressly

preempted by the Education Act? We decline to rule on this

issue without briefing by the parties and without first giving

the District Court an opportunity to assess this issue in light of

Pennsylvania law. We also decline to say in the first instance

whether the Commonwealth alleges any material omissions.

We note that, under Pennsylvania law, to state a claim

for intentional misrepresentation a plaintiff must allege “(1) [a]

representation; (2) which is material . . .; (3) made falsely, with

knowledge of its falsity . . . ; (4) with the intent of misleading

another . . . ; (5) justifiable reliance on the misrepresentation;

and[] (6) the resulting injury was proximately caused by the

reliance.” Bortz v. Noon, 729 A.2d 555, 560 (Pa. 1999) (citing,

inter alia, Restatement (Second) of Torts § 525 (1977)). The

tort of “intentional non-disclosure has the same elements as

intentional misrepresentation except[,] in the case of

intentional non-disclosure, the party intentionally conceals a

material fact rather than making an affirmative

misrepresentation.” Id. (citation and internal quotation marks

omitted). Concealment of a material fact can amount to

actionable fraud if the seller intentionally concealed a material

fact to deceive the purchaser. See Moser v. DeSetta, 589 A.2d

679, 682 (Pa. 1991); Sevin v. Kelshaw, 611 A.2d 1232, 1237–

1238 (Pa. Super. Ct. 1992) (“[A]ctive concealment of defects

known to be material to the purchaser is legally equivalent to

an affirmative misrepresentation.”) (emphasis in original); see

36

3. Section 1098g Does Not Impliedly

Conflict Preempt the Commonwealth’s

State-Law Claims.

We next turn to Navient’s argument that even if § 1098g

does not expressly preempt Counts II and IV, ordinary conflict-

preemption principles bar them. See Geier v. Am. Honda

Motor Co., 529 U.S. 861, 869–70 (2000) (holding that the

presence of an express preemption clause does not preclude

“the ordinary working of conflict pre-emption principles”). To

repeat, state laws are preempted if it is impossible for a party

to comply with both state and federal law or they “stand[] as

an obstacle to the accomplishment and execution of the full

purposes and objectives of Congress.” Crosby, 530 U.S. at 373

(citation omitted).

The Supreme Court explained in Cipollone that “[w]hen

Congress has considered the issue of pre-emption and has

included in the enacted legislation a provision explicitly

addressing that issue, . . . there is no need to infer congressional

intent to pre-empt state laws from the substantive provisions of

the legislation.” 505 U.S. at 517 (internal citation and

quotation marks omitted). The Court relied on the statutory

canon “of expressio[] unius est exclusio alterius [to include

also Derby & Co., Inc. v. Seaview Petroleum Co., 756 F. Supp.

868, 876 (E.D. Pa. 1991) (stating that “[t]he failure to disclose

a material fact amounts to a misrepresentation where

disclosure would correct a mistake as to a basic assumption and

non-disclosure amounts to a failure to act in good faith . . . .”).

But see Martin v. Hale Prods., Inc., 699 A.2d 1283, 1288 (Pa.

Super. Ct. 1997) (stating that “[m]ere silence in the absence of

a duty to speak” does not constitute fraud). Thus, it appears

that under Pennsylvania law intentional material omissions are

treated similarly to affirmative misrepresentations.

37

one is to exclude all others]: Congress’ enactment of a

provision defining the pre-emptive reach of a statute implies

that matters beyond that reach are not pre-empted.” Id.

We agree with the Eleventh and the Seventh Circuits

that, per the Supreme Court’s instruction in Cipollone, we need

not infer congressional intent to pre-empt state laws by the

Education Act. Both reasoned that “[w]hen Congress has

explicitly addressed preemption in a statute, an implication

arises that it did not intend to preempt other areas of state law.”

Lawson-Ross, 955 F.3d at 920 (citations omitted); Nelson, 928

F.3d at 648 (same). The Education Act includes several

provisions expressly preempting specific areas of state law,

including § 1098. See also 20 U.S.C. §§ 1078(d) (state usury

laws); 1091a(a)(2) (state statutes of limitations); 1091a(b)(2)

(state law infancy defense).

We note that the Ninth Circuit in Chae concluded

otherwise and held that although some of the borrowers’ claims

were not expressly preempted by § 1098g, they nonetheless

were implicitly preempted because they posed an obstacle to

the uniform operation of the Education Act. 593 F.3d at 946-

47. The Court concluded that uniformity was an intended

purpose of the Education Act as illustrated by Congress’s

direction to the DOE to standardize the Indirect Loan

Program’s forms, procedures, terms, conditions, and benefits

throughout federal student loan programs. Id. at 944–45. It

reasoned that allowing state law causes of action to proceed

would conflict with the purpose of uniformity. Id. at 943, 945.

We are not persuaded by the Ninth Circuit’s conclusion

that uniformity was an intended purpose of the Education Act,

and we join the other Circuits that have rejected that idea.

Lawson-Ross, 955 F.3d at 922; Nelson, 928 F.3d at 651;

College Loan Corp. v. SLM Corp., 396 F.3d 588, 597 (4th Cir.

2005) (“We are unable to confirm that the creation of

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uniformity . . . was actually an important goal of the [Education

Act].”) (internal quotation marks omitted). “To infer pre-

emption whenever an agency deals with a problem

comprehensively is virtually tantamount to saying that

whenever a federal agency decides to step into a field, its

regulations will be exclusive.” Hillsborough, 471 U.S. at 717.

Thus we do not apply preemption from the comprehensive

nature of a regulation alone. See N.Y. State Dep’t of Soc. Servs.

v. Dublino, 413 U.S. 405, 415 (1973).

The Seventh Circuit aptly pointed out that Chae’s broad

language was based on a different sort of claim, relating to the

method of setting late fees, repayment start dates, and interest

calculations. The Nelson Court assumed that “the need for

nationwide consistency on those sorts of administrative

mechanics is substantial” and that there “the value of

uniformity would be more compelling.” 928 F.3d at 651

(emphasis added). Allegations of affirmative

misrepresentations and misconduct stand in stark contrast.

There is no indication that Congress had the sweeping goal of

regulating all misconduct that could possibly occur in student-

loan financing and requiring uniformity of all claims

tangentially related to the Education Act. “[S]tate law and

federal law can exist in harmony” under the Education Act,

Nelson, 928 F.3d at 651, and conflict preemption does not bar

the Commonwealth’s claims.

4. Section 1098g Does Not Field Preempt

the Commonwealth’s Claims under the

PA Protection Law.

Navient does not expressly argue that § 1098g preempts

the field of regulation of student loans, but, to the extent it

suggests as much, see Navient Br. 31, 35 (describing the

language of § 1098g as “unqualified” and creating a

“comprehensive federal regulatory scheme”), we reject that

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suggestion as well. Field preemption exists “where Congress

has legislated so comprehensively [in an area of law] that it has

left no room for supplementary state legislation.” R.J.

Reynolds Tobacco Co. v. Durham Cty., 479 U.S. 130, 140

(1986). Every Circuit Court to consider the issue has

concluded that the Education Act does not field preempt the

regulation of student loans. See, e.g., Lawson-Ross, 955 F.3d

at 923; Nelson, 928 F.3d at 651-52; Chae, 593 F.3d at 941–42;

Armstrong v. Accrediting Council for Continuing Educ. &

Training, Inc., 168 F.3d 1362, 1369 (D.C. Cir. 1999); Keams

v. Tempe Tech. Inst., Inc., 39 F.3d 222, 226 (9th Cir. 1994).

And indeed, consumer protection is a field that states have

traditionally occupied. See, e.g., California v. ARC Am. Corp.,

490 U.S. 93, 101 (1989) (noting the long history of state

common-law and statutory remedies against unfair business

practices); Fla. Lime & Avocado Growers, Inc. v. Paul, 373

U.S. 132, 146 (1963) (observing that statute to “prevent the

deception of consumers” was within scope of state’s police

powers); In re Nortel Networks, Inc., 669 F.3d 128, 137–38 (3d

Cir. 2011) (noting that consumer protection is part of

governmental police powers).

From a practical standpoint, if we were to hold that the

Education Act preempts state-law consumer protection claims,

consumers would be left with no protection against unfair or

deceptive acts or practices by loan servicers because the

Education Act contains no general prohibition against those

practices. Taken to its logical conclusion, Navient’s proposed

outcome here would mean that servicers would in theory be

free to mislead consumers provided that they met the

Education Act’s technical disclosure requirements. That

outcome is untenable. “It is difficult to believe that Congress

would, without comment, remove all means of judicial

recourse for those injured by illegal conduct.” Silkwood v.

Kerr-McGee Corp., 464 U.S. 238, 251 (1984). Field

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preemption thus does not apply to the Commonwealth’s

claims. 13

* * * * *

The Commonwealth’s parallel enforcement action

against Navient under the Consumer Protection Act is

permitted by the statute’s plain language, and the Education

Act does not expressly preempt the Commonwealth’s claims

under the PA Protection Law to the extent they are based on

affirmative misrepresentations and misconduct rather than

13

The States argue in their Amicus brief that they are

well positioned to protect their residents from unfair and

deceptive practices by student loan servicers. Many States

have developed comprehensive systems for tracking and

responding to complaints from consumers. In the last five

years, amici have collectively received and responded to

thousands of complaints about federal student loan servicers—

including many against Navient. And the federal Government

has for decades welcomed the States’ expertise and worked

with the States to provide active oversight in the student loan

industry. For example, the DOE’s regulations and servicer

contracts expressly require compliance with not only federal

laws but also state laws. See, e.g., 34 C.F.R. § 682.401.

Starting in 2000, at the latest, the DOE routinely disclosed

student loan information to state and local authorities that were

investigating and prosecuting crimes, civil frauds, and other

violations in the student loan industry. See Privacy Act of

1974, 64 Fed. Reg. 72384, 72399 (Dec. 27, 1999); Privacy Act

of 1974, 81 Fed. Reg. 12081-02, 12083 (Mar. 8, 2016).

Likewise, the Bureau shares with states information it receives

in consumer complaints. Amicus Curiae Br. for States of New

York et al. 16–17.

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failures of disclosure. No other preemption principle stands as

a bar to the Commonwealth’s claims. We thus affirm the

District Court’s well-reasoned ruling.

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