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Alexander v. Coast Professional Inc.

United States District Court, E.D. Pennsylvania

September 5, 2014

SHEENA ALEXANDER, on behalf of herself and all others similarly situated, Plaintiff.
COAST PROFESSIONAL INC., et al. Defendants.




Before this Court is a motion for class certification filed by Plaintiff Sheena Alexander ("Plaintiff') pursuant to Federal Rule of Civil Procedure (Rule) 23. [ECF 55]. Defendant Coast Professional Inc. ("Defendant") has filed an opposition. [ECF 57]. Plaintiff filed a reply, [ECF 60], Defendant filed a sur-reply, [ECF 63], and Plaintiff filed a response to Defendant's sur-reply. [ECF 66]. The motion is ripe for disposition.

For the reasons stated herein, the motion for class certification is granted.


In 1992, Congress amended Section 428F of the Higher Education Act, 20 U.S.C. §1078-6, et seq., ("HEA"), to enable students with defaulted federally-insured student loans to rehabilitate the loans by making a fixed number of consecutive monthly payments in an amount that was "reasonable and affordable, " based on the individual borrower's "total financial circumstances." Specifically, the relevant provision provides:

Neither the guaranty agency nor the Secretary shall demand from a borrower as monthly payment amounts described in subparagraph (A) more than is reasonable and affordable based on the borrower's total financial circumstances.

20 U.S.C. §1078-6(a)(1)(B). Under the rehabilitation program, once the borrower makes the necessary number of monthly payments, the loan is no longer in default and the borrower is eligible to receive additional student financial aid. 20 U.S.C. §1078-6(a)(1)(C) and (a)(3).

In 2002, Plaintiff applied for and received a student loan through the Federal Family Education Loan Program ("FFELP loan"). At the time of the underlying events, Plaintiffs loan was in default with an outstanding balance of approximately $27, 500. The defaulted loan was assigned to the Department of Education, which in turn, assigned it to Defendant for collection purposes.

Defendant is in the collection business, with an emphasis on collecting student loans, including, FFELP and Direct loans. In February 2012, Defendant contacted Plaintiff by telephone to discuss Plaintiffs defaulted school loan and potential repayment options. Defendant advised Plaintiff that failure to cure her default could result in garnishment, litigation, or other actions to recover the unpaid balance of her loan. Only after determining that Plaintiff could not pay off the loan and advising her that involuntary administrative wage garnishment was a possibility, Defendant informed Plaintiff that she had some rehabilitation options. At the time, Plaintiffs monthly expenses exceeded her monthly income, leaving her with a monthly financial shortfall of $145. Despite being aware of Plaintiffs financial situation, Defendant offered Plaintiff a loan rehabilitation program consisting of monthly payments in the amount of $260, and advised her that this amount was the minimum amount that would be accepted. Pursuant to its policies and practices, Defendant calculated Plaintiffs monthly payment based solely on a percentage of her outstanding loan balance. Defendant followed this same policy and practice with regard to other student loan debtors.

Defendant maintains that this rehabilitation practice for collecting defaulted student loans was in line with rehabilitation program guidelines issued by the Department of Education. In contrast, Plaintiff contends that Defendant's practice violated the HEA by failing to take into account Plaintiffs "total financial circumstances" when determining the monthly payments required for Plaintiff to rehabilitate her defaulted school loan.

Plaintiff commenced this action by filing a complaint on March 23, 2012. [ECF 1]. On June 22, 2012, Plaintiff filed an amended complaint in which she asserted her original individual claims as well as claims on behalf of a purported class of similarly-situated student loan debtors. [ECF 15]. Plaintiff has moved to certify a class based on the allegations in her amended complaint. As defined by Plaintiff, the proposed class is:

All residents of the Commonwealth of Pennsylvania with Federal FFELP and/or Direct Loans whose loans were serviced by Coast Professional, Inc., in default, had no judgments related to the default, were not previously rehabilitated and were otherwise qualified for rehabilitation and who did not pursue an offer of balance in full or settlement in full payment.


Rule 23 governs the certification of class actions in federal court. A plaintiff seeking class certification must satisfy all requirements of Rule 23(a) and at least one of the requirements of Rule 23(b). Amgen Inc. v. Conn. Ret. Plans & Trust Funds, ___ U.S. ___, 133 S.Ct. 1184, 1194 (2013); see also Marcus v. BMW of North America, 687 F.3d 583, 590 (3d Cir. 2012). "Rule 23 does not set forth a mere pleading standard. A party seeking class certification must affirmatively demonstrate his compliance with the Rule." Wal-Mart Stores, Inc. v. Dukes, ___ U.S. ___, 131 S.Ct. 2541, 2551 (2011). A district court's analysis of a motion for class certification "must be rigorous' and may entail some overlap with the merits of the plaintiffs underlying claim."' Amgen Inc. at 1194 (quoting Dukes, 131 S.Ct. at 2551). However, "Rule 23 grants courts no license to engage in free-ranging merits inquiries at the certification stage. Merits questions may be considered to the extent - but only to the extent - that they are relevant to determining ...

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