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Consumer Financial Protection Bureau v. Navient Corp.

United States District Court, M.D. Pennsylvania

October 15, 2019

NAVIENT CORPORATION, et al., Defendants.


          MARIANI JUDGE.


         One of the claims presented by Plaintiff Consumer Financial Protection Bureau (the “Bureau”) against Defendants (collectively referred to as “Navient”) is that an incorrect code was reported by Navient to “National Credit Reporting Agencies” (“NCRAs” (also known as “credit bureaus”)) for student loan borrowers whose educational loans had been discharged due to the student borrowers' total and permanent disability (“TPD”). Specifically, the Bureau contends that from 2012 to 2014, Navient improperly used special comment code “AL” when reporting to NCRAs that a student borrower's educational loan had been discharged due to TPD. The Bureau asserts that student borrowers' credit scores were adversely affected as a result of Navient's use of the AL special comment code, and that this adverse impact on credit scores caused the student borrowers to suffer various types of harms, including higher interest rates on mortgages, car loans, etc.

         In support of its position, the Bureau has tendered the August 8, 2019 report of Michael A. Turner, Ph.D. To ascertain the impact on credit scores resulting from Navient's reporting of the AL code, Dr. Turner contracted with a credit reporting agency, TransUnion. He tasked TransUnion with running simulations on more than 19, 000 student loan borrowers whose education loans were discharged for TPD and for whom Navient reported the AL code during the years 2012 through 2014. TransUnion was asked to report the credit scores with and without the AL code for affected student loan borrowers on an anonymous basis at the end of each quarter for the years in question using a computer-based credit scoring program known as VantageScore 3.0.[1] According to Dr. Turner:

For each of [the] quarterly snapshots, two versions of credit scores (VantageScore 3.0) and attributes were returned. One version shows the credit file as it was at the time, with no changes to the credit file data (i.e., the borrowers had the “AL” code, as furnished by Navient). The second version was based on the same set of files with the Special Comment Code “AL” removed. It was replaced with the previous code that may have been displaying prior to the Special Comment Code “AL” being added. Account Status Code was displayed as “05”, as of the date when the Special Comment Code “AL” was incorrectly added. This second version shows what the credit scores and credit profiles would have been if Navient had simply not added the Special Comment Code “AL” and had left other aspects of how the account was reporting unchanged (such as the Payment Rating Code).

(Turner Report, (Ex. 1 to Navient's letter of Aug. 27, 2019) at p. 36.)

         Navient raised the sufficiency of the Bureau's production of information related to Dr. Turner's report during a conference call held on August 22, 2019. Consequently, the parties were directed to provide letter briefs on the issue and to address the matter during a subsequent conference call. (See Special Master Order #42.) By Special Master Order # 46, the Bureau was directed to produce by September 13, 2019 the TransUnion data received by Dr. Turner as well as copies of all written communications between Dr. Turner and TransUnion related to this litigation. By Special Master Order #49, dated September 20, 2019, Navient was directed to “report in writing, no later than September 25, 2019, whether the information received in connection with the VantageScore 3.0 simulation ran by TransUnion is sufficient to assess the propriety of the methodology employed by [Dr. Turner], . . . or whether additional information is needed or whether the matter is one that must be presented by a Motion in Limine challenging Dr. Turner's report.” Navient's letter of September 25, 2019 contended that the TransUnion data produced in response to Special Master Order #46 was not adequate. Moreover, Navient's letter took issue with the Bureau's explanation of the nature of the work performed by TransUnion, pointing out that TransUnion had performed services over a period of at least six weeks and for which it had been paid at least $265, 000. Contending that it was unable to replicate the work performed by TransUnion without receipt of significant additional information, Navient asked that the Bureau be ordered to:

[D]isclose . . . no later than October 9, 2019, the details of any analysis, manipulations, and/or simulations performed by and the supporting data/documentation used by TransUnion pursuant to the Research Data Services Agreement . . ., including, but not limited to, the following categories of information:
1. A copy of the specific VantageScore 3.0 iteration(s) that was used in TransUnion's simulations and modeling exercise. In addition, a description of the methodology and process that this VantageScore 3.0 iteration used to weight Metro
2 special comment code “AL.” 2. All iterations/version(s) of VantageScore that were in use between January 1, 2012 and December 31, 2014. In the alternative, a description of the differences present in each such iteration from the version that was used for the simulations and modeling exercise. In addition, a description of the methodology and process that each of these VantageScore iterations used to weight Metro 2 special comment code AL, including any modifications made to the scoring model during the specified time period.
3. The inputs into the “quarterly archive files, ” including the underlying credit files and tradelines and TransUnion's treatment of certain Metro 2 special comment code AL.
4. The methodology used to process the “Input Files” received from Dr. Turner against the TransUnion credit archives, including what fields were used to match and identify the approximately 19, 000 consumers to specific tradelines.
5. The manner in which TransUnion's “quarterly credit archives” were constructed, including whether each quarterly archive was a snapshot of a credit file on a certain date or was an aggregation of a time period within that quarter, and whether the archive incorporated information reported within the quarter, or information effective in that quarter.
6. The manner in which corrections or updates made to a consumer's credit file were incorporated into the “quarterly credit archives.”
7. The relationship between TransUnion's proprietary remark code and the Metro 2 special comment code “AL” and whether TransUnion considers Special Comment Code “AL” to a be a field that needs to be reported each month it applies.
8. The specific modifications performed pursuant to the simulation, including what specific code(s) were substituted for Metro 2 special comment code AL - “Assigned to Government” in TransUnion's modification to produce the “Modified Observation Period Archive Dates, ” and whether these modifications were made only to Navient student loan tradelines.
9. Whether TransUnion ran any other simulations or modeling in connection with the work it performed for Dr. Turner in connection with this lawsuit.
10. The name(s) of the TransUnion personnel that performed the work pursuant to Dr. Turner's Research Data ...

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