Costello v. U.S. Department of Education

MOTION to Dismiss for Lack of Jurisdiction and failure to state a claim

D. Colo.November 22, 2016

1 IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO Civil Action No. 16-cv-02224-MSK-MEH BRIAN COSTELLO, Plaintiff, v. UNITED STATES DEPARTMENT OF EDUCATION, Defendant. MOTION TO DISMISS Defendant United States Department of Education moves to dismiss Plaintiff Brian Costello’s Complaint, Doc. 1, for lack of jurisdiction under Fed. R. Civ. P. 12(b)(1) and for failure to state a claim under Fed. R. Civ. P. 12(b)(6). INTRODUCTION Plaintiff alleges that in the 2009-2010 Academic Aid Year, an unidentified, unauthorized person used his identity to obtain student loan funds, including a Federal Pell Grant in the amount of $2,150; a Direct Subsidized loan in the amount of $1,750; and Direct Unsubsidized Loans in the amount of $3,000. Doc. 1 ¶ 3. He further alleges that he has repeatedly communicated with Defendant Department of Education to dispute that he is responsible for repaying these loans. Id. ¶¶ 4-12. Case 1:16-cv-02224-MSK-MEH Document 12 Filed 11/22/16 USDC Colorado Page 1 of 7 2 Plaintiff asserts two claims in connection with these allegations: First, he asserts that Defendant has violated the Fair Credit Reporting Act (“FCRA”), specifically 15 U.S.C. § 1681s- 2(a)(3). Id. ¶ 13. Second, he asserts that any debt is invalid, because “Defendant under the NATIONAL BANK ACT of June 03, 1864 § 8 codified to Title 12 § 24 paragraph 7 cannot Loan Credit or Money under TILA or REGULATION Z as of June 5, 1933, 48 Stat. 113.” Id. at page 4. STANDARD OF REVIEW A. Fed. R. Civ. P. 12(b)(1) Actions are subject to dismissal when the court lacks subject matter jurisdiction over the claims. Fed. R. Civ. P. 12(b)(1). A district court has authority to consider matters outside the pleadings when subject matter jurisdiction is challenged under Rule 12(b)(1). Holt v. United States, 46 F.3d 1000, 1003 (10th Cir. 1995). The burden of proving subject matter jurisdiction under Fed. R. Civ. P. 12(b)(1) falls on the plaintiff. Kinney v. Blue Dot Services of Kansas, 505 F. App’x 812, 814 (10th Cir. 2012); Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). B. Fed. R. Civ. P. 12(b)(6) “[O]nly a complaint that states a plausible claim for relief survives a motion to dismiss.” Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009); see also Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007). The Court must evaluate whether the alleged facts plausibly establish the legal elements of the claim that a plaintiff attempts to plead. Iqbal, 556 U.S. at 679, 682-83. Allegations that merely assert conclusions are not entitled to the presumption of truth. Id. at 678. Moreover, “[i]t is not … proper to assume that the [plaintiff] can prove facts that [he] has Case 1:16-cv-02224-MSK-MEH Document 12 Filed 11/22/16 USDC Colorado Page 2 of 7 3 not alleged . . . .” Associated Gen. Contractors v. Cal. State Council of Carpenters, 459 U.S. 519, 526 (1983) (quoted in Twombly, 550 U.S. at 563 n.8). Therefore, “where the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged-but it has not ‘show[n]’-’that the pleader is entitled to relief.’” Id. at 679 (quoting Fed. R. Civ. P. 8(a)(2)). ARGUMENT I. In the Absence of an Express Waiver, Sovereign Immunity Bars Suit Against the United States. Under the doctrine of sovereign immunity, the United States is immune from suit unless it consents to be sued. See United States v. Dalm, 494 U.S. 596, 608 (1990). This consent must be unequivocally expressed in statutory text, see United States v. Nordic Village, Inc., 503 U.S. 30 (1992), and the scope of a sovereign immunity waiver is strictly construed in favor of the sovereign. See id. at 34. Sovereign immunity not only protects the United States from liability, it deprives the court of subject matter jurisdiction over the claims. United States v. Mitchell, 445 U.S. 535, 538 (1980); United States v. Sherwood, 312 U.S. 584, 586-88 (1941). II. Plaintiff’s First Claim is Subject to Dismissal under Fed. R. Civ. P. 12(b)(1) and 12(b)(6). Plaintiff’s first claim is asserted under 15 U.S.C. § 1681s-2(a)(3), a provision of FCRA. This subsection states that “[i]f the completeness or accuracy of any information furnished by any person to any consumer reporting agency is disputed to such person by a consumer, the person may not furnish the information to any consumer reporting agency without notice that such information is disputed by the consumer.” 15 U.S.C. § 1681s-2(a)(3). However, as Tenth Circuit precedent has established, FCRA gives consumers no private right of action against those Case 1:16-cv-02224-MSK-MEH Document 12 Filed 11/22/16 USDC Colorado Page 3 of 7 4 who report credit information to a credit reporting agency. Sanders v. Mountain Am. Fed. Credit Union, 689 F.3d 1138, 1147 (10th Cir. 2012). Rather, while FCRA gives consumers a private right of action against those who violate its provisions, that right of action is limited to claims against credit reporting agencies. Id. It does not extend to those who-like the Department of Education-furnish information to credit reporting agencies. Id. Even assuming arguendo that FCRA contains an express waiver of the United States’ sovereign immunity, that waiver only extends as far as the liability provided for under the statute. Because the provision cited as the basis for Plaintiff’s claim does not give rise to a private cause of action, there is no waiver of the United States’ sovereign immunity, and Plaintiff’s first claim is subject to dismissal pursuant to Fed. R. Civ. P. 12(b)(1). By the same token, Plaintiff has failed to state a claim under FCRA on which relief can be granted, and the first claim is subject to dismissal pursuant to Fed. R. Civ. P. 12(b)(6).1 III. Plaintiff’s Second Claim is Subject to Dismissal under Fed. R. Civ. P. 12(b)(1) and 12(b)(6). Plaintiff’s second claim is difficult to parse. However, none of the authorities cited expressly waive the United States’ sovereign immunity. Therefore, Plaintiff has not met his burden of proving subject matter jurisdiction, and this claim is subject to dismissal under Fed. R. Civ. P. 12(b)(1). 1 Even if there were a private right of action under 15 U.S.C. § 1681s-2(a)(3), the Complaint fails to allege facts sufficient to support such a claim. Specifically, while Plaintiff alleges that debts owed to the Department of Education appear on his credit report, he does not allege that the Department failed to notify any credit reporting agency that these debts are disputed. This leaves open the possibility that any fault lies with the credit reporting agency, rather than with Defendant. Case 1:16-cv-02224-MSK-MEH Document 12 Filed 11/22/16 USDC Colorado Page 4 of 7 5 Additionally, Plaintiff’s second claim fails to state a cause of action. In this section of the Complaint, Plaintiff recites the principle of statutory construction “expressio unius est exclusion alterius;” asserts that any debt is invalid, because “Defendant under the NATIONAL BANK ACT of June 03, 1864 § 8 codified to Title 12 § 24 paragraph 7 cannot Loan Credit or Money under TILA or REGULATION Z as of June 5, 1933, 48 Stat. 113;” and then quotes at some length from the latter-a 1933 House Joint Resolution suspending the gold standard in the United States. See H.J. Res. 192, 73rd Cong. (1933), enacted by Pub.L. No. 73-10, 48 Stat. 112-13 (1933). It therefore appears that this second claim is a version of claims other plaintiffs have unsuccessfully attempted via Public Law 73-10, such as the “vapor money” theory, “unlawful money” theory, or “redemption” theory. See Sanford v. Robins Fed. Credit Union, No. 5:12-CV-306 MTT, 2012 WL 5875712, at *3-4 (M.D. Ga. Nov. 20, 2012). Such claims have been “universally and emphatically” rejected by the courts. McLaughlin v. CitiMortgage, Inc., 726 F.Supp.2d 201 (D.Conn.2010). Consequently, Plaintiff’s second claim is subject to dismissal pursuant to Fed. R. Civ. P. 12(b)(6). CONCLUSION For the foregoing reasons, Plaintiff’s Complaint should be dismissed for lack of jurisdiction. In the alternative, the Complaint should be dismissed for failure to state a claim. Case 1:16-cv-02224-MSK-MEH Document 12 Filed 11/22/16 USDC Colorado Page 5 of 7 6 Dated November 22, 2016. Respectfully submitted, ROBERT C. TROYER Acting United States Attorney s/ Katherine A. Ross KATHERINE A. ROSS Assistant United States Attorney 1225 Seventeenth Street, Suite 700 Denver, CO 80202 Telephone: (303) 454-0100 E-mail: katherine.ross@usdoj.gov Counsel for Defendant Case 1:16-cv-02224-MSK-MEH Document 12 Filed 11/22/16 USDC Colorado Page 6 of 7 7 CERTIFICATE OF SERVICE (CM/ECF) I certify that on November 22, 2016, I provided the foregoing to the following non- CM/ECF participants, with copies of all unpublished cases cited therein, as indicated: Brian R. Costello 10884 Valleybrook Circle Highlands Ranch, CO 80130 Plaintiff, pro se Via U.S. Mail s/ Caitlin McConnell United States Attorney’s Office Case 1:16-cv-02224-MSK-MEH Document 12 Filed 11/22/16 USDC Colorado Page 7 of 7