Navient, the student loan servicing company formerly known as Sallie Mae, paid $2.5 million to settle claims that it violated the Telephone Consumer Protection Act by using automated dialers to seek information about borrowers from third parties who were not responsible for the loans.
Nearly half of the settlement finalized in Virginia’s Eastern District Court Friday will go to the plaintiff’s attorneys and the firm administrating the class and settlement. The verified class of 17,780 class members will each receive about $75, according to Henry Turner of Decatur’s Turner Law Offices, who originated the litigation.
Navient is the largest student loan servicer in the country with more than 12 million borrowers, Turner said.
None of the class members were themselves borrowers, but Navient and its third-party collection contractors nonetheless targeted them as it attempted to collect on loans, Turner said.
“Navient is of course a loan servicer, but it also functions as collector when there’s a default,” Turner said.
“Student loan servicers are protected more than normal debt collector under TCPA because of protections Congress passed when they wrote it,” said Turner. “But there are still restrictions under TCPA.”
Turner’s client was Denise Baker, a Tennessee woman whose brother used her as a reference for obtaining a student loan and who was repeatedly the subject of auto-dialed calls to her cellphone seeking information.
Despite several requests for Navient and its agents to stop calling about her brother, the calls kept coming, Turner said.
“She never authorized or gave express permission for them to call her, which is required under the TCPA,” Turner said.
Navient is headquartered in Virginia, and Turner enlisted the aid of Bill Downing and his Suffolk firm, Consumer Legal Solutions, to file a putative class action in November 2017.
The complaint asserted that Navient “has a corporate policy of using an Autodialer or a prerecorded or artificial voice message to call persons listed as references, relatives, neighbors, acquaintances or otherwise” on loan applications or through skip-trace searches as a means of tracking down borrowers, it said.
Navient had been the subject of thousands of complaints to the Consumer Financial Protection Bureau and more than 1,300 complaints to the Better Business Bureau related to “billing/collection issues,” the complaint said.
The company filed a motion to dismiss but, while it pending, the parties met for a daylong mediation and announced a preliminary settlement in June.
In the agreement, Navient said it “denies the material allegations of plaintiff’s Class Complaint and vigorously disputes that it violated the TCPA when contacting Plaintiff and the proposed class members. Therefore, in the litigation, [Navient] denies that Plaintiff and the putative class members are entitled to any relief whatsoever.”
“Nevertheless,” it said, “after extensive discovery, the full briefing of Navient’s motion for summary judgment and a mediation before a former United States magistrate judge, the parties have agreed to resolve this matter for an all-cash, non-reversionary settlement fund in the amount of $2.5 million.”
Navient was represented by Margaret Inomata of Vedder Price’s Washington, D.C., office and Lisa Simonetta and Christopher Ramos of the firm’s Los Angeles branch. Turner said Simonetta led the company’s negotiations.
A Navient spokesman declined to comment.
Turner said Navient’s team “put up a real fight” before agreeing to the settlement, which was given final approval by Judge Leonie Brinkema of the U.S. District Court for the Eastern District of Virginia.
According to figures Turner provided, the lawyers will receive $857,713 in fees and expenses; the settlement administrator, Rust Consulting, will receive $362,639; and Baker will receive a $15,000 service as class representative.
Each class member will receive a pro rata share of $74.24 from the remaining $1.3 million