Published on:

Court Decides Case Involving Student Loan Industry

A law firm claims that for several years, the Attorney General has devoted substantial resources to an investigation of the $85 billion student loan industry. The investigation has revealed that the industry is infected with serious conflicts of interest. The said conflicts of interest have prevented students and parents from making informed decisions about financing higher education. The investigation, which remains open, has resulted in numerous settlements with schools and lenders, including a student lending institution. In these settlements, schools and lenders have agreed to adopt the Attorney General’s Student Loan Code of Conduct, which prohibits lenders from providing improper financial incentives to schools and eliminates a number of other practices presenting conflicts of interest.

a New York Injury Lawyer said that based on records, the Attorney General has widely publicized its commitment to the protective efforts, particularly with respect to illegal relationships between schools and greedy student lending institutions. Notably, the Attorney General entered into a $2 million settlement with the student lending giant which brought about a code of conduct prohibiting greedy and illegal behavior by the lender. However, the investigation surrounding the settlement is now being carefully, and needlessly, shrouded by the Attorney General’s office. The consumers are entitled to the information discovered by the Office of the Attorney General to ensure fair dealings with the student lending giant, and the Office of the Attorney General should encourage, not interfere with those attempts at protective measures.

The law firm moves for a judgment directing the accused parties which includes the State of New York, Office of the Attorney General and the Records Appeals Officer to comply with the duties imposed on them to provide the information requested by the complainant in its April 17, 2009 request and May 29, 2009 appeal, and awarding reasonable lawyer’s fees and litigation costs.

More specifically, a Nassau County Personal Injury Lawyer said the law firm seeks access to the documents associated with the Office of the Attorney General’s investigation of the student loan industry, as they relate to the student lending giant or any related subsidiaries with respect to the preferred lender relationships and kick-back arrangements between the student lending giant and various colleges and universities.

The accused parties and the student lending giant oppose the petition through their answers, affidavits and affirmations. They assert a counterclaim that although the Office of the Attorney General has sustained some but not all of the lending company’s claims of exemption from disclosure based on the competitive injury exception, to the extent that the Office has not sustained the claims of exemption.

In response to the counterclaim, the Attorney General’s Office admits that the accused parties sustained some but not all of the lending company’s claims of exemption from disclosure. A Queens Personal Injury Lawyer said that the Office asserts that if the documents that the accused parties declined to provide exemptions are ordered to be disclosed, any information that would constitute an unwarranted invasion of personal privacy and any lawyer-client communication should be protected. The accused parties assert that they declined to find certain documents be exempt because the student lending company failed to establish a likelihood of substantial competitive injury from the disclosure of the documents.

During 2007 and 2008, the Office of the Attorney General sought a number of documents from the student lending company, both in demand letters and by subpoenas. The lending company produced the documents voluntarily in response to the demand letters, as well as in response to the subpoenas. Through its lawyers, the lending company requested that the documents they provided be governed by the provision which permits any person who submits information to a State agency to request that the information be exempted from disclosure under the trade secret exemption.

On April 11, 2007, the lending company entered into a settlement with the Office of the Attorney General. The lending company agreed to adopt the Attorney General’s Code of Conduct governing student lending and to contribute to a fund devoted to educating college-bound students about their loan options. They also agreed to discontinue providing staffing for school’s call centers or other staffing for college financial aid offices, discontinue paying financial aid officers for serving on advisory boards, and discontinue paying for any trips or travel for any financial aid officer.

The settlement further requires that the lending company cooperate in any ongoing or future investigations of student loans. They agreed to produce, voluntarily and without service of subpoenas, any information and all documents related to student loans reasonably requested by the Attorney General’s Office. In fact, the Office has requested and received documents from the lending company after the settlement was executed. Furthermore, the settlement provides that if the lending company commits a material breach of the agreement, the settlement may be terminated and an investigation, prosecution action or proceeding against them may be conducted.

On April 17, 2009, the Attorney General’s Office received a request for records related to its investigation of the student loan industry from an investigator in the law firm. The law firm requested the documents related to the student lending corporation and its affiliates obtained by the Office of the Attorney Secretary during its investigation of the student loan industry. The letter stated that the request includes, but is not limited to the 11 requests.

By a letter dated May 22, 2009, the Office of the Attorney General denied the law firm’s request on the ground that the documents requested were compiled for law enforcement purposes which, if disclosed, would interfere with law enforcement investigations or judicial proceedings. The law firm administratively appealed, and by a letter, the determination was upheld on the ground that the law enforcement exemption had been correctly invoked.

On November 9, 2009, the Attorney General’s Office notified the student lending company that it intended to determine whether the request for an exception should be granted, continued or denied. The lending company submitted an additional written statement of the necessity for the granting or continuation of an exception to disclosure. By a letter, the lending company withdrew its claim of exemption as to some documents, and maintained that remainder of the documents are exempted from disclosure because disclosure would cause substantial injury to their competitive position. They also asserted that all of the documents were also exempt under the law enforcement exemption, and that certain documents contained information entitled to protection because disclosure would constitute an unwarranted invasion of personal privacy.

By letter, the Attorney General’s Office granted the lending company’s request for an exception to certain documents, except for those portions that do not contain essential business terms. The Office granted the request for an exception in its entirety as to certain documents, and denied the request for the remainder of the documents.

On December 30, 2009, the Attorney General’s Office issued an appeal determination that expanded the number of documents deemed protected under the competitive injury exemption. The appeal determination did not address the other grounds for exemption.

In support of the petition, the law firm contends that the letter of denial dated May 22, 2009 did not contain any explanation of any of the documents that were being withheld or particularized reason for the withholding. Also, the June 23, 2009 letter did not contain any explanation of any of the documents that were being withheld or particularized reasons for the withholding. The law firm’s appeal specifically requested an explanation of the reasons for the denial fully in writing as required by law. In response, the Office appeal upheld the denial with only the simple explanation that the Office correctly invoked the exemption. The law firm was advised that there were no further avenues for administrative review of the request.

The law firm claims that the accused fail to meet, or even address, the requisite burden in establishing a basis for withholding the requested documentation. The initial denial provided no analysis of the determination to deny accessibility. The subsequent confirmation provided no additional insight into the decision to deny accessibility.

The accused parties contend that the denial of the law firm’s request was valid when issued and remains valid today. The Office of the Attorney General properly denied disclosure of the requested documents because disclosure would interfere with law enforcement investigations. The investigation of the student loan industry was, and continues to be, a major investigation of a large, very competitive business. The documents requested could provide information to current and potential targets of ongoing investigation, and would interfere with the ability to successfully conduct its investigations. Much of the information requested and received during the investigation is considered highly confidential and sensitive by the entities that provided the information.

The student lending company contends that the documents at issue, produced to the Office of the Attorney General during the investigation into the student loan industry, are exempt from disclosure under multiple exceptions. First and foremost, the Office would not have the documents but for the investigation. Thus, all of the documents were compiled for law enforcement purposes. A substantial number of the documents also are protected from disclosure because they contain confidential information about the business and disclosure would cause competitive injury to the lending company, or contain private information about individuals. Certain of the documents also contain lawyer-client communications and are exempt from disclosure on that basis. Finally, at the administrative level, the Office of the Attorney General has sustained many but not all of the lending company’s claims of exemption based on competitive injury, privacy and privilege. And to the extent that the Office of the Attorney General has not sustained the claims of exemption, the Attorney General’s Office’s determinations should be reversed.

The lending company requested at the time the documents were produced, that all the documents be maintained as confidential and exempt from disclosure. The expectation of confidentiality was specifically discussed at the time. The expectation of confidentiality for the documents was very important in the lending company’s decision to cooperate with the Office of the Attorney General’s investigation. It would violate that expectation, and probably deter future cooperation by the lending company and other affected entities, if any of the documents were released.

Other than the enumerated list of 11 categories of documents requested, the law firm also made a blanket document request and an introductory general request. The two global document requests do not reasonably describe the records requested. However, the court finds that the global request, read in conjunction with the enumerated categories of documents requested was sufficient for purposes of locating and identifying the documents sought. It was possible for the court to review of the documents withheld on the basis that the document was not reasonably described in the request to determine if they should be produced.

The court finds that documents withheld solely on the basis that the materials were not reasonably described in the law firm’s request shall be produced, subject to the redaction conditions detailed.

Finally, the law firm seeks an award of lawyer’s fees and litigation costs. Under the cited law, a prevailing requester may recover counsel fees and costs where the agency lacked a reasonable basis for denying access to the requested records. The court denies the branch of the law firm’s application. The court is not persuaded that the accused lacked a reasonable basis for its actions. The complainant law firm has not substantially prevailed in the matter, notwithstanding the court’s directing that a limited category of documents be produced.

The legal system in any State is very distinct and a skilled lawyer can identify every distinction there is. When disclosing pertinent facts is used against you and could harm your establishment, seek legal counsel. Whether you have been charged with premises liability, medical malpractice or product liability, contact Stephen Bilkis & Associates.

Contact Information