Supreme Court Vacates 2nd Circuit Win for Lawyer Challenging Student Loan Fees
The U.S. Supreme Court has vacated a federal appeals court decision that allowed a solo practitioner to avoid arbitration in a lawsuit that claims his student loan company charged hidden penalties.
Manhattan solo Joshua Fensterstock had claimed in his suit that Affiliated Computer Services Inc. and Education Finance Partners were applying payments that were not received by a certain day each month to interest instead of principal. ACS had serviced loan notes for Education Finance Partners, a California company that is now bankrupt.
The New York City-based 2nd U.S. Circuit Court of Appeals had ruled a ban on class actions in Fensterstock’s student loan agreement was unconscionable under California law. On Monday, the Supreme Court vacated the decision and remanded for further consideration in light of AT&T Mobility v. Concepcion. The April Supreme Court decision held that the Federal Arbitration Act pre-empts California common law regarding unconscionability and class action waivers.
Hinshaw & Culbertson partner Edward Lenci is one of two lawyers representing ACS. He tells the ABA Journal in an email that he considers the Supreme Court action a victory. “The Supreme Court obviously decided the parties’ agreement should be enforced in accordance with its recent decision in AT&T Mobility,” he said. “The order of remand is not much of a concern. In fact, it’s a common practice of the court in these circumstances simply to GVR, which stands for grant cert, vacate and remand.”
Hat tip to the Disputing blog.
