Gearhart v. United States Department of Education

Background

Jeffrey Gearhart, a federal student-loan borrower, sued the United States Department of Education and Secretary of Education Betsy DeVos over the garnishment of his tax returns to collect alleged student-loan debt. After the court dismissed his original complaint with leave to amend, Gearhart filed a First Amended Complaint.

The amended complaint asserted two types of claims:

- An Administrative Procedure Act claim alleging that the Department’s rejection of Gearhart’s objections concerning the enforceability of the debt and his financial hardship, and its refusal to provide an in-person hearing, were arbitrary, capricious, or contrary to law. - A constitutional damages claim under the Bivens doctrine, alleging that the Department deprived him of property without due process under the Fifth Amendment. Bivens refers to a court-created claim for damages against federal officials who allegedly violate the Constitution.

Administrative Procedure Act claim

The government moved to dismiss under Federal Rule of Civil Procedure 12(b)(1), which concerns subject-matter jurisdiction, and Rule 12(b)(6), which concerns whether a complaint states a legally sufficient claim. The government did not dispute that the agency decisions identified by Gearhart were final decisions that could be reviewed under the Administrative Procedure Act.

The court held that Gearhart alleged enough facts to seek judicial review. He alleged that the Department did not explain why it rejected his objections and hearing request and did not consider, or explain its decision with reference to, evidence about his employment history and the enforceability of the debt. The opinion also noted allegations that his mother made $12,000 in loan payments, settled remaining debt with a collection agency, and that a class-action settlement forgave debt owed to one institution; Gearhart also alleged that he paid $12,000 toward loans from another institution.

The court stated that Gearhart did not have to attach the agency decisions to his complaint or plead detailed facts refuting the government’s factual contentions at the motion-to-dismiss stage. The court therefore denied the motion to dismiss the Administrative Procedure Act cause of action.

Bivens claim

The court held that the Department was not a proper defendant for a Bivens claim. Bivens permits a damages action against federal agents in certain circumstances, but federal agencies themselves cannot be sued directly under that theory. Although Gearhart named Secretary DeVos, the amended complaint did not allege that she committed conduct supporting the Bivens claim; instead, the claim was directed against the Department.

The court therefore granted the motion to dismiss the Bivens claim without leave to amend. The court noted that Gearhart did not argue that he could amend the claim or address the government’s argument in his opposition.

Requested relief under the Higher Education Act

The government also sought dismissal of parts of Gearhart’s requested relief under the Higher Education Act. The challenged requests sought an order requiring the Department to withdraw its authority to garnish his wages, provide him a hearing, return garnished funds, and restore his creditworthiness.

The court explained that the Higher Education Act permits suits against the Secretary but generally prohibits injunctive relief, including declaratory and mandamus relief. The court also explained that specific relief requiring the Secretary to perform a legal duty may still be available when the alleged conduct exceeds the statutory limits on the Secretary’s authority. It therefore denied the motion to dismiss the identified portions of the requested relief at that stage, while leaving the government free to challenge the propriety of that relief in further proceedings related to the Administrative Procedure Act claim.

Other orders and disposition

The court ordered that two declarations and a request for judicial notice were not properly considered on the motion to dismiss and struck them from consideration. The overall order states that the motion to dismiss was granted in part and denied in part without leave to amend. The defendants were ordered to answer the First Amended Complaint within 21 days, and the court scheduled a case-management conference.