After Court Decision, Could Title IX Expand to Cover Hazing?

A recent federal court decision in Louisiana suggests that Title IX requires institutions of higher education to treat fraternities and sororities equally. While Title IX generally involves cases of sexual assaults on campus, this new lawsuit argues that fraternity members are more at risk than sorority members of hazing due to unequal protections by colleges.

The lawsuit alleges that Louisiana State University (“LSU”) treats Greek organizations for men and women differently. The Plaintiffs allege that four fraternity pledges have died during hazing incidents at LSU since 1979, whereby hazing of sorority pledges is virtually non-existent due to restrictions and strict oversight provided by LSU. By not offering these same protections to the men involved in Greek organizations, the lawsuit states LSU has violated Title IX.

According to USA Today, Title IX has never been tested in hazing cases. As stated in that story, the lawsuit pushes the boundaries of Title IX enforcement. If successful, the litigation could set a precedent that drastically changes college disciplinary systems nationwide. Colleges and universities would have to ensure that they treat fraternities and sororities similarly when enforcing anti-hazing laws.

This lawsuit could also help shape new legislation. Florida recently enacted legislation that enables prosecutors to bring charges against fraternity and sorority members who weren’t present for hazing activities, but helped plan the events. Similar legislation is likely to be proposed elsewhere.

As the new academic year begins, institutions should take steps to enforce anti-hazing laws uniformly among fraternities and sororities in order to minimize the risk of similar claims based on Title IX.

© Steptoe & Johnson PLLC. All Rights Reserved.
For more university litigation news, please see the National Law Review Public Education & Services type of law page.

Louisiana Governor Declares Statewide Emergency After Cyber-Attacks Against School Systems

Louisiana Governor John Bel Edwards, for the first time in history, declared a statewide cybersecurity emergency last week, following cyber-attacks against several school systems in the state.

By declaring a cybersecurity emergency, the state is able to garner needed resources, including cybersecurity experts from the Louisiana National Guard, State Police, the Office of Technology Services, the Governor’s Office of Homeland Security and Emergency Preparedness, Louisiana State University, and others to assist school systems in Sabine, Morehouse and Oachita parishes that were compromised with malware attacks.

According to the Governor’s office, although these resources are working on the incident, the threat is ongoing. The Governor established a statewide Cyber Security Commission in 2017 and stated that these incidents against school systems in the State are the reason the Commission was established.

Several states, but not all, have established Cyber Security Commissions or similar public-private partnerships in order to prepare for and respond to cyber-attacks that affect state resources. Setting up the Commission in advance of attacks like the ones that occurred in Louisiana will assist states in responding quickly to these attacks and provide appropriate resources and help to those affected.

Copyright © 2019 Robinson & Cole LLP. All rights reserved.
This article is by Linn F. Freedman of Robinson & Cole LLP.
For more in cybersecurity issues, please see the Communications, Media & Internet law page on the National Law Review.

Wide-Ranging Senate Bill Aims to Streamline Post-Grant Proceedings and Block Trolls

On Wednesday, Senator Coon—of 101 hearings fame—and five co-sponsors introduced the Stronger Patents Act in the Senate (“Support Technology & Research for Our Nation’s Growth and Economic Resilience”). About 22 of the bill’s 40 pages involve amendments to IPR, PGR and ex parte reexamination that limit appeals and clarify overlapping court and PTO actions. These provisions have been ably summarized by Joshua Rich in a post at PatentDocs, but there are other interesting amendments to 35 U.S.C. so I thought I would start toward the last half of the bill.

Section 106 of the bill, entitled “Restoration of Patents as Property Rights,” amends section 283 to require that a court that finds infringement to presume that further infringement would cause irreparable injury and that remedies available at law are inadequate to compensate for that injury. These are the circumstances that encourage the court to issue an injunction against the infringer.

Section 42 of 35 U.S.C. would be amended to end USPTO fee diversion into the general fund by providing that any fees collectable by the Director shall be “available to the Director” and used to operate the PTO. Remaining unobligated funds are to be maintained in the “USPTO Innovation Promotion Account.”

Section 123(d) would be amended to clarify that a mircoentity includes an applicant who receives the majority of his income for a institution of higher education, or applicant has, or is under an obligation to assign, grant or convey a license or other ownership interest to said institution or the applicant is the institution or the applicant is a 501(c)(3) “nonprofit organization” that holds title to the institution’s patents “for the purpose of facilitating commercialization of the technologies” of the IP.

The bill establishes a pilot program whereby no fewer than six district courts will receive one additional law clerk or secretary who is tasked, with the assistance of the Federal Judicial Center, with helping  the court “develop expertise in patent and PVPA cases”…”for the purpose of expanding the [patent cases pilot program] to address special issues raised in patent infringement suits against individuals or small business concerns.”

The bill introduces Title II—”Targeting Rouge and Opaque Letters” and defines “Unfair or Deceptive Acts or Practices in Connection with the Assertion of a United States Patent” (section 202). The bill makes it an “unfair or deceptive act or practice,” as defined by the ITC, to send written communications that the recipient is or was an infringer of “the patent” and bear liability or owe compensation to another, if the sender, in bad faith (high probability of deceit and intentional avoidance of the truth—defined in more detail in the bill—sends communications regarding 15 specific assertions regarding infringement, licensing and prior suits, or failure to identify the sender.

These bad acts or failures to act are a laundry list of the approaches patent trolls use to intimidate recipient targets or to mask their identities. Bad acts include falsely representing that sender has the right to enforce the patent, that a civil action has been filed against the recipient or other parties, that recipient will be sued, that third parties have taken licenses, including failure to disclose that the other licenses are not to the allegedly infringing acts, that recipient’s alleged infringement has been investigated by sender or that sender has filed an action that sender knew had failed.

A sender cannot seek compensation for infringement of a claim that has been held unenforceable or invalid, acts by recipient after the patent has expired or recipient’s acts that the sender knew were properly licensed.

A sender in bad faith, cannot fail to include the identity of the person asserting the right to license or to enforce the patent, including ultimate parent entities. The patent asserted to be infringed upon must be identified, as must the product or activity of the recipient alleged to be infringing. The name of a contact person must be given to the recipient.

While the sender can argue that any of these acts or failures to act was due to an honest mistake, enforcement is by the FTC and the fines can be as high as $5 million.

Section 204 preempts State laws regarding “transmission or contents of communication relating to the assertion of patent rights,” but does not preempt other State laws relating to state trespass, contract or tort law. The FTC can intervene in suits brought by States and, if the FTC has instituted a civil suit, the State cannot begin an action under section 202.

While I am sure that there are freedom of speech and commerce clause arguments to be made, this bill elevates its prohibitions to the level of shouting “fire!” in a crowded theater. Combined with the proposed traffic laws meant to limit the use of multiple IPR filings, and their associated appeals at every turn in the litigation road, this seems to be a reasonable attempt to untangle the tortuous relationship between district court litigation and post-grant PTO proceedings.

Senator Coons played an important role in the recent Senate subcommittee hearings on the misguided expansion of patent ineligibility under Section 101. He may have found this part of the Patent Statute to be easier to untangle than defining a “natural phenomenon” or an “abstract idea” but I hope that this issue remains on his IP to-do list.

© 2019 Schwegman, Lundberg & Woessner, P.A. All Rights Reserved.
For more on patent laws & legislation see the National Law Review Intellectual Property page.

Lessons in Becoming a Second Rate Intellectual Power – Through Privacy Regulation!

The EU’s endless regulation imposed on data usage has spooled over into academia, providing another lesson in kneecapping your own society by overregulating it. And they wonder why none of the big internet companies arose from the EU (or ever will). This time, the European data regulators seem to be doing everything they can to hamstring clinical trials and drive the research (and the resulting tens of billions of dollars of annual spend) outside the EU. That’s bad for pharma and biotech companies, but it’s also bad for universities that want to attract, retain, and teach top-notch talent.

The European Data Protection Board’s Opinion 3/2019 (the “Opinion”) fires an early and self-wounding shot in the coming war over the GDPR meaning and application of “informed consent.” The EU Board insists on defining “informed consent” in a manner that would cripple most serious health research on humans and human tissue that could have taken place in European hospitals and universities.

As discussed in a US law review article from Former Microsoft Chief Privacy Counsel Mike Hintz called Science and Privacy: Data Protection Laws and Their Impact on Research (14 Washington Journal of Law, Technology & Arts 103 (2019)), noted in a recent IAPP story from Hintz and Gary LaFever, both the strict interpretation of “informed consent” and the GDPR’s right to withdraw consent can both cripple serious clinical trials. Further, according to LaFever and Hintz, researchers have raised concerns that “requirements to obtain consent for accessing data for research purposes can lead to inadequate sample sizes, delays and other costs that can interfere with efforts to produce timely and useful research results.”

A clinical researcher must have a “legal basis” to use personal information, especially health information, in trials.  One of the primary legal basis options is simply gaining permission from the test subject for data use.  Only this is not so simple.

On its face, the GDPR requires clear affirmative consent for using personal data (including health data) to be “freely given, specific, informed and unambiguous.” The Opinion clarifies that nearly all operations of a clinical trial – start to finish – are considered regulated transactions involving use of personal information, and special “explicit consent” is required for use of health data. Explicit consent requirements are satisfied by written statements signed by the data subject.

That consent would need to include, among other things:

  • the purpose of each of the processing operations for which consent is sought,
  • what (type of) data will be collected and used, and
  • the existence of the right to withdraw consent.

The Opinion is clear that the EU Board authors believe the nature of clinical trials to be one of  an imbalance of power between the data subject and the sponsor of the trial, so that consent for use of personal data would likely be coercive and not “freely given.” This raises the specter that not only can the data subject pull out of trials at any time (or insist his/ her data be removed upon completion of the trial), but EU Privacy Regulators are likely to simply cancel the right to use personal health data because the signatures could not be freely given where the trial sponsor had an imbalance of power over the data subject. Imagine spending years and tens of millions of euros conducting clinical trials, only to have the results rendered meaningless because, suddenly, the trial participants are of an insufficient sample size.

Further, if the clinical trial operator does not get permission to use personal information for analytics, academic publication/presentation, or any other use of the trial results, then the trial operator cannot use the results in these manners. This means that either the trial sponsor insists on broad permissions to use clinical results for almost any purpose (which would raise the specter of coercive permissions), or the trial is hobbled by inability to use data in opportunities that might arise later. All in all, using subject permission as a basis for supporting legal use of personal data creates unnecessary problems for clinical trials.

That leaves the following legal bases for use of personal data in clinical trials:

  • a task carried out in the public interest under Article 6(1)(e) in conjunction with Article 9(2), (i) or (j) of the GDPR; or

  • the legitimate interests of the controller under Article 6(1)(f) in conjunction with Article 9(2) (j) of the GDPR;

Not every clinical trial will be able to establish it is being conducted in the public interest, especially where the trial doesn’t fall “within the mandate, missions and tasks vested in a public or private body by national law.”  Relying on this basis means that a trial could be challenged later as not supported by national law, and unless the researchers have legislators or regulators pass or promulgate a clear statement of support for the research, this basis is vulnerable to privacy regulators’ whims.

Further, as observed by Hintze and LaFever, relying on “the legal basis involves a balancing test between those legitimate interests pursued by the controller or by a third party and the risks to the interests or rights of the data subject.” So even the most controller-centric of legal supports can be reversed if the local privacy regulator feels that a legitimate use is outweighed by the interests of the data subject.  I suppose the case of Henrietta Lacks, if arising in the EU in the present day, would be a clear situation where a non-scientific regulator can squelch a clinical trial because the data subjects rights to privacy were considered more important than any trial using her genetic material.

So none of the “legal basis” options is either easy or guaranteed not to be reversed later, once millions in resources have been spent on the clinical trial. Further, as Hintze observes, “The GDPR also includes data minimization principles, including retention limitations which may be in tension with the idea that researchers need to gather and retain large volumes of data to conduct big data analytics tools and machine learning.” Meaning that privacy regulators could step in and decide that a clinician has been too ambitious in her use of personal data in violation of data minimization rules and shut down further use of data for scientific purposes.

The regulators emphasize that “appropriate safeguards” will help protect clinical trials from interference, but I read such promises in the inverse.  If a hacker gains access to data in a clinical trial, or if some of this data is accidentally emailed to the wrong people, or if one of the 50,000 lost laptops each day contains clinical research, then the regulators will pounce with both feet and attack the academic institution (rarely paragons of cutting edge data security) as demonstrating a lack of appropriate safeguards.  Recent staggeringly high fines against Marriott and British Airways demonstrate the presumption of the ICO, at least, that an entity suffering a hack or losing data some other way will be viciously punished.

If clinicians choosing where to set human trials knew about this all-encompassing privacy law and how it throws the very nature of their trials into suspicion and possible jeopardy, I can’t see why they would risk holding trials with residents of the European Economic Zone. The uncertainty and risk involved in the aggressively intrusive privacy regulators now having specific interest in clinical trials may drive important academic work overseas. If we see a data breach in a European university or an academic enforcement action based on the laws cited above, it will drive home the risks.

In that case, this particular European shot in the privacy wars is likely to end up pushing serious researchers out of Europe, to the detriment of academic and intellectual life in the Union.

Damaging friendly fire indeed.

 

Copyright © 2019 Womble Bond Dickinson (US) LLP All Rights Reserved.

UPDATE: NCAA Flexes Its Muscle in Response to California Fair Pay To Play Act

NCAA President Mark Emmert has predicted that it would become “impossible” for the NCAA to consider California colleges eligible to participate in national championship competitions should California pass the Fair Pay To Play Act (SB 206) and allow college athletes to maintain their amateur status while accepting pay for marketing their name, image and likeness (as discussed in our recent blog posts on March 4, 2019, and May 23, 2019).

Emmert stated this in a letter to Senator Nancy Skinner, the sponsor of the proposed legislation, and the Chairpersons of two California State Assembly Committees (the Arts Entertainment, Sports, Tourism and Internet Committee and the Higher Education Committee).

Emmert has requested the two committees postpone consideration of the proposed legislation while the NCAA convenes an investigatory working group of school presidents and athletics administrators who will be reviewing the current prohibition on NCAA athletes earning income from the use of their names, images, and likenesses. The working group, led by Big East Commissioner Val Ackerman and Ohio State University Athletic Director Gene Smith, is authorized to propose specific recommendations to potentially reform and modify current NCAA Bylaws.

In his letter, Emmert recognized the California legislature’s efforts in developing the bill, but noted, “when contrasted with current NCAA rules,

the bill threatens to alter materially the principles of intercollegiate athletics and create local differences that would make it impossible to host fair national championships.”

Emmert continued, “… it likely would have a negative impact on the exact students athletes it intends to assist.”

The timing of President Emmert’s request presents a dilemma for the California state legislature as the Ackerman and Smith-led NCAA group is not scheduled to update the NCAA Board of Governors until August and will not issue a final report until late-October, more than a month after the end of the current California legislative session considering SB 206.

SB 206 was just approved by the Committee on Arts without any formal opposition. The bill is now headed to the 12-member Committee on Higher Education, which must express its approval before July 11 and before the 61 Democratic members of the full 80-member California assembly will have an opportunity to consider the bill.

In its current form, the legislation would prohibit a California postsecondary educational institution, athletic association, conference, or any other organization with authority over intercollegiate athletics, from preventing student-athletes from earning compensation in connection with the use of the student-athlete’s name, image, or likeness. This would result in colleges, such as perennial sports powers like UCLA, USC, the University of California, and Stanford from being unable to stop their male and female student-athletes from signing endorsement deals or licensing contracts under the NCAA prohibition, circumventing the power and authority of the NCAA.

Senator Skinner responded to Emmert’s letter, saying, “It’s definitely a threat to colleges.”

She continued, “And this is what I think is so ironic: They are colleges. The NCAA is an association of colleges, and yet they’re threatening California colleges and saying that they would not allow them to participate in championships if my bill passes.”

Skinner reminded the public that if her bill were signed into law, it would not go into effect for another three years. She said the NCAA would have ample time to assess its own rules regarding student-athlete compensation. “Both the colleges and the NCAA have plenty of time to do the right thing,” she said.

Jackson Lewis P.C. © 2019
For more on NCAA and other sports news see the National Law Review page on Entertainment, Art & Sports.

IRS Notice Offers Good News for State Colleges and Universities (at Least for Now)

In January 2019, the Internal Revenue Service (IRS) issued Notice 2019-09, which provides interim guidance for Section 4960 of the Internal Revenue Code of 1986. As a reminder, Section 4960 imposes an excise tax of 21 percent on compensation paid to a covered employee in excess of $1 million and on any excess parachute payments paid to a covered employee. A “covered employee” is one of the organization’s top-five highest-paid individuals for years beginning after December 31, 2016. An organization must determine its covered employees each year, and once an individual becomes a covered employee, that individual will remain a covered employee for all future years.

Of particular interest to state colleges and universities is the answer to Q–5 of the notice. It provides that the Section 4960 excise tax does not apply to a governmental entity (including a state college or university) that is not tax-exempt under Section 501(a) and does not exclude income under Section 115(l). What does this mean? Basically, if an institution does not rely on either of those statutory exemptions from taxation, the institution will not be subject to the excise tax provisions of Section 4960. This exclusion from Section 4960 means the institution could compensate its athletic coaches (or other covered employees) in excess of the $1 million threshold and not be subject to the 21 percent excise tax.

As we discussed previously, some institutions rely on political subdivision status for tax purposes. Importantly, the notice also provides that any institution relying on its political subdivision status to avoid taxation, as opposed to relying on either of the above-mentioned exemptions, will be subject to the Section 4960 excise tax if the institution is “related” to any entity that does rely on either of the exemptions.

Although the IRS’s guidance is helpful in determining Section 4960’s application to state colleges and universities, it appears not to reflect “Congressional intent.” On January 2, 2019, the Committee on Ways and Means of the U.S. House of Representatives released a draft technical corrections bill that seeks to correct “technical and clerical” issues in the Tax Cuts and Jobs Act of 2017. The corrections bill seeks to clarify Section 4960’s application by stating that any college or university that is an agency or instrumentality of any government or any political subdivision, or that is owned or operated by a government or political subdivision, is subject to Section 4960. Given the current state of affairs in Washington, D.C., we are not confident that the corrections bill’s expanded application to state colleges and universities will ever come to fruition.

 

© 2019, Ogletree, Deakins, Nash, Smoak & Stewart, P.C., All Rights Reserved.

State Legislators React to Proposed Federal Title IX Regulations with State Law Proposals

While college, universities and educational professionals await the Department of Education’s (DOE) proposed new Title IX regulations, which will dictate a revised process by which allegations of sexual misconduct must be handled, the state legislatures in Missouri and Arizona are currently considering legislation that would adopt many of Secretary DeVos’s anticipated regulatory modifications.

The proposed Missouri legislation, contained in Senate Bill 259 offered by Senator Gary Romine and House Bill 573 introduced by Representative Dean Dohrman, would allow students involved in Title IX complaints to appeal findings outside of the university system to the Missouri Administrative Hearing Commission, considered a “neutral and independent hearing officer for the state.”

The key elements of the proposed Missouri bill are:

  • All state universities would be required to expedite hearings for students if the investigation and resolution of the complaint deprives their education.
  • Those accused would be provided with the identities of the parties and known witnesses and would have the opportunity to cross-examine parties and witnesses.
  • Denial of appropriate due process in a Title IX complaint would be considered a “breach of contract between the student and the university,” potentially resulting in a $250,000 fine for the institution.
  • If someone is found to have made a false complaint, the accused has the right to seek actual and punitive damages.

The House version of the bill would also “ensure that all parties use the terms ‘complainant’ and ‘respondent’ and refrain from using the term ‘survivor’ or any other term that presumes guilt before an actual finding of guilt.”

Senator Romine commented on his reason for introducing the proposed legislation by stating, “The problem is that a lot of times the accused does not have a proper recourse through the system, and we want to make sure that if there isn’t a proper recourse, that the institution that’s supposed to be upholding Title IX is held accountable for it.”

Representative Dohrman commented on his reasons for introducing the House bill in a press release, stating “due process is vital in both civil and criminal proceedings and Title IX proceedings are no different. I have filed this bill to… protect all students by making sure both the accuser and the accused are in a just proceeding.”

In addition to the proposed legislation in Missouri, Arizona State Representative Anthony Kern has introduced House Bill 2242, the “Campus Individual Rights Act, which is a similar statutory modification to Title IX for students in Arizona. Senator Kern’s proposed legislation would amend existing state law and would provide that an Arizona community college district or university may not prohibit the following:

  • An accused student and an alleged victim from having a legal representative at  disciplinary proceeding
  • The legal representative for the accused student and the alleged victim from having full participation in the disciplinary proceeding

In addition, the bill requires the parties to the disciplinary proceeding to make a good faith effort to exchange any evidence which either party intends to use in the proceeding, without authorizing either party the right to participate in formal discovery. In addition, Senator Kern’s proposed legislation would prohibit a school employee from acting as an adjudicator, hearing officer or appellate officer if that individual has previously served as:

  • An advocate or counselor for an accused student or alleged victim,
  •  An investigator,
  • An administrator presenting arguments and evidence on behalf of the educational institution, or
  • An advisor to a person described in 1-4 above.
Jackson Lewis P.C. © 2019
Read more Education Legal News on the National Law Review’s Public Education & Services Type of law page.

Department of Education Unveils Proposed Title IX Regulations

On Friday, November 16, 2018, the Department of Education (DOE) released proposed Title IX regulations dictating the process by which colleges and universities must handle allegations of sexual misconduct.

Institutions of higher education have been in limbo since September 2017 when the DOE rescinded Obama-era guidance that called for hard-hitting enforcement of Title IX and issued interim guidance as a placeholder until they could engage in the formal rulemaking process. Today’s proposed regulations, if enacted, will take the place of the DOE’s September 2017 interim guidance.  According to the DOE, the new regulations would substantially decrease the number of investigations into complaints of sexual misconduct and save institutions millions over the next decade.

Many of the new regulations deviate significantly from prior guidance. The most significant changes increase the discretion given to universities in crafting procedures for adjudicating Title IX claims within their institutions.  The proposed guidance allows universities to choose the applicable evidentiary standard (either “preponderance of the evidence” or “clear and convincing evidence”) in determining responsibility, as long as it is consistent with the standard used in other student disciplinary matters.  The new regulations also permit the use of informal resolution processes to resolve sexual misconduct allegations if the parties agree.

Other notable provisions of the proposed regulations include the following:

  • The definition of “sexual harassment” has been more narrowly defined as “unwelcome conduct on the basis of sex that is so severe, pervasive and objectively offensive that it denies a person access to the school’s education program or activity.”
  • For purposes of administrative enforcement, universities would be held to a “deliberately indifferent” standard. In other words, to avoid liability, a university with “actual knowledge” of sexual harassment need only respond in a manner that is not “deliberately indifferent.” An institution would be found deliberately indifferent “only if its response to sexual harassment is clearly unreasonable in light of the known circumstances.”
  • “Actual knowledge” is defined in the proposed regulations as notice of sexual harassment or allegations of sexual harassment provided to an official of the institution “who has the authority to institute corrective measures on behalf of the [institution].” In contrast to prior guidance, this definition excludes most professors, administrators, and staff.
  • Under the proposed regulations, universities would no longer be allowed to investigate allegations of sexual harassment that occurred off-campus.
  • The proposed regulations would require universities to provide written notice to a respondent upon receipt of a complaint, which would include a statement that the responding party is presumed to be not responsible for the alleged conduct and that a determination of responsibility will be made at the end of the grievance process.
  • Live fact-finding hearings would be mandatory for universities under the new regulations. Investigators would also be precluded from serving as factfinders.  This would eliminate the use of the single investigator model currently used by many universities.
  • Universities must permit cross-examination of any party or witness by the opposing party’s advisor, but not by the party him/herself.  If a party or witness refuses to submit to cross-examination, that person’s testimony could not be relied on by the fact-finder. The party’s choice of advisor could not be limited by the institution of higher education.
  • Religious institutions of higher education would no longer be required to seek assurances of exemption from Title IX regulations in advance of a DOE investigation. Under the new regulations, a religious institution of higher education could invoke an exemption to Title IX’s requirements at any time during the investigation.

The new regulations address other topics such as constitutional issues and the intersection between Title IX and Title VII of the Civil Rights Act. They also clarify that, just as an institution’s treatment of a complaining party may constitute discrimination based on sex, an institution’s treatment of the responding party may also constitute discrimination based on sex. Institutions of higher education must continue to comply with all applicable state laws regarding sexual misconduct and sexual misconduct investigations.

Now that the proposed regulations have been published, the public has sixty days to submit comments before the regulations go into effect. The final regulations, however, are likely to closely mirror what has been proposed today, and colleges and universities should act immediately to carefully review their sexual misconduct policies and practices for compliance.

 

Jackson Lewis P.C. © 2018
This post was written by Susan D. Friedfel, Monica H. Khetarpal Marla N. Presley Crystal L. Tyler and Hobart J. Webster.

State of Washington Enacts Student Loan Servicing Law

Washington has become the latest state to impose a licensing requirement on student loan servicers. Yesterday, Governor Jay Inslee signed  SB 6029, which establishes a “student loan bill of rights,” similar to the bills that have been enacted in California, Connecticut, the District of Columbia, and Illinois.

The law’s requirements include the following:

  • Creation of Advocate Role: The law creates the position of “Advocate” within the Washington Student Achievement Council to assist student education loan borrowers with student loans. This role is analogous to that of “ombudsman” under proposed and enacted servicing bills in other states.  One of the Advocate’s roles is to receive and review borrower complaints, and refer servicing-related complaints to either the state’s Department of Financial Institutions (“DFI”) or the Attorney General’s Office, depending on which office has jurisdiction. The Advocate is also tasked with:
    • Compiling information on borrower complaints;
    • Providing information to stakeholders;
    • Analyzing laws, rules, and policies;
    • Assessing annually the number of residents with federal student education loans who have applied for, received, or are waiting for loan forgiveness;
    • Providing information on the Advocate’s availability to borrowers, institutions of higher education, and others;
    • Assisting borrowers in applying for forgiveness or discharge of student education loans, including communicating with student education loan servicers to resolve complaints, or any other necessary actions; and
    • Establishing a borrower education course by 10/1/20.
  • Licensing of Servicers: SB 6029 requires servicers to obtain a license from the DFI. There are various exemptions from licensing for certain types of entities and programs (trade, technical, vocational, or apprentice programs; postsecondary schools that service their own student loans; persons servicing five or fewer student loans; and federal, state, and local government entities servicing loans that they originated), although such servicers would still need to comply with the statute’s substantive requirements even if they are not licensed.
  • Servicer Responsibilities: All servicers, except those entirely exempt from the statute, are subject to various obligations. Among other things, servicers must:
    • Provide, free of charge, information about repayment options and contact information for the Advocate ;
    • Provide borrowers with information about fees assessed and amounts received and credited;
    • Maintain written and electronic loan records;
    • Respond to borrower requests for certain information within 15 days;
    • Notify a borrower when acquiring or transferring servicing rights; and
    • Provide borrowers with disclosures relating to the possible effects of refinancing student loans.
  • Modification Servicer Responsibilities: The bill imposes a number of requirements on third-parties providing student education loan modification services, including mandates that such persons: not charge or receive money until their services have been performed; not charge fees that are in excess of what is customary; and immediately inform a borrower in writing if a modification, refinancing, consolidation, or other such change is not possible.
  • Requirements for Educational Institutions: Institutions of higher education are required to send borrower notices regarding financial aid.
  • Fees: The bill also calls for the establishment, by rule, of fees sufficient to cover the costs of administering the program created by the bill.
  • Bank Exemption: The statute provides for a complete exemption for “any person doing business under, and as permitted by, any law of this state or of the United States relating to banks, savings banks, trust companies, savings and loan or building and loan associations, or credit unions.” Notably, this exemption does not expressly cover state banks chartered in other states.

As we recently noted, bills like  SB 6029 are being introduced in legislatures across the country at an increasing rate, and we are continuing to track the progress of these proposals as they move through various statehouses.

Hopefully the torrent of such proposals will soon be reduced to a trickle, now that the U.S. Department of Education has formally weighed in on this trend, issuing an interpretation emphasizing that the Higher Education Act, federal regulations, and applicable federal contracts preempt laws like SB 6209 that purport to regulate federal student loan servicers.

 

Copyright © by Ballard Spahr LLP 2018
This post was written by Jeremy C. Sairsingh of Ballard Spahr LLP.

               

Education Secretary Signals Shift in Title IX Policy for Dealing with Sexual Misconduct Allegations

On September 7, 2017, Secretary of Education, Betsy DeVos announced a marked policy shift in how the Department of Education will approach Title IX enforcement with regard to sexual misconduct. DeVos indicated that the Department plans to withdraw the controversial Dear Colleague Letters issued during the Obama administration. Instead, the Department will issue formal regulations that will establish a new Title IX framework for educational institutions investigating and responding to sexual misconduct allegations. The full text of Secretary DeVos’s speech can be found here.

Title IX has been a dominant topic in higher education since 2011, when the Obama Administration issued the “Dear Colleague Letter” explaining that a failure to adequately address sexual misconduct on campus constituted discrimination on the basis of sex in education programs under Title IX.[1] Among other things, the Dear Colleague Letter set forth how schools should respond to sexual misconduct, dictated specific procedures schools must follow to investigate and adjudicate such misconduct, and established various other requirements such as climate surveys, standards of proof, and survivor sensitivity. The Letter made clear that a failure to meet these expectations, and the expanded guidance issued by the Department in 2014, could result in a loss of federal funding, and thus had a swift and substantial impact on the way educational institutions responded to reports of sexual assault or harassment.

In a speech at the George Mason University School of Law on September 7, 2017, Secretary DeVos said that schools will still be required to address sexual misconduct. However, she announced the Department would be rescinding the Dear Colleague Letters and instead regulate through actual regulations, subject to notice and comment. Secretary DeVos lamented that “for too long, rather than engage the public on controversial issues, the Department’s Office for Civil Rights has issued letters from the desks of un-elected and un-accountable political appointees.” She made it clear that “the era of ‘rule by letter’ is over.” DeVos emphasized the Department’s ongoing commitment to protecting victims of sexual violence. But she also clearly signaled that the Department will pay more attention to the due process rights of the accused, including questioning the “preponderance of the evidence” standard that the Department required all schools to use in adjudicating sexual misconduct cases. DeVos promised to work more closely with educational institutions, rather than operating “through intimidation and coercion.” And she said the Department would be open to exploring alternative methods of enforcing Title IX, including the possibility of voluntary regional centers where outside professionals would be available to handle Title IX investigations and adjudications.

DeVos did not indicate exactly what the new Department rules might entail, or when they will come into effect, nor has there been an official withdrawal of the Dear Colleague Letter yet. DeVos did indicate, however, that the Department will base the new rules on public feedback and will take into account the views of educational institutions, professionals, and individual students. In her closing remarks, DeVos noted that the Department of Education’s “interest is in exploring all alternatives that would help schools meet their Title IX obligations and protect all students. [The Department] welcome[s] input and look[s] forward to hearing more ideas.”[2]

Schools should take advantage of the Secretary’s call for comments, as the Department moves towards the development and implementation of a different and hopefully clearer set of rules governing the enforcement of Title IX. However, schools should also anticipate a period of uncertainty until final rules are issued. Moreover, schools should be aware of the continuing (and possibly conflicting) state law obligations that have been put into place following the Dear Colleague Letter. For example, many states including Connecticut and New York have passed legislation mandating use of the preponderance of the evidence standard in evaluating sexual misconduct on college campuses. We anticipate further, more detailed guidance in the next few weeks as the Department of Education works to implement Secretary DeVos’s policy announcements.


[1] 20 U.S.C. §§ 1681 et seq.; 34 C.F.R. Part 106.

[2] Secretary DeVos Prepared Remarks on Title IX Enforcement, available here.

 This post was written by Benjamin DanielsAaron Bayer, & Dana M. Stepnowsky of Wiggin and Dana LLP., © 1998-2017