Grabis v. Navient Solutions, LLC et al

NOT FOR PUBLICATION
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
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In re: 	: 	Chapter 7
:
Michael Grabis, 	: 	Case No. 13-10669-JLG
:
Debtor. 	:
:
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Michael Grabis, 	:
: 	Adv. Pro. No. 15-01420-JLG
Plaintiff, 	:
:
v. 	:
:
Navient Solutions, LLC, et al., 	:
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Defendants. 	:
:
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APPEARANCES:
MICHAEL GRABIS
1 Hays Drive
Morristown, NJ 07960
Plaintiff-Debtor, pro se
PAUL J. HOOTEN
Paul J. Hooten & Associates
5505 Nesconset Highway, Suite 203
Mt. Sinai, NY 11706
Attorney for Defendant-Navient Solutions, LLC
KENNETH L. BAUM
167 Main Street
Hackensack, NJ 07601
Attorney for Defendant-ECMC Inc.
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DOMINIKA TARCZYNSKA
86 Chambers Street, Third Floor
New York, New York 10007
Attorney for Defendant-United States Department of Education
JOSEPH LUBERTAZZI, JR.
SHEILA E. CALELLO, ESQ.
Four Gateway Center
100 Mulberry Street
Newark, New Jersey 07102
Attorneys for Defendant-Lafayette College
MEMORANDUM DECISION AND ORDER RESOLVING DEBTOR’S
REQUEST FOR DOCUMENT DISCOVERY
Introduction
In this adversary proceeding, Michael Grabis, the pro se chapter 7 debtor herein (the
“Debtor”), is seeking a determination that his student loan indebtedness is not excepted from
discharge under section 523(a)(8) of the Bankruptcy Code. The matter before the Court is the
Debtor’s request for leave to obtain document discovery from Navient Solutions, Inc.
(“Navient”), the Department of Education (the “DOE”) and Lafayette College (“Lafayette”).
Navient is a defendant herein. The DOE and Lafayette were named defendants in the Debtor’s
complaint, but have been dismissed from this action by orders of this Court. The Debtor’s
discovery requests are embodied in three documents filed herein (referred to collectively as the
“Discovery Motion.”).1
1 	Those documents are: (i) a document titled “Discovery Dispute – Request for Information” [AP ECF No. 103]
(the “Initial Discovery Request”); (ii) a document titled “Discovery Request Simplified” [AP ECF No. 125] (the
“Simplified Discovery Request”), and (iii) a document titled “Further Description of Previously Filed Amended
Schedule and Supplemental Discovery Demand” [AP ECF No. 191] (the “Supplemental Discovery Request”).
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The DOE, Navient, and Lafayette object to the Discovery Motion. As discussed below,
the Court rejects their contention that the Court should deny the motion, as untimely.
Accordingly, the Court has considered the merits of the Discovery Motion. For the reasons set
forth herein, the motion is GRANTED in part, and DENIED in part.
Jurisdiction
This Court has jurisdiction over the Discovery Motion pursuant to 28 U.S.C. §§ 1334(a)
and 157(a) and the Amended Standing Order of Referral of Cases to Bankruptcy Judges of the
United States District Court for the Southern District of New York (M-431), dated January 31,
2012 (Preska, C.J.). This matter is a core proceeding under 28 U.S.C. § 157(b)(2)(I).
Background
On March 5, 2013 (the “Petition Date”), the Debtor, through counsel, filed a voluntary
petition for relief under chapter 7 of the Bankruptcy Code in this Court. See ECF No. 1.2 By
order of the Court dated June 11, 2013, the Debtor received his discharge in bankruptcy, the
chapter 7 trustee appointed to administer the Debtor’s estate was discharged, and the case was
closed. See ECF No. 8.
As of the Petition Date, the Debtor’s unsecured indebtedness included debts on account
of federal and private student loans (collectively, the “Student Loan Debt”), as follows:
(1) 	The Educational Credit Management Corporation (“ECMC”), in its
capacity as a federal student loan guarantor in the Federal Family
Education Loan Program (“FFELP”), holds an interest in two
consolidation loans owed by the Debtor, each of which was disbursed on
or about June 24, 2005, in the original principal amounts of $19,934 and
$30,096 (collectively, the “Consolidation Loans”).
2 	“ECF No. ___” refers to a document filed in the Debtor’s chapter 7 case (No. 13-10669-JLG). “AP ECF No.
___” refers to a document filed in this adversary proceeding.
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(2) 	Navient is the holder of five private educational loans, with an aggregate
balance, including principal, interest and fees, of more than $119,095.39
(collectively, the “Private Loans”).
In August 2013, the Debtor reopened his case, and on December 15, 2015, acting pro se,
he commenced this adversary proceeding by filing a complaint seeking a determination that his
Student Loan Debt is not excepted from discharge under section 523(a)(8) of the Bankruptcy
Code. See AP ECF No. 1. As filed, the complaint named Sallie Mae, Navient, Lafayette, and
the University of Vermont as defendants. ECMC moved to intervene as a defendant, and over
the Debtor’s objection, the Court granted ECMC leave to do so. See AP ECF Nos. 11 (Motion to
Intervene); 16 (Order Granting Leave to Intervene). With authorization of the Court, the Debtor
amended the complaint several times. The operative complaint is the Debtor’s “Third Adversary
Complaint for Discharge of Student Loans” (the “Third Complaint”). See AP ECF No. 84. In
that complaint, the Debtor added the DOE as a named defendant.
In support of the Third Complaint, the Debtor asserts that he filed this adversary
proceeding “as an addition to my core bankruptcy proceeding to discharge my student loans
under [Bankruptcy] Rule 4007(b), l1 U.S.C[. §] 523 (a)(8), as per my rights to a ‘fresh start’
under the U.S. Bankruptcy Code.” Third Complaint at 2. He alleges that there are two reasons
why this Court should grant him such relief. First, he says that he is entitled to “the full
discharge of the unqualified private loan portion of my debt and full discharge of my federal
debt, both under section 523(a)(8) of the [B]ankruptcy [C]ode[,]” because
[u]nder the standard tests for discharge of student loans I have made a good faith
effort to repay my loans, I am currently unable and will be unable to repay the loans
for a considerable period, and I have not been able to maintain a minimal standard
of living as defined by the poverty guidelines.
Id. He asks this Court
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to recognize that the size and nature of my debt make my case fundamentally
different from any guidelines decided under the Brunner case standard which dealt
with federal student loans for graduate education under $15,000 dollars close to 30
years ago in an economic environment far different from today. My debt is largely
unqualified private student loans which are dischargeable under the [B]ankruptcy
[C]ode. The Southern District of New York has jurisdiction of the Brunner
standard.
Id. Second, he maintains that he is entitled to relief under section 523(a)(8) to redress the harm
caused to him by the defendants. He says that “I believe that my degree issuing college and
lenders did not act in good faith in the origination and servicing of my student loans and, in fact,
acted to collude, embezzle, and purposely defraud me as a student borrower.” Id. at 1-2. Thus,
in addition to his Brunner based arguments, he asserts that “I am alleging fraud, breach of
contract, and unjust enrichment in my defense of repayment.” Id. at 2. The Debtor is asking for
damages that he says he has suffered by reason of the defendants’ fraud. He maintains that
although he is “seeking the full discharge of the unqualified private loan portion of my debt and
my federal debt, both under sections 523(a)(8) of the [B]ankruptcy [C]ode[,] [t]he fraud that
occurred also caused damage to me personally and I am asking the court to grant damages from
these parties to pay towards the debt and personal costs incurred as a result of the fraud.” Id.
Over the course of this litigation, the Debtor stipulated to dismiss the University of
Vermont from the action, and the Court granted motions to dismiss all claims that the Debtor
asserted against Lafayette, Sallie Mae and the DOE. 3 The Court also dismissed all claims
3 	See Stipulation of Dismissal [of the University of Vermont] [AP ECF No. 15]; Order Granting Motion to
Dismiss the claims against Lafayette College [AP ECF No. 43]; Order Granting Navient Solutions, Inc.’s Motion to
Dismiss “Sallie Mae, Inc.” as a Defendant in This Adversary Proceeding Pursuant to Fed. R. Civ. P. 21 and Fed. R.
Bankr. P. 7021 and to Dismiss All Claims for Relief in Plaintiff’s Third Amended Complaint Not Based on 11
U.S.C. § 523(a)(8) Pursuant to Fed. R. Civ. P. 12(b)(1) & (6) and Fed. R. Bankr. P. 7012(b) [AP ECF No. 45];
Memorandum Decision Granting Department of Education’s Motion To Dismiss [AP ECF No. 133].
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against Navient that are not predicated on section 523(a)(8) of the Bankruptcy Code.4 As such,
the defendants remaining in this action are ECMC and Navient, and the matter at issue is
whether the Debtor is entitled to a determination that his Student Loan Debt is not excepted from
discharge under section 523(a)(8) of the Bankruptcy Code.
The following categories of educational loans are within the scope of section 523(a)(8):
(i) 	educational benefit overpayments or loans made, insured, or guaranteed
by a governmental unit;
(ii) 	educational benefit overpayments or loans made under any program
partially or fully funded by a governmental unit or nonprofit institution;
(iii) 	obligations to repay funds received as an educational benefit,
scholarship, or stipend; and
(iv) 	any other educational loan that is a “qualified education loan” under
section 221(d)(1) of the Internal Revenue Code, incurred by a debtor
who is an individual.
11 U.S.C. § 523(a)(8).5 The first three loan categories fall under section 523(a)(8)(A), while the
last category is within the scope of section 523(a)(8)(B). Those subsections are mutually
4 	On June 22, 2016, among other things, Navient moved to dismiss all claims in the Third Complaint not based on
11 U.S.C. § 523(a)(8). The Court heard arguments on the motion and granted it. See AP ECF No. 45.
5 	Section 523(a)(8) states:
(a) A discharge under section 727 ... of this title does not discharge an individual debtor from any debt—
(8) unless excepting such debt from discharge under this paragraph would impose an undue
hardship on the debtor and the debtor's dependents, for—
(A)(i) an educational benefit overpayment or loan made, insured, or
guaranteed by a governmental unit, or made under any program funded in
whole or in part by a governmental unit or nonprofit institution; or
(ii) an obligation to repay funds received as an educational benefit,
scholarship, or stipend; or
(B) any other educational loan that is a qualified education loan, as defined
in section 221(d)(1) of the Internal Revenue Code of 1986, incurred by a
debtor who is an individual[.]
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exclusive. See Campbell v. Citibank, N.A. (In re Campbell), 547 B.R. 49, 55 (Bankr. E.D.N.Y.
2016). Accordingly, for the Debtor to prove that his Student Loan Debt is not excepted from
discharge, he must establish either (i) that the Consolidation Loans and Private Loans do not fall
within the scope of section 523(a)(8)(A) or section 523(a)(8)(B); or (ii) that excepting such loans
from discharge would impose an undue hardship on him. In Brunner v. New York Higher Educ.
Servs., 831 F.2d 395 (2d Cir. 1987) (per curiam), the Second Circuit established a three-prong
test to determine if a debtor is eligible for an “undue hardship” discharge of its student loan debt.
Under Brunner, the Debtor must prove:
(1) 	that he cannot maintain, based on current income and expenses, a
“minimal” standard of living for himself and his dependents if forced to
repay the loans;
(2) 	that additional circumstances exist indicating that this current state of
affairs is likely to persist for a significant portion of the repayment period;
and
(3) 	that he has made good faith efforts to repay the loans.
Id. at 396. The Debtor must establish all three prongs of this test by a preponderance of the
evidence. See Davis v. Educ. Credit Mgmt. Corp. (In re Davis), 373 B.R. 241, 245 (Bankr.
W.D.N.Y. 2007; Garneau v. New York State Higher Educ. Servs. Corp. (In re Garneau), 122
B.R. 178, 180 (Bankr. W.D.N.Y. 1990).
At the hearing on this motion, Navient did not dispute the Debtor’s assertion that the
Private Loans are outside of the scope of section 523(a)(8)(A).6 Thus, to prove that the Private
11 U.S.C. § 523(a)(8).
6 At the hearing, the Debtor conceded that the Consolidation Loans fall within the scope of section 523(a)(8)(A).
Thus, to show that those loans are not excepted from discharge, the Debtor must prove that excepting such loans
from discharge would impose an undue hardship on him. In the Discovery Motion, the Debtor is focusing on the
dischargeability of the Private Loan debt. He is not seeking discovery from ECMC regarding the Consolidation
Loans.
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Loans are not excepted from discharge, the Debtor must establish either that (i) the Private Loans
are not “qualified educational loans” incurred by an individual debtor under section
523(a)(8)(B), or (ii) under Brunner, it will be an undue hardship for him to repay that debt.
Section 523(a)(8) defines the term “qualified education loan” by reference to section 221 of the
Internal Revenue Code, 26 U.S.C. § 221. Under that section, a “qualified education loan” is any
indebtedness incurred by the taxpayer solely to pay “qualified higher education expenses”—
(A) 	which are incurred on behalf of the taxpayer, the taxpayer’s spouse, or any
dependent of the taxpayer as of the time the indebtedness was incurred,
(B) 	which are paid or incurred within a reasonable period of time before or after the
indebtedness is incurred, and
(C) 	which are attributable to education furnished during a period during which the
recipient was an eligible student.
26 U.S.C. § 221(d)(1). Section 221(d)(2) defines the term “qualified higher education expenses”
to mean the “cost of attendance (as defined in section 472 of the Higher Education Act of 1965,
20 U.S.C. 1087ll, as in effect on the day before the date of the enactment of the Taxpayer Relief
Act of 1997) at an eligible educational institution,” reduced by educational expenses paid under
certain other programs. 26 U.S.C. § 221(d)(2). In turn, section 472 of the Higher Education Act
includes the following categories of costs within the definition of “cost of attendance”:
(1) tuition and fees normally assessed a student carrying the same academic workload
as determined by the institution, and including costs for rental or purchase of any
equipment, materials, or supplies required of all students in the same course of study;
[and]
(2) an allowance for books, supplies, transportation, and miscellaneous personal
expenses, including a reasonable allowance for the documented rental or purchase of a
personal computer, for a student attending the institution on at least a halftime basis, as
determined by the institution[.]
20 U.S.C. § 1087ll.
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The Debtor contends that the Student Loan Debt is not excepted from discharge under
section 523(a)(8) of the Bankruptcy Code because: (i) it will be an undue hardship for him to
repay that indebtedness; and (ii) the Private Loans are not “qualified education loans.” See Third
Complaint at 2. As support for the latter, and in furtherance of his request in the Discovery
Motion7 for document discovery from the DOE, Navient and Lafayette,8 the Debtor makes the
following arguments:9
A. 	The Proceeds Of His Private Loans Were Not Applied To Expenses Associated
With “Teaching Or Instruction” As Defined In The “Cost of Attendance”
Definition Of 26 U.S.C. 221(d)(1) And Therefore Are Not “School Certified”
The Debtor contends that with the assistance of Sallie Mae, Lafayette and other
colleges/universities forced him and other students to take out student loans in
amounts that exceeded the students’ “cost of attendance,” as defined in 26 U.S.C.
§ 221 (d)(1). He says that in doing so, Lafayette was able to create a reserve fund,
the proceeds of which it used to pay its school president and other administrators
much higher salaries, as well as other expenses that are not associated with
teaching and instruction or related to the normal cost of attendance.
As support, the Debtor asserts that when he requested funding, Sallie Mae would
simply ask how much the Debtor needed, without any itemization, but then pay
that amount directly to Lafayette. He claims that a detailed review of a number of
7 	In support of the Discovery Motion, the Debtor also contends that the Student Loan Debt is not excepted from
discharge under section 523(a)(8) because: (i) actions taken by ECMC, Navient, the DOE and Lafayette constitute a
fundamental breach of contract, as well as fraud, that deems the loans dischargeable based on the no-asset discharge
ruling previously entered in this case; and (ii) (a) the United States Constitution and Bankruptcy Code only provide
an exemption from student loans for situations involving a certain period of time; and (b) the Debtor graduated over
15 years ago and according to the Bankruptcy Code, the Student Loan Debt is no longer governed by section
523(a)(8). See Debtor’s Supplemental Discovery Request at 1-2. The document requests at issue in the Discovery
Motion do not bear on those arguments. Accordingly, the Court will not consider them further in resolving the
Discovery Motion.
8 	As filed, the Debtor’s Simplified Discovery Request included a request that ECMC produce:
Any memoranda or directives ECMC has received from Sallie Mae/Navient or the DOE related to
the handling or strategy of student loan bankruptcy filers, including any directives as to Grabis’s
case.
See Simplified Discovery Request at 4. At the hearing on this matter, the Debtor confirmed that he is no longer
seeking document production from ECMC.
9 	In the three documents that comprise the Discovery Motion, the Debtor made a number of arguments in support
of his request for leave to obtain document discovery from the DOE, Navient and Lafayette. What follows is the
Court’s summary of those arguments, as distilled from those documents.
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documents (including (i) Lafayette's methodology of calculating and
administering grant funds during the period he attended the school, and,
particularly, the "cost of attendance" numbers used for different students, and (ii)
the publicly announced annual budget of financial aid grants during this time as
well as (iii) the "estimated family contribution" number Lafayette calculated for
him to use) will prove that his loans were not borrowed in conjunction with "cost
of attendance" but rather for profit.
B. 	Lafayette Engaged In Tax Fraud By Withholding Grant Money To Debtor and
Others
The Debtor says that as an educational non-profit, Lafayette was required to
distribute grant funds uniformly. He contends that if Lafayette did not distribute
the grants uniformly, it was required by tax law to report as taxable income any
amount borrowed by a student not receiving uniform grant funds. He maintains
that: (i) Lafayette was financially profiting by withholding grants funds from
certain students, including the Debtor; and (ii) Lafayette's annual financial reports
for the years the Debtor attended the school will show that Lafayette did not pay
any income taxes.
C. 	Sallie Mae Aided The Tax Fraud Scheme
The Debtor maintains that a detailed review of Sallie Mae's communications with
Lafayette and other schools, particularly through their sales teams, will show that
Sallie Mae was pushing Lafayette and other schools to break tax laws and
overcharge students. He says that Sallie Mae not only participated in this tax
fraud for profit scheme but also attempted to block borrowers from repaying their
loans by setting impossibly high minimum payments and forcing borrowers into
forbearance in order to generate higher loan balances and fees. As support for
that assertion, he says that several lawsuits were brought against Sallie Mae for
doing this including by employees and former employees of Sallie Mae, and that
one such case was brought by former employee Michael Zahara.
He also contends that Sallie Mae repeatedly loaned out funds it knew were
dischargeable in bankruptcy but at the same time attempted to buy government
influence to later deem the loans exempt from discharge under the 523(a)(8)
provision. He says that Sallie Mae continued to use backdoor and hidden
communications with the United States House of Representatives and the DOE to
create a “veneer" provision to the section 523(a)(8) exemptions to discharge,
while fully knowing it was hiding facts such as the school certified vs non-school
certified nature of the loans to the borrowers, including the Debtor, and
attempting a secret renegotiation of terms of loan contracts already entered into,
including the Debtor’s contract. He maintains that those actions display Sallie
Mac's blatant attempt at fraud and illegal profiteering.
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The DOE, Navient, and Lafayette object to the Discovery Motion. 10
Discussion
Rule 26 of the Federal Rules of Civil Procedure, as made applicable herein by
Bankruptcy Rule 7026, governs the scope of discovery and provides, in relevant part:
Unless otherwise limited by court order, the scope of discovery is as follows:
Parties may obtain discovery regarding any nonprivileged matter that is relevant to
any party’s claim or defense and proportional to the needs of the case, considering
the importance of the issues at stake in the action, the amount in controversy, the
parties’ 	relative 	access 	to 	relevant 	information, 	the 	parties’ 	resources, 	the
importance of the discovery in resolving the issues, and whether the burden or
expense of the proposed discovery outweighs its likely benefit. Information within
this scope of discovery need not be admissible in evidence to be discoverable.
Fed. R. Civ. P. 26(b)(1). In 2015, the rule was amended to narrow the relevance required of
discovery requests and emphasize the proportionality factors in considering the scope of
discovery. See Fed. R. Civ. P. 26(b)(1) advisory committee’s note (2015) (“The present
amendment restores the proportionality factors to their original place in defining the scope of
discovery. This change reinforces the Rule 26(g) obligation of the parties to consider these
factors in making discovery requests, responses, or objections.”).11 See also Lozada v. Cty. of
10 	See Department of Education’s Opposition to Plaintiffs’ Discovery Motions [AP ECF No. 138] (“DOE’s
Simple Opposition”); Department of Education’s Opposition to Plaintiff’s Further Description of Previously Filed
Amended Schedule and Supplemental Discovery Demand [AP ECF No. 196] (“DOE’s Further Opposition”);
Navient Solutions, LLC’s Response to Plaintiff’s Discovery Request Simplified [AP ECF No. 134] (“Navient’s
Simple Response”); Navient Solutions, LLC’s Response to Plaintiff’s Further Description of Previously Filed
Amended Schedule and Supplemental Discovery Demand [AP ECF No. 195]; Non-Party Lafayette College’s
Objection to Plaintiff’s Discovery Requests [AP ECF No. 172] (“Lafayette’s Initial Objection”); Non-Party
Lafayette College’s Further Objections to Plaintiff’s Discovery Requests [AP ECF No. 197] (“Lafayette’s Further
Objection”).
11 	Prior to the 2015 amendment, Rule 26(b)(1) read as follows:
Unless otherwise limited by court order, the scope of discovery is as follows: Parties may obtain
discovery regarding any nonprivileged matter that is relevant to any party’s claim or defense—
including the existence, description, nature, custody, condition, and location of any documents or
other tangible things and the identity and location of persons who know of any discoverable matter.
For good cause, the court may order discovery of any matter relevant to the subject matter involved
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Nassau, No. CV 16-6302, 2017 WL 6514675, at *4 (E.D.N.Y. Dec. 20, 2017) (stating that “the
current version of Rule 26 defines permissible discovery to consist of information that is, in
addition to being relevant ‘to any party’s claim or defense,’ also ‘proportional to the needs of the
case.’”). The term “relevant” is not defined in Rule 26, and courts often look to the definition of
“relevant evidence” under Rule 401 of the Federal Rules of Evidence.12 See, e.g., O’Garra v.
Northwell Health, No. CV 16-2191, 2018 WL 502656, at *2 (E.D.N.Y. Jan. 22, 2018)
(“Information ‘is relevant if: (a) it has any tendency to make a fact more or less probable than it
would be without the evidence; and (b) the fact is of consequence in determining the action.’”)
Cf. 6 Moore’s Fed. Prac. § 26.44[3][a] (3d ed. 2015) (noting that while Rule 26 does not define
“relevant,” “relevant evidence” is defined by FRE 401). A trial court has broad discretion in
determining the “relevance” of the requested discovery. See, e.g., Homeward Residential, Inc. v.
Sand Canyon Corp., No. 12-CV-5067, No. 12-CV-7319, 2017 WL 4676806, at *5 (S.D.N.Y.
Oct. 17, 2017) (“A district court has wide latitude to determine the scope of discovery.” (quoting
In re Agent Orange Prod. Liability Litig., 517 F.3d 76, 103 (2d Cir. 2008))); Narayanan v.
Sutherland Global Holdings Inc., 285 F. Supp. 3d 604, 610 (W.D.N.Y. 2018) (“Motions to
compel are entrusted to the sound discretion of the district court … and a trial court enjoys wide
discretion in its handling of pre-trial discovery.”) (internal citations and quotation marks
in the action. Relevant information need not be admissible at the trial if the discovery appears
reasonably calculated to lead to the discovery of admissible evidence. All discovery is subject to the
limitations imposed by Rule 26(b)(2)(C).
Fed. R. Civ. P. 26(b)(1), as in effect November 30, 2015.
12 	Federal Rule of Evidence 401 states:
Evidence is relevant if (a) it has any tendency to make a fact more or less probable than it would be
without the evidence; and (b) the fact is of consequence in determining the action.
Fed. R. Evid. 401.
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omitted). Whether the discovery sought is relevant to a claim or defense depends on the facts
and circumstances of the case. See, e.g., Carl v. Edwards, No. CV 16-3863, 2017 WL 4271443,
at *9 (E.D.N.Y. Sept. 25, 2017) (noting that the court must determine if the discovery sought is
“both relevant and proportional in light of the particular facts and circumstances of this case.”
(citing Fed. R. Civ. P. 26(b)(1)); Trevino v. Caliber Home Loans (In re Trevino), 564 B.R. 890,
911–12 (Bankr. S.D. Tex. 2017) (“Specifically, Rule 26 provides that discovery sought must be
relevant to a claim and proportional given the specific circumstances of the case.”). Cf. 6
Moore’s Fed. Prac. § 26.42[1] (3d ed. 2015) (“A court’s determination of whether a discovery
request is ‘relevant to any party’s claim or defense’ must look beyond the allegation of a claim or
defense to the controlling substantive law.”). “The burden of demonstrating relevance is on the
party seeking discovery.” Republic of Turkey v. Christie's, Inc., 326 F.R.D. 394, 400 (S.D.N.Y.
2018); see also Winfield v. City of New York, No. 15 CV 05236, 2018 WL 840085, at *3
(S.D.N.Y. Feb. 12, 2018) (“The party moving to compel bears the initial burden of
demonstrating relevance and proportionality.” (citing Johnson v. J. Walter Thompson U.S.A.,
LLC, No. 16-cv-1805 (JPO) (JCF), 2017 WL 3055098, at *2-3 (S.D.N.Y. July 18, 2017))).
Non-party discovery is governed by Rule 45 of the Federal Rules of Civil Procedure,
which is made applicable to this proceeding by Bankruptcy Rule 9016. When discovery is
sought from third parties, the Court must also weigh the probative value of the information
against the burden of production on the non-party. See generally Concord Boat Corp. v.
Brunswick Corp., 169 F.R.D. 44, 48-49 (S.D.N.Y. 1996); see also Fed. R. Civ. P. 45(d)(1) &
(d)(2)(B)(ii) (stating that non-party status entitles parties to consideration regarding expense).
Whether a discovery request imposes an “undue burden” depends on factors including relevance,
the need of the party for the documents, the breadth of the document request, the time period
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covered by the request, the particularity with which the documents are described, and the burden
imposed. See Concord Boat Corp., 169 F.R.D. at 49. Therefore, “to the extent a subpoena
sweepingly pursues material with little apparent or likely relevance to the subject matters it runs
the greater risk of being found overbroad and unreasonable.” Id. at 50 (quoting U.S. v. Int’l Bus.
Machines Corp., 83 F.R.D. 97, 106-07 (S.D.N.Y. 1979).
On August 31, 2016, the Court entered a scheduling order calling for discovery herein to
be completed by November 29, 2016 (i.e., 90 days after entry of the order). See AP ECF No. 44.
None of the parties to the action sought to extend the discovery deadline and it was not extended.
As a preliminary matter, Lafayette, the DOE and Navient all contend that the Court should deny
the Debtor’s request for discovery since he did not timely seek such discovery. In support of his
request for leave to take discovery, the Debtor explains that he thought that the discovery
deadline applied only to the defendants named in this adversary proceeding. He contends that he
has complied with all the discovery requested of him and that “[i]t was [his] understanding that
[he] would be afforded the same opportunity as the defendants to request information from
them.” See Simplified Discovery Request at 1. The Debtor is proceeding pro se and is actively
pursuing this action. The Court credits the Debtor’s assertion that he believed the discovery
deadline was applicable to the defendants’ discovery requests, and that he would be afforded the
opportunity, if needed, to seek discovery later in this litigation against the defendants.
Accordingly, the Court will consider the merits of the Discovery Motion. 13
13 	The Debtor’s document requests are spread throughout the three documents that comprise the Discovery
Motion. In citing to those requests, the Court will not tie the document request to a particular document filed by the
Debtor.
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Department of Education
The Debtor seeks the production of a wide range of documents from the DOE. 14 A party
to an adversary proceeding in which the United States is not a party that seeks to obtain
documents from a federal agency for use in that adversary proceeding must follow the so-called
“Touhy regulations” applicable to that agency. See United States ex rel. Touhy v. Ragen, 340
U.S. 462 (1951) (authorizing such regulations).15 A party seeking records in the custody of the
14 The document requests directed to the DOE are as follows:
Request 1. Any and all inter-department emails, memoranda, or directives related to the DOE’s handling of
Sallie Mae’s attempt to include private loans as exception to discharge “prior to 2004 – 2005 time period
and after”;
Request 2. Any and all memoranda and directives given by the DOE to ECMC regarding handling student
loan bankruptcy filings for the period 2002 to the present;
Request 3. Any and all inter-department memoranda and directives related to federal student loan revenue
financing of the Affordable Care Act;
Request 4. Any inter-office communication between the DOE and Sallie Mae related to forbearance fees
and management of borrower accounts and any borrower complaints discussed with Sallie Mae;
Request 5. Any documentation on educational non-profit schools such as and including Lafayette College
and their maintenance of cash reserves and any complaints of unjust tuition increases between 1997 and
2003; and
Request 6. DOE internal and inter-departmental (including the Department of Justice, military branches or
intelligence branches of government) memoranda between 1997 to the present, related to “dangerous or
threatening or otherwise imperiling levels of debt” being accrued by student loan borrowers and
notifications to borrowers or potential borrowers related to high levels of debt and its relation to imperiling
future employment.
Supplemental Request 1. DOE correspondence or announcement to private loan borrowers prior to
BAPCPA that Sallie Mae had requested a change in the existing loan terms and changes to the Bankruptcy
Code; and
Supplemental Request 2. DOE communication with the House Committee on Education “during this
period,” specifically with John Boehner, Chris Coons, Ron Johnson, Vin Webber, Joe Biden, Tim Kaine,
Hillary Clinton, and Bob Casey.
15 	In Touhy, the Supreme Court reversed a contempt order entered by a federal district court against an FBI agent
who had defied a deposition subpoena in accordance with a Department of Justice regulation issued under the
Federal Housekeeping Statute, 5 U.S.C. § 301, which authorizes agencies to adopt regulations regarding “the
conduct of [their] employees . . . and the custody, use, and preservation of [agency] records, papers, and property.”
The Court held that the contempt citation was improper because the Department’s regulation, which gave the
Attorney General the power to decide whether to comply with a subpoena, was valid, and the agent was simply
obeying a lawful instruction from a superior. The Court found it unnecessary “to consider the ultimate reach of the
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DOE or information relating to those records must satisfy the regulations governing “Demands
for Testimony or Records in Legal Proceedings” set forth at 34 C.F.R. §§ 8.1 – 8.5. Briefly,
those regulations provide that a demand for records must (1) be in writing, and (2) state the
nature of the requested testimony or records, why the information sought is unavailable by any
other means, and the reason why the release of the information would not be contrary to an
interest of the Department or the United States. See 34 C.F.R. § 8.3(a). The demand for records
must be served on “an employee who has custody of the records” with a copy simultaneously
delivered to the General Counsel, U.S. Department of Education, Office of the General Counsel,
400 Maryland Avenue, SW., room 6E300, Lyndon Baines Johnson Building, Washington, DC
20202-2100. 34 C.F.R. § 8.3(b).
The DOE contends that the Court must deny the Debtor’s request for document
production from the DOE because he failed to comply with the Touhy regulations applicable to
the DOE. See DOE’s Simple Opposition ¶¶ 4-8; DOE’s Further Opposition ¶¶ 5-8. The Court
agrees. The Debtor served the Discovery Motion on the Office of the United States Attorney, for
the Southern District of New York, as counsel to the DOE. He did not serve it on either an
employee of the DOE with custody of the information, or the Office of the General Counsel at
the Department of Education, as required by the Touhy regulations described above. See, e.g.,
Debtor’s Certificate of Service (attached to the Supplemental Discovery request) [AP ECF No.
191]. Moreover, in the Discovery Motion, he failed to state why the documents he seeks are
unavailable by any other means, and why the production of those documents would not be
contrary to an interest of the DOE or the United States. See 34 C.F.R. § 8.3(a)(2). For those
reasons, the Court sustains the DOE’s objection to the Discovery Motion, without prejudice to
authority of the Attorney General to refuse to produce at a court’s order the government papers in his possession.”
340 U.S. at 467.
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the Debtor’s right to renew such requests through the Touhy procedures applicable to the DOE.
See Manzo v. Stanley Black & Decker, Inc., No. 13CV3963JFBSIL, 2017 WL 1194651, at *7
(E.D.N.Y. Mar. 30, 2017) (denying plaintiff’s motion to compel production of documents against
the U.S. Department of Labor as premature where the plaintiff had not first made his request
through the Touhy regulations applicable to the DOL, and thus the DOL had not yet provided a
final determination as to the information sought). In addition to seeking the production of
documents from the DOE, in the Discovery Motion, the Debtor seeks the appointment of an IRS
Special Agent and the United States Trustee “to provide detailed definitions on some of the
terms [he has] put forth in this filing.” Supplemental Discovery Request at 4. The Court lacks
the power to make such appointments and, as such, denies that request. In any event, to the
extent that the Debtor is seeking discovery from the Internal Revenue Service or the Office of the
United States Trustee, the Court denies it, without prejudice to the Debtor’s right to request the
information through the Touhy procedures applicable to the Department of Treasury/Internal
Revenue Service and the Department of Justice, respectfully.
Navient 16
The Discovery Motion includes 15 requests for document production from Navient. The
Court groups them (each a “Navient Group”) into requests seeking documents relating to:
A. 	The Debtor’s account with Navient.17
16 	Navient is the successor to Sallie Mae. See Motion to Dismiss “Sallie Mae Servicing” as a Defendant in this
Adversary Proceeding or in the Alternative for Summary Judgment Dismissing “Sallie Mae Servicing” as a
Defendant in this Adversary Proceeding [AP ECF No. 10]. The Court treats the Debtor’s request for documents
from Sallie Mae as being directed to Navient, in that capacity.
17 	The relevant document requests are:
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B. 	Instructions, including internal memoranda, directives and other training materials
relating to Sallie Mae’s advice to borrowers generally, relating to bankruptcy and
Sallie Mae’s collection of forbearance fees from borrowers.18
C. 	Sallie Mae’s alleged efforts to include private loans within the section 523(a)(8)
exception to discharge.19
D. 	Sallie Mae’s communications with Lafayette College and other
colleges/universities.20
Request 1. Records of Grabis’s borrowing, including information relating to forbearance, fees, and debt
management solutions advised.
Request 10. Copies of all Sallie Mae employees’ emails or correspondence related to Grabis’s account.
18 	The relevant document requests are:
Request 2. Specific instructions Sallie Mae gave to its debt counselors in advising private student loan
borrower bankruptcy rights for the period 2000 – 2005, and any changes thereafter.
Request 3. Specific instructions Sallie Mae gave to its debt counselors in appropriating and distributing
forbearances to private student loan borrowers for the period 2000 – 2005.
Request 4. Any and all intercompany memoranda, directives, and training manuals for the period 2002 –
2012, related to debt servicing employee’s handling of borrowers, including, more specifically, statements
and directives to debtors regarding bankruptcy rights and eligibility.
Request 5. Any and all intercompany directives related to forbearances offered, including when and how
and frequency offered, and applicable fees.
Request 6. Copies of internal complaints by Sallie Mae employees related to forcing or manipulating
borrowers into forbearance.
Request 7. Any and all intercompany memoranda, directives, or projections of revenue/profit for the
period 1995 – 2006, related to forbearance fees and establishing private student loans as exception to
discharge.
Request 9. Copies of any intercompany directives for the period 2002 – 2012, related to a strategy or
policy advising or instructing borrowers with both private and federal student loans, on how to “stay
current” and pay fees towards private loan balances rather than federal loan balances.
19 	The relevant document requests are:
Request 8. All communications for the period 1997 – 2006 between Sallie Mae and the DOE related to
Sallie Mae’s attempts to include private student loans as exception to discharge.
Supplemental Request 1. Sallie Mae’s instructions or requests to the House of Representative Committee
on Education related to BAPCPA and John Boehner.
20 	The relevant document requests are:
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E. 	Sallie Mae’s legal filings in connection with the litigation brought against it by
former employee Michael Zahara.21
Navient Request A. The Debtor’s account with Navient.
As noted previously, the Debtor contends that the Private Loan debt is not excepted from
discharge under section 523(a)(8) of the Bankruptcy Code because it will be an undue hardship
on the Debtor to repay that debt, and those loans are not “qualified education loans” under
Section 523(a)(8)(B). Documents relating to the Debtor’s account with Navient that the Debtor
identified in the document requests underlying Navient Request A are relevant to those issues,
and Navient acknowledges as much. In response to the Discovery Motion, Navient asserts,
among other things, that it will “supply proof of the [Private Loan debt], the amount at issue, and
any relevant payment history and related relevant documents at trial, or as part of a motion for
summary judgment. See Navient’s Simple Response ¶ 10. The Court directs Navient to deliver
copies of those documents to the Debtor on or before December 28, 2018. Moreover, the Court
finds that communications, including documents, emails and correspondence, evidencing,
encompassing or concerning information or advice that Sallie Mae/Navient provided to the
Request 11. Copies of any documents, memoranda, correspondence, and “sales pitches” Sallie Mae sent to
colleges and universities for the period 1995 – 2008 regarding their lending services and how those services
might benefit the colleges.
Request 12. Any correspondence between Lafayette and Sallie Mae between 1997 and 2005
related to lending and lending limits.
Request 13. Any and all correspondence between Sallie Mae and Arthur Rothkopf “while
president of Lafayette College.”
21 	The relevant document request is:
Supplemental Request 2. Sallie Mae’s legal filings with respect to former employee Michael
Zahara and any record of complaints from Zahara or other internal employees relating to blocking
or preventing borrower payments to increase their overall loan balance.
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Debtor with respect to (i) forbearance, fees, and debt management, and (ii) the Private Loans,
generally, are relevant to the Debtor’s claims and defenses in this action. Under the Brunner test
for evaluating undue hardship, a debtor must establish, among other things, that he has made
good faith efforts towards repayment of the loan(s) sought to be discharged. The instructions or
advice that Navient and/or Sallie Mae gave to the Debtor with respect to the repayment of the
Private Loans, including, without limitation, matters concerning loan forbearance/forgiveness
and repayment plans, may bear directly on that prong of the Brunner test. See J.P.Morgan Sec.
LLC v. Mariano, 1:17-cv-01080, 2018 WL 522339, at *2 (S.D.N.Y. Jan. 22, 2018) (“noting that
“with respect to relevance, the scope of discovery in the federal courts is quite broad.” (citing
Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340, 351 (1978))). That aspect of the Debtor’s
document request is narrowly drawn. It should not impose an undue burden on Navient to
respond to it. Accordingly, the Court directs Navient to deliver copies of those documents to the
Debtor on or before December 28, 2018.22 The Court also directs Navient to produce to the
Debtor any communications, including documents, evidencing Navient/Sallie Mae’s calculation
of the Debtor’s “cost of attendance,” as that term is defined in Section 523(a)(8)(B) of the
Bankruptcy Code, at Lafayette for the period of 1998 through 2002. That information is relevant
to the Debtor’s assertion that the Private Loans are not “qualified” education loans. Those
documents shall include, without limitation, correspondence (email or otherwise) between
Navient/Sallie Mae and the Debtor or Lafayette, or any other third party, relating to the
calculation of the Debtor’s “cost of attendance.” Accordingly, the Court overrules Navient’s
objection to the document requests underlying Navient Request A and directs Navient to produce
documents identified herein.
22 The definitions set forth in Civil Rule 26.3 of the Local District Rules are applicable and incorporated herein.
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Navient Request B. Instructions, including internal memoranda, directives and other training
materials relating to Sallie Mae’s advice to borrowers generally, relating to bankruptcy and Sallie
Mae’s collection of forbearance fees from borrowers.
The Court sustains Navient’s objection to this request. The documents the Debtor is
seeking relate to Sallie Mae’s loan servicing operations generally, including advice the Sallie
Mae gave to borrowers regarding bankruptcy, Sallie Mae’s procedures relating to borrower
forbearance agreements, and Sallie Mae’s “strategy” for advising borrowers how to “stay
current” on their federal loans and private loans. Those documents do not satisfy the relevancy
requirement in Rule 26(b)(i), because they will not provide evidence relating to either whether
the Private Loans are “qualified education loans” or whether the Debtor is entited to a hardship
discharge. See generally Fed. Trade Comm’n v. Rensin, 687 F. App’x 3, 6 (2nd Cir. 2017)
(affirming district court’s denial of discovery because the request for invoices was irrelevant to
the issue of whether the defendants’ misrepresentations “were of a kind usually relied upon by
reasonable prudent persons.”).
Navient Request C. Sallie Mae’s alleged efforts to include private loans within the section
523(a)(8) exception to discharge.
The Court sustains Navient’s objection this request. Sallie Mae’s communications, if
any, with the DOE for the period 1997- 2006 related to Sallie Mae’s attempts to include private
student loans as exceptions to discharge, and with the House of Representatives Committee on
Education regarding BAPCA, has no bearing on whether the Student Loan Debt should be
excepted from discharge.
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Navient Request D. Sallie Mae’s communications with Lafayette College and other
colleges/universities.
The Court has determined that any communications between Lafayette and Sallie Mae
regarding the Debtor’s “cost of attendance” during his four years at Lafayette are relevant to the
matters at issue herein. However, correspondence between Sallie Mae and Lafayette during the
period of 1997 to 2005 relating to lending and lending limits, other than documents related to the
Debtor’s “cost of attendance,” are not relevant to this litigation. Nor is correspondence between
Sallie Mae and Lafayette’s president, except to the extent that it relates to the Debtor’s cost of
attendance”, or the “sales pitches” that Sallie Mae sent to colleges and universities during the
period 1995 – 2008 regarding their lending services and how those services might benefit the
colleges. The Court sustains Navient’s objection to the production of documents responsive to
those requests.
Navient Request E. Sallie Mae’s legal filings in connection with the litigation brought against it
by former employee Michael Zahara, and records of complaints from Zahara or other internal
employees relating to blocking or preventing borrower payments to increase their overall loan balance.
The Court sustains Navient’s objection to the production of documents responsive to this
request. Sallie Mae’s legal filings with respect to litigation brought against it by Michael Zahara
are a matter of public record. The Debtor can obtain those records on his own. Moreover, in any
event, documents relating to that litigation, and to complaints from Zahara or other internal
employees relating to borrower payments are not relevant to whether the Private Loans should
not be excepted from discharge under section 523(a)(8).
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Lafayette College
The Discovery Motion includes ten requests for document production from Lafayette.
The Court groups them into requests (each a “Lafayette Request”), seeking documents relating
to:
A. 	The Debtor’s personal record of financial aid with the college.23
B. 	Any records of giving grants and financial aid to students “both in general and
specific student records” for the period 1998 – 2014, and a “snapshot of what
other borrowers received in grant money” versus the grant money the Debtor
received for the years 1998 through 2002.24
C. 	All records relating to Lafayette’s cash and liquid investment reserves for the
period 1995-2017, its federal tax filings for the period 1998 – 2005, and its annual
report and financial statements” for the years 1998 through 2002.25
D. 	Lafayette’s institutional methodology for calculating grants, financial aid, cost of
attendance, and estimated family contribution for the years 1998 through 2002.26
23 	The request relevant to that issue is:
Request 4. Records relating to Grabis’s personal record of financial aid with the college.
24 	The relevant document requests are:
Request 1. Any records of giving grants and financial aid to students “both in general and specific
student records” for the period 1998 – 2014.
Supplemental Request 5. A “snapshot of what other borrowers received in grant money” versus the grant
money the Debtor received for the years 1998 through 2002.
25 	The relevant document requests are:
Request 2. Any and all records related to Lafayette’s federal tax filings for the period 1998 – 2005.
Request 3. Any and all records of Lafayette’s cash and liquid investment reserves for the period 1995 –
2017.
Supplemental Request 1. Lafayette’s “Annual report and financial statements” for the years 1998 through
2002.
26 	The relevant document requests are:
Supplemental Request 2. Lafayette’s institutional methodology for calculating grants, financial aid, cost of
attendance, and estimated family contribution (“EFC”) for the years 1998 through 2002.
Supplemental Request 3. Lafayette’s institutional methodology for calculating EFC for the Debtor for the
years 1998 through 2002.
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E. 	Any tuition reserve amount, defined as “an amount beyond or not used or applied
to teaching and instruction costs” for the years 1998 through 2003, and what
“Lafayette announced they had budgeted to pay out in financial aid” versus the
amount of financial aid paid out during the years 1998 through 2002.27
Lafayette Request (A). The Debtor’s personal record of financial aid with the college.
After filing its Initial Objection to the Discovery Motion, Lafayette accessed its financial
aid award database to review the Debtor’s personal record of financial aid received while he was
a student at Lafayette. See Lafayette’s Further Objection ¶ 12. Lafayette contends that it has
produced to the Debtor printouts from the database that include a breakdown of the Debtor’s
grants, student loans and estimated family contribution amounts for the 1998-1999, 1999-2000,
2000-2001 and 2001-2002 school years (the “Lafayette Production”). As such, it asserts, in
effect, that the Lafayette Production contains all documents in its possession that are responsive
to Lafayette Request (A). See id. The Debtor does not contend otherwise. It is not clear to the
Court whether the information provided by Lafayette to the Debtor in the Lafayette Production
includes a calculation of the “cost of attendance” for the Debtor in each of the four years he
attended Lafayette. To the extent that the production did not include documents evidencing that
calculation, the Court directs Lafayette to provide those documents to the Debtor on or before
December 28, 2018. The Debtor’s request for documents responsive to Lafayette Request (A) is
otherwise denied as moot.
27 	The relevant document requests are:
Supplemental Request 4. Any tuition reserve amount, defined as “an amount beyond or not used or applied
to teaching and instruction costs” for the years 1998 through 2003.
Supplemental Request 6. What “Lafayette announced they had budgeted to pay out in financial aid” versus
the amount of financial aid paid out during the years 1998 through 2002.
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Lafayette Request (B). Any records of giving grants and financial aid to students “both in
general and specific student records” for the period 1998 – 2014, and a “snapshot of what other
borrowers received in grant money” versus the grant money the Debtor received for the years
1998 through 2002.
The Debtor is not entitled to discovery of these documents because they are not relevant
to the matters at issue in this action. As discussed above, to obtain a determination that his
Student Loan Debt is not excepted from discharge, the Debtor must demonstrate that his
Consolidation Loans and Private Loans are not within the scope of section 523(a)(8)(A) or
section 523(a)(8)(B), or that it would be an undue hardship on him if those loans are not
discharged. The financial aid records (including grant information) of other students at Lafayette
for the period of 2002 – 201428 have no bearing on any of the Brunner factors in determining the
Debtor’s undue hardship, or on whether his Student Loan Debt falls within the indebtedness
described in section 523(a)(8)(A) and section 523(a)(8)(B). See Shim-Larkin v. City of New
York, No. 16-CV-6099 (AJN), 2018 WL 4636839, at *4 (S.D.N.Y. Sept. 27, 2018) (noting that
discovery requests that seek information irrelevant to the case are outside the scope of discovery
under Rule 26 and should not be permitted). Additionally, as noted by Lafayette, records
relating to the financial aid sought and/or received by other Lafayette students and borrowers are
protected education records under the Family Educational Rights and Privacy Act of 1974
28 The Debtor attended Lafayette during the years 1998 – 2002. The Debtor provided no justification for the 12-
year period (2002 – 2014) for which he seeks the financial records of “general and specific” students. Moreover, as
noted in Lafayette’s Initial Objection, there could be over 10,000 student records responsive to the Debtor’s request.
See Lafayette Initial Objection at 8, n.6. Thus, in addition to the lack of relevance and privacy issues of the
documents sought, the request is also overbroad and vague, and would be costly to Lafayette, a non-party, to comply
with. See, e.g., Marlow v. Chesterfield Cty. School Bd., No. 3:10cv18-DWD, 2010 WL 3660770, at *4 (E.D. Va.
Sept. 15, 2010) (denying plaintiff’s discovery request for “copies of all emails to, or from, any [of defendant’s]
board member or employee related to nine (9) categories” because with 8,000 employees, “most of whom have no
information relevant to the claims at issue, the request is also overly broad and places an undue burden on
[defendant] for compliance.”).
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(“FERPA”), 20 U.S.C. § 1232g; 34 CFR Part 99.29 FERPA applies to any school, such as
Lafayette, that receives funding under an applicable program of the DOE, and generally prohibits
the release by the school of such education records unless there is written consent from the
student or the student’s parents. See 20 U.S.C. § 1232g(b). The purpose of FERPA is to
“protect [students’] right to privacy by limiting the transferability (and disclosure) of their
records without their consent.” Rios v. Read, 73 F.R.D. 589, 597 (E.D.N.Y. 1977) (quoting 120
Cong. Rec. S21497 (daily ed. Dec. 13, 1974) (joint remarks of Sen. Buckley and Sen. Pell)).
Thus, “a party seeking disclosure of education records protected by FERPA bears ‘a significantly
heavier burden ... to justify disclosure than exists with respect to discovery of other kinds of
information. . . .’” Ragusa v. Malverne Union Free Sch. Dist., 549 F. Supp. 2d 288, 292
(E.D.N.Y. 2008) (citation omitted); see also Alig-Mielcarek v. Jackson, 286 F.R.D. 521, 526
(N.D. Ga. 2012) (same). The Debtor has not met that burden. See, e.g., Marlow v. Chesterfield
Cty. School Bd., No. 3:10cv18-DWD, 2010 WL 3660770, at *4 (E.D. Va. Sept. 15, 2010)
(denying discovery of email correspondence within the scope of student records because of
privacy concerns under FERPA, burden of notification on producing party, and lack of relevance
of requested correspondence to plaintiff’s claim “or any issue in the case”). Accordingly, the
Court sustains Lafayette’s objection to the production of documents requested by the Debtor in
Lafayette Request (B).
29 The term “education records” means, except as may be provided otherwise in subparagraph (B), those records,
files, documents, and other materials which—
(i) contain information directly related to a student; and
(ii) are maintained by an educational agency or institution or by a person acting for such agency or
institution.
20 U.S.C. § 1232g(a)(4)(A).
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Lafayette Request (C). All records relating to Lafayette’s cash and liquid investment reserves for
the period 1995-2017, its federal tax filings for the period 1998 – 2005, and its annual report and
financial statements” for the years 1998 through 2002.
The Debtor’s request for this category of documents pertaining to Lafayette’s reserves,
federal tax returns, annual reports, and financial statements, ranging from 1995 through 2017,30
likewise fails to satisfy the relevancy standards under Rules 26 and 45 and warrants denial.
Documents responsive to this request have no bearing on the Debtor’s claim of undue hardship
and his assertion that his Student Loan Debt are not of the types of loans described in section
523(a)(8). See Solow v. Conseco, Inc., No. 06 Civ. 5988, 2008 WL 190340, at *4-5 (Jan. 18,
2008) (denying plaintiff’s discovery request for financial documents of non-party for period
2003 – 2007 where “the Court fails to see the relevance” of the non-party’s financial condition to
the transaction at issue). To be sure, the Debtor admits that the purpose behind his request for
Lafayette’s financial information is not to support the grounds for dischargeability, but to prove
his theory that Lafayette, like other colleges and universities across America, and in conjunction
with the DOE, Sallie Mae, and ECMC, is engaged in a massive illegal tax fraud that profits from
students. See Simplified Discovery Request at 3 (“In this particular request, I advise Lafayette
College to refer to University of Wisconsin Madison’s 2005 public record of admission of unjust
and illegal tuition raising and cash reserve creation for purposes of profit. I am seeking records
of Lafayette College’s similar or mimicking of Wisconsin Madison’s operations for profit.”). To
the extent that the Debtor is asserting claims for fraud, breach of fiduciary duties, and/or
violations of U.S. tax laws by Lafayette, the Court has already dismissed such claims. See Order
signed on 8/31/2016 Granting Motion to Dismiss the claims against Lafayette College [AP ECF
30 As with the Debtor’s other requests, no explanation is given as to the relevance of the time period 1995 – 2017.
Not only is a 22-year span patently beyond the years in which the Debtor was a matriculating student at Lafayette,
but it is also grossly overbroad.
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No. 43]; see also 8/25/16 Hr’g Tr. at 14:13-15:1. The Debtor cannot now seek discovery of
documents as to claims which have already been dismissed. See, e.g., Refco Grp. Ltd., LLC v.
Cantor Fitzgerald, L.P., No. 13-cv-1654, 2014 WL 5420225, at *7 (S.D.N.Y. Oct. 24, 2014)
(stating that “[w]hile relevance is broadly construed in the context of discovery, it is proper to
deny discovery of matter that is relevant only to claims or defenses that have been stricken.”
(quoting Treppel v. Biovail Corp., 233 F.R.D. 363, 375-76 (S.D.N.Y. 2006))).
Moreover, like the protected educational records, discovery of tax returns and financial
records implicate privacy concerns and there is a general policy against their production. See,
e.g., 6 Moore’s Fed. Prac. § 26.45[1][b] (3d ed. 2015) (“Public policy disfavors disclosure of tax
returns, and courts should not require their production if the information sought is available from
another source.”).31 See also S.E.C. v. Garber, 990 F. Supp. 2d 462, 465 (S.D.N.Y. 2014)
(noting that courts should exercise caution in ordering the production of tax returns because of
“the private nature of the sensitive information” and the “public interest in encouraging filing by
tax payers of complete and accurate returns” and collecting cases) (citations omitted). Thus, a
party seeking the production of tax returns must satisfy a two-part test: (1) the tax returns must
be relevant to the subject matter of the action, and (2) a compelling need must exist because the
information is not readily obtainable from a less intrusive source.” Sadofsky v. Fiesta Prods.,
LLC, 252 F.R.D. 143, 150 (E.D.N.Y. 2008) (citations omitted). Cf. Xiao Hong Zheng v. Perfect
Team Corp., 739 F. App’x 658, (2d Cir. 2018) (“Courts in this Circuit long have observed that
discovery of tax return information ‘presents a delicate situation.’” (quoting SEC v. Cymaticolor
31 See also 6 Moore’s Fed. Prac. § 26.45[1][a] (3d ed. 2015) (“Information about a party’s financial condition or
net worth was seldom relevant for discovery purposes, absent special circumstances, before the 2000 amendments to
Rule 26(b)(1), and is likely to remain relevant in only a few instances under the more restrictive definition of
relevance embodied in those amendments.”).
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Corp., 106 F.R.D. 545, 547 (S.D.N.Y. 1985))). Generally, the burden is on the “party seeking
discovery [of tax returns] to demonstrate both relevancy and a compelling need.” Agerbrink v.
Model Serv. LLC, No. 14 Civ. 7841, 2017 WL 933095, at *5 (S.D.N.Y. Mar. 8, 2017) (quoting
Uto v. Job Site Servs. Inc., 269 F.R.D. 209, 212 (E.D.N.Y. 2010)).
Here, as discussed above, the Debtor has not demonstrated how Lafayette’s financial
statements, annual reports and tax returns are relevant to his claim or defense of undue hardship
and the status of his Student Loan Debt as dischargeable indebtedness within the scope of §
523(a)(8). Nor has the Debtor set forth any compelling need for these documents or shown that
these documents would support his wholly speculative theory that Lafayette was “mimicking”
the University of Madison Wisconsin.32 As such, the Debtor’s request for Lafayette’s financial
records (including as to Lafayette’s reserve funds) and tax returns in Lafayette Request C is
denied. See generally United States v. Fed'n of Physicians & Dentists, Inc., 63 F. Supp. 2d 475,
479-80 (D. Del. 1999) (denying discovery from non-parties for confidential financial information
where information sought was only “remotely connected” to the claims at issue and in support of
a speculative argument). 	Accordingly, the Court sustains Lafayette’s objection to the
production of documents requested by the Debtor in Lafayette Request (C).
32 	Courts have held that litigants may not use discovery under Rule 26 to engage in “fishing expeditions” in order
to find support for baseless or speculative allegations. See Micro Motion v. Kane Steel Co., 894 F.2d 1318, 1327-28
(Fed. Cir. 1990) (“The discovery rules are designed to assist a party to prove a claim it reasonably believes to be
viable without discovery, not to find out if it has any basis for a claim. That the discovery might uncover evidence
showing that a plaintiff has a legitimate claim does not justify the discovery request.”). See also United States v.
Eisenberg, 773 F. Supp. 662, 713, 714 (D.N.J. 1991) (“[Defendant’s] claims of prosecutorial misconduct are
baseless as a reason for moving for…discovery…These allegations are meritless when considered singly or
cumulatively”); Cf. Sec. Investor Prot. Corp v. Bernard L. Madoff Inv. Sec. LLC, 496 B.R. 713, 725 (Bankr.
S.D.N.Y., 2013) (denying motion to subpoena certain records on the grounds that the discovery was “neither
relevant to [movants’] claims or defenses, nor the subject matter of this proceeding.). There is no evidentiary basis
for the Debtor’s allegation that Lafayette was “mimicking” the University of Madison Wisconsin’s purported
operations for profit, and the Debtor should not be allowed to take discovery to “fish” for documents in support of
such a speculative theory.
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Lafayette Request (D). Lafayette’s institutional methodology for calculating grants, financial
aid, cost of attendance, and estimated family contribution for the years 1998 through 2002.
Insofar as this request seeks documents that demonstrate how Lafayette calculated
financial aid, cost of attendance, grants and estimated family contribution for the relevant years
1998 – 2002, as to the Debtor, Lafayette contends that such information has already been
provided to the Debtor in the Lafayette Production. Insofar as this request seeks calculation
records for all other Lafayette students for the years 1998 – 2002, such information is not
relevant to the Debtor’s claim or defense of the dischargeability of his Student Loan Debt and is
protected from disclosure under FERPA, as more fully set forth above in Lafayette Request (B).
Accordingly, the Court sustains Lafayette’s objection to the production of documents requested
by the Debtor in Lafayette Request (D).
Lafayette Request (E). Any tuition reserve amount, defined as “an amount beyond or not used or
applied to teaching and instruction costs” for the years 1998 through 2003,33 and what “Lafayette
announced they had budgeted to pay out in financial aid” versus the amount of financial aid paid
out during the years 1998 through 2002.
Like Lafayette Request (C), this request seeks the production of documents that are not
relevant to the issues in this action. As already discussed herein, the Debtor’s objective in
obtaining Lafayette’s financial information, including reserve amounts and tax filings is, by his
33 It is not clear why the Debtor defined tuition reserve as “an amount beyond or not used or applied to teaching
and instruction costs.” Notably, it is virtually identical to the definition the Debtor has attributed to the term “cost of
attendance.” See, e.g., Supplemental Discovery Request at 2 (“Cost of attendance is further defined in this section
[221 of the Higher Education Act] and by the Internal Revenue Service as funds going directly to ‘teaching and
instruction.’”). The Debtor seems to be contending that if Lafayette has reserves beyond teaching and instruction
costs, Lafayette has excess funds sufficient to cover a student’s cost of attendance. Such argument is without merit.
First, costs of attendance, as relevant to a determination of whether a loan is “any other educational loan that is a
‘qualified education loan’” under § 221(d)(1) of the Internal Revenue Code, within the scope of section 523(a)(8)(B)
is not limited to teaching and instruction costs. Rather, as discussed above, “cost of attendance” refers to several
categories of costs and expenses. See 20 U.S.C. § 1087ll. Second, assuming arguendo that Lafayette had sufficient
reserves to cover students’ teaching and instruction costs, there’s no authority or basis to conclude that a school’s
reserve funds has any impact on the determination of a student loan as a “qualified education loan” for purposes of
dischargeability under section 523(a)(8)(B).
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own admission, to prove that Lafayette was profiteering illegally and fraudulently by, inter alia,
charging higher than necessary tuition and/or not disbursing grants to students. Even if the
Debtor’s theory and allegations were assumed to be true, these claims of fraud have no bearing
on the dischargeability of the Student Loan Debt under § 523(a)(8). Accordingly, the Court
sustains Lafayette’s objection to the production of documents requested by the Debtor in
Lafayette Request (E).
Conclusion
Based on the foregoing, the Court: (i) sustains the DOE’s objection to the Discovery
Motion, without prejudice to the Debtor’s right to renew the document requests underlying the
motion through the Touhy procedures applicable to the DOE; (ii) sustains Navient’s objection to
the Discovery Motion, except that it overrules Navient’s objection to the production of
documents responsive to the document requests underlying Navient Request A, and directs
Navient to produce to the Debtor the documents requested in Navient Group (A), as set forth
herein, including documents, relating to the calculation of the Debtor’s “cost of attendance at
Lafayette; and (iii) sustains Lafayette’s objection to the Discovery Motion, except that it directs
Lafayette to supplement the Lafayette Production to the Debtor to include any documents
containing Lafayette’s calculation of the Debtor’s “cost of attendance” during the years the
Debtor attended Lafayette. Navient and Lafayette are directed to complete such document
production on or before December 28, 2018.
IT IS SO ORDERED.
Dated: New York, New York
November 20, 2018 	/s/ James L. Garrity, Jr.
United States Bankruptcy Judge
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