Why is Betsy DeVos Tolerating a An Unexcused Absence From a Student Loan Servicer CEO?

The CEO is refusing to update Congress on implementation of the Public Service Loan Forgiveness program. 

WASHINGTON, DC — James H. Steeley, the President and CEO of the Pennsylvania Higher Education Assistance Agency (PHEAA) – the student loan servicer that oversees the troubled Public Service Loan Forgiveness (PSLF) program – is refusing to testify today before the House Education and Labor Subcommittee hearing on the failed implementation of the program.

“Taking a page out of the President’s ‘never testify’ playbook, PHEAA doesn’t want to face the music about theirterrible recordof servicing student loans.” said Derek Martin, director of Allied Progress. “If Secretary Betsy DeVos doesn’t call them out for this slap in the face to our federal system, she either doesn’t care or she’s complicit in their defiance of Congress. Neither is acceptable.”

Martin continued, “Secretary DeVos has refused to demand better from PHEAA so we’re not surprised she’s dithering on demanding an explanation from Steeley about why he will be marked ‘ABSENT’ at today’s hearing.”

The Government Accountability Office (GAO) recently criticized DeVos in a scathing report for not properly utilizing a 2018 Congressional “fix” designed to make it easier for teachers, nurses, and other public service professionals to complete the paperwork for PSLF.

WHAT YOU NEED TO KNOW:

PHEAA Executives Make High Salaries Despite Poor Service Resulting In Unusually High Rates Of Delinquent Borrowers And Defaulted Loans—Not To Mention Complaints About The Public Service Loan Forgiveness Program

The President And CEO Of PHEAA—A Quasi-Governmental State Agency That Services Federal Student Loans Through Its FedLoan Arm—Is Among The Highest Paid Pennsylvania State Employees, Making $330K Per Year.

James Steeley Makes $330,000 A Year As President And CEO Of Pennsylvania Higher Education Assistance Agency (PHEAA), A Quasi-Governmental State Agency.

PHEAA President And CEO James Steeley Makes $330,000 A Year. “Once again, the state’s student financial aid agency conducted a national search for its next president and CEO and landed on someone already on its payroll. The Pennsylvania Higher Education Assistance Agency board of directors on Thursday named its interim CEO James Steeley to lead the 3,300-employee agency on a permanent basis. […] Steeley is the seventh person in the 56-year-old agency’s history to head this agency. He will be paid $330,000 a year, which is one of the highest paid positions in all of Pennsylvania’s state government.” [Jan Murphy, “PHEAA finds its next CEO inside its Harrisburg headquarters,”Penn Live, 01/17/19] 

  • The Pennsylvania Higher Education Assistance Agency (PHEAA) Is “A Quasi-Governmental Agency Originally Established By The State Of Pennsylvania.”“PHEAA declined to comment on the judge’s ruling. It had argued that as a quasi-governmental agency originally established by the state of Pennsylvania to provide student loans to its residents, it enjoyed sovereign immunity that protects it from being sued.” [Nate Raymond, “Massachusetts can sue federal student loan servicer, judge rules,” Reuters,03/01/18]
  • FedLoan Is PHEAA’s Federal Student Loan Servicing Division. “That’s been the experience of many borrowers dealing with FedLoan, part of the state-run monolith Pennsylvania Higher Education Assistance Agency (PHEAA) that services about 7.5 million federal student borrowers.” [Bob Fernandez and Erin Arvedlund, “Is FedLoan, America’s giant student loan servicer, running out of money?,” The Philadelphia Inquirer, 02/24/19]

PHEAA’s Previous President And CEO James Preston—One Of The Highest Paid Pennsylvania State Government Employees—Made $329,887 Per Year. 

Former PHEAA President And CEO James Preston Made $329,887 Per Year And Was “Among The Highest Paid State Government Employees.” “The president and CEO of Pennsylvania Higher Education Assistance Agency announced on Thursday he will be retiring from his post in July. James Preston, 67, has been employed for the past 15 years by the agency that oversees the state grant program and is as one of the nation’s largest student loan servicers. […] Preston, who receives a $329,887-a-year salary, is among the highest paid state government employees.” [Jan Murphy, “Retiring Pa.’s student aid agency CEO praised as ‘an incredible force’ in helping students go to college,” Penn Live, 02/15/18]

However, PHEAA’s Poor Track Record Doesn’t Justify The High Salaries – The Student Loan Servicer Has Been Sued For Failing To Properly Process Payments And Has Had The Highest Rates Of Delinquent Borrowers And Defaulted Loans.

PHEAA Is Facing A Bundle Of Class-Action Lawsuits Brought By Tens Of Thousands Of Borrowers Who Have Been Saddled With Additional Debt Because The Servicer Failed To Properly Process Payments. 

PHEAA Currently Is Facing Ten Class-Action Lawsuits That Have Been Bundled In Federal Court In Philadelphia Brought By Tens Of Thousands Of Borrowers Who “Have Been Saddled With Additional Debt Because PHEAA Cannot Or Will Not Properly Process Their Payments.”University of Pittsburgh Law graduate Arianne Gallagherwas “a plaintiff in one of 10 class-action lawsuits filed against the Pennsylvania Higher Education Assistance Agency that have been bundled in federal court in Philadelphia. The plaintiffs — borrowers from 10 states — say they represent tens of thousands who have been saddled with additional debt because PHEAA cannot or will not properly process their payments.The agency, which conducts its federal loan business as FedLoan Servicing, does not comment on pending litigation, spokesman Keith New said. But he maintains PHEAA is living up to the terms of its contracts with the U.S. Department of Education. The federal agency hired PHEAA to process payments on 7.6 million student loans, which represents about a quarter of the $1.3 trillion in federal student loan debt owed by 44 million Americans.”[Deb Erdley, “Federal class-action lawsuits target practices of Pennsylvania-based student loan agency,” Pittsburgh Tribune-Review, 09/01/18]

PHEAA Was Sued In Massachusetts For Allegedly Preventing “Borrowers From Making Qualifying Monthly Payments That Count Toward Loan Forgiveness” And Also For Overcharging Students. In 2017, “Massachusetts Attorney General Maura Healey filed the lawsuit against Pennsylvania Higher Education Assistance Agency, which manages over a fourth of the nation’s $1.4 trillion student loan debt on behalf of various lenders. The complaint, filed in Suffolk County Superior Court, claimed PHEAA caused teachers and other public servants to lose benefits and financial assistance under two federal programs.”[Nate Raymond, “Massachusetts accuses PHEAA of unfair student loan servicing practices,” Reuters, 08/23/17]

PHEAA Has The Highest Rates Of Delinquent Borrowers And Defaulted Loans Of All Federal Loan Servicers. 

According To FTC Commissioner Rohit Chopra, PHEAA “Had The Lowest Percentage Of Borrowers In Current Repayment Status, The Highest Percentage Of Those Considered Severely Delinquent And Highest Percentage Who Had Defaulted” At The End Of 2017. “Rohit Chopra, a U.S. Federal Trade commissioner and former student loan ombudsman for the federal Consumer Financial Protection Bureau, analyzed the numbers and said they bear ‘an uncanny resemblance’ to problems in the mortgage servicing market that set off the recession a decade ago. ‘The default rates on student loans are alarmingly high,’ Chopra said. ‘And there are some serious questions about how student loan servicers might be responsible for many of these defaults. Importantly, in the federal student loan program it is easy to avoid default if you get the right information because all borrowers are entitled to repay their loans based on income.’ Chopra said PHEAA, the nation’s second-largest student loan servicer, at the end of last year had the lowest percentage of borrowers in current repayment status, the highest percentage of those considered severely delinquent and highest percentage who had defaulted.” [Deb Erdley, “Federal class-action lawsuits target practices of Pennsylvania-based student loan agency,” Pittsburgh Tribune-Review, 09/01/18]

PHEAA’s FedLoan Is The Only Servicer That Manages Loans For The Department Of Education’s Public Service Loan Forgiveness Program (PSLF).

FedLoan, “An Arm Of” PHEEA, Is The Only Servicer That Managers Loans By Borrowers Pursuing Public Service Loan Forgiveness.

FedLoan, “An Arm Of” PHEEA, “Is The Only Servicer Designated By The Education Department To Manage Loans Held By Borrowers Pursuing Public Service Loan Forgiveness.” “FedLoan, an arm of Pennsylvania Higher Education Assistance, is the only servicer designated by the Education Department to manage loans held by borrowers pursuing Public Service Loan Forgiveness.” [Danielle Douglas-Gabriel, “Watchdog agency blasts government contractor for mishandling student loan forgiveness program,” The Washington Post, 06/22/17]

  • The Department Of Education Manages The PSLF Program And Contracts With A Single Loan Servicer—FedLoan—“To Handle Day-To-Day Activities Associated With The Program,” Including Making Determinations About Whether Employment And Loans Qualify For PSLF. “The Department of Education (Education) manages the PSLF program and contracts with a single loan servicer to handle day-to-day activities associated with the program, which include responding to borrower inquiries, making preliminary determinations about whether borrowers’ employment and loans qualify for PSLF, and processing loan forgiveness applications.” [“Public Service Loan Forgiveness: Education Needs to Provide Better Information for the Loan Servicer and Borrowers,” U.S. Government Accountability Office, 09/05/18]

The First Borrowers Began Applying For Loan Forgiveness Under The PSLF Program In September 2017. 

The First Borrowers Began Applying For Loan Forgiveness In September 2017, Ten Years After The PSLF Program Was Established. “Starting in September 2017, borrowers began applying to have their federal student loans forgiven through the Public Service Loan Forgiveness (PSLF) program. This program, established by law in 2007, is intended to encourage individuals to enter and continue careers in public service by forgiving borrowers’ remaining federal student loan balances after they have made at least 10 years of loan payments while working in public service and meeting other requirements.” [“Public Service Loan Forgiveness: Education Needs to Provide Better Information for the Loan Servicer and Borrowers,” U.S. Government Accountability Office, 09/05/18]

In Late 2018, The Department Of Education Found That 99% Of PSLF Applications Were Denied—Only 55 Out Of 19,300 Applications For PSLF Were Approved In The First Eight Months Since Borrowers Became Eligible To Apply. 

Data From The Department Of Education Showed That 99 Percent Of Applications For Loan Forgiveness Under The Program Have Been Denied.

“[…] Recent Data From The Department Of Education Show That 99 Percent Of Applications For Loan Forgiveness Have Been Denied.” “But recent data from the Department of Education show that 99 percentof applications for loan forgiveness have been denied. The pitch may have been simple, but the execution was anything but.” [Cory Turner, “Why Public Service Loan Forgiveness Is So Unforgiving,” NPR, 10/17/18]

In The First Eight Months Since Borrowers Became Eligible To Apply, Only 55 Borrowers Out Of 19,300 Were Approved For Loan Forgiveness Under The PSLF Program. 

The Government Accountability Office (GAO) Found That, Out Of The 19,300 Applications Submitted By Borrowers Between September 2017 And April 2018, Only 55 Borrowers Were Approved For Loan Forgiveness.“In the first 8 months that borrowers were able to apply for loan forgiveness (September 2017 through April 2018), Education had approved 55 borrowers and forgiven a total of almost $3.2 million in outstanding student loan balances, an average of almost $58,000 per borrower. The amount of loan forgiveness for individual borrowers ranged from almost $800 to almost $290,000. Over 19,300 borrowers had submitted loan forgiveness applications as of April 2018.” [“Public Service Loan Forgiveness: Education Needs to Provide Better Information for the Loan Servicer and Borrowers,” U.S. Government Accountability Office, 09/05/18]

After ED’ Mass Denials To PSLF Applicants, Congress Temporarily Expanded PSLF And ED Denied 99% Of Applicants To The Expansion Program Based On A Requirement That Was Not Statutorily Mandated By Congress. 

In 2018, Congress Provided A Temporary Expansion Of PSLF That Gave Applicants Another Chance To Have Their Federal Student Loans Forgiven With “Simpler Requirements.”

In 2018, “Congress Stepped In And Ordered A Program Expansion” That Gave “Applicants Another Chance To Clear Their Federal Student Loans” With “Simpler Requirements.”“Congress stepped in and ordered a program expansion in 2018 to offer the applicants another chance to clear their federal student loans through a new program with simpler requirements.” [Alexa Díaz, “Federal student loan forgiveness program rejects almost everyone, again,” Los Angeles Times, 09/05/19]

In September 2019, The GAO Revealed That ED Rejected 99% Of Applicants To The Temporary Expansion Program With Only 661 Approved Of 54,000 Requests.

In September 2019, The GAO Revealed That The “Education Department Has Rejected 99%” Of Applicants To The Temporary Expansion Program With Only 661 Approved Of 54,000 Requests.“But a year later, a new watchdog report has found, the Education Department has rejected 99% of those applicants too. The Government Accountability Office report released Thursday found that of the more than 54,000 applications to the new program — named Temporary Expanded Public Service Loan Forgiveness — processed through May, only 661 were accepted.” [Alexa Díaz, “Federal student loan forgiveness program rejects almost everyone, again,” Los Angeles Times, 09/05/19]

The Reason Many Borrowers Were Rejected Was Based On A Stipulation Implemented By ED “That Congress Didn’t Order.” 

The Primary “Reason Borrowers Were Rejected” Was Based On “A Requirement That Congress Didn’t Order And That Applicants Found Confusing.”“The biggest reason borrowers were rejected under the new program, the report found, was that they hadn’t separately applied to the original program — a requirement that Congress didn’t order and that applicants found confusing. There’s no formal appeals process, the report said, and key parts of the Education Department website lack information about the new program.” [Alexa Díaz, “Federal student loan forgiveness program rejects almost everyone, again,” Los Angeles Times, 09/05/19]

The Trump Administration Has Proposed Eliminating PSLF Altogether, As Part Of A Proposal That Betsy DeVos Said Eliminated “‘Ineffective Federal Programs.’”

The Trump Administration Has Proposed Eliminating The PSLF Program Altogether.

As Part Of The Trump Administration’s FY 2020 Budget Proposal, “The White House Proposed Eliminating PSLF.” “As part of the budget the White House proposed eliminating PSLF, a program signed into law in 2007 that allows borrowers who work in government and some nonprofits to have their loans forgiven after 10 years of payments. This marks one of a few instances the Trump administration has floated the idea of eliminating PSLF.” [Jillian Berman, “The Trump administration proposes eliminating Public Service Loan Forgiveness,” MarketWatch, 03/12/19]

In Response To Trump’s Proposal, DeVos Said The Administration Was Eliminating “‘Ineffective Federal Programs’” And Had To Make “‘Tough Decisions.’”

In Response To The 2020 Budget Proposal, Betsy DeVos Said The Administration Was “‘Eliminating Duplicative And Ineffective Federal Programs’” And That “‘Tough Decisions Were Made.’”“‘We have also reaffirmed our commitment to spending taxpayer dollars wisely and efficiently by consolidating or eliminating duplicative and ineffective federal programs. Tough decisions were made.’” [Press Release, U.S. Department of Education, 03/11/19]

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New Report: DeVos Abandons Student Loan Borrowers After Servicers Spend Millions on Lobbying and Politics

Student Loan Servicers Flood D.C. with Cash – DeVos Hobbles Borrower Protections Rather Than Holding Servicers Accountable

Read the Report, ‘The DeVos Debt Disaster’

WASHINGTON, D.C. — Ahead of today’s House Financial Services Committee hearing concerning the $1.5 trillion student loan debt crisis, consumer advocacy group Allied Progress released a new report showing how the Department of Education, under Secretary Betsy Devos, protected student loan servicers by systematically eroding protections for borrowers following millions of dollars in campaign contributions and lobbying by the servicer industry.

The Education Department has the important responsibility of making sure student loan servicers do right by borrowers, guiding them through the repayment process and making sure they make the best decisions for their respective circumstances. But under DeVos, the Department of Education has allowed every loan servicer to violate federal rules and has rarely punished them for their abuses. Servicers have poured more than $10 million into lobbying and campaign contributions – an investment that has paid off handsomely as DeVos abandons borrowers.

“Student loan servicers have showered Washington with millions of dollars in lobbying and campaign contributions – an investment that continues to pay off,” said Derek Martin, director of Allied Progress. “Rather than holding servicers who break the rules and hurt student loan borrowers accountable, the Education Department under Betsy DeVos has empowered servicers to abuse consumers and filled its ranks with former industry executives. The fox isn’t guarding the henhouse here… it owns the henhouse.”

KEY FINDINGS : 

Student loan servicers have spent more than $7.5 million on lobbying since Trump and DeVos took office. The industry has poured $3.9 million into campaign contributions since 2012.  Here’s how those investments have paid off under DeVos:

  • DeVos is obstructing Obama-era borrower defense rules through an “unlawful” delay and proposing weaker protections that would deny $13 billion to students who were victimized by sham schools.
  • DeVos’ Education Department, staffed with former servicer industry executives, repealed the Obama-era gainful employment rule to prevent federal loan aid from being wasted on schools that chronically disregard students’ job prospects, costing taxpayers over $6 billion.
  • Additionally, DeVos is working alongside servicers to combat state-level borrower protections, even appearing to “strategize together” in one lawsuit.
  • DeVos is thwarting another Trump Administration agency’s efforts to oversee servicers, prompting its Director to say DeVos is “getting in the way of efforts to police the student loan industry.”

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Allied Progress Letter To Senate HELP Committee: Reject Eugene Scalia And His Irredeemable Anti-Worker Record

Disqualifying: Scalia’s Entire Career as a Corporate Attorney Has Been Dedicated to Criticizing and Litigating Against the Labor Department’s Mission to Protect Workers

WASHINGTON, D.C. – As the Senate returns to Washington to consider Eugene Scalia’s nomination, consumer watchdog group Allied Progress sent letters to the offices of all members of the Senate Committee on Health, Education, Labor and Pensions (HELP) urging their immediate public opposition to the conflicted corporate attorney with a blemished record of trampling workers’ rights. Scalia has no business enforcing the nation’s laws that protect workers’ wages, retirement, safety, and the right to medical and family leave. See full text of the letter below. [PDF: Chairman Alexander version]

“There is nothing that could be brought to light during the nomination process that would redeem Eugene Scalia’s anti-worker record,” said Jeremy Funk, spokesman for Allied Progress. “What more do Senators need to know about this prominent corporate attorney who never hesitated to represent powerful corporate interests that mistreated employees? Even in his free time, Scalia floated arguments to help corporations escape accountability in cases of sexual misconduct and workplace safety. Senators should not waste the public’s time and demand a new nominee who is a friend to workers, not a long-time adversary.” 

FULL TEXT OF LETTER TO SENATE HELP COMMITTEE MEMBERS:

Dear Senator:

On behalf of Allied Progress, a leading consumer watchdog group, I am writing to urge you to reject the President’s nomination of Eugene Scalia for U.S. Labor Secretary when the matter comes before you in the Senate Health, Education, Labor and Pension Committee. We know everything we need to know about Scalia’s record to conclude today that he is too extreme and too conflicted for this role, including his troubling views that companies shouldn’t be held responsible for sexual harassment at the workplace.

The President has a history of appointing known enemies of federal agencies to lead them, whether it was Scott Pruitt’s corruption-soaked tenure at the EPA orMick Mulvaney’s ‘bull in a china shop’ turn as Acting Director of the CFPB. Eugene Scalia would be no different as someone who regularly criticized and litigated against Labor Department policies. As a typical example, Scalia represented the U.S. Chamber of Commerce in 2017 as it was challenging the U.S. Labor Department’s Fiduciary Rule, the Obama-era consumer protection that required financial advisers and their firms provide retirement investment advice that is in their clients’ best interests.[1]The Fifth Circuit Court of Appeals ultimately ruled in Scalia’s client’s favor[2], allowing unscrupulous Wall Street brokers to continue grifting their own clients out of billions of dollars of retirement savings without any consequences.[3]

The Labor Secretary is supposed to be the Advocate-in-Chief for America’s hard-working men and women. Instead, Trump chose a high-powered corporate attorney who built a career on representing powerful interests at the expense of everyday workers, including cases involving workplace safety and sexual harassment. It is your responsibility to consider whether someone who put themselves in an adversarial role against workers time and again is able to ‘flip a switch’ and advocate on behalf of all the nation’s working families, even when their interests come up against those of his long list of former corporate clients. We firmly believe he is not capable of making that transition.

It is the kind of bad corporate behavior he was willing to defend that we believe is most disqualifying for this post. For instance, Scalia represented a major auto manufacturer as it was sued for harboring a culture of sexual harassment, racial discrimination, and retaliating against employees who spoke out against the hostile work environment.[4]Scalia also represented the same company after its retirement plan allegedly “violated its fiduciary duties” and shortchanged and employee’s retirement benefits.[5]Scalia represented a package delivery company as it was accused of a “pattern or practice of unlawful discrimination” in violation of the Americans With Disabilities Act.[6]Scalia defended a major airline company as it was accused of illegally threatening a union and attempting to force it to agree to a “No-Strike Clause” in its Labor Agreement.[7]Scalia represented a major retail corporate chain as it fought lawsuits accusing it of illegally firing corporate whistleblowers, and again as the corporation fought against a Maryland Law requiring it to help cover its employees’ healthcare costs.7And Scalia represented an electronic component distributor when employees sued the company for allegedly denying them overtime compensation by misclassifying them as “‘administrative’” workers.[8]

The list of cases of this kind goes on and on. For any corporation accused of violating workers’ rights or defrauding consumers that is in need of legal representation, they could not do much better than Eugene Scalia. It is clearly what he is good at. But it is these same deep relationships with corporate America that makes him perhaps the most conflicted choice Trump could have made to be the next Labor Secretary.

What is also deeply concerning is the extremes Scalia was willing to go to defend companies in conflict with workers. Consider:

    • Scalia Argued That Companies Shouldn’t Necessarily Bear Legal Responsibility for Bosses Who Sexually Harass or Threaten Employees. In 1998, Scalia argued that companies should be let off the hook in sexual harassment cases in the Harvard Journal of Law & Public Policy, offering these scenarios: “One supervisor orders his assistant to accompany him on a business trip and gropes her on the plane, at dinner, and in the hotel. A second supervisor does the same and tells her that’s what he did with her predecessors … I believe the employer should not be liable in any of these scenarios unless it endorsed the conduct.” Scalia also opined: “Saying ‘You’re an incompetent stupid female bitch’ a single time is not actionable environmental harassment.”[9] 
    • Scalia Argued the Federal Government Does Not Have A Leading Role in Occupational Safety and That Repetitive Stress Injuries on the Job are Medical “Quackery”. Scalia fundamentally disagrees that one of the most important responsibilities of the Labor Department is enforcing the laws that protect the health and safety of the nation’s workers, writing in 2005: “The Government does not have the sole-or even primary-role in furthering occupational safety and health or compliance with the employment laws.”[10]Scalia’s opposition to federal workplace oversight made him a natural fit to represent a number of corporate interests in their 2001 fight to undo the Clinton-era ergonomics rule – a regulation designed to prevent injuries among workers who perform repetitive tasks. Scalia called it “the most costly and intrusive regulation in (OSHA’s) history”[11]and often trashed the science of ergonomics as “quackery.”[12]Scalia changed his tune, however, when he was nominated to be Labor Solicitor during the Bush administration, admitting that “ergonomic pain is real” when a promotion was on the line.[13]

Workers deserve a Labor Secretary who is always on their side, not just when it is politically convenient. Someone who believes the government should have minimal say in keeping workers safe may be a great choice to represent corporations that like to cut corners, but they are a dangerous choice to be enforcing laws as Labor Secretary.

There is no mystery what Eugene Scalia stands for. When there is a dispute, Scalia believes corporate CEOs are always right, and workers are always wrong. This is not someone who would take his responsibility to uphold theFamily And Medical Leave Act[14]seriously after repeatedlydefending corporations against lawsuits from workers who claimed they were fired for taking leave.[15][16]This is not someone who will be concerned about fair wages or the income inequality crisis in America after publicly deriding even a modest proposal for raising the minimum wage for federal workers. This is not someone interested in helping workers hoping to climb into the middle class if it in any way impacts the corporate bottom line.[17]

Eugene Scalia may be a gifted legal mind when it comes to defending big businesses, but he has no business leading the Labor Department. America’s working families deserve far better. I strongly encourage you to oppose this nomination on its face.

Respectfully,

Kyle Herrig

Senior Advisor, Allied Progress

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Eugene Scalia Spent Career Fighting Against the Labor Department’s Mission To Protect Workers’ Safety, Wages, Retirements, and Rights

Trump Wants Another Federal Agency Run by an Enemy of Its Mission 

*Read New Report from Allied Progress, ‘Enemy Within’

WASHINGTON, D.C. — The U.S. Labor Secretary may not typically receive the same level of public attention as other members of the President’s cabinet, but the responsibilities they hold are no less important, including the enforcement of laws that protect workers’ wages, retirement, safety, and the right to medical and family leave. And yet President Trump is expected to nominate someone for the post who has stood against virtually every element of the DOL’s mission: corporate lawyer Eugene Scalia. Consumer watchdog group Allied Progress released a new report today, ‘Enemy Within’, and called on members of the Senate HELP committee to demand a new nominee that is committed to advocating for all the nation’s working families — not someone who spent decades representing corporate special interests against workers whose rights had been violated.

The Senate will soon consider: Can Eugene Scalia be trusted to carry out his responsibility as Labor Secretary to enforce the Family and Medical Leave Act (FMLA) as someone who repeatedly defended corporations accused of firing workers for taking leave? Would Scalia uphold overtime law after defending a major car manufacturer that allegedly denied women equal access to overtime shifts and another company accused of illegally denying overtime wages? Would Scalia enforce minimum wage laws as someone who publicly derided President Obama for proposing even a modest increase in the minimum wage for federal workers?

Would Scalia take workplace safety seriously after arguing that government does not have “the sole-or even primary-role in furthering occupational safety and health” and after trashing a federal safety inspection program as “coercion”? Would Scalia follow his duty protect workers’ retirement funds from employer misuse after representing the U.S. Chamber of Commerce in its challenge of the U.S. Labor Department’s Fiduciary Rule, the Obama-era consumer protection that required financial advisers and their firms provide retirement investment advice that is in their clients’ best interests? Could Scalia be counted on to hold federal contractors accountable if they engage in disability discrimination after he defended a package delivery company in a class action lawsuit accusing them of just that?

“Senators should ask themselves: can someone who has spent decades trying to undermine the mission of the Labor Department suddenly come to respect and follow it? Working families shouldn’t hold their breath,” said Jeremy Funk, spokesman for Allied Progress. “Eugene Scalia’s corporate client list is a mile-long, but his record advocating for everyday workers is as thin as a pink slip. This is someone who reflexively believes CEOs are always right and their employees are always in the wrong when there are allegations of harm at the workplace.”

Added Funk: “President Trump’s choice of Scalia for the DOL is more proof he has no interest in a functional government that works for all people. Once again, Trump wants to put a known enemy of a federal agency in charge of it, following Scott Pruitt’s corruption-oozing stint at the EPA and Mick Mulvaney’s tornadic turn at the CFPB. It’s not hard to imagine Scalia using his power to throw out the rules that hold his former corporate clients in check. Because it’s what he’s been trying to do his entire career. Senators should not wait to reject his nomination.” 

PREVIOUSLY FROM ALLIED PROGRESS: 

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Consumers Would Have Saved Over $6B a Year Starting Today, Then Trump Happened

In Payback to Trump’s Predatory Lending Donors, CFPB Delayed Rule Protecting Vulnerable Communities From the Payday Loan Debt Trap Today

Washington DC (August 19th, 2019) — This was supposed to be a great day for consumers, until the Trump CFPB messed it all up on behalf of Trump’s donor friends in the payday lending industry. In June, the  administration issued a final rule rewarding the payday industry with a 15-month delay from compliance with the ability-to-repay standard of the CFPB’s short term lending rule established in November 2017. If the Bureau had done nothing, the rule would have gone into effect today and predatory payday lenders would have been prohibited from approving high-interest loans – that average 300 percent APR and come as high as 950 percent – to borrowers they know do not have the ability to repay them in time.

By conservative estimates, the new payday protection would have started saving consumers nearly $6.4 billion in fees every year – or $202 per second– while even CFPB Director Kathy Kraninger admits the damage that could have been spared to vulnerable communities exceeds $7 billion. Consumer watchdog group Allied Progress called the delay of the rule ‘payback’, pure and simple, for the $2.5 million the payday industry gave to Donald Trump’s campaign and inaugural committees, and the estimated $1 million the payday trade association spent holding its annual conference at Trump’s Doral Golf Resort in March.

“This isn’t theoretical anymore. Starting now, consumers will be punished with billions of dollars in abusive fees from predatory lenders they would have avoided if the Trump administration had just done nothing,” said Jeremy Funk, spokesman for Allied Progress. “There was no good reason to withhold this protection from consumers. The CFPB even admitted it was not based on a shred of new academic research, while the original rule was carefully crafted after 5 years of research and input from the full spectrum of stakeholders. The facts of the payday lending industry haven’t changed in the last two years – the only thing that’s changed is we have a President and a CFPB Director who don’t care if businesses prey on consumers, as long as their big campaign checks continue to clear.

Added Funk: “Making things worse for consumers has been standard operating procedure at the Trump CFPB, but they still have ability to stop the bleeding with a final rule that restores the ability-to-repay standard. The choice is theirs: keep the campaign money spigot open from the predatory lending industry, or save consumers billions of dollars every year by keeping them out of the payday debt trap. If the administration wants to keep the economy out of a recession, putting over $6 billion back into the pockets of consumers is a good place to start.”

In May, Allied Progress exposed thousands of suspicious, duplicative pro-industry comments that were designed to look like personal stories, including over 200 comments from purported borrowers who claimed verbatim that a payday loan was “needed to replace my hot water tank.” If the CFPB fully repeals the ability-to-repay standard, they should admit the real reason why and not hide behind thousands of industry-manufactured comments as evidence of public support for abusive 300 percent interest loans.

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Only the Most Conflicted People: Kraninger Appoints Servicer Industry Insider to Be Next Student Loan Ombudsman

WASHINGTON, D.C.– After 8 months on the job, CFPB Director Kraninger has finally gotten around to appointing a new Student Loan Ombudsman, an important role that deals with complaints from consumers who’ve been taken advantage of by the student loan servicing industry. The position was left vacant by her predecessor Mick Mulvaney after the previous ombudsman resigned last August in protest of the Mulvaney-led Bureau ‘abandoning’ its enforcement responsibility against illegal behavior from the student loan companies. Instead of choosing an experienced consumer advocate, Kraninger went the opposite direction and recruited a student loan industry insider out of the Pennsylvania Higher Education Assistance Agency, a servicer with a history of leaving students in the cold.

“Only the Trump Administration would think a loan servicing industry insider is the best person to look out for the interests of America’s student borrowers. But what else can you expect from Director Kraninger who won’t even admit there’s a student loan debt crisis,” said Derek Martin director of Allied Progress.

Martin continued, “Kathy Kraninger should remember that her job is to look out for the interests of consumers, not industry’s bottom line. We hope Mr. Cameron will demonstrate independence in his new role; we fear he will just be industry’s man on the inside.”

WHAT YOU NEED TO KNOW:

Robert G. Cameron Previously Oversaw “Compliance” At PHEAA (aka FedLoan)

On Friday, The CFPB Announced That Robert G. Cameron Would Become The Bureua’s New Student Loan Ombudsman. “The Consumer Financial Protection Bureau (Bureau) announced the appointment of Robert G. Cameron to serve as the Bureau’s private education loan ombudsman. Mr. Cameron is a Colonel and Staff Judge Advocate for the Pennsylvania Army National Guard. He has served in the United States Army for 29 years. Mr. Cameron also joins the Bureau from the Pennsylvania Higher Education Assistance Agency where he was a high-ranking official responsible for litigation, compliance, and risk mitigation efforts.” [Press Release, “CFPB Appoints Private Education Loan Ombudsman,” ConsumerFinance.gov, 08/16/19]

  • Cameron Oversaw “Compliance Activites” While At PHEAA. “While at the Pennsylvania Higher Education Assistance Agency, Mr. Cameron directed a staff of attorneys and other personnel and oversaw compliance activities at the agency. He was also responsible for ensuring the Pennsylvania Higher Education Assistance Agency’s compliance with numerous federal and state laws, including the Dodd-Frank Act.[Press Release, “CFPB Appoints Private Education Loan Ombudsman,” gov, 08/16/19]

PHEAA/FedLoan Has A Checkered History When it Comes To Serving Student Borrowers

The Pennsylvania Higher Education Assistance Agency (PHEAA), And Its Student Loan Servicing Division, FedLoan, Have Repeatedly Failed Student Borrowers.

FedLoan Attempted To Convert A Special-Education Teacher’s TEACH Grant Into A Loan, And Refused To Reverse Their Decision Until An Outside Attorney Became Involved.

FedLoan Converted A Special-Education Teacher’s “$4,000 TEACH Grant” Into A $4,000 Loan And Ignored All Her Attempts To Have The Decision Reversed. “The special-education teacher qualified for a $4,000 grant for tuition by teaching math in a poor public schools in Prince George’s County, Md., and Baltimore. But when Gammill sent her grant recertification paperwork into FedLoan, as required, it was rejected. And as Gammill, 35, scrambled to fix it with calls and emails, the Harrisburg-based agency converted her TEACH grant into a $4,000 loan and told her the decision was irreversible. Not willing to accept another $4,000 in debt, Gammill pleaded with the servicer, speaking to about 40 call-center employees and noting many of their company identification numbers over two years to get her grant recertified. Nothing worked.” [Bob Fernandez and Erin Arvedlund, “Is FedLoan, America’s giant student loan servicer, running out of money?,” The Philadelphia Inquirer, 02/24/19]

A 2013 Lawsuit Revealed That PHEAA “Had No Formal Procedures To Investigate, Report, Or Deal With Identity Theft.”

A 2013 Lawsuit Found That The Pennsylvania Higher Education Assistance Agency, The Agency That Runs FedLoan, “Had No Formal Procedures To Investigate, Report, Or Deal With Identity Theft.”“According to a 2013 suit filed in federal court in Richmond, Va., PHEAA had no formal procedures to investigate, report, or deal with identity theft. Plaintiff and victim Lee Pele first learned that his identity had been stolen for two student loans amounting to $137,000 after a debt collector called him.” [Bob Fernandez and Erin Arvedlund, “Is FedLoan, America’s giant student loan servicer, running out of money?,” The Philadelphia Inquirer, 02/24/19]

  • “That’s been the experience of many borrowers dealing with FedLoan, part of the state-run monolith Pennsylvania Higher Education Assistance Agency (PHEAA) that services about 7.5 million federal student borrowers.”[Bob Fernandez and Erin Arvedlund, “Is FedLoan, America’s giant student loan servicer, running out of money?,” The Philadelphia Inquirer, 02/24/19]

In August 2017, the Massachusetts Attorney General sued PHEAA For failing to “Service The Public Service Loan Forgiveness And TEACH Grant Programs,” Despite Having “The Nation’s Exclusive Contracts To Service These Two Loan-Forgiveness Programs.”

In August 2017, Massachusetts Attorney General Maura Healy Sued PHEAA For Failing To “Service The Public Service Loan Forgiveness And TEACH Grant Programs, In Violation Of Massachusetts And Federal Law.” “In August 2017, Massachusetts Attorney General Maura Healey filed suit in state court, alleging that PHEAA’s had failed to service the Public Service Loan Forgiveness and TEACH grant programs, in violation of Massachusetts and federal law.” [Bob Fernandez and Erin Arvedlund, “Is FedLoan, America’s giant student loan servicer, running out of money?,”The Philadelphia Inquirer, 02/24/19]

Kathy Kraninger Refused To Acknowledge That There Is A Student Debt Crisis In America…

·     Kathy Kraninger Refused To Acknowledge That There Is A Student Debt Crisis In America.

  • When Questioned By Rep. Ayanna Pressley (D-MA), Kathy Kraninger Refused To Acknowledge There Is A Student Debt Crisis In America. Pressley:Yes or no. Would you agree that we have a student debt crisis in our country? Kathy Kraninger:Certainly growing student debt is a concern that we absolutely need to look at and ensure that people… Rep. Pressley:Yes or no, would you agree that we have student debt crisis in this country? Kathy Kraninger:That word is a very loaded word and for that reason… Rep. Pressley:I’ll take that as a no. [“Putting Consumers First? A Semi-Annual Review of the Consumer Financial Protection Bureau,” House Financial Services Committee, 03/07/19 (3:59:46)]

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Uncovered Emails Show Secretary DeVos Asks ‘How High’ When Student Loan Servicers Say ‘Jump’

See highlights below from the explosive August 15 story from Politico, ‘How the student loan industry lobbied DeVos to fight state regulations.’  Derek Martin, director of consumer watchdog group Allied Progress issued the following in response: 

 “These emails confirm what everyone suspected: Secretary DeVos works for the student loan servicer industry, not the other way around. It’s clear that an email from Navient’s CEO making demands for less oversight carries more weight with DeVos than tens of thousands of student borrower complaints about industry mistreatment. 

“It’s bad enough that the Trump administration has dispensed with any and all serious effort to hold loan servicers accountable for bad behavior, but they are actively making the student debt crisis worse by stamping out state efforts to try and keep servicers honest.”

 WHAT YOU NEED TO KNOW:

After A Lobbying Blitz By The Student Loan Industry, Betsy DeVos Granted Their Wish And The Department Of Education Took A Strong Stance On Federal Preemption.

The Student Loan Industry Lobbied The Education Department (ED) Heavily To Fend Off State Proposals “To Crack Down On Student Loan Servicing Companies” And The Education Department’s Strong Stance On Federal Preemption Came Shortly After.

The Student Loan Industry “Turned To The Education Department For Help” To Fend Off State Proposals “To Crack Down On Student Loan Servicing Companies” And, “After A Flurry Of Industry Lobbying,” Came The Education Department’s Strong Stance On Federal Preemption. “The Trump administration’s attempts to block states from regulating some student loan companies last year came after a flurry of industry lobbying, […] As a growing number of states considered new laws to crack down on student loan servicing companies, the industry turned to the Education Department for help in fending off that scrutiny.” [Michael Stratford, “Exclusive: How the student loan industry lobbied DeVos to fight state regulations,” Politico, 08/15/19]

SLSA, The Student Loan Industry Trade Group, Shared Proposals On How To Implement A Preemption Policy And Helped DeVos Aides To Track States Working On Regulating The Student Loan Industry.

Emails Show The President Of The Student Loan Servicing Alliance (SLSA) Sharing Multiple Options From Industry On How To Approach A Preemption Policy.

Emails Show Industry “Debated Whether To Ask The Trump Administration To Add Student Loan Preemption” In Emails With ED.“The emails obtained under FOIA also show that the student loan industry debated whether to ask the Trump administration to add student loan preemption to its wide-ranging regulatory agenda. Winkie Crigler, who led the Student Loan Servicing Alliance, a trade group, sent an email to an Education Department official forwarding a proposal by Navient to add preemption to the regulatory agenda. But Crigler also noted that she was skeptical about that approach. ‘I would want to talk to others but I don’t think that we want to debate preemption in neg reg,’ she said, referring to the required process by which the Education Department publicly negotiates new regulations with various interest groups.” [Michael Stratford, “Exclusive: How the student loan industry lobbied DeVos to fight state regulations,” Politico, 08/15/19]

The SLSA President Also Helped Betsy DeVos’ Aides Track State Loan Servicing Regulations Before The Department Came Out Against Them.

The Trade Group President “Was In Frequent Contact With Kathleen Smith, Another DeVos Aide, About The Progress Of The Laws In Various States” As ED Was “Closely Monitoring The Status Of State Loan Servicing Laws Before Coming Out Against Them.”“The emails also show that Education Department officials were closely monitoring the status of state loan servicing laws before coming out against them. Crigler was in frequent contact with Kathleen Smith, another DeVos aide, about the progress of the laws in various states, trading intelligence about whether state lawmakers and governors would adopt them, according to the emails.” [Michael Stratford, “Exclusive: How the student loan industry lobbied DeVos to fight state regulations,” Politico, 08/15/19]

Loan Servicers Also Individually Worked With Betsy DeVos’ ED To Implement A Federal Preemption Policy, Including Personal Lobbying From Navient’s CEO And PHEAA’s Lawyers Collaborating With The Administration On A Lawsuit Between The Company And The Commonwealth Of Massachusetts.

Navient CEO Jack Remondi “Personally Emailed” A “Top” DeVos Aide Urging ED To Implement A Federal Preemption Policy For Student Loan Companies And Months Later The Trump Administration Did Just That.

Navient CEO Jack Remondi “Personally Emailed” A “Top” DeVos Aide Urging ED To “Declare That States Lacked The Authority To Police The Companies That Collect Federal Student Loans” And “The Trump Administration Several Months Later Agreed To Remondi’s Request.” Navient CEO Jack Remondi “personally emailed a top aide to Secretary Betsy DeVos in September 2017 urging the administration to ‘quickly’ declare that states lacked the authority to police the companies that collect federal student loans. Remondi, who called the timing ‘critical, said he was concerned about the licensing fees that companies would have to pay to state regulators. […] The Trump administration several months later agreed to Remondi’s request — which had been echoed in other emails by student loan industry groups like the Student Loan Servicing Alliance and the National Council for Higher Education Resources.” [Michael Stratford, “Exclusive: How the student loan industry lobbied DeVos to fight state regulations,” Politico, 08/15/19]

PHEAA Lawyers And ED Officials Were In Contact As The Administration Was Trying To “Stop Massachusetts From Suing The Company” And Even “Appeared To Strategize Together” On At Least One Occasion.

Emails Between ED Officials And PHEAA Show They Communicated “As The Trump Administration Sought To Stop Massachusetts From Suing The Company” And “In At Least One Case The PHEAA Lawyer And The Administration Appeared To Strategize Together.”Emails “show correspondence between Education Department officials and attorneys for another loan servicer, the Pennsylvania Higher Education Assistance Authority, or PHEAA, as the Trump administration sought to stop Massachusetts from suing the company. The administration in January 2018 filed a statement of interest in state court in Massachusetts that said the state attorney general, Maura Healey, lacked the authority to sue PHEAA because it collects student loans on behalf of the federal government. PHEAA’s outside counsel, an attorney at the firm Ballard Spahr, was in contact with Education Department attorneys before and after the Trump administration made the filing. And in at least one case the PHEAA lawyer and the administration appeared to strategize together, according to the emails, some of which are redacted.” [Michael Stratford, “Exclusive: How the student loan industry lobbied DeVos to fight state regulations,” Politico, 08/15/19]

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When Mick Mulvaney Learned Of Racist Blogger on Trump CFPB Staff, He Gave Blankenstein a ‘High Five’

See July 30 Washington Post story, ‘Trump’s former anti-discrimination official ‘may have abused his authority,’ inspector general’s report finds’. Nearly three months after their internal investigation was completed, the public finally has a window into how Mick Mulvaney, Eric Blankenstein and the Trump administration reacted to public reports that Blankenstein had published racist writings beginning in his mid-20s: with ‘a high-five… sort of, celebration of the article.'” In response, Allied Progress Director Derek Martin issued the following statement:

“The Trump administration had been accused of harboring racist views; but now we know they celebrate them as well. It’s despicable enough that someone with Blankenstein’s views was allowed to stay on the job for nearly a year after his writings came to light. But today’s revelations — that the reaction from then-CFPB Director Mick Muvaney was essentially to give a “high five” and an “Atta’ boy” — raises serious concerns about policy decisions both men were involved in. Congress and the American people need to demand a full accounting of how the CFPB decided to weaken anti-discrimination laws given what we know about the people in charge at the time.”

Key Point from the Post article:

Mulvaney told him “he wasn’t going anywhere” and had been “smeared” by The Post, Blankenstein told investigators. “Blankenstein described this encounter to him as Mulvaney giving him a high-five that morning in sort of, celebration of the article,” according to the inspector general’s report. Mulvaney is now President Trump’s acting chief of staff.

Previous from Allied Progress:

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FLASHBACK: Trump Labor Pick Eugene Scalia Argued Companies Shouldn’t Necessarily Bear Legal Responsibility for Bosses Who Sexually Assault or Threaten Employees

Scalia in 1998: “Saying ‘You’re An Incompetent Stupid Female Bitch’ A Single Time Is Not Actionable Environmental Harassment.”

WASHINGTON, D.C. (July 25th, 2019) — President Trump’s Labor Secretary pick Eugene Scalia’s record representing big corporations that trampled workers’ rights was disqualifying enough. Now some of Scalia’s past legal opinions, unearthed by consumer watchdog group Allied Progress, reveal there was no line he was not willing to cross to shield companies from legal responsibility, even to argue that workplace protections against sexual harassment and assault put too much onus on company leadership. These are views he held even in the 1990s when victim-blaming was prevalent and inappropriate workplace behavior was more commonly swept under the rug.

Scalia proposed letting companies off the hook in these kinds of cases in the Harvard Journal of Law & Public Policy in 1998, offering these scenarios: “One supervisor orders his assistant to accompany him on a business trip and gropes her on the plane, at dinner, and in the hotel. A second supervisor does the same and tells her that’s what he did with her predecessors. … I believe the employer should not be liable in any of these scenarios unless it endorsed the conduct.”  Scalia also opined: “Saying ‘You’re an incompetent stupid female bitch’ a single time is not actionable environmental harassment.”

Derek Martin, director of Allied Progress reacted: “Only Donald Trump would pick a guy who thinks sexual assault at work isn’t a company problem to run his Labor Department. Eugene Scalia may be a gifted legal mind, but his moral compass clearly needs some calibration. The Senate should reject this nominee and demand a Labor Secretary who will look out for all Americans in the workplace, not just the ones that sign the checks.”

Consumer watchdog group Allied Progress echoed its prior call on the Senate to reject Scalia’s expectednomination to be the next Secretary of Labor. Scalia’s record shows he would be a threat to the agency’s fundamental mission to look out for the welfare of workers and job seekers, from his attacks on raising the minimum wage, to his representation of corporations accused of illegally mistreating whistleblowers and union organizers, to his reputation as a “one-man scourge” against the Wall Street reforms put in place to protect workers following the financial crisis, to his extreme views that companies shouldn’t be accountable for sexual misconduct at the workplace.

WHAT YOU NEED TO KNOW:

Eugene Scalia Believes Companies Are Not Necessarily Liable For Sexual Harassment Against Their Employees

Eugene Scalia Has Argued That Weighing Employers’ Quid Pro Quo Sexual Threats As A Distinct Form Of Sexual Harassment Is “The Triumph Of Form Over Substance” And “Should Be Abandoned.”

Eugene Scalia Has Argued That The Legal Concept Of Quid Pro Quo Sexual Harassment, Or Threatening Employees Into Submitting To Sexual Advances, “Should Be Abandoned” And It Represents “The Triumph Of Form Over Substance.”

Eugene Scalia Argued That The Concept Of Quid Pro Quo “Should Be Abandoned” Because It Is “Redundant And Ambiguous In Theory, And Cumbersome And Confusing In Practice.” In a 1998 article in the Harvard Journal of Law & Public Policy, Eugene Scalia argued,“quid pro quo is redundant and ambiguous in theory, and cumbersome and confusing in practice. It should be abandoned.” [Eugene Scalia, “Article: The Strange Career of Quid Pro Quo Sexual Harassment,” Harvard Journal of Law & Public Policy, 307, Spring 1998]

  • The American Bar Association Defines Quid Pro Quo Harassment As “When A Job Benefit Is Directly Tied To An Employee Submitting To Unwelcome Sexual Advances.” “This occurs when a job benefit is directly tied to an employee submitting to unwelcome sexual advances. For example, a supervisor promises an employee a raise if she will go out on a date with him, or tells an employee she will be fired if she doesn’t sleep with him. Only individuals with supervisory authority over a worker can engage in quid pro quo harassment, since it requires the harasser to have the authority to grant or withhold job benefits.” [“Sexual Harassment,“ American Bar Association, 03/18/13]

Eugene Scalia Argued That Quid Pro Quo “Owes Its Longevity To The Triumph Of Form Over Substance In The Application Of Discrimination Law.”[Eugene Scalia, “Article: The Strange Career of Quid Pro Quo Sexual Harassment,” Harvard Journal of Law & Public Policy, 307, Spring 1998]

Eugene Scalia Argued That The Quid Pro Quo Threats Should Not Be Treated As A Separate Form Of Discrimination.

Eugene Scalia Wrote, “No Reason Exists To Treat Quid Pro Quo Sexual Harassment Cases As A Category Of Discrimination Separate And Apart From Adverse Job Action Simple.” “Whatever the origin of the quid pro quo test for women who suffer adverse job action because they refuse to trade sex for work, today no reason exists to treat quid pro quo retaliation cases as a category of discrimination separate and apart from adverse job action simple.” [Eugene Scalia, “Article: The Strange Career of Quid Pro Quo Sexual Harassment,” Harvard Journal of Law & Public Policy, 307, Spring 1998]

Eugene Scalia: It Would Be A “Tired Formalism” And A “Legal Fiction” To Hold Companies Responsible For Managers Who Sexually Assault And Threaten Employees.

Eugene Scalia Said It Would Be A “Tired Formalism” And A “Legal Fiction” To Hold A Company Responsible If Its Supervisors Ordered Employees On Business Trips, Groped Them, And Then Threatened To Fire Them.

Eugene Scalia Argued That An Employer Should Not Be Liable If Its Supervisors Ordered Employees On Business Trips, Groped Them, And Then Fired Them If They Didn’t Submit. “One supervisor orders his assistant to accompany him on a business trip and gropes her on the plane, at dinner, and in the hotel. A second supervisor does the same and tells her that’s what he did with her predecessors. A third supervisor adds that if she doesn’t submit she’s fired. The first scenario is environmental harassment only, not quid pro quo. The third is both. The second is ambiguous. I believe the employer should not be liable in any of these scenarios unless it endorsed the conduct.” [Eugene Scalia, “Article: The Strange Career of Quid Pro Quo Sexual Harassment,” Harvard Journal of Law & Public Policy, 307, Spring 1998]

Eugene Scalia Said That It Would Be A “Tired Formalism” And Implied It Would Be A “Legal Fiction” To Argue The Employer Should Be Liable For The Threat Against The Employee In This Scenario. “Others will argue that the employer should be liable without more in each. Either answer has more to recommend it than yoking to the tired formalism of quid pro quo yet another legal fiction: that the supervisor who goes the extra measure and violates the company non-discrimination policy in word as well as deed, thereupon acts with the authority of, and on behalf of, the company.” [Eugene Scalia, “Article: The Strange Career of Quid Pro Quo Sexual Harassment,” Harvard Journal of Law & Public Policy, 307, Spring 1998]

Eugene Scalia: “Saying ‘You’re An Incompetent Stupid Female Bitch’ A Single Time Is Not Actionable Environmental Harassment.”

Eugene Scalia Argued That Calling An Employee “‘An Incompetent Stupid Female Bitch’” A Single Time Is Not Actionable Environmental Harassment.”

Eugene Scalia Argued That If An Employer Called An Employee “‘An Incompetent Stupid Female Bitch’ A Single Time It Would Not Be Actionable Environmental Harassment.” “Saying ‘You’re an incompetent stupid female bitch’ a single time is not actionable environmental harassment.” [Eugene Scalia, “Article: The Strange Career of Quid Pro Quo Sexual Harassment,” Harvard Journal of Law & Public Policy, 307, Spring 1998]

Eugene Scalia: “Why Should Suit Lie For Saying ‘I Don’t Have Time For You Right Now, Kim, Unless You Tell Me What You’re Wearing,’[…]?”

Eugene Scalia Asked Why An Employer Should Be Liable For A Quid Pro Quo Threat By Saying To An Employee, “‘I Don’t Have Time For You Right Now, Kim, Unless You Tell Me What You’re Wearing.’”

Eugene Scalia Asked Why An Employer Should Be Liable For A Quid Pro Quo Threat By Saying To An Employee, “‘I Don’t Have Time For You Right Now, Kim, Unless You Tell Me What You’re Wearing.’” “Why should suit lie for saying ‘I don’t have time for you right now, Kim, unless you tell me what you’re wearing,’ a statement that Judge Flaum found to be a quid pro quo proposition in his Jansen opinion?” [Eugene Scalia, “Article: The Strange Career of Quid Pro Quo Sexual Harassment,” Harvard Journal of Law & Public Policy, 307, Spring 1998]

Eugene Scalia Argued That The Quid Pro Quo Threat In This Case Is Not “Substantial Enough, Or Different Enough, To Constitute A Separate ‘Form’ Or ‘Category’ Of Discrimination.” “More to the point, if the retaliation case is treated as adverse job action, and the submission case is handled as environmental discrimination, it is difficult to see how the quid pro quo threat alone is substantial enough, or different enough, to constitute a separate ‘form’ or ‘category’ of discrimination.” [Eugene Scalia, “Article: The Strange Career of Quid Pro Quo Sexual Harassment,” Harvard Journal of Law & Public Policy, 307, Spring 1998]

A Conservative Lawyer Called Scalia’s Argument “Nothing Less Than A Well-Cloaked Assault Upon The Citadel Of Sexual Harassment Law Itself.”

Steven H. Aden, The Top Lawyer For “America’s Most Effective Pro-Life Organization,” Argued That Scalia’s Article Was “Nothing Less Than A Well-Cloaked Assault Upon The Citadel Of Sexual Harassment Law Itself.”

In A Rebuttal To Scalia’s Article, Lawyer Steven H. Aden Argued That Scalia’s Argument Was “Nothing Less Than A Well-Cloaked Assault Upon The Citadel Of Sexual Harassment Law Itself.” “Scalia’s argument is nothing less than a well-cloaked assault upon the citadel of sexual harassment law itself. In tearing down the quid pro quo/hostile environment superstructure, Scalia ignores or redefines several types of sexual harassment claims, leaving them either without adequate remedy or with heightened standards of employer liability to meet.” [Steven H. Aden, Esq., “Symposium: “Harm In Asking“: A Reply To Eugene Scalia And An Analysis Of The Paradigm Shift In The Supreme Court’s Title Vii Sexual Harassment Jurisprudence,”8 Temp. Pol. & Civ. Rts. L. Rev. 477, Spring 1999]

Steven H. Aden Is Now Chief Legal Officer And General Counsel At Americans United For Life, “America’s Most Effective Pro-Life Organization.” “Steven H. Aden serves as Chief Legal Officer & General Counsel at Americans United for Life. Aden joined Americans United for Life in August 2017, overseeing all legal operations of America’s most effective pro-life organization.” [“Steven H. Aden,” Americans United for Life, accessed 07/23/19]

In 2011, Eugene Scalia Reportedly Defended HSBC Bank In A Sexual Harassment Case By Attempting To Depict A Deposed Witness As A “Slut.”

Eugene Scalia Represented HSBC Bank In A Sexual Harassment Case That Alleged The Bank Had Fired An Employee In Retaliation For Reporting Inappropriate Behavior By A Senior Employee.

HSBC Bank Hired Eugene Scalia As A Defense Counsel After It Was Sued For Firing An Employee In Retaliation For Reporting A Senior Employee’s Inappropriate Behavior Towards A Co-Worker. “I reported a long feature for HuffPost Highline last year about Picarella, who in 2011 joined a three-person team at HSBC and almost immediately discovered that his boss, Eileen Hedges, was harassing a young analyst, who in the story I called Jill. […] Eventually he decided to go to HR to report Hedges’s behavior. This led to Jill getting fired (for lying to HR about a relationship with a fellow employee) and Picarella losing all his responsibilities at work. […] Picarella sued HSBC over the retaliation, and that’s where Eugene Scalia comes in:  HSBC hired him as defense counsel.” [David Dayen, “Eugene Scalia Once Represented a Big Bank in a Sexual Harassment Case. It Got Ugly.,” The American Prospect, 07/22/19]

  • HSBC Settled With The Abused Employee For A “Rumored” “Low Seven Figures.” “HSBC, after firing Jill, did conduct an investigation of one aspect of the harassment claim, and it resulted in a settlement with Jill rumored to be in the low seven figures. Hedges was eventually fired, though she landed with a good job at a vendor of HSBC’s.” [David Dayen, “Eugene Scalia Once Represented a Big Bank in a Sexual Harassment Case. It Got Ugly.,” The American Prospect, 07/22/19] 

Eugene Scalia Reportedly Tried To Depict A Witness As A “Slut” In Order To Dismiss Her Claims Of Sexual Harassment, Even Though HSBC Had Already Settled With Her.

In Defending HSBC Bank From The Case, Scalia Used “Probing Questions About [A Deposed Witness’] Romantic Relationships To “Depict [Her] As A Slut And Effectively Dismiss Her Claims.” “For much of the deposition, Scalia asked probing questions about Jill’s romantic relationships. Scalia intimated that Jill was stalking a former HSBC colleague, asked if others in the office had nude photographs of her, and queried about various other sexual partners. At one point Scalia used the fact that Jill told a colleague about a senior HSBC executive grabbing her behind, but not her leg, as some proof that she wasn’t being wholly truthful. The line of questioning ventured close to the experiences Jill cited at HSBC as harassment. And the goal was obvious—to depict Jill as a slut and effectively dismiss her claims, as a bank shot to discredit Picarella’s retaliation case.” [David Dayen, “Eugene Scalia Once Represented a Big Bank in a Sexual Harassment Case. It Got Ugly.,” The American Prospect, 07/22/19]

As Recently As 2015, Eugene Scalia Was Part Of A Legal Team That Tried To Get A Class Action Sexual Harassment Case DismissedBy Claiming A Company Could Not Be Held “Vicariously Liable For Acts Outside The Scope Of Managers’ And Supervisors’ Employment.”

In 2015, Eugene Scalia Defended Ford Motor Company Against A Sexual Harassment Lawsuit And Attempted To Get The Case Dismissed On “Legalistic Grounds” Arguing In Part That Ford Couldn’t Be Held Liable For Actions “Outside The Scope Of Managers’ And Supervisors’ Employment.”

Eugene Scalia Represented Ford Motor Company In A “Class Action Sexual Harassment Lawsuit” In Which The Company’s Legal Team Asked “A Federal Judge To Dismiss The Case On A Wide Range Of Legalistic Grounds.”“Ford has moved to dismiss a class action sexual harassment lawsuit that has been broadened to include 29 more women, including employees at the Chicago Stamping Plant in Chicago Heights. […] Ford’s legal team, which includes Eugene Scalia, the son of Supreme Court Justice Antonin Scalia, is asking a federal judge to dismiss the case on a wide range of legalistic grounds and submitted 472 pages of documents to support their case. Ford’s attorneys for instance say the claims of five of the defendants should be dismissed because they failed to disclose their claims against Ford as potential assets in bankruptcy proceedings.” [Joseph Pete, “Ford asks court to toss growing sexual harassment lawsuit,” The Times, 07/05/15]

  • Ford’s Defense Team On The Case – Which Included Eugene Scalia – Explicitly Argued That “Ford Cannot Be Held Vicariously Liable For Acts Outside The Scope Of Managers’ And Supervisors’ Employment.”[Joseph Pete, “Ford asks court to toss growing sexual harassment lawsuit,” The Times, 07/05/15]

Thirty-Three Women Claimed That, While Employees At A Ford Plant, They Were Subject To Sexual Harassment, Unwanted Touching, Explicit Photos Of Their Colleagues’ Genitals, And Attempted Rape.

Thirty-Three Women Claimed That While They Were Employed At A Ford Plant, They Were Subject To “Unwanted Touching, Unwelcome Sexual Advances, Requests For Sexual Favors, Male Colleagues Showing Them Pictures Of Their Genitals And Attempted Rape.”“Thirty-three female employees total at local Ford plants now say they were victims of unwanted touching, unwelcome sexual advances, requests for sexual favors, male colleagues showing them pictures of their genitals and attempted rape, in a federal lawsuit filed in November.” [Joseph Pete, “Ford asks court to toss growing sexual harassment lawsuit,” The Times, 07/05/15]

The Employees Alleged They Were Retaliated Against If They Tried To Report The Sexual Harassment.

The Employees “Alleged They Were Written Up Or Threatened” If They Complained. “Female autoworkers alleged they were written up or threatened with being fired if they dared to complain. They also said men were routinely given personal days they hadn’t earned and were paid for overtime they didn’t work, while women didn’t enjoy such privileges.” [Joseph Pete, “Ford asks court to toss growing sexual harassment lawsuit,” The Times, 07/05/15]

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Anti-Worker Eugene Scalia Has No Business Leading the Labor Department

Trump Once Again Wants a Federal Agency Run by an Enemy of Its Mission

WASHINGTON, D.C. — Consumer watchdog group Allied Progress today called on the Senate to reject President Trump’s expected choice of Eugene Scalia to be the next Secretary of Labor based on his well-documented animus for worker’s rights. Scalia’s career has been built on attacks against the minimum wage and a history of defending corporations accused of illegally mistreating whistleblowers and union organizers. Also disqualifying is Scalia’s reputation as a “one-man scourge” against the Wall Street reforms put in place to protect workers following the financial crisis. Like Betsy DeVos, Scott Pruitt, Mick Mulvaney and Tom Price before him, Scalia would be the latest Trump official out to cripple the agency they’re running from within.

“The good news is there’s no mystery what Eugene Scalia stands for. The bad news is it’s for selling out workers to enrich Wall Street CEOs and corporations that ship jobs overseas,” said Jeremy Funk, spokesman for consumer watchdog group Allied Progress. “Eugene Scalia would be to worker’s rights what Secretary DeVos has been to public education – a wrecking ball. The Labor Secretary is supposed to be the Advocate-in-Chief for America’s hard-working men and women. Instead, Trump picked the go-to lawyer for corporations when they’re accused of illegal anti-work behavior like union busting or firing whistleblowers. This is the guy Wall Street turned to first to jam up the courts with time-wasting legal challenges against the reforms that came after the financial crisis.”

Added Funk: “On the same day the Democratic-led House voted to raise the federal minimum wage to $15, Trump tapped a guy who trashed President Obama’s efforts to make the wage more livable. This is not someone concerned about the income inequality crisis in America, and Scalia would offer no help for workers hoping to climb into the middle class. The sooner the Senate recognizes that and rejects his nomination, the better.”

WHAT YOU NEED TO KNOW:

Eugene Scalia: A “One-Man Scourge” Against Dodd-Frank, Opponent Of Minimum Wage, A Defender Of Wal-Mart Against Whistleblowers And Employees, And A Champion Of Union-Busting Corporations.

Eugene Scalia Has Been Seen As A “One-Man Scourge” Against Dodd-Frank, Who “Single-Handedly Slow[ed] Its Rollout To A Snail’s Pace”—The National Law Review Even Called Him A “Visionary” For His Efforts To Stymy Financial Regulators.

Eugene Scalia Was Seen As “A One-Man Scourge” Against Dodd-Frank Financial Reforms, Who “Single-Handedly Slow[ed] Its Rollout To A Snail’s Pace.” “In less than five years, the 50-year-old son of Supreme Court Justice Antonin Scalia has become a one-man scourge to the reformers who won a hard-fought battle to pass the 2010 Dodd-Frank Act to rein in the out-of-control financial sector. So far, he’s prevailed in three of the six suits he’s filed against the law, single-handedly slowing its rollout to a snail’s pace. As of May [2014], a little more than half of the nearly four-year-old law’s rules had been finalized and another 25 percent hadn’t even been drafted. Much of that breathing room for Wall Street is thanks to Scalia, who has deployed a hyperliteral, almost absurdist series of procedural challenges to unnerve the bureaucrats charged with giving the legislation teeth.” [Patrick Caldwell, “Did You Know That Antonin Scalia’s Son Is Sabotaging Wall Street Reform?,”Mother Jones, July/August 2014]

Eugene Scalia’s “Success Challenging Federal Regulations” Has Been Profiled By Bloomberg BusinessweekAnd The Wall StreetJournal – The National Law Review  EvenCalled Him A “‘Visionary’” For His Work Against Financial Regulators.  “His success challenging federal regulations has been profiled in a Bloomberg Businessweek article titled ‘Suing the Government? Call Scalia,’ and a Wall Street Journal article titled ‘Another Scalia Vexes Regulators.’ The National Law Journal recognized Mr. Scalia as a ‘Visionary’ for his litigation against financial regulatory agencies, and the Nation magazine has called him a ‘fearsome litigator.’ He is a senior fellow of the Administrative Conference of the United States, a federal agency that makes recommendations to Congress and the Executive Branch on ways to improve the administrative process.” [“Eugene Scalia,” Gibson, Dunn & Crutcher LLP, accessed 07/19/19]

In 2014, Eugene Scalia Opposed President Obama’s Efforts To Raise The Minimum Wage For Federal Workers, Questioning His Knowledge About “Basic Economics” And Arguing He Was “Misusing” His Authority.

In February 2014, Eugene Scalia Co-Authored A Washington PostPiece Criticizing President Obama’s Efforts To Raise The Minimum Wage For Federal Workers, Arguing That “Obama’s Judgment About Basic Economics Is Worse Than Carter’s” And That Obama Was “Misusing” His Authority. “Obama asks us to conclude that the government spends less when it requires workers to be paid more. The point is not simply that in this instance, at least, Obama’s judgment about basic economics is worse than Carter’s. It is also that presidents have been misusing their procurement authority by making increasingly implausible claims on matters they know little about so they can further ends unrelated to saving taxpayer dollars.” [Eugene Scalia and Rachel Mondl, “Obama’s minimum-wage increase is on shaky legal ground,” The Washington Post, 02/20/14]

  • “In setting a $10.10 minimum wage last week for workers on federal contracts, President Obama acted on his State of the Union vow to use executive powers to bypass Congress “wherever and whenever” he deems it necessary. But the legal basis for the president’s order is shaky and, if challenged in court, could diminish the presidential powers that Obama seeks to expand.” [Eugene Scalia and Rachel Mondl, “Obama’s minimum-wage increase is on shaky legal ground,” The Washington Post, 02/20/14]

Eugene Scalia Defended Wal-Mart As It Fought Lawsuits “Accusing It Of Illegally Firing Corporate Whistleblowers” And As The Corporation Fought Against A Maryland Law Requiring It To Help Cover Its Employees’ Healthcare Costs.

Eugene Scalia Was Hired By Wal-Mart To Defend The Merchandise Giant In Court As It Faced Lawsuits Accusing It Of Illegally Firing Corporate Whistleblowers.” “After his tenure as the solicitor for the Labor Department, Scalia was hired by Wal-Mart Stores in 2005 to defend the merchandise giant in court as it faced lawsuits accusing it of illegally firing corporate WeWwhistleblowers.” [Seung Min Kim and Damian Paletta, “Trump to nominate Eugene Scalia, the son of the late Supreme Court justice, as his next secretary of Labor,” The Washington Post, 07/18/19]

Eugene Scalia Also Represented Wal-Mart As It Fought Against A Maryland Law Requiring Large Companies To “Spend At Least 8 Percent Of Their Payroll Costs On Health Care.” “In 2006, he helped Walmart triumph in a prominent fight against a Maryland law that would have required companies with more than 10,000 workers to either spend at least 8 percent of their payroll costs on health care, or pay into a state Medicaid fund.” [Maggie Haberman, Noam Scheiber and Michael Crowley, “Trump to Nominate Eugene Scalia for Labor Secretary Job,” The New York Times, 07/18/19]

Eugene Scalia Defended Boeing As It Was Accused Of Illegally Threatening A Union And Attempting To Force It To Agree To A “No-Strike Clause” In Its Labor Agreement.

Eugene Scalia Defended Boeing In “A Politically Charged Case” In Which A Union Accused Boeing Of Violating Labor Law By “Threatening” To Move Operations Unless It Could Include A “No-Strike Clause In Its Contract.”“Mr. Scalia also defended Boeing in a politically charged case. A union representing the company’s workers in Washington State argued that Boeing had violated labor law by threatening to open another assembly plant in South Carolina unless the union agreed to a no-strike clause in its contract.” [Maggie Haberman, Noam Scheiber and Michael Crowley, “Trump to Nominate Eugene Scalia for Labor Secretary Job,” The New York Times, 07/18/19]

The Obama Administration’s National Labor Relations Board’s General Counsel Brought A Case Against Boeing Over The Dispute. “The general counsel of the National Labor Relations Board under President Barack Obama brought a case against the company, which the union ultimately abandoned when it reached a deal to raise wages and expand its presence in Washington. But the case set off an intense backlash against the labor board among Republicans in Congress. The company and its Republican defenders derided the case as frivolous.” [Maggie Haberman, Noam Scheiber and Michael Crowley, “Trump to Nominate Eugene Scalia for Labor Secretary Job,” The New York Times, 07/18/19]

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