Sweet v. Cardona

Docket number: 23-15049 (9th Cir.)

On May 10, HLLI filed an amicus brief on behalf of three colleges appealing the district court’s approval of a collusive class action settlement that skirts statutory limits. The underlying settlement was struck between the U.S. Department of Education and a plaintiff class of student borrowers seeking relief from federal student loan payments under the borrower-defense statute, 20 U.S.C. 1087e(h), and accompanying regulations.

HLLI’s brief notes that the district court rejected an earlier settlement negotiated under the prior administration. This gave the parties an opening to negotiate a new settlement that amounts to legislation disguised as a judicial settlement and helped the Biden administration achieve the political goal of broad student debt relief. HLLI’s brief emphasizes that the settlement has no statutory or regulatory basis. Moreover, the revised settlement fails to meet the class certification prerequisites of Rule23(a) and (b)(2) of the Federal Rules of Civil Procedure because, unlike the original settlement, the revised version creates three-subclasses with divergent claims who are accorded divergent relief, and thereby could not be certified as a unified class. Finally, HLLI’s brief highlights Constitutional separation of powers concerns related to the settlement. The Secretary of Education failed to faithfully follow the law and relevant regulations in negotiating the settlement which infringes upon Congress’s power of the purse. Rather than approving the settlement, the district court should have acted as a check on the Executive branch’s unlawful actions.

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