Sweet v. Cardona

Background

The plaintiffs were former students of for-profit schools who had asserted “borrower defense” claims with the United States Department of Education. That process allows a borrower to seek cancellation of federal student-loan repayment based on misconduct by the school attended.

The plaintiffs alleged that the Department had stopped deciding borrower-defense applications in June 2018. They brought one claim under Section 706(1) of the Administrative Procedure Act, which allows a court to address agency action that has been unlawfully withheld or unreasonably delayed. They sought an order requiring the Department to begin deciding applications again, whether the result would be approval or denial.

The plaintiffs moved to certify a class under Federal Rule of Civil Procedure 23(a) and Rule 23(b)(2). They proposed a class consisting of people who borrowed a Direct Loan or Federal Family Education Loan to pay for higher education, asserted a borrower defense with the Department, had not received a decision on the merits, and were not members of the class in the earlier related proceeding identified in the order as Calvillo Manriquez v. DeVos, No. 17-7106 (N.D. Cal.). The defendants opposed certification, arguing that the plaintiffs had not shown a common answer, typical claims, or a single injunction that could provide relief to the entire class.

Rule 23 requirements

Rule 23(a) requires numerosity, common questions of law or fact, typical claims or defenses, and adequate representation. Rule 23(b)(2) permits class treatment when the opposing party has acted or refused to act on grounds generally applicable to the class, so that one injunction or declaratory judgment is appropriate for the class as a whole.

The court found numerosity because the proposed class included more than 158,000 members. It found the named plaintiffs adequate because the record showed no conflict between their interests and those of other class members and no reason to believe that the plaintiffs or their counsel would fail to prosecute the case vigorously.

The court also found commonality and typicality. It identified the common issue as whether the Department had a mandatory duty to decide borrower-defense claims and whether its alleged blanket refusal to do so violated the Administrative Procedure Act. The court emphasized that the plaintiffs challenged an alleged uniform policy of inaction, rather than seeking an individualized decision on the merits of every borrower’s loan-cancellation claim.

The court rejected the defendants’ argument that differences among the borrowers’ claims prevented class certification. It reasoned that the alleged policy applied to all proposed class members and that the Department had decided no borrower-defense applications since June 2018, even as the backlog grew. The court stated that the plaintiffs did not have to prove the merits of their underlying claim at the class-certification stage; they had to show a common method for resolving it.

The court further held that Rule 23(b)(2) was satisfied because one injunction could address the alleged common harm by requiring the Department to restart processing borrower-defense applications. A more specific plan, such as a timeline for resolving the backlog, could be developed later. The court also found the requirements of Rule 65(d), which governs the specificity of injunctions, satisfied at this stage.

Disposition

Judge William Alsup granted the plaintiffs’ motion for class certification. The court certified the proposed class for all purposes, including settlement; appointed Theresa Sweet, Chenelle Archibald, Daniel Deegan, Samuel Hood, Tresa Apodaca, Alicia Davis, and Jessica Jacobson as class representatives; appointed attorneys from the Harvard Legal Service Center’s Project on Predatory Student Lending and Housing and Economic Rights Advocates as class counsel; and ordered the parties to submit a class-notification proposal by November 6 at noon. The order certified the class but did not decide whether the Department had unlawfully delayed any particular borrower-defense application or whether any borrower was entitled to loan forgiveness.