Sweet v. Cardona

Background

This class action concerns the Department of Education’s processing of student-loan borrower-defense applications. The Chicago School of Professional Psychology, Everglades College, Inc., American National University, and Lincoln Educational Services Corporation moved to intervene—that is, to become parties for a limited purpose—to oppose a proposed class-action settlement.

The schools were included in Exhibit C to the proposed settlement. Under the settlement, class members who attended a school on that list would have their federal student loans automatically discharged. The schools argued that approving the settlement would violate certain procedural rights and cause reputational harm.

Court’s analysis

The court concluded that the schools had not shown that they could intervene as of right. It nevertheless found that they satisfied the requirements for permissive intervention under Federal Rule of Civil Procedure 24(b).

First, the court held that the independent-jurisdiction requirement did not apply because the schools were not raising new claims and the case was based on a federal question. Second, the court found the motions timely because the schools filed them about three weeks after the parties sought preliminary approval of the settlement, when the settlement’s proposed relief and Exhibit C triggered the schools’ interests. The court also found that intervention would not cause undue delay prejudicing the parties.

Third, the court determined that the schools’ objections shared common legal and factual questions with the main action because the schools sought to address the subject matter of the proposed settlement.

Disposition

Judge William Alsup granted the motions for permissive intervention filed by the four schools, but only for the express purpose of objecting to and opposing the class-action settlement. The order also states that the schools had disclaimed, and were prohibited from pursuing, any further discovery in the litigation.