Petition for Writ of Certiorari — Everglades College, Inc., Petitioner v. Linda McMahon, Secretary of Education, et al.

Supreme Court briefOct 17, 2025

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No. 25In the

Supreme Court of the United States

EVERGLADES COLLEGE, INC.,

Petitioner,

LINDA MCMAHON, et al.,

Respondents.

On Petition for a Writ of Certiorari to the

United States Court of A ppeals for the Ninth Circuit

PETITION FOR A WRIT OF CERTIORARI

Jesse Panuccio

Counsel of Record

Jason Hilborn

Eric M. Palmer

David M. Costello

Boies Schiller Flexner LLP

401 East Las Olas Boulevard

Suite 1200

Fort Lauderdale, FL 33301

(954) 356-0011

jpanuccio@bsfllp.com

Counsel for Petitioner

QUESTION PRESENTED

Rebuffed by Congress and this Court in its

attempts to cancel student-loan debt en masse, the

Biden Administration transmogrified a narrow

procedural lawsuit into a sweeping class-action

settlement that eliminated $7.5 billion in debt and

rewrote

student-loan

regulations

without

Congressional authorization.

Worse still, the

government used the settlement to label 150 nonparty educational institutions guilty of “substantial

misconduct” without providing those schools notice or

an opportunity to be heard. This settlement was an

egregious example of “sue and settle”—i.e.,

“collusion between advocacy groups and executive

officials who want to bind the hands of future

policymakers.”

Horne v. Flores, 557 U.S. 433,

449 (2009).

Several schools injured by their surprise inclusion

in the settlement intervened in the district court to

challenge the settlement’s legality. After the district

court rejected those challenges and approved the

settlement, the schools appealed. A split panel of the

Ninth Circuit—over a dissent from Judge Collins—

held that although the schools suffered Article III

injury, they lacked so-called “prudential standing” to

challenge or appeal the settlement because it did not

inflict “formal legal prejudice.”

The question presented is: Whether federal courts

may impose a judge-made “prudential standing” bar

to block non-settling intervenors from redressing

Article III injury imposed on them by a government

class-action settlement simply because the injury does

not create “formal legal prejudice.”

iii

PARTIES TO THE PROCEEDINGS

Petitioner Everglades College, Inc., was an

intervenor-appellant in the court of appeals. The

other intervenor-appellants were American National

University, Inc. and Lincoln Educational Services

Corporation.

Respondents

were

plaintiff-appellees

and

defendant-appellees in the court of appeals. The

plaintiff-appellees were Theresa Sweet, Chenelle

Archibald, Daniel Deegan, Samuel Hood, Tresa

Apodaca, Alicia Davis, and Jessica Jacobson. The

defendant-appellees were the U.S. Department of

Education and its Secretary.

CORPORATE DISCLOSURE STATEMENT

Petitioner Everglades College, Inc., is a not-forprofit entity and has no parent corporation, and no

publicly held company owns ten percent or more of its

stock.

STATEMENT OF RELATED CASES

The related proceedings are as follows:

•

Sweet v. Everglades Coll., Inc., No.

23-15049, U.S. Court of Appeals for

the Ninth Circuit. Judgment entered

on November 5, 2024; timely

rehearing petition denied on May 21,

2025.

•

Sweet v. Lincoln Educ. Servs. Corp.,

No. 23-15050, U.S. Court of Appeals

for the Ninth Circuit. Judgment

entered on November 5, 2024; timely

rehearing petition denied on May 21,

2025.

•

Sweet v. Am. Nat’l Univ., No. 2315051, U.S. Court of Appeals for the

Ninth Circuit. Judgment entered on

November 5, 2024; timely rehearing

petition denied on May 21, 2025.

•

Sweet v. Cardona, No. 3:19-cv-3674,

U.S. District Court for the Northern

District of California.

Judgment

entered on Nov. 16, 2022.

TABLE OF CONTENTS

Page

QUESTION PRESENTED.......................................... i

PARTIES TO THE PROCEEDINGS ........................ iii

CORPORATE DISCLOSURE STATEMENT .......... iv

STATEMENT OF RELATED CASES ....................... v

TABLE OF CONTENTS ........................................... vi

TABLE OF APPENDICES ..................................... viii

TABLE OF AUTHORITIES ...................................... ix

PETITION FOR WRIT OF CERTIORARI ................ 1

OPINIONS BELOW ................................................... 1

JURISDICTION ......................................................... 1

RELEVANT PROVISIONS ........................................ 1

INTRODUCTION ....................................................... 2

STATEMENT ............................................................. 5

A. LEGAL BACKGROUND ........................................ 5

B. FACTS AND PROCEDURAL HISTORY ................... 8

REASONS FOR GRANTING THE PETITION ...... 16

There Is a Circuit Split on the

Requirement for “Prudential Standing” To

Challenge Settlements .................................. 16

II. The Decision Below Impermissibly Grafts

a Judge-Made Prudential-Standing Rule

Atop the Requirements of Article III and

Rule 24 ........................................................... 24

vii

III. The Question Presented Is Exceptionally

Important

for

Policing

Collusive

Government Settlements .............................. 31

CONCLUSION ......................................................... 36

viii

TABLE OF APPENDICES

Page

APPENDIX A — OPINION OF THE UNITED

STATES COURT OF APPEALS FOR THE

NINTH CIRCUIT, FILED NOVEMBER 5,

2024 ....................................................................... 1a

APPENDIX B — ORDER OF THE UNITED

STATES DISTRICT COURT FOR THE

NORTHERN DISTRICT OF CALIFORNIA,

FILED NOVEMBER 16, 2022 ............................ 45a

APPENDIX C — ORDER OF THE UNITED

STATES DISTRICT COURT FOR THE

NORTHERN DISTRICT OF CALIFORNIA,

FILED AUGUST 31, 2022 .................................. 83a

APPENDIX D — DENIAL OF REHEARING OF

THE UNITED STATES COURT OF

APPEALS FOR THE NINTH CIRCUIT,

FILED MAY 21, 2025 ......................................... 86a

APPENDIX E — RELEVANT PROVISIONS ....... 88a

TABLE OF AUTHORITIES

Page(s)

Cases

Agretti v. ANR Freight Sys., Inc.,

982 F.2d 242 (7th Cir. 1992) ........................... 27, 30

Ahanchian v. Xenon Pictures, Inc.,

624 F.3d 1253 (9th Cir. 2010) ............................... 25

Airline Stewards & Stewardesses Ass’n v.

Am. Airlines, Inc.,

573 F.2d 960 (7th Cir. 1978) ................................. 19

Alumax Mill Prods., Inc. v. Cong. Fin. Corp.,

912 F.2d 996 (8th Cir. 1990) ........................... 17, 23

Arizona v. City & Cnty. of San Francisco,

596 U.S. 763 (2022) .............................. 2, 3, 5, 31-33

Ball ex rel. Burba v. DeWine,

2021 WL 4047032 (6th Cir. June 30, 2021) ......... 17

Bhatia v. Piedrahita,

756 F.3d 211 (2d Cir. 2014) ...................... 17, 23, 27

Biden v. Nebraska,

600 U.S. 477 (2023) ........................................... 3, 10

Broadway & Ninety-Sixth St. Realty Corp v.

Loew’s, Inc.,

23 F.R.D. 9 (S.D.N.Y. 1958) .................................. 23

Candelaria v. Health Care Serv. Corp.,

2020 WL 3832919 (D.N.M. July 8, 2020) ............. 19

Career Colls. & Sch. of Tex. v.

U.S. Dep’t of Educ.,

98 F.4th 220 (5th Cir. 2024) ................................... 6

Cascade Nat. Gas Corp. v. El Paso Nat. Gas Co.,

386 U.S. 129 (1967) ............................................... 29

Chambers v. Florida,

309 U.S. 227 (1940) ............................................... 33

Citizens for a Better Env’t v. Gorsuch,

718 F.2d 1117 (D.C. Cir. 1983) ........................ 32-33

City of Bangor v. Citizens Commc’ns Co.,

532 F.3d 70 (1st Cir. 2008) ................................... 17

Cohens v. Virginia,

19 U.S. 264 (1821) ................................................. 28

Colo. River Water Conservation Dist. v.

United States,

424 U.S. 800 (1976) ........................................... 4, 27

Conservation Nw. v. Sherman,

715 F.3d 1181 (9th Cir. 2013) ............................... 36

Dep’t of Educ. v. Career Colls. & Sch. of Tex.,

145 S. Ct. 1039 (2025) ............................................. 6

Diamond v. Charles,

476 U.S. 54 (1986) .................................. 4, 24-25, 31

Edwards v. City of Houston,

78 F.3d 983 (5th Cir. 1996) ................................... 19

Eichenholtz v. Brennan,

52 F.3d 478 (3d Cir. 1995) .............................. 17, 23

Gardiner v. A.H. Robins Co.,

747 F.2d 1180 (8th Cir. 1984) ............................... 31

Gould v. Alleco, Inc.,

883 F.2d 281 (4th Cir. 1989) ............................ 17-19

Heller v. Quovadx, Inc.,

245 F. App’x 839 (10th Cir. 2007) ......................... 18

Horne v. Flores,

557 U.S. 433 (2009) ................................ 2, 31-33, 36

In re Beef Indus. Antitrust Litig.,

607 F.2d 167 (5th Cir. 1979) ........................... 17, 23

In re Fine Paper Litig.,

632 F.2d 1081 (3d Cir. 1980) ........................... 18-19

In re Integra Realty Res., Inc.,

262 F.3d 1089 (10th Cir. 2001) ................. 17, 23, 27

In re Novatel Wireless Sec. Litig.,

2014 WL 2858518 (S.D. Cal. June 23, 2014)........ 19

In re U.S. Dep’t of Educ.,

25 F.4th 692 (9th Cir. 2022) ................................... 9

In re Viatron Computer Sys. Corp. Litig.,

614 F.2d 11 (1st Cir. 1980) ................................... 23

Kennedy v. Warren,

66 F.4th 1199 (9th Cir. 2023) ................................. 7

Kirkland v. N.Y. State Dep’t of Corr. Servs.,

711 F.2d 1117 (2d Cir. 1983) ................................ 19

Lawyer v. Dep’t of Just.,

521 U.S. 567 (1997) .................... 5, 17, 21-22, 28, 30

LeBlanc v. Tex. Brine Co.,

989 F.3d 359 (5th Cir. 2021) ........................... 23, 27

Lexmark Int’l, Inc. v.

Static Control Components, Inc.,

572 U.S. 118 (2014) ...................................... 4, 24-27

Local No. 93, Int’l Ass’n of Firefighters v.

City of Cleveland,

478 U.S. 501 (1986) ............... 5, 17, 19-22, 24, 28-29

Mayfield v. Barr,

985 F.2d 1090 (D.C. Cir. 1993) ....................... 17, 23

xii

Meese v. Keene,

481 U.S. 465 (1987) ................................................. 7

Mi Familia Vota v. Fontes,

129 F.4th 691 (9th Cir. 2025) ........................... 2, 32

Mullane v. Cent. Hanover Bank & Tr. Co.,

339 U.S. 306 (1950) ............................................... 25

Music Choice v. Copyright Royalty Bd.,

970 F.3d 418 (D.C. Cir. 2020) ............................... 35

New Orleans Pub. Serv., Inc. v.

Council of City of New Orleans (NOPSI),

491 U.S. 350 (1989) ............................................... 27

Nw. Airlines, Inc. v. Am. Airlines, Inc.,

989 F.2d 1002 (8th Cir. 1993) ............................... 30

P.R. Dairy Farmers Ass’n v. Pagan,

748 F.3d 13 (1st Cir. 2014) ................................... 19

Portland Gen. Elec. Co. v.

Bonneville Power Admin.,

501 F.3d 1009 (9th Cir. 2007) ............................... 22

Quad/Graphics, Inc. v. Fass,

724 F.2d 1230 (7th Cir. 1983) ........ 17, 23, 26-27, 30

Ralpho v. Bell,

569 F.2d 607 (D.C. Cir. 1977) ............................... 35

South Carolina v. North Carolina,

558 U.S. 256 (2010) ......................................... 22, 29

Sprint Commc’ns, Inc. v. Jacobs,

571 U.S. 69 (2013) ........................................... 25, 28

Streber v. Hunter,

221 F.3d 701 (5th Cir. 2000) ................................. 25

Tenn. Ass’n of HMOs, Inc. v. Grier,

262 F.3d 559 (6th Cir. 2001) ................................. 19

xiii

Texas v. New Mexico,

602 U.S. 943 (2024) ............................................... 29

TransUnion LLC v. Ramirez,

594 U.S. 413 (2021) ............................................... 27

Trump v. CASA, Inc.,

606 U.S. 831 (2025) ............................................... 30

TRW Inc. v. Andrews,

534 U.S. 19 (2001) ................................................. 29

United States v. Carpenter,

526 F.3d 1237 (9th Cir. 2008) ................... 19, 22, 32

United States v. City of Hialeah,

140 F.3d 968 (11th Cir. 1998) ............................... 19

United States v. Metro. St. Louis Sewer Dist. (MSD),

952 F.2d 1040 (8th Cir. 1992) ............................... 19

United States v. Sineneng-Smith,

590 U.S. 371 (2020) ............................................... 36

Vanguards of Cleveland v. City of Cleveland,

753 F.2d 479 (6th Cir. 1985) ........................... 20, 25

Waller v. Fin. Corp. of Am.,

828 F.2d 579 (9th Cir. 1987) ...................... 15-16, 23

Wal-Mart Stores, Inc. v. Dukes,

564 U.S. 338 (2011) ................................... 14, 16, 35

Zipes v. Trans World Airlines, Inc.,

455 U.S. 385 (1982) ............................................... 28

Constitutional Provisions

U.S. Const. Art. III, § 2, cl. 1 ...1, 4-5, 14-16, 23-27, 31-32

xiv

Statutes

5 U.S.C. § 551(4) ....................................................... 36

5 U.S.C. § 553 ........................................................... 36

20 U.S.C. § 1070 et seq. .............................................. 5

20 U.S.C. §§ 1071 to 1087-4 ................................. 5, 35

20 U.S.C. § 1082(a)(6) ......................................... 34-35

20 U.S.C. § 1087a-1087j ............................................. 5

20 U.S.C. § 1087e(h) ....................................... 6, 34, 36

20 U.S.C. § 1099c(b)-(c) .............................................. 7

28 U.S.C. § 1254(1) ..................................................... 1

28 U.S.C. § 1404(a) ................................................... 31

Rules and Regulations

34 C.F.R. § 668.171 .................................................... 7

34 C.F.R. § 685.206(c)(2) ............................................ 6

34 C.F.R. § 685.206(c)(3) ............................................ 7

34 C.F.R. § 685.206(d) ................................................ 6

34 C.F.R. § 685.206(e)(10) .......................................... 6

34 C.F.R. § 685.206(e)(11)-(12) .................................. 7

34 C.F.R. § 685.206(e)(16) .......................................... 7

34 C.F.R. § 685.222(e)(3)-(4) ...................................... 6

34 C.F.R. § 685.222(e)(3)(i) ........................................ 6

34 C.F.R. § 685.222(e)(7) ............................................ 7

34 C.F.R. § 685.222(f)(2)(iv) ....................................... 6

Fed. R. Civ. P. 23 .................................... 13, 17, 18, 35

Fed. R. Civ. P. 23(b)(2) ............................. 9, 14, 16, 35

Fed. R. Civ. P. 24 ...................1, 3, 5, 15, 17, 18, 24, 31

Fed. R. Civ. P. 24(a)............................................ 29, 31

Fed. R. Civ. P. 24(b)...................................... 15, 29, 31

Fed. R. Civ. P. 41 ........................................ 1, 5, 23, 26

Fed. R. Civ. P. 41(a)(2) ............................................. 26

Fed. R. Civ. P. 42 ...................................................... 31

60 Fed. Reg. 37,768 (July 21, 1995) ........................... 6

81 Fed. Reg. 75,926 (Nov. 1, 2016) ............................ 6

84 Fed. Reg. 49,788 (Sept. 23, 2019) ......................... 6

87 Fed. Reg. 65,904 (Nov. 1, 2022) ............................ 6

Pub. L. No. 119-21, § 85001(b), 139 Stat. 72

(2025) ....................................................................... 7

Other Authorities

Authority of the U.S. to Enter Settlements

Limiting the Future Exercise of Executive

Branch Discretion, 23 Op. O.L.C. 126, 136-38

(1999) ..................................................................... 34

Joe Biden, Joe Biden Outlines New Steps to Ease

Economic Burden on Working People, Medium

(Apr. 9, 2020), https://tinyurl.com/29f7tprr ......... 10

Education Department Takes Steps to Hold

Leaders of Risky Colleges Personally Liable,

Educ.

Advisors

(Mar.

2023),

https://tinyurl.com/vrns77vz ................................... 7

House Speaker Weekly Briefing, C-SPAN, at

14:24-16:24

(July

28,

2021),

https://tinyurl.com/ycx28t8a ................................. 10

xvi

Michael W. McConnell, Why Hold Elections?

Using Consent Decrees to Insulate Policies from

Political Change, 1987 U. Chi. Legal Forum

295 ........................................................................... 2

Memorandum from Jefferson B. Sessions III,

Principles and Procedures for Civil Consent

Decrees and Settlement Agreements with State

and Local Governmental Entities, DOJ (Nov. 7,

2018), https://tinyurl.com/3hn3z69h .................... 32

Memorandum from Merrick B. Garland, Civil

Settlement Agreements and Consent Decrees

with State and Local Governmental Entities,

DOJ

(Apr.

16,

2021),

https://tinyurl.com/mss8jvs2 ................................. 32

Press Release, Durbin Calls on Illinois

Educators to Sound the Alarm on For-ProfitColleges

(Apr.

15,

2025),

https://tinyurl.com/3zrabhve................................... 8

Pub. L. No. 119-21, § 85001(b), 139 Stat. 72, 355

(2025) ....................................................................... 7

Antonin Scalia, The Doctrine of Standing as an

Essential Element of the Separation of

Powers, 17 Suffolk U. L. Rev. 881 (1983) ............. 28

Student Loan Cancellation Under the HEROES

Act,

CRS

(Apr.

14,

2023),

https://tinyurl.com/58v64j8a ................................. 10

Martin H. Redish, Abstention, Separation of

Powers, and the Limits of the Judicial

Function, 94 Yale L.J. 71 (1984) ........................... 28

Wright & Miller, 7C Fed. Prac. & Proc. Civ. §

1920 (3d ed.) .......................................................... 25

PETITION FOR WRIT OF CERTIORARI

Petitioner Everglades College, Inc. respectfully

petitions for a writ of certiorari to review the

judgment of the United States Court of Appeals for

the Ninth Circuit.

OPINIONS BELOW

The Ninth Circuit’s opinion is reported at 121

F.4th 32 (9th Cir. 2024), and reproduced at App.1a44a. The Ninth Circuit’s order denying rehearing en

banc is unpublished and reproduced at App.86a-87a.

The district court’s order approving the settlement

is reported at 641 F. Supp. 3d 814 (N.D. Cal. 2022),

and reproduced at App.45a-82a. The district court’s

order permitting Everglades to intervene is reported

at 2022 WL 4596629 (N.D. Cal. Aug. 31, 2022), and

reproduced at App.83a-85a.

JURISDICTION

The Ninth Circuit issued its decision on November

5, 2024, and denied a timely rehearing petition on

May 21, 2025. Justice Kagan extended the time to file

a petition for a writ of certiorari by sixty days on July

21, 2025. This Court has jurisdiction under 28 U.S.C.

§ 1254(1).

RELEVANT PROVISIONS

Federal Rules of Civil Procedure 24 and 41 are

reproduced at App.89a-93a. Article III, Section 2,

Clause 1 of the United States Constitution is

reproduced at App.88a.

INTRODUCTION

Few practices warp our separation of powers more

than “sue and settle”: collusive deals in which the

executive branch and politically aligned plaintiffs

effectively amend federal law through court-approved

settlements. Mi Familia Vota v. Fontes, 129 F.4th

691, 745 (9th Cir. 2025) (Bumatay, J., dissenting).

These settlements, for example, raise the

“fundamental” question of “whether the Government’s

actions … comport with the principles of

administrative law” because they “allow[] the

Government to circumvent the usual and important

requirement”

that

“a

regulation

originally

promulgated using notice and comment … may only

be repealed through notice and comment.” Arizona v.

City & Cnty. of San Francisco, 596 U.S. 763, 765-66

(2022) (Roberts, C.J., concurring).

And they

“sidestep” our democratic process by “bind[ing] the

hands of future policymakers,” “depriv[ing them] of

their designated legislative and executive powers.”

Horne v. Flores, 557 U.S. 433, 448-49 (2009) (citing

Michael W. McConnell, Why Hold Elections? Using

Consent Decrees to Insulate Policies from Political

Change, 1987 U. Chi. Legal Forum 295, 317).

This case is a brazen example. In 2019, a class of

federal student-loan borrowers sued the Department

of Education, alleging unlawful delay in processing

their “borrower defense” applications—a carefully

circumscribed process that cancels student debt

related to schools proven by the borrower to have

engaged in loan-related misconduct.

Plaintiffs

disclaimed seeking a specific outcome for their

applications; they sought only an order requiring

resumption of the adjudication process.

The

Department vigorously opposed this claim for years.

Meanwhile, President Biden took office after

promising during the campaign to cancel student

loans en masse. Yet Congress declined to enact that

policy, and this Court rejected the administration’s

attempt to cancel debt by executive fiat. See Biden v.

Nebraska, 600 U.S. 477 (2023).

So the administration turned to this case about

procedural delay and—through an unprecedented,

collusive class settlement—transformed it into a

vehicle for rewriting federal regulations to permit

blanket cancellation of $7.5 billion in loan debt. The

government also justified that act by slapping a

scarlet letter on roughly 150 schools, declaring in the

settlement—without providing notice, evidence, or a

hearing—that the schools had engaged in “substantial

misconduct.”

Challenging

democracy-distorting,

collusive

settlements like this one is often difficult, especially

after the fact. One way to do so, however, is for parties

harmed by the putative settlement to intervene to

challenge its legality. Cf. Arizona, 596 U.S. at 765-66

(Roberts, C.J., concurring) (describing States’ attempt

to intervene “in light of the Government’s actions” to

collude with politically aligned plaintiffs). That is

what occurred here. Petitioner and several other

schools, deemed by the proposed settlement to have

committed “substantial misconduct,” moved to

intervene to challenge its legality. App.14a, 52a.

Finding that intervention would “keep the system

honest,” ER-341,1 the district court permitted the schools

to intervene under Rule 24(b) for the “express purpose of

objecting to and opposing” the settlement, App.83a-85a.

“ER” refers to the “Excerpts of Record” filed below.

The district court considered, but ultimately rejected,

the schools’ arguments.

After the schools appealed, a divided Ninth Circuit

panel—over Judge Collins’ dissent—dismissed the

appeal.

Although the court conceded that the

settlement’s approval inflicted Article III injury on the

schools, it held they lacked so-called “prudential

standing” to redress that injury by challenging the

settlement’s legality. App.11a-24a. By the panel’s

lights, “a non-settling entity generally lacks

prudential standing to object to a settlement—or to

challenge on appeal a district court’s approval of a

settlement”—unless it establishes “formal legal

prejudice.” App.17a. Such prejudice, the court held,

occurs when a settlement “formally strips” a party of

a legal right, like a “claim or cause of action.”

App.20a-21a. Without that specific form of injury, an

intervening party may not challenge a settlement’s

approval, regardless of constitutional standing.

This judge-made “prudential standing” rule has no

basis in positive law. An intervening party is just

that: a party. Parties may respond to motions that

hamper their interests, like a motion to approve a

settlement. And when, as here, the settlement’s

approval causes the intervenor to suffer Article III

injury, it may appeal the settlement’s approval.

Diamond v. Charles, 476 U.S. 54, 68-69 (1986). Those

straightforward rules should have obliged the Ninth

Circuit to “reach the merits.” App.39a (Collins, J.,

dissenting).

The panel’s decision to duck that

“virtually unflagging obligation,” Colo. River Water

Conservation Dist. v. United States, 424 U.S. 800, 817

(1976), based on its mistaken view of what “‘prudence’

dictates,” Lexmark Int’l, Inc. v. Static Control

Components, Inc., 572 U.S. 118, 128 (2014), stems

from no legal authority and raises serious

constitutional problems. It also undermines Rule 24

intervention, one of the few checks on the alarmingly

growing trend of unlawful “rulemaking-by-collusiveacquiescence.” Arizona, 596 U.S. at 765-66 (Roberts,

C.J., concurring).

Unsurprisingly, this “prudential standing”

doctrine splits the circuits. Contrary to the Ninth

Circuit, the Fourth Circuit holds that intervenors may

challenge settlements, without regard for “formal

legal prejudice.” The Ninth Circuit’s holding also

clashes with a different line of circuit authority

applying this Court’s rule that parties are “entitled to

… have [their settlement] objections heard” in the

district court and on appeal. Local No. 93, Int’l Ass’n

of Firefighters v. City of Cleveland, 478 U.S. 501, 529

(1986); see Lawyer v. Dep’t of Just., 521 U.S. 567, 579

(1997). And adding to the confusion, even courts

applying the Ninth Circuit’s rule cannot agree on its

provenance, with some grounding it in Article III,

others in Rule 41, and still more in raw judicial

policymaking. In short, this tangled area of law needs

this Court’s clarification.

STATEMENT

A. LEGAL BACKGROUND

The Department of Education administers

student-loan programs under the Higher Education

Act of 1965 (HEA), 20 U.S.C. § 1070 et seq., including

the Direct Loan Program, id. §§ 1087a-1087j, and the

Federal Family Education Loan Program, id. §§ 1071

to 1087-4.

For Direct Loans, the Secretary must “specify in

regulations which acts or omissions of an institution

of higher education a borrower may assert as a

defense to repayment.” Id. § 1087e(h). The Secretary

has done so several times from 1995 to 2022.2

Together, those regulations establish a borrowerdefense program, which allows borrowers to obtain

affirmative debt cancellation (rather than a defense to

collection) if they prove their school engaged in

specified misconduct.3

The regulatory regime outlines a two-step

framework to ensure schools are afforded due process

before their federal regulator declares they have

committed misconduct.

First, the Department

notifies the school of a borrower-defense claim. 34

C.F.R. §§ 685.206(c)(2), (d), (e)(10) & 685.222(e)(3)(i),

(f)(2)(iv). For loans issued before July 1, 2020, the

Department must “consider[]” “[a]ny response or

submissions from the school.” Id. § 685.222(e)(3)(i).

The Department adjudicates the applications

“through a fact-finding process” and issues a written

decision. Id. § 685.222(e)(3)-(4). For loans issued on

or after July 1, 2020, the Department must “provide a

copy” of the application to the school, “invite the school

to respond and to submit evidence” in its defense, id.

§ 685.206(e)(10), and “consider[] the school’s

60 Fed. Reg. 37,768 (July 21, 1995); 81 Fed. Reg. 75,926

(Nov. 1, 2016); 84 Fed. Reg. 49,788 (Sept. 23, 2019); 87 Fed. Reg.

65,904 (Nov. 1, 2022).

The Fifth Circuit has held the Department’s regulatory

regime for affirmative borrower-defense claims is likely unlawful

under the HEA. Career Colls. & Sch. of Tex. v. U.S. Dep’t of

Educ., 98 F.4th 220, 239-42 (5th Cir. 2024). This Court granted

certiorari to resolve that issue, Dep’t of Educ. v. Career Colls. &

Sch. of Tex., 145 S. Ct. 1039 (2025), but the case was voluntarily

dismissed.

response,” id. § 685.206(e)(11)-(12). The Department

must then issue a written decision. Id.4

Step Two occurs only if the Department finds a

school engaged in misconduct, grants a borrowerdefense application, and discharges debt. In that

event, the Department may sue the school to recoup

the discharged amount. See id. §§ 685.206(c)(3) &

(e)(16), 685.222(e)(7).

A Step One finding, standing alone, can have

serious consequences for schools. For example, the

Department may wield the finding to conclude that a

school is not “financially responsible,” which would

bar the school from participating in federal financialaid programs. 20 U.S.C. § 1099c(b)-(c); 34 C.F.R.

§ 668.171; see ER-83-85, 89-90 (activists claimed

misconduct findings should bar schools from

financial-aid participation). It may also use the

finding to justify “pursu[ing] personal liability”

against school directors and officers.5 Moreover,

defamatory misconduct findings from an entity’s

regulator can have an outsized effect on the entity’s

reputation, see Meese v. Keene, 481 U.S. 465, 473-77

(1987), as there is a “unique stigma associated with

having a government official label someone a law

breaker,” Kennedy v. Warren, 66 F.4th 1199, 1206 (9th

Cir. 2023). And that reputational harm—serious in

its own right—can trigger grievous financial and

Though the regulations purport to set different standards

for loans issued on or after July 1, 2023, the One Big Beautiful

Bill Act has undone those changes. Pub. L. No. 119-21,

§ 85001(b), 139 Stat. 72, 355 (2025).

Education Department Takes Steps to Hold Leaders of Risky

Colleges Personally Liable, Educ. Advisors (Mar. 6, 2023),

https://tinyurl.com/vrns77vz.

programmatic injuries.

As this case shows,

misconduct findings may prompt lenders to freeze

lines of credit or subject schools to closer due-diligence

scrutiny, ER-77; force schools to disclose the finding

in securities reporting, ER-72; prompt high schools to

bar named institutions from recruiting their students,

ER-69-70; and even provoke United States Senators

to call for boycotts of universities.6

B. FACTS AND PROCEDURAL HISTORY

1. Everglades College, Inc., is a Florida nonprofit

that helps students achieve social mobility through

higher education. ER-189, 460. It advances that

mission through two universities: Keiser University

and Everglades University. Id. In 2022, Keiser was

ranked best in the nation for upward social mobility

and seventh among its peers for graduation rates.

ER-189. Everglades University, too, has earned “Top

Performer” status for upward social mobility and firstplace rankings for its online aeronautics and

environmental programs. Id. The schools serve

roughly 20,000 students across twenty-seven

campuses and online, many of whom are lower-income

adults who rely on Everglades to “enhance or change

their careers.” ER-460.

2. In 2019, a putative class of student-loan

borrowers sued the Department for failing to process

their borrower-defense applications. ER-834-37, 888.

The borrowers emphasized they did “not ask th[e]

Court to adjudicate their borrower defenses,” nor “to

dictate how the Department should prioritize” their

Press Release, Durbin Calls on Illinois Educators to Sound

the Alarm on For-Profit-Colleges (Apr. 15, 2025),

https://tinyurl.com/3zrabhve.

claims. ER-836-37. Plaintiffs sought only to compel

the Department to process their applications. Id.

They moved to certify a Rule 23(b)(2) class to obtain

“a single injunction requiring the Department to start

and to continue adjudicating borrower defenses.” ER828. The district court certified a (b)(2) class, “for all

purposes, including settlement,” of essentially all

people with qualifying federal loans who had pending

borrower-defense claims. ER-820-21. The class

covered about 296,000 members, U.S. Stay Opp. 8-9,

No. 22A867 (U.S. Apr. 12, 2023), who received more

than $7.5 billion in loans, ER-558.

After months of litigation, the parties lodged a

settlement.

The Department agreed to resolve

pending borrower-defense claims on a timeline and

issue written decisions. ER-776-800. Before final

approval, however, Plaintiffs alleged that the

Department violated the settlement’s terms by

issuing unreasoned “Form Denial[s]” for many

borrower-defense applicants. ER-755-63. The court,

in turn, expressed “disappoint[ment]” with the

Department because it had hoped to “get reasoned

decisions, even if reasoned denials.” ER-721.

Judge Alsup withheld settlement approval and

directed a “return to litigating the merits.” ER-72021. The court also sua sponte ordered Plaintiffs to

seek extra-record discovery from the Department,

including depositions of Department officials. ER726.7 And it instructed Plaintiffs to “move for

summary judgment as to the lawfulness of the

The district court even ordered the Secretary of Education

to sit for deposition, which the Ninth Circuit quashed by writ of

mandamus. In re U.S. Dep’t of Educ., 25 F.4th 692 (9th Cir.

2022).

Secretary’s delay and the lawfulness of the

perfunctory denial notice.” ER-717-21, 726. Plaintiffs

abided yet still sought to compel the Department only

“to lawfully adjudicate each and every borrower

defense

application”

through

reasoned

decisionmaking. ER-698-99.

3. Meanwhile, during the 2020 presidential

campaign, then-candidate Biden promised to cancel

federal student-loan debt if elected President.8 But,

as then-Speaker Pelosi explained: “[T]he President”

“does not have th[e] power” to cancel student debt; it

is “not even a discussion” because such a policy change

requires “an Act of Congress.”9 After President

Biden’s election, Congress declined to enact such

legislation.

Undeterred, the Biden Administration acted

unilaterally. Then-Secretary of Education Cardona

announced he would invoke the HEROES Act to

cancel up to $20,000 in debt per borrower.10 But this

Court rejected the Secretary’s bid to “rewrite th[e]

statute from the ground up” “to cancel” billions in

“student loan principal.” Biden v. Nebraska, 600 U.S.

477, 494 (2023).

Scrambling for other ways to fulfill its campaign

promise, the Biden Administration turned to this

lawsuit to enshrine the very policy changes both

Congress and this Court rejected. In June 2022, after

Joe Biden, Joe Biden Outlines New Steps to Ease Economic

Burden on Working People, Medium (Apr. 9, 2020),

https://tinyurl.com/29f7tprr.

House Speaker Weekly Briefing, C-SPAN, at 14:24-16:24

(July 28, 2021), https://tinyurl.com/ycx28t8a.

Student Loan Cancellation Under the HEROES Act, CRS

(Apr. 14, 2023), https://tinyurl.com/58v64j8a.

years of denying Plaintiffs’ claim of unlawful delay,

the Department turned heel and consented to a

settlement that swept far beyond the requested

procedural relief and the defined class. ER-554-603.

Rather than merely grant a restart of agency

adjudications, the settlement redefined the regulatory

framework and granted substantive relief of $7.5

billion in debt cancellation—and reimbursement of

past payments—to hundreds of thousands of

borrowers, broken up into three subclasses. ER-558,

571, 580-87.

Subclass One: For roughly 196,000 borrowers

with debt “associated with the schools” in “Exhibit C

to the Settlement,” the Department would

“automatic[ally]” cancel all student loans and refund

all past payments, regardless of the merits or

timeliness of their borrower defenses. In other words,

for this subclass, all borrower-defense requirements

were effectively repealed. ER-559, 580-83; App.9a.11

Exhibit C originally listed 153 institutions (though

several “were erroneously included” due to

unexplained “clerical errors,” and one was added

later). ER-612-16, 283. The settlement offered no

explanation for why any school was listed, nor were

the schools notified that they would be roped into the

settlement for public opprobrium by their federal

regulator. The preliminary-approval motion offered a

single sentence of explanation:

[B]ecause the Department has identified

common evidence of institutional

If any “substantial question” arose over whether debt was

“associated with” a school, it was “resolved in favor of the Class

Member,” without any process for the school. ER-583.

misconduct by the schools, programs,

and school groups identified in Exhibit C

to the Agreement, it has determined that

every Class Member whose Relevant

Loan Debt is associated with those

schools should be provided presumptive

relief under the settlement due to strong

indicia

regarding

substantial

misconduct by the listed schools,

whether credibly alleged or in some

instances proven, and the high rate of

class members with applications related

to the listed schools.

ER-573-74.

The parties neither supplied the

“evidence” driving their allegations nor permitted the

summarily convicted schools to rebut it.

Subclass Two: The second subclass contained

about 100,000 debtors with pending borrower-defense

applications not associated with an Exhibit C school.

ER-559; App.9a. For them, the settlement established

a new “review” process not found in any operative

borrower-defense rule. ER-583-87. It entitled them

to a decision on a certain timeline and granted them

several “presumptions” that effectively guaranteed a

finding of misconduct by their schools. ER-557-60,

584-86. Under those presumptions, a borrower’s

claim could not be denied for (1) false allegations,

(2) insufficient evidence, (3) lack of reliance, or

(4) untimeliness. ER-584. And if the Department

“fail[ed] to provide a written decision within the

specified time period,” subclass-two members would

also have all debt cancelled and all prior payments

refunded. ER-559.

Subclass Three: The final subclass consisted of

so-called “Post-Class Applicants” who “submit[ted] a

borrower defense application after” the settlement’s

“Execution Date … but before the Final Approval

Date.” ER-560, 587. Accordingly, subclass three

included borrowers who never suffered any injury

alleged in the lawsuit—and potentially encompassed

anyone with a federal student loan. To maximize the

subclass’ membership, Plaintiffs’ counsel and the

Department collaborated to solicit new borrowerdefense applications, eventually recruiting about

206,000 borrowers. ER-70-71, 273; App.9a.

For Post-Class Applicants, the Department agreed

to “review” their applications under its 2016-era

regulations, even though different borrower-defense

regulations would normally govern many such

applications. ER-587. It also had to process those

applications within thirty-six months or else the

borrower also received automatic cancellation of all

debt and refunds of all prior payments, regardless of

the claim’s merit. Id.

4. Everglades and three other “Exhibit C” schools

moved to intervene to challenge the settlement’s

legality. ER-434-58, 345-94. To “keep the system

honest” and develop the issues for resolution, ER-341,

the court granted permissive intervention for the

“express purpose of objecting to and opposing the class

action settlement,” App.85a.

The schools challenged the settlement’s legality for

a host of reasons. First, they explained that the

settlement exceeded the Department’s authority

under the HEA. ER-204-06.

Second, the schools explained that the settlement

violated Rule 23 for many reasons, including that it

impermissibly granted to a (b)(2) class “individualized

award[s] of monetary damages,” rather than

indivisible injunctive relief. Wal-Mart Stores, Inc. v.

Dukes, 564 U.S. 338, 360-61 (2011); see ER-193-97.

Third, the schools asserted that the settlement

was arbitrary and capricious and violated the Due

Process Clause because it effectively “determined,”

through secret and collusive negotiations, that every

borrower-defense application associated with 151

schools was justified, without any explanation, notice,

or an opportunity to be heard. ER-197-200, 201-03.

Fourth, the schools highlighted that the settlement

contravened the HEA and the APA by amending the

Department’s borrower-defense regulations without

undergoing notice-and-comment procedures. ER-20001.

The court rejected these challenges and approved

the settlement. App.45a-82a.

5. Everglades and two other schools appealed. ER898-913. A coalition of states filed an amicus brief

supporting the schools, underscoring that the

Department’s “strategic surrender” had allowed it to

seize “immense new authority beyond the scope of

anything Congress ever approved” and posed a severe

“threat to our separation of powers.” CA9 Dkt.24 at

2-3. Neither Plaintiffs nor the Department challenged

the district court’s intervention ruling.

A split Ninth Circuit panel dismissed the appeal.

All panel members agreed that the schools had Article

III standing to challenge the settlement because the

Department’s “substantial misconduct” finding

inflicted “reputational harm.” App.13a-17a; App.29a

(Collins, J., dissenting). Nonetheless, the majority

declined to adjudicate the merits of the schools’

challenges because the schools lacked “prudential

standing.” App.17a-24a.

Although neither Plaintiffs nor the government

cited the case or relied on its reasoning in their briefs,

the majority invoked Waller v. Financial Corp. of

America, 828 F.2d 579 (9th Cir. 1987). Under Waller,

“an entity who is not a party to a settlement” may not

“object[] to court approval of the settlement” unless

the settlement will cause the objector to suffer “formal

legal prejudice.” App.12a. To cause such prejudice,

the agreement must “formally strip[]” the non-settling

entity of a legal right, like a “cause of action” or a

“contract right[].” App.21a. Based on this judge-made

rule, the majority held that the schools could not

challenge the settlement either in district court or on

appeal, regardless of their Article III injury. App.20a24a.

Judge Collins dissented, refusing to apply a

judicially manufactured prudential-standing bar to a

party that satisfies both Article III and Rule 24(b).

The question, he explained, was simply whether the

district court “abuse[d] its discretion in allowing the

Schools to permissively intervene for the purpose of

objecting to the settlement.” App.30a. Because it had

not, the court had “properly reached the merits of the

Schools’ objections.” App.38a. And because the

district court’s approval inflicted Article III injury on

the schools, they had “standing” to appeal the

judgment. App.38a-39a. The majority’s contrary

analysis, Judge Collins noted, wrongly transformed

the “‘formal legal prejudice’ standard [into] an

artificial constraint on a district court’s [power] to

allow permissive intervention [to] object[] to a

settlement.” App.35a.

With “prudential standing” posing no bar, Judge

Collins would have vacated the settlement. Though

he did “not exhaustively address the Schools’

objections,” he easily found that “at least two” justified

vacatur. App.39a.

First, Judge Collins explained, the HEA does not

authorize the Department “to grant the relief

contained in the settlement.” Id. Second, “the

settlement

unlawfully

grants

individualized

monetary relief” to swathes of borrowers, even though

the class “was certified only as an injunctive-relief

class under Federal Rule of Civil Procedure 23(b)(2).”

App.42-43a. (citing Wal-Mart, 564 U.S. at 360-61).

6. Everglades sought rehearing en banc. CA9

Dkt.94. It again drew support from a coalition of

states concerned that the panel had “damaged the

separation of powers” by blessing a “collusi[ve]”

settlement that bypassed the “limits on [the

executive’s] power.” CA9 Dkt.95 at 1, 5. The Ninth

Circuit denied rehearing en banc, again over Judge

Collins’ dissenting vote. App.86a-87a.

REASONS FOR GRANTING THE PETITION

There Is a Circuit Split on the Requirement

for “Prudential Standing” To Challenge

Settlements

The Ninth Circuit holds that “a non-settling entity

generally lacks prudential standing to object to a

settlement—or to challenge on appeal a district

court’s approval of a settlement, unless” the entity

establishes “formal legal prejudice.” App.17a (citing

Waller, 828 F.2d at 583). That judge-made rule, the

panel explained, recognizes a narrower universe of

injuries than does Article III. It credits only certain

injuries like the loss of a “cause of action” or a

“contract right[].” App.21a. Other circuits have

likewise applied that rule to non-settling intervenors

and other parties seeking to challenge a settlement’s

approval.12

The Fourth Circuit, by contrast, has “reject[ed] the

blanket proposition” that non-settling intervenors

lack “standing” to press settlement objections. Gould

v. Alleco, Inc., 883 F.2d 281, 285 (4th Cir. 1989). And

the formal-legal-prejudice bar also splits with cases

applying this Court’s teaching that parties are

“entitled to … have [their settlement] objections

heard” in the district court and on appeal. Local No.

93, Int’l Ass’n of Firefighters v. City of Cleveland, 478

U.S. 501, 529 (1986); see Lawyer v. Dep’t of Just., 521

U.S. 567, 579 (1997).

1. In Gould, the Fourth Circuit held that

intervenors may object to, and appeal, their co-parties’

settlements. There, stockholders filed a class action

against a beverage company. 883 F.2d at 283. After

they agreed to settle, a group of bondholders opposed

the settlement under Rule 23 and moved to intervene

under Rule 24, but their motion was denied. Id. On

E.g., City of Bangor v. Citizens Commc’ns Co., 532 F.3d 70,

92 (1st Cir. 2008) (co-defendant); Bhatia v. Piedrahita, 756 F.3d

211, 218-19 (2d Cir. 2014) (same); Eichenholtz v. Brennan, 52

F.3d 478, 482-83 (3d Cir. 1995) (same); In re Beef Indus. Antitrust

Litig., 607 F.2d 167, 172 (5th Cir. 1979) (same); Ball ex rel. Burba

v. DeWine, 2021 WL 4047032, at *3 (6th Cir. June 30, 2021)

(intervenor); Quad/Graphics, Inc. v. Fass, 724 F.2d 1230, 123234 (7th Cir. 1983) (co-defendant); Alumax Mill Prods., Inc. v.

Cong. Fin. Corp., 912 F.2d 996, 1002 (8th Cir. 1990) (same); In re

Integra Realty Res., Inc., 262 F.3d 1089, 1102-03 (10th Cir. 2001)

(same); Mayfield v. Barr, 985 F.2d 1090, 1092-93 (D.C. Cir. 1993)

(co-plaintiff).

appeal, the Fourth Circuit agreed that Rule 23 did not

permit non-party, non-class members like the

bondholders to object to the settlement. Id. at 284.

But the court “reject[ed] the blanket proposition” that

the bondholders “ha[d] no standing as a matter of law

to intervene” to challenge the settlement “solely by

virtue of their” not being class members. Id. at 285.

Rather, “[i]nterjection of the opposing views of nonclass members should proceed via intervention under

Rule 24.” Id. at 284. Nowhere did the court suggest

that, to do so, intervening parties also must establish

formal legal prejudice. See id. at 284-87.

Gould is not alone. Though the Tenth and Third

Circuits have sometimes echoed the Ninth Circuit’s

judge-minted rule, other cases from those courts adopt

the Fourth Circuit’s view that non-settling

intervenors may “interject[]” their “opposing views” of

a settlement, without regard for formal legal

prejudice. Heller v. Quovadx, Inc., 245 F. App’x 839,

842 (10th Cir. 2007) (Gorsuch, J.). In In re Fine Paper

Litig., a district court held that a non-party to a

settlement “had no standing to object” to the

settlement because “it was not part of any certified

class that joined in the settlement” and “none of its

rights would be compromised” because it was “free to

file a separate action.” 632 F.2d 1081, 1085 (3d Cir.

1980). On the “question of [the non-party’s] standing

to present its objections,” the Third Circuit agreed

that, under Rule 23, the “general rule [is] that a

nonsettling party may not object to the terms of a

settlement.” Id. at 1086, 1087. But the court further

held that the non-party could have—and “should

have”—intervened to “properly present its contention”

about the legality of the settlement. Id. at 1088.13

2. This split is part of a broader disconnect in this

muddled area of law. Like ships passing in the night,

the formal-legal-prejudice line of authority has drifted

past a different strand of caselaw: decisions applying

this Court’s rule that parties are “entitled to … air

[their] objections” to a settlement and appeal orders

overruling them. Local No. 93, 478 U.S. at 529.

Courts applying that rule regularly permit nonsettling intervenors to challenge their co-parties’

settlements, without regard for the judge-made

doctrine of formal legal prejudice. See, e.g., P.R. Dairy

Farmers Ass’n v. Pagan, 748 F.3d 13, 20 (1st Cir.

2014); Kirkland v. N.Y. State Dep’t of Corr. Servs., 711

F.2d 1117, 1128 (2d Cir. 1983); Tenn. Ass’n of HMOs,

Inc. v. Grier, 262 F.3d 559, 567 (6th Cir. 2001); Airline

Stewards & Stewardesses Ass’n v. Am. Airlines, Inc.,

573 F.2d 960, 963-64 (7th Cir. 1978); United States v.

Metro. St. Louis Sewer Dist. (MSD), 952 F.2d 1040,

1044 (8th Cir. 1992); United States v. Carpenter, 526

F.3d 1237, 1240-41 (9th Cir. 2008); United States v.

City of Hialeah, 140 F.3d 968, 975-81 (11th Cir. 1998);

see also Edwards v. City of Houston, 78 F.3d 983,

1003-04 (5th Cir. 1996) (en banc) (reversing denial of

intervention motions, vacating class settlement, and

remanding so intervenors could object, without

discussing “prudential standing”).

Citing Gould, district courts have also permitted

intervenor parties to challenge settlements without imposing a

prudential-standing overlay. E.g., In re Novatel Wireless Sec.

Litig., 2014 WL 2858518, at *2 (S.D. Cal. June 23, 2014); cf.

Candelaria v. Health Care Serv. Corp., 2020 WL 3832919, at *2

(D.N.M. July 8, 2020).

The latter lineage stems from Local No. 93. There,

a class of first responders sued Cleveland for

employment discrimination. 478 U.S. at 504-05. The

district court also allowed a firefighter’s union (Local

93) to intervene. Id. at 506. The first responders and

Cleveland later reached a settlement that “imposed no

legal duties or obligations on Local 93.” Id. at 511.

Even so, the district court entertained Local 93’s

objections, overruled them, and approved the

settlement. Id. at 511-12. On appeal, the Sixth

Circuit held that Local 93 had appellate standing to

challenge the settlement—even though it was “not

formally bound or restricted by the agreement”—

because it caused Local 93’s members to endure “some

detriment.”

Vanguards of Cleveland v. City of

Cleveland, 753 F.2d 479, 484 (6th Cir. 1985). The

appellate court thus considered Local 93’s challenges

to the settlement, without requiring Local 93 to show

formal legal prejudice. Id. at 484-89.

On certiorari review, this Court confirmed that

approach. In challenging a settlement, the Court

explained, intervenors are no different from “an

original party.” Local No. 93, 478 U.S. at 529. They

are thus “entitled to … have [their] objections heard

at the [fairness] hearings.” Id. But they cannot

“block” a settlement “merely by withholding [their]

consent.” Id. To trigger that greater power, the

settlement must instead inflict some “legal” harm on

the non-settler, like saddling it with “legal duties or

obligations,” or “dispos[ing] of” its legal “claims.” Id.

at 529-30. Because the settlement in Local No. 93 did

not do that, the intervenor could not “preclude” the

settlement through nonconsent. Id. But—contra the

Ninth Circuit’s rule here—the intervenor was allowed

to argue on appeal that the settlement violated federal

law—an argument this Court resolved on the merits.

See id. at 515-24.

This Court reiterated that non-settling parties

may challenge and appeal co-party settlements in

Lawyer v. Department of Justice, 521 U.S. 567 (1997).

There, a plaintiff challenged his co-parties’

redistricting settlement on two grounds. He first

argued that, because he had not consented to

settlement, the district court could not approve relief

without first holding that the challenged districting

map was unconstitutional. Id. at 578-80. He also

asserted that the settlement’s proposed districting

plan produced an unlawful racial gerrymander. Id. at

580.

In addressing those arguments, the Court

reiterated that non-settling parties are “entitled to …

have [their] objections heard at the [fairness]

hearings,” but may not “preclude other parties from

settling” by withholding their consent unless the

settlement causes the non-settlers to suffer legal

injury. Id. at 579. Here, the Court explained, the nonsettler was entitled to have “his views on the merits of

the proposed plan … heard, and … to attack it [o]n …

appeal.” Id. at 580. This Court thus reached the

merits of his assertion that the settlement’s

districting plan violated federal law. See id. at 58083.

The Ninth Circuit’s approach to non-settler

objections thus contradicts this Court’s precedents.

Local No. 93 and Lawyer hold that non-settling

parties (including intervenors) with constitutional

standing may challenge and appeal their co-parties’

settlements, even when they “do[] not bind” the nonsettlers in a formal legal way. Local No. 93, 478 U.S.

at 529-30; see Lawyer, 521 U.S. at 579-83. The Ninth

Circuit, by contrast, requires non-settlers to show

formal legal prejudice to even “be heard in objection to

the settlement.” App.30a (Collins, J., dissenting).

Those irreconcilable rules have, unsurprisingly,

yielded arbitrary outcomes. Sometimes, circuit courts

apply the Ninth Circuit’s prudential-standing rule to

bar non-settler objections and appeals. Supra n.12.

Other times, those same circuits apply Local No. 93 to

authorize non-settler challenges to co-party

settlements, without mentioning formal legal

prejudice or the cases requiring it. Supra 19. Indeed,

the Ninth Circuit itself has allowed non-settling

intervenors to challenge a settlement without regard

for “formal legal prejudice.” See Carpenter, 526 F.3d

at 1240-41 (citing Local No. 93); Portland Gen. Elec.

Co. v. Bonneville Power Admin., 501 F.3d 1009, 102632, 37 (9th Cir. 2007) (entertaining non-settling

intervenor’s appeal challenging a settlement, and

vacating the settlement as unlawful, without regard

for formal legal prejudice). A non-settling party’s

“right to object to a settlement agreement,” South

Carolina v. North Carolina, 558 U.S. 256, 288 (2010)

(Roberts, C.J., concurring in judgment in part and

dissenting in part), thus turns on which line of

conflicting precedent a court selects.

Nor is that the only inconsistency in this tangled

web: Courts adopting the prudential-standing bar

cannot even agree on the rule’s provenance. Some

decisions call it a judge-made dictate designed to

“advance[] the policy of encouraging the voluntary

settlement of lawsuits.” App.17a.14 Others claim the

doctrine “maintain[s] consistency” with Rule 41,

which has been interpreted to require non-settling

defendants opposing their co-defendants’ dismissal to

establish “plain legal prejudice.” Quad/Graphics, 724

F.2d at 1233.15 Still more say it is not a prudentialstanding rule at all, but an Article III injury

requirement16—a rationale the Ninth Circuit

disclaimed here. App.17a. And many decisions do not

even try to justify the rule: They simply cite cases

applying it and declare the principle “settled.”17

The upshot is that this area of law remains deeply

conflicted despite decades of development.

The

Court’s review is warranted to set a clear, nationwide

rule.

E.g., Mayfield, 985 F.2d at 1092; In re Integra, 262 F.3d at

1102.

E.g., Waller, 828 F.2d at 583; Alumax, 912 F.2d at 1002.

E.g., Bhatia, 756 F.3d at 217-18; In re Integra, 262 F.3d at

1102-03; LeBlanc v. Tex. Brine Co., 989 F.3d 359, 364 (5th Cir.

2021).

E.g., Eichenholtz, 52 F.3d at 482; In re Viatron Computer

Sys. Corp. Litig., 614 F.2d 11, 14 (1st Cir. 1980); In re Beef Indus.,

607 F.2d at 172. Usually, these citation rabbit holes lead back to

a single district-court case from the 1950s that not only

disclaimed reliance on the federal rules, but involved an

objection to a co-defendant’s voluntary dismissal, not a

settlement objection. Broadway & Ninety-Sixth St. Realty Corp

v. Loew’s, Inc., 23 F.R.D. 9, 11 (S.D.N.Y. 1958).

II.

The Decision Below Impermissibly Grafts a

Judge-Made Prudential-Standing Rule

Atop the Requirements of Article III and

Rule 24

The Ninth Circuit wrongly applied a judicially

invented “prudential” bar to hold that parties cannot

challenge a settlement causing them Article III injury.

Under ordinary rules of civil procedure and standing,

intervenors

Everglades

may

challenge

settlements that impair their interests and appeal

judgments that cause them Article III injury. The

Ninth Circuit’s extratextual rule resurrects the

concept of “prudential standing” this Court buried in

Lexmark Int’l, Inc. v. Static Control Components, Inc.,

572 U.S. 118 (2014), and raises serious constitutional

questions about whether judges may conjure up

procedural bars to avoid their “virtually unflagging

obligation” to decide cases,

Colo. River Water

Conservation Dist. v. United States, 424 U.S. 800, 817

(1976). The Ninth Circuit’s rule also spurns this

Court’s teaching that non-settling parties are

“entitled” to have their settlement “objections heard”

in district court and on appeal. Local No. 93, 478 U.S.

at 529. And it raises so many practical problems that

it cannot possibly be correct.

1. As Judge Collins outlined in dissent, basic

principles of civil procedure and Article III standing

should have made this an easy issue. The district

court permitted Everglades to intervene under Rule

24 for the “express purpose of … opposing” a

government settlement. App.83a-85a. At that point,

Everglades became a “part[y].” Diamond v. Charles,

476 U.S. 54, 68 (1986). So, like the “original parties,”

Everglades was entitled to “litigate fully on the

merits” at the fairness hearing. Wright & Miller, 7C

Fed. Prac. & Proc. Civ. § 1920 (3d ed.) (collecting

cases). After all, “[o]ur adversarial system depends on

the principle that all sides to a dispute must be given

the opportunity to fully advocate their views of the

issues presented.” Ahanchian v. Xenon Pictures, Inc.,

624 F.3d 1253, 1263 (9th Cir. 2010). “[F]undamental

requirement[s] of due process” thus entitled

Everglades “to present [its] objections” to the

settlement in district court. Mullane v. Cent. Hanover

Bank & Tr. Co., 339 U.S. 306, 314 (1950); see Streber

v. Hunter, 221 F.3d 701, 733 (5th Cir. 2000) (“It is

well-settled that litigants have due process rights to

fully litigate each issue.”). And because the Ninth

Circuit conceded that the settlement’s approval

caused Everglades injury under Article III, App.17a,

Everglades also had constitutional standing to appeal

the judgment, Diamond, 476 U.S. at 68-69; see

Vanguards, 753 F.2d at 484 (intervenor had

“standing” to appeal settlement that caused it “some

detriment”).

2. By layering a judge-made prudential-standing

rule atop that analysis, the Ninth Circuit defied this

Court’s teaching in Lexmark. There, the Court

clarified that limitations on a party’s right to litigate

come from positive law—Article III and statutes—not

“merely because ‘prudence’ dictates.” 572 U.S. at 128.

Thus, the Court explained that “declin[ing] to

adjudicate” based on “grounds that are ‘prudential,’

rather than constitutional” or statutory is “in some

tension with [the Court’s] reaffirmation of the

principle that ‘a federal court’s obligation to hear and

decide cases within its jurisdiction is virtually

unflagging.’” Id. at 125-26 (quoting Sprint Commc’ns,

Inc. v. Jacobs, 571 U.S. 69, 77 (2013)).

Incredibly, the Ninth Circuit cited Lexmark for the

proposition that it “describ[ed] the development of a

‘prudential’ branch of standing, a doctrine not derived

from Article III,” App.11a, ignoring entirely this

Court’s rejection of that development. With this

expurgated version of Lexmark in hand, the Ninth

Circuit reasoned that the formal-legal-prejudice rule

“advances the policy of encouraging the voluntary

settlement of lawsuits.” App.17a. In other words,

contra Lexmark, the Ninth Circuit grounded its rule

in what “‘prudence’ dictates.” 572 U.S. at 128.

The closest courts come to grounding the formallegal-prejudice bar in any positive law is Rule 41,

which governs when “an action may be dismissed at

the plaintiff’s request.”

The rule dictates such

dismissal may occur “on terms that the court

considers proper,” and courts have developed the

theory that a defendant may not block a voluntary

dismissal unless it “demonstrate[s] plain legal

prejudice.”

Quad/Graphics, 724 F.2d at 1233.

Because “Rule 41(a)(2) is usually the mechanism by

which … settling defendants are eliminated from the

case,” courts have required non-settling parties

opposing a settlement to meet the same requirement.

Id. That rule, they say, is necessary because it would

“be incongruous for a non-settling defendant to have

any less of a burden in [opposing another’s] voluntary

dismissal than he would if he were the party being

dismissed.” Id.

That reasoning is flawed to the core. For one thing,

it is still an application of judicial policymaking.

Courts adopting the theory have not derived the

formal-legal-prejudice principle from Rule 41’s text;

they created it to “maintain[] consistency” with Rule

41, Quad/Graphics, 724 F.2d at 1233—or, put

differently, because “‘prudence’ dictates.” Lexmark,

572 U.S. at 128. Moreover, challenging the legality of

a settlement’s substantive terms is distinct from

opposing a party’s dismissal. It is one thing to say a

non-settling defendant cannot challenge the

“mechanism by which … settling defendants are

eliminated from the case,” Quad/Graphics, 724 F.2d

at 1233, but quite another to say the entire settlement

is off limits because it may eventually be effectuated

by that mechanism.

The prudential-standing bar also does not derive

from Article III, as some courts have posited. E.g.,

Bhatia, 756 F.3d at 218; In re Integra, 262 F.3d at

1103; LeBlanc, 989 F.3d at 364. As the Ninth Circuit

held, “Article III injury” need “not equal formal legal

prejudice.” App.12a; see Agretti v. ANR Freight Sys.,

Inc., 982 F.2d 242, 247 (7th Cir. 1992) (“Mere

allegations of injury in fact [flowing from] a

settlement simply do not rise to the level of plain legal

prejudice.”). Many non-legal harms satisfy the injuryin-fact requirement, from “reputational” damage to

“monetary” loss. TransUnion LLC v. Ramirez, 594

U.S. 413, 417 (2021).

Unmoored from any text, the Ninth Circuit’s rule

raises the same constitutional “tension[s]” this Court

sought to avert in Lexmark. 572 U.S. at 126. It is an

“undisputed constitutional principle that Congress,

and not the Judiciary, defines the scope of federal

jurisdiction within the constitutionally permissible

bounds.” New Orleans Pub. Serv., Inc. v. Council of

City of New Orleans (NOPSI), 491 U.S. 350, 359

(1989). Thus, save for a few traditional abstention

doctrines, “federal courts lack the authority to abstain

from the exercise of jurisdiction that has been

conferred.” Id. at 358. They must instead “decide

cases within the scope of federal jurisdiction,” Sprint,

571 U.S. at 72, and “have no more right to decline the

exercise of jurisdiction which is given, than to usurp

that which is not given,” Cohens v. Virginia, 19 U.S.

264, 404 (1821).18 Yet, by fashioning an “artificial”

prudential-standing rule out of whole cloth, App.35a

(Collins, J., dissenting), the Ninth Circuit violated its

duty to exercise the jurisdiction Congress gave it.

3. Along with disavowing this Court’s prudentialstanding precedents, the Ninth Circuit’s holding also

defies this Court’s rule that parties are “entitled to”

have their “objections heard at the [fairness]

hearings” and on appeal. Local No. 93, 478 U.S. at

529; see Lawyer, 521 U.S. at 579. As explained above,

this Court has not required non-settlers to also

establish formal legal prejudice. See id. To the

contrary, this Court has held that formal legal

prejudice grants non-settling parties the greater

power to “block” a settlement by withholding consent.

Local No. 93, 478 U.S. at 529. Such harm, however,

is not necessary merely to have one’s “objections

heard” at the fairness hearing and on appeal. Id.; see

Zipes v. Trans World Airlines, Inc., 455 U.S. 385, 39192, 400 (1982) (allowing litigant who “was permitted

to intervene and to object to the settlement” to appeal

the settlement’s approval, without discussing formal

See Antonin Scalia, The Doctrine of Standing as an

Essential Element of the Separation of Powers, 17 Suffolk U. L.

Rev. 881, 882 (1983) (Prudential standing “leaves unexplained

the Court’s source of authority for simply granting or denying

standing as its prudence might dictate.”); Martin H.

Redish, Abstention, Separation of Powers, and the Limits of the

Judicial Function, 94 Yale L.J. 71, 74 (1984) (“[N]either total nor

partial judge-made abstention is acceptable as a matter of legal

process and separation of powers[.]”).

legal prejudice); Cascade Nat. Gas Corp. v. El Paso

Nat. Gas Co., 386 U.S. 129, 136 (1967) (reversing

denial of intervention and ordering that intervenors

be given “an opportunity to be heard” on a settlement

agreement, without discussing formal legal

prejudice).

Nor have those precedents yellowed with time.

This Court reiterated just last year that “an

intervenor is entitled to … have its [settlement]

objections heard” and may even “block” a settlement

that “affect[s] the intervenor’s claims.” Texas v. New

Mexico, 602 U.S. 943, 953-54 (2024) (citing Local No.

93, 478 U.S. at 529). And in 2010, four Justices cited

Local No. 93 to emphasize that “intervention makes

settling a case more difficult, as a private intervenor

has the right to object to a settlement agreement.”

South Carolina, 558 U.S. at 288 (Roberts, C.J.,

concurring in judgment in part and dissenting in part,

joined by Thomas, Ginsburg, and Sotomayor, JJ.).

4. The Ninth Circuit’s prudential-standing bar is

wrong for still more reasons.

First, it would

“effectively eliminate” permissive intervention when

challenging a settlement. App.35a-36a (Collins, J.,

dissenting). If a settlement causes an entity formal

legal prejudice, that would also “establish an interest

… impair[ed] by the [settlement], which is the

standard for intervention as of right.” Id. (quoting

Fed. R. Civ. P. 24(a)). The prudential-standing bar

thus improperly collapses Rules 24(a) and 24(b) in the

settlement context. See TRW Inc. v. Andrews, 534

U.S. 19, 31 (2001) (rejecting a judicially implied rule

that would render positive law “superfluous”).

Second, courts have offered no clear framework to

define what counts as “formal legal prejudice.” The

rule supposedly applies when a settlement “formally

strips a non-settling party of a legal claim or cause of

action” or “invalidates a non-settling party’s contract

rights.” App.21a. But what does it mean for a right

to be stripped “formally”? Does the rule cover noncontract rights, like the right to participate in noticeand-comment (a right denied here)? And does the rule

extend to other legal interests, like a right to

attorney’s fees? Cf. Lawyer, 521 U.S. at 579-83 (in

which a plaintiff’s claim, and possible entitlement to

fees, was mooted by his co-parties’ settlement). All

that is a mystery, further undermining the rule’s

validity.

Third, even if policy concerns were not “beside the

point,” Trump v. CASA, Inc., 606 U.S. 831, 856 (2025),

the formal-legal-prejudice rule does not advance the

policy it purports to serve. The rule’s proponents

preach that it achieves finality by “encouraging the

voluntary settlement of lawsuits.” App.17a. Yet, in

the same breath, those courts concede that the rule

“encourag[es] additional litigation,” Quad/Graphics,

724 F.2d at 1234, by “forc[ing]” non-settlers to file “a

second lawsuit against the dismissed parties,” Agretti,

982 F.2d at 247; see App.23a (suggesting that

Everglades “must file a second lawsuit to remedy” its

“reputational harm”). The rule thus finalizes nothing;

at most, it shifts the laboring oar to a new judge who

must adjudicate a collateral attack on a settlement

approved by another court. That maneuver is fraught

with thorny comity concerns. See, e.g., Nw. Airlines,

Inc. v. Am. Airlines, Inc., 989 F.2d 1002, 1004-07 (8th

Cir. 1993) (affirming an injunction of parallel districtcourt proceedings under the first-filed rule to “avoid

conflicting rulings” between the courts). And it cuts

against the civil-procedure devices meant to minimize

such conflict, such as transfer under 28 U.S.C.

§ 1404(a) or consolidation under Rule 42.

Nor must courts concoct prudential-standing rules

to further “the policy of encouraging the voluntary

settlement of lawsuits.” App.17a. They need only

faithfully apply Rule 24 and Article III. When a

district court grants intervention—especially when

done for the “express purpose of objecting to and

opposing” the settlement, App.83a-85a—it necessarily

determines that the intervenor has a sufficient interest

to justify being heard. See Fed. R. Civ. P. 24(a)-(b). And

Article III, in turn, precludes a party from appealing the

settlement’s approval unless it causes the party

concrete and redressable injury. Diamond, 476 U.S.

at 68-69. Together, those principles prevent litigants

from unjustifiably delaying settlements.

III. The Question Presented Is Exceptionally

Important

for

Policing

Collusive

Government Settlements

The split over the formal-legal-prejudice bar, and

the rule’s disregard for this Court’s precedents,

warrants review standing alone. But as this case

illustrates, the bar is especially problematic in the

context of “collusive” government settlements—a

constitutional problem that has long merited this

Court’s attention. Flores, 557 U.S. at 448-49

(collecting critiques of the practice); cf. Arizona, 596

U.S. at 765-66 (Roberts, C.J., concurring) (similar).

Indeed, settlements in “ordinary litigation” between

“private parties” usually affect only those parties’

interests. Gardiner v. A.H. Robins Co., 747 F.2d 1180,

1189 (8th Cir. 1984). But a secretly negotiated

government surrender requiring a federal agency to

alter a regulatory program can inflict sweeping harm

on regulated entities and persons, without affording

them required process.

This “sue and settle” regime “presents disturbing

separation-of-powers concerns.” Mi Familia Vota v.

Fontes, 129 F.4th 691, 745 (9th Cir. 2025) (Bumatay,

J., dissenting). It circumvents the democratic process

by “bind[ing] the hands of future policymakers.”

Flores, 557 U.S. at 449. It runs roughshod over the

APA by inviting agencies to modify rules without

notice-and-comment—a

pernicious

form

“rulemaking-by-collusive-acquiescence.” Arizona, 596

U.S. at 766 (Roberts, C.J., concurring). And it

tramples the separation of powers by allowing

agencies to provide relief “well beyond what is

required”—or even allowed—“by federal law.” Flores,

557 U.S. at 448.19

The Ninth Circuit’s prudential-standing bar

exacerbates those problems. Under Article III and the

Federal Rules of Civil Procedure, parties injured

by a collusive government settlement may intervene

to challenge its legality.20 But superimposing a

Citing those very reasons, the Department of Justice in

2018 issued a policy requiring “special caution” for such

settlements. Memorandum from Jefferson B. Sessions III,

Principles and Procedures for Civil Consent Decrees and

Settlement Agreements with State and Local Governmental

Entities, DOJ (Nov. 7, 2018), https://tinyurl.com/3hn3z69h. The

Biden Administration abolished that policy upon assuming

office. Memorandum from Merrick B. Garland, Civil Settlement

Agreements and Consent Decrees with State and Local

Governmental

Entities,

DOJ

(Apr.

16,

2021),

https://tinyurl.com/mss8jvs2.

E.g., Carpenter, 298 F.3d at 1124 (private parties

intervened to challenge EPA’s settlement); Citizens for a Better

nebulous prudential-standing bar atop those ordinary

principles “immunize[s]” unlawful government

settlements from meaningful adversarial testing.

Flores, 557 U.S. at 449. Even the district court here,

which approved the settlement, recognized this

problem, permitting intervention to “keep the system

honest” and “help [the court] see the opposing

arguments.” ER-341. The Ninth Circuit eviscerated

that important check on a practice that already

stretches the constitutional separation of powers to its

breaking point.

This case well illustrates why it is especially

important that injured parties be able to challenge the

“evil of government by consent decree” or collusive

settlement. Gorsuch, 718 F.2d at 1136 (Wilkey, J.,

dissenting). Plaintiffs sued the Department for the

modest relief of ordering the Department to process

their applications, and not for any specific substantive

outcome. Yet because President Biden could not fulfill

his campaign promise to cancel student debt through

legislation or lawful agency action, his administration

turned to this collusive settlement to achieve the same

end. In doing so, the Department cancelled billions in

student-loan debt and rewrote its governing

regulations without statutory authority or APA

compliance. Then, in a process reminiscent of the Star

Chamber, the parties (that is, the accusers and the

adjudicator) secretly determined 151 schools had

engaged in “substantial misconduct,” without

affording the schools notice, evidence, hearings, or

even a description of the misconduct alleged. See

Chambers v. Florida, 309 U.S. 227, 237 (1940) (“[A]n

Env’t v. Gorsuch, 718 F.2d 1117, 1120-21 (D.C. Cir. 1983) (same);

cf. Arizona, 596 U.S. at 765-66 (Roberts, C.J., concurring) (States

sought intervention to defend Public Charge Rule).

accused’s right to procedural due process sprang in

large part from knowledge of the historical truth that

the rights and liberties of people accused of crime

could not be safely entrusted to secret inquisitorial

processes.”).

To describe this unprecedented power grab is to

detail its illegality—illegality that the Ninth Circuit

conceded inflicted constitutionally cognizable harm on

Petitioner. Yet, under the Ninth Circuit’s “prudence,”

Petitioner cannot redress that injury by challenging

the settlement’s legality, despite the following litany

of infirmities.

First, the settlement is unlawful because, as all

parties concede, the federal government cannot enter

a settlement requiring an agency “to take substantive

action that exceeds [their] statutory power.” App.40a

(Collins, J., dissenting) (citing Authority of the U.S. to

Enter Settlements Limiting the Future Exercise of

Executive Branch Discretion, 23 Op. O.L.C. 126, 13638 (1999)); see ER-35. Yet the HEA provisions relied

on by the Department do not permit it to cancel

student-loan debt en masse. See App.39a-42a (Collins,

J., dissenting). Specifically, the Department cited 20

U.S.C. § 1087e(h), but that provision requires the

Department to “specify” borrower defenses “in

regulations,” which is the exact opposite of cancelling

borrower debt in a settlement. App.40a-41a (Collins,

J., dissenting). The Department also invoked 20

U.S.C. § 1082(a)(6), which bears the heading “General

[P]owers” and states: “In the performance of, and with

respect to, the functions, powers, and duties, vested in

him by this part, the Secretary may … enforce, pay,

compromise, waive, or release any right, title, claim,

lien, or demand, however acquired, including any

equity or any right of redemption.” But “this part” is

Part B of the HEA, id. §§ 1071 to 1087-4, which

addresses only FFEL Loans, not the Direct Loans that

constitute most of the cancelled loans. ER-204-05.

And even if Section 1082(a)(6) did apply to Direct

Loans, it would not provide authority for blanket

cancellation because Part B specifically delimits the

circumstances under which the Secretary may cancel

FFEL Loans.

To read Section 1082(a)(6) as

authorizing full discharge in every circumstance

would render meaningless the specific authorizations

provided in these sections.

Second, the settlement violated Rule 23 in

multiple ways. ER-193-97. Most glaringly, Rule

23(b)(2) “does not authorize class certification when

each class member would be entitled to an

individualized award of monetary damages.” WalMart, 564 U.S. at 360-61. Yet the “settlement

recognize[d] that individualized determinations will

be required to decide whether” each borrower’s debt

should be cancelled and how much of a “refund[]” the

borrower should receive. App.42a-43a (Collins, J.,

dissenting).

Third, the settlement was arbitrary and capricious

and violated Everglades’ due-process rights. ER-197200, 201-03. After secret negotiations, the settlement

“determined” that Everglades had engaged in

“substantial misconduct” without explanation, notice,

or a hearing.

But the arbitrary-and-capricious

standard requires “reasoned decisionmaking,” not

“ipse dixit.” Music Choice v. Copyright Royalty Bd.,

970 F.3d 418, 429 (D.C. Cir. 2020). And the Due

Process Clause demands “[a]n opportunity to meet

and rebut evidence utilized by an administrative

agency” to harm a regulated entity. Ralpho v. Bell,

569 F.2d 607, 628 (D.C. Cir. 1977).

Fourth, the settlement unlawfully amended the

Department’s rules without notice-and-comment. ER200-01.

A settlement cannot “permanently and

substantially amend[] an agency rule that would have

otherwise been subject to statutory rulemaking

procedures.” Conservation Nw. v. Sherman, 715 F.3d

1181, 1187 (9th Cir. 2013). Yet the settlement did just

that: It created three new avenues to succeed in a

borrower-defense proceeding that were divorced from

the Department’s governing regulations.

Those

substantive changes required both notice and

comment, 5 U.S.C. §§ 551(4), 553, and negotiated

rulemaking, 20 U.S.C. § 1087e(h).

Any of these significant infirmities should have

stopped the settlement cold, protecting Petitioner

from the injury caused by the Department’s illegal

actions. Yet the Ninth Circuit’s judge-made bar on

non-settler challenges holds that Petitioner is

powerless to do anything about it. That tactic upends

the “party presentation” principle that drives “our

adversarial system,” United States v. SinenengSmith, 590 U.S. 371, 375 (2020)—a critical part of

“institutional reform litigation.” Flores, 557 U.S. at

448. And it charts a path to stonewall other efforts to

contest strategic surrenders on issues of national

importance. Those serious repercussions warrant this

Court’s review.

CONCLUSION

The Court should grant the petition for writ of

certiorari.

Respectfully submitted,

JESSE PANUCCIO

Counsel of Record

JASON HILBORN

ERIC M. PALMER

DAVID M. COSTELLO

BOIES SCHILLER FLEXNER LLP

401 East Las Olas Boulevard

Suite 1200

Fort Lauderdale, FL 33301

(954) 356-0011

jpanuccio@bsfllp.com

Counsel for Petitioner

October 17, 2025

APPENDIX

TABLE OF APPENDICES

Page

APPENDIX A — OPINION OF THE UNITED

STATES COURT OF APPEALS FOR THE

NINTH CIRCUIT, FILED NOVEMBER 5, 2024 . . 1a

APPENDIX B — ORDER OF THE UNITED

STATES DISTRICT COURT FOR THE

NORTHERN DISTRICT OF CALIFORNIA,

FILED NOVEMBER 16, 2022 . . . . . . . . . . . . . . . . 45a

APPENDIX C — ORDER OF THE UNITED

STATES DISTRICT COURT FOR THE

NORTHERN DISTRICT OF CALIFORNIA,

FILED AUGUST 31, 2022 . . . . . . . . . . . . . . . . . . . . 83a

APPENDIX D — DENIAL OF REHEARING

OF THE UNITED STATES COURT OF

APPEALS FOR THE NINTH CIRCUIT,

FILED MAY 21, 2025 . . . . . . . . . . . . . . . . . . . . . . . . 86a

APPENDIX E — RELEVANT PROVISIONS . . . . 88a

Appendix

APPENDIX A — OPINION

OF THE

UNITED STATES

COURT OF APPEALS FOR THE NINTH CIRCUIT,

FILED NOVEMBER 5, 2024

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

No. 23-15049

D.C. No. 3:19-cv-03674-WHA

THERESA SWEET; CHENELLE ARCHIBALD;

DANIEL DEEGAN; SAMUEL HOOD; TRESA

APODACA; ALICIA DAVIS; JESSICA JACOBSON,

ON BEHALF OF THEMSELVES AND ALL

OTHERS SIMILARLY SITUATED,

Plaintiffs-Appellees,

EVERGLADES COLLEGE, INC.,

Intervenor-Appellant,

MIGUEL A. CARDONA, SECRETARY OF THE

UNITED STATES DEPARTMENT OF EDUCATION;

U.S. DEPARTMENT OF EDUCATION,

Defendants-Appellees,

Appendix A

LINCOLN EDUCATIONAL SERVICES

CORPORATION; AMERICAN NATIONAL

UNIVERSITY; CHICAGO SCHOOL OF

PROFESSIONAL PSYCHOLOGY,

Intervenors.

No. 23-15050

D.C. No. 3:19-cv-03674-WHA

THERESA SWEET; CHENELLE ARCHIBALD;

DANIEL DEEGAN; SAMUEL HOOD; TRESA

APODACA; ALICIA DAVIS; JESSICA JACOBSON,

ON BEHALF OF THEMSELVES AND ALL

OTHERS SIMILARLY SITUATED,

Plaintiffs-Appellees,

LINCOLN EDUCATIONAL SERVICES

CORPORATION,

Intervenor-Appellant,

MIGUEL A. CARDONA, SECRETARY OF THE

UNITED STATES DEPARTMENT OF EDUCATION;

U.S. DEPARTMENT OF EDUCATION,

Defendants-Appellees,

Appendix A

EVERGLADES COLLEGE, INC.; AMERICAN

NATIONAL UNIVERSITY; CHICAGO SCHOOL OF

PROFESSIONAL PSYCHOLOGY,

Intervenors.

No. 23-15051

D.C. No. 3:19-cv-03674-WHA

THERESA SWEET; CHENELLE ARCHIBALD;

DANIEL DEEGAN; SAMUEL HOOD; TRESA

APODACA; ALICIA DAVIS; JESSICA JACOBSON,

ON BEHALF OF THEMSELVES AND ALL

OTHERS SIMILARLY SITUATED,

Plaintiffs-Appellees,

AMERICAN NATIONAL UNIVERSITY,

Intervenor-Appellant,

MIGUEL A. CARDONA, SECRETARY OF THE

UNITED STATES DEPARTMENT OF EDUCATION;

U.S. DEPARTMENT OF EDUCATION,

Defendants-Appellees,

Appendix A

EVERGLADES COLLEGE, INC.;

LINCOLN EDUCATIONAL SERVICES

CORPORATION; CHICAGO SCHOOL OF

PROFESSIONAL PSYCHOLOGY,

Intervenors.

Appeal from the United States District Court

for the Northern District of California

William Alsup, District Judge, Presiding

Argued and Submitted December 5, 2023

San Francisco, California

Filed November 5, 2024

Before: Daniel P. Collins, Danielle J. Forrest, and

Jennifer Sung, Circuit Judges.

Opinion by Judge Sung;

Dissent by Judge Collins

OPINION

SUNG, Circuit Judge:

Three intervenor for-profit university organizations

(American National University, Everglades College, Inc.,

and Lincoln Educational Services Corp.—collectively,

“the Schools”) appeal from the district court’s final

approval of a class action settlement between the United

States Department of Education (“the Department”) and

Appendix A

Plaintiffs, who represent a class of over 500,000 federal

loan borrowers. The settlement completely resolves

Plaintiffs’ class action complaint, originally filed in June

2019, regarding the Department’s backlog of hundreds

of thousands of unprocessed applications for borrower

defense (“BD”) relief.

For the reasons stated below, we conclude that

the Schools have alleged the minimum constitutional

requirements for Article III standing. But because the

Schools are not parties to the settlement and have not

shown that the settlement will cause them formal legal

prejudice, they lack standing to challenge the district

court’s final approval of the settlement on appeal. We

also conclude that the dispute between Plaintiffs and the

Department was not moot at the time the district court

approved the settlement, and we affirm the district court’s

denial of the Schools’ motion to intervene as of right.

Background

The Student Loan Reform Act of 1993 authorized

the Secretary of Education to develop a program for

discharging federal educational loan debts based on the

wrongful acts or omissions of the schools attended by

borrowers. 20 U.S.C. §§ 1070, 1087e(h); Student Loan

Reform Act of 1993, Pub. L. No. 103-66, § 455, 107 Stat.

341, 351. Accordingly, the Secretary established the BD

program. William D. Ford Federal Direct Loan Program,

59 Fed. Reg. 61,664, 61,696 (Dec. 1, 1994) (to be codified

at 34 C.F.R. pt. 685); see also Office of Postsecondary

Education, 60 Fed. Reg. 37,768, 37,769 (July 21, 1995).

Appendix A

Under the program regulations, when a borrower submits

a BD application, the Department engages in factfinding

and decides whether and to what extent to grant any

repayment relief. 34 C.F.R. §§ 685.222(e), 685.206(e).1 If

the Department approves the application and discharges

any of the borrower’s debt, the Department may, but is

not required to, seek recoupment of funds from the school

in a separate adjudicatory proceeding. Id. §§ 668.125,

685.308(a)(3); see also id. §§ 685.206(c)(3)-(4), 685.222(e)(7).

During the first 20 years of the BD program’s

existence, few borrowers filed applications for relief. See

Student Assistance General Provisions, Federal Perkins

Loan Program, Federal Family Education Loan Program,

William D. Ford Federal Direct Loan Program, and

Teacher Education Assistance for College and Higher

Education Grant Program, 81 Fed. Reg. 39,330, 39,330

(June 16, 2016) (to be codified in scattered sections of

34 C.F.R.). In May 2015, however, Corinthian Colleges,

Inc., a for-profit educational institution with over 70,000

students across more than 100 campuses, filed for

bankruptcy, which caused a “flood” of BD applications.

Id. In response, the Department announced that it would

1. The Department has amended the regulations governing

the adjudication of BD applications several times, including in 2016

and 2019. As a result, two different versions of the adjudication

process are relevant in this appeal. Compare 34 C.F.R. § 685.206,

with 34 C.F.R. § 685.222. The date on which a BD applicant’s

original federal loan was disbursed determines which version

applies. 34 C.F.R. § 685.206(c)-(e). The parties agree that either

the 2016 or 2019 versions govern the class members’ applications,

so we consider both.

Appendix A

“develop new regulations to establish a more accessible

and consistent borrower defense standard and clarify

and streamline the borrower defense process to protect

borrowers and improve the Department’s ability to hold

schools accountable for actions and omissions that result

in loan discharges.” Id. at 39,331.

By the end of 2016, more borrowers from a range

of schools had begun to use the BD process, and “the

Secretary had approved 31,773 applications for discharge

and found 245 ineligible, for a 99.2% grant rate.” Still, many

thousands of applications remained pending. By June 2018,

“borrowers had submitted, in total, 165,880 applications”

with “105,998 still to be decided.” By June 2019, the

backlog had grown to more than 210,000 applications,

and the Department had stopped adjudicating any BD

applications. In re U.S. Dep’t of Educ., 25 F.4th 692, 696

(9th Cir. 2022) (“From June 2018 through December 2019,

the Department issued no borrower defense decisions.”).

Plaintiffs sued the Department in June 2019, alleging

that its failure to adjudicate BD applications violated

the Administrative Procedure Act (“APA”). In October

2019, the district court certified a class of “[a]ll people

who borrowed a Direct Loan or FFEL loan to pay for

a program of higher education, who have asserted a

borrower defense to repayment to the U.S. Department of

Education, whose borrower defense has not been granted

or denied on the merits, and who is not a class member

in Calvillo Manriquez v. DeVos, No. 17-7106 (N.D. Cal.).”

Appendix A

First settlement agreement. In December 2019,

Plaintiffs and the Department cross-moved for summary

judgment. But before the district court ruled on the

motions, the parties executed their first settlement

agreement. In this settlement, the Department agreed

to decide all pending BD applications within 18 months.

The district court preliminarily approved the settlement

in May 2020.

Before final approval, however, the Department began

issuing pro forma denial notices to a large number of

class members, instead of adjudicating the applications

on the merits. When Plaintiffs learned about the pro

forma denials, they notified the district court that the

Department was breaching the settlement agreement. The

district court conducted an inquiry, and the Department

admitted that it had used four templates to deny 89.8% of

the 131,800 applications reviewed. At the fairness hearing,

several class members expressed “serious concern” with

the settlement “in light of the Secretary’s recent string

of form denials.” Because of Plaintiffs’ concerns and the

class members’ objections, the district court denied final

approval of the first settlement and ordered discovery to

resume. A few months later, Plaintiffs filed a supplemental

complaint adding claims that the Department had illegally

adopted a “presumption of denial” policy in violation of the

APA and the Due Process Clause of the Fifth Amendment.

Second settlement agreement. In June 2022, Plaintiffs

again moved for summary judgment. While that motion

was pending, the parties requested preliminary approval

of a second settlement agreement—the one at issue in this

Appendix A

appeal. The settlement divides the class into three groups,

described below, for the purposes of relief.

Borrowers in Group One (approximately 196,000

borrowers) get automatic debt forgiveness. Group One

consists of borrowers who have pending BD applications

associated with any of 151 schools on a list attached as

Exhibit C to the settlement. The settlement agreement

does not explain how Exhibit C was developed. But the

parties’ joint motion for preliminary approval of the

settlement states: “The Department has determined

that attendance at one [of the schools listed in Exhibit C]

justifies presumptive relief, for purposes of this settlement,

based on strong indicia regarding substantial misconduct

by [the] listed schools, whether credibly alleged or in some

instances proven, and the high rate of class members with

applications related to the listed schools.”

Group Two (approximately 100,000 borrowers)

consists of borrowers with pending BD applications

associated with schools that are not listed in Exhibit C.

The Department agreed to resolve Group Two borrowers’

claims in a streamlined adjudication process. If the

Department does not meet specified deadlines, Group Two

borrowers will receive automatic debt relief.

Group Three (approximately 206,000 borrowers)

covers borrowers who submitted a BD application after

the settlement’s execution date but before the date of final

approval. The Department may adjudicate Group Three

borrowers’ applications under the regulations applicable

to loans between 2017 and 2020, but it must resolve them

10a

Appendix A

within three years. If the Department fails to meet the

deadline, Group Three borrowers will receive full relief.

Intervention by Schools. Three weeks after the

parties moved for preliminary approval of the second

settlement, four schools listed in Exhibit C (including

the three Schools bringing the present appeal) moved

to intervene. Plaintiffs and the Department opposed

intervention. The district court conducted a hearing

where it heard from the prospective intervenors regarding

their asserted interests in the litigation and heard from

the parties regarding the settlement. At the close of the

hearing, the district court preliminarily approved the

settlement in a bench ruling. A few weeks later, the district

court denied the intervenors’ motions to intervene as of

right but allowed them to permissively intervene for the

sole purpose of objecting to the class action settlement at

the final approval fairness hearing.

The Schools submitted written objections to the

settlement and were given an opportunity to be heard

at the final fairness hearing. The district court rejected

the Schools’ objections and granted final approval of the

settlement.

The Schools timely appealed and moved to stay the

judgment pending appeal. The district court, our court,

and the Supreme Court all denied the Schools’ applications

for a stay.

11a

Appendix A

II. Standing

The Department 2 argues that this appeal should be

dismissed because the Schools do not have Article III

standing. Additionally, the Department argues that,

because the Schools are not parties to the settlement,

they have no “cause of action” to challenge the settlement.

Standing analysis “involves both constitutional

limitations on federal-court jurisdiction and prudential

limitations on its exercise.” Warth v. Seldin, 422 U.S.

490, 498, 95 S. Ct. 2197, 45 L. Ed. 2d 343 (1975). “The

constitutional requirements are derived from Article III,

Section 2, Clause 1 of the United States Constitution,

and the prudential limitations are rules of judicial selfgovernance.” United States v. Mindel, 80 F.3d 394, 396

(9th Cir. 1996).

“Apart from th[e] minimum constitutional mandate,

[the Supreme] Court has recognized other limits on the

class of persons who may invoke the courts’ decisional

and remedial powers.” Warth, 422 U.S. at 499 (explaining

prohibitions on generalized grievances and third-party

standing); see also Lexmark Int’l, Inc. v. Static Control

Components, Inc., 572 U.S. 118, 126, 134 S. Ct. 1377, 188

L. Ed. 2d 392 (2014) (describing the development of a

“‘prudential’ branch of standing, a doctrine not derived

from Article III” (quoting Elk Grove Unified Sch. Dist.

v. Newdow, 542 U.S. 1, 12, 124 S. Ct. 2301, 159 L. Ed. 2d

2. We have considered both Plaintiffs’ and the Department’s

arguments, but because they are so similar, we refer to “the

Department” for simplicity.

12a

Appendix A

98 (2004))); United States ex rel. Alexander Volkhoff,

LLC v. Janssen Pharmaceutica N.V., 945 F.3d 1237, 1241

(9th Cir. 2020) (“‘The rule that only parties to a lawsuit

. . . may appeal an adverse judgment’ . . . is sometimes

described as ‘standing to appeal,’ [but] it is distinct from

the requirements of constitutional standing.” (citation

omitted)).

One of these additional limits prevents an entity who

is not a party to a settlement from objecting to court

approval of the settlement, either before the district court

or on appeal. Waller v. Fin. Corp. of Am., 828 F.2d 579,

582 (9th Cir. 1987) (“[A] non-settling defendant, in general,

lacks standing to object to a partial settlement.”). There

is only one exception to this general rule: A non-settling

entity may challenge a settlement when it “demonstrate[s]

that it will sustain some formal legal prejudice as a result

of the settlement.” Id. at 583.

A rticle III injury does not equal formal legal

prejudice. See United States v. Kovall, 857 F.3d 1060,

1068 (9th Cir. 2017) (“The fact that a would-be litigant

has Article III standing does not guarantee the right to

take an appeal.”); Agretti v. ANR Freight Sys., Inc., 982

F.2d 242, 247 (7th Cir. 1992) (“Mere allegations of injury

in fact . . . as a result of a settlement simply do not rise to

the level of plain legal prejudice.”). Thus, a non-settling

entity may have Article III standing but nonetheless lack

prudential standing to challenge a settlement. 3

3. We recognize that it might be better to ask whether a nonsettling entity has a “cause of action” to object to the settlement,

instead of asking whether the non-settling party has “standing”

13a

Appendix A

To establish Article III standing, the Schools must

show that they have “(1) suffered an injury in fact, (2)

that is fairly traceable to the challenged conduct of the

defendant, and (3) that is likely to be redressed by a

favorable judicial decision.” Spokeo, Inc. v. Robins, 578

U.S. 330, 338, 136 S. Ct. 1540, 194 L. Ed. 2d 635 (2016).

The Schools allege that their inclusion on Exhibit

C has caused them reputational harm. We must first

determine whether the alleged reputational harm is

to object the settlement, as we did in Waller. The term “standing”

“is a word of many, too many, meanings.” Steel Co. v. Citizens for

a Better Env’t, 523 U.S. 83, 90, 118 S. Ct. 1003, 140 L. Ed. 2d 210

(1998) (quoting United States v. Vanness, 85 F.3d 661, 663 n.2,

318 U.S. App. D.C. 95 (D.C. Cir. 1996)). And federal courts use

many different terms to refer to a litigant’s eligibility to bring

a particular claim or appeal when the eligibility requirements

stem from a statute or legal doctrine other than Article III. See,

e.g., Bank of Am. Corp. v. City of Miami, 581 U.S. 189, 197, 137

S. Ct. 1296, 197 L. Ed. 2d 678 (2017) (pointing out that the terms

“prudential standing,” “statutory standing,” and “cause of action”

have all been used to describe the “zone of interests” requirement);

Lexmark, 572 U.S. at 128 n.4 (explaining that the nomenclature

of “statutory standing,” “prudential standing,” and a “cause of

action” have all been used interchangeably to refer to non-Article

III limits on standing). Still, because we, and our sister circuits,

have predominantly referred to the Waller formal-legal-prejudice

requirement as a “standing” requirement, we continue to do so

here. See, e.g., Melito v. Experian Mktg. Sols., Inc., 923 F.3d 85,

91 (2d Cir. 2019); In re Vitamins Antitrust Class Actions, 215 F.3d

26, 31, 342 U.S. App. D.C. 26 (D.C. Cir. 2000); Smith v. Arthur

Andersen LLP, 421 F.3d 989, 998-99 (9th Cir. 2005).

14a

Appendix A

concrete enough to constitute “injury in fact.” Lujan v.

Defs. of Wildlife, 504 U.S. 555, 560, 112 S. Ct. 2130, 119

L. Ed. 2d 351 (1992).

“Central to assessing concreteness is whether

the asserted harm has a ‘close relationship’ to a harm

traditionally recognized as providing a basis for a lawsuit

in American courts—such as physical harm, monetary

harm, or various intangible harms including (as relevant

here) reputational harm.” TransUnion LLC v. Ramirez,

594 U.S. 413, 417, 141 S. Ct. 2190, 210 L. Ed. 2d 568 (2021).

The Department argues that, because Exhibit C is not

false, misleading, or defamatory, it cannot cause injury that

is concrete enough to support Article III standing without

other proof of concrete harm. Nothing in the settlement

agreement states that the schools listed in Exhibit C

engaged in any wrongdoing or that the Department made

a finding to that effect. However, the Department and

Plaintiffs’ joint motion for settlement approval states, “The

Department has determined that attendance at one [of the

schools listed in Exhibit C] justifies presumptive relief,

for purposes of this settlement, based on strong indicia

regarding substantial misconduct by [the] listed schools,

whether credibly alleged or in some instances proven, and

the high rate of class members with applications related

to the listed schools.” The Schools argue that, because

the “speaker” of this statement is the Department, and

the Department is their “primary federal regulator,” the

reputational harm caused by the statement is sufficiently

concrete to constitute Article III injury.

15a

Appendix A

We agree with the Schools that the Department’s

statement could cause reputational injury that supports

Article III standing, even if the statement is not false,

misleading, or defamatory. “In looking to whether a

plaintiff’s asserted harm has a ‘close relationship’ to

a harm traditionally recognized as providing a basis

for a lawsuit in American courts, we do not require an

exact duplicate.” TransUnion, 594 U.S. at 433. A nondefamatory statement may cause reputational harm that is

concrete enough to confer standing if it is “disparag[ing]”

or “impugns the professional integrity” of its subject,

Kennedy v. Warren, 66 F.4th 1199, 1206 (9th Cir. 2023),

or if it “would subject [a person] to hatred, contempt, or

ridicule,” TransUnion, 594 U.S. at 432 (citation omitted).

Such statements cause more concrete harm when the

government is the speaker, because there is a “unique

stigma associated with having a government official

label someone a law breaker.” Kennedy, 66 F.4th at 1206.

Thus, even when “we are unsure” that an unretracted

government statement actually implies that a person or

entity engaged in unlawful conduct, if “any reader . . .

might come away with this impression,” the resulting

reputational injury “is a sufficiently concrete injury for

standing purposes.” Id. Here, an individual who reads the

Department’s statement about Exhibit C might come away

with the impression that schools listed in Exhibit C have

engaged in unlawful conduct. Consequently, the Schools’

alleged reputational harm is concrete enough to support

Article III standing.

The Department also contends that the alleged

reputational injury is not redressable by a favorable

16a

Appendix A

decision. Reputational injury, however, is redressable

if the relief sought “would remove the unique stigma

associated with having a government official label someone

a law breaker and thereby cast a shadow over their

activities and affiliates.” Id.; see also Foretich v. United

States, 351 F.3d 1198, 1213-14, 359 U.S. App. D.C. 54 (D.C.

Cir. 2003) (explaining that “[c]ase law is clear that where

reputational injury derives directly from an unexpired

and unretracted government action, that injury satisfies

the requirements of Article III standing to challenge

that action,” but “the ‘lingering effects’ on reputation of a

retracted or repealed government action normally do not

furnish a basis for Article III standing”). A reputational

injury is redressable by retraction even if retraction would

not prevent other public criticism. Kennedy, 66 F.4th at

1206; see also Meese v. Keene, 481 U.S. 465, 476-77, 107

S. Ct. 1862, 95 L. Ed. 2d 415 (1987).

In this case, the alleged reputational harm was caused

by the Department’s inclusion of the Schools on Exhibit C

coupled with its unretracted statement regarding Exhibit

C in the joint motion for settlement approval. Because the

reputational harm was not caused by the district court’s

final approval of the settlement, the relief sought by the

Schools—reversal or vacatur of that approval—would

not necessarily require the Department to redress the

Schools’ claimed injury. Still, where “a favorable judicial

decision would not require the defendant to redress the

plaintiff’s claimed injury,” the plaintiff can demonstrate

redressability by “show[ing] that the defendant or a third

party are nonetheless likely to provide redress as a result

of the decision.” M.S. v. Brown, 902 F.3d 1076, 1083 (9th

17a

Appendix A

Cir. 2018) (internal citations and quotation marks omitted).

Further, there is redressability if the relief sought would

“at least partially redress the reputational injury.” Meese,

481 U.S. at 476. Applying these standards here, we find

redressability because reversal or vacatur would enable

and likely cause the Department to retract the statement

and file a new motion for settlement approval. Therefore,

the Schools have met their burden to establish Article

III standing based on their alleged reputational harm.4

As noted above, a non-settling entity generally

lacks prudential standing to object to a settlement—or

to challenge on appeal a district court’s approval of a

settlement, unless the non-settling entity demonstrates

that it will “sustain some formal legal prejudice as a

result of the settlement.” Waller, 828 F.2d at 583. “This

rule advances the policy of encouraging the voluntary

settlement of lawsuits.” Id. “[T]he interest in encouraging

settlements” is particularly strong “in class actions, which

are often complex, drawn out proceedings demanding a

large share of finite judicial resources.” Mayfield v. Barr,

985 F.2d 1090, 1092, 300 U.S. App. D.C. 31 (D.C. Cir. 1993).

Courts have applied this rule to both parties and

non-parties, including non-settling defendants, Smith,

421 F.3d at 998; Waller, 828 F.2d at 582; non-settling

4. Because we conclude that the Schools have Article III

standing based on their alleged reputational injury, we do not

reach whether they have standing based on their alleged financial

and procedural injuries.

18a

Appendix A

third-party defendants, Melito, 923 F.3d at 91; opted-out

class members, Mayfield, 985 F.2d at 1092; and non-class

members, Gould v. Alleco, Inc., 883 F.2d at 281, 285 (4th

Cir. 1989).

The Department argues that the Schools, as nonsettling permissive intervenors, lack standing to challenge

the settlement approval on appeal. The Schools argue

that the parties have forfeited this issue. Alternatively,

the Schools argue that they have demonstrated that the

settlement will cause them formal legal prejudice.

We first address the Schools’ argument that the

Department and Plaintiffs forfeited the argument that the

Schools lack standing to challenge the district court’s final

approval of the settlement. We have never decided whether

or how a settling party must preserve this issue, and we

do not need to do so here, because the parties adequately

raised the issue below and on appeal.

Below, the Schools moved to intervene for the purpose

of objecting to the parties’ proposed settlement agreement.

Plaintiffs opposed the intervention motions, arguing

that the Schools did not have “standing to block” the

settlement’s approval. Plaintiffs also repeatedly argued

that the Schools should not be permitted to intervene

because they do not have “any claims or defenses” at issue

in the settlement. The Department similarly opposed

the Schools’ motions to intervene on the ground that the

Schools “lack any concrete interest” in the discretionary

settlement, and cited Gould, 883 F.2d at 285, for the

19a

Appendix A

proposition that “courts usually reject outsiders’ attempts

to enter the litigation during the settlement phase.”5

The Department has not abandoned its challenge to

the Schools’ standing to object to the settlement on appeal.

Specifically, the Department argues in its answering

brief that the Schools, as intervenors, “fail to identify

any cause of action that would permit them to challenge

the district court’s approval of the settlement.” As noted

above, courts use the terms “standing” and “cause of

action” interchangeably to refer to a particular litigant’s

eligibility to bring a particular claim or appeal. See supra

note 3. Although the Department did not cite Waller, a

party does not have to cite a particular case to adequately

raise an issue. See Nelson v. Adams USA, Inc., 529 U.S.

460, 469, 120 S. Ct. 1579, 146 L. Ed. 2d 530 (2000) (“[T]his

principle [of preserving an issue] does not demand the

incantation of particular words; rather, it requires that the

lower court be fairly put on notice as to the substance of

the issue.”); see also United States v. Williams, 846 F.3d

303, 311 (9th Cir. 2017) (explaining that a party does not

waive or forfeit arguments relating to claims it properly

presents to the district court); Thompson v. Runnels, 705

F.3d 1089, 1098 (9th Cir. 2013) (“[W]e may consider new

legal arguments raised by the parties relating to claims

previously raised in the litigation.”). And in any event,

the Schools apparently understood that the Department’s

5. In Gould, the Fourth Circuit held that “non-class members

have no standing to object . . . to a proposed class settlement”

under Rule 23(e), and it affirmed the district court’s denial of the

non-class members’ motion to intervene as of right under Rule

24 because they lacked sufficient interest in the settlement. 883

F.2d at 284-85.

20a

Appendix A

cause-of-action argument invoked the Waller rule because

they countered in their reply brief, “[U]nder a ‘recognized

exception,’ non-settling defendants may object if, as

here, they will suffer ‘formal legal prejudice as a result

of the settlement,’” quoting Waller and citing Smith. See

Thompson, 705 F.3d at 1100 (noting the court did not abuse

its discretion in considering a new legal argument that was

“fully addressed by both parties” on appeal).

Under these circumstances, the parties have not

forfeited their challenge to the Schools’ standing to object

to the settlement.

The Schools, as non-settling intervenors, lack standing

to object to the district court’s settlement approval unless

they demonstrate formal legal prejudice.6

Formal legal prejudice “exists only in those rare

circumstances when, for example, the settlement

6. For purposes of the Waller rule, an intervenor who is not

a party to a settlement is like any other non-settling entity. See,

e.g., Waller, 828 F.2d at 584 (holding that non-settling entity should

have been granted intervention as of right but lacked standing

to object to settlement); United States v. Gila Valley Irrigation

Dist., 345 F. App’x 281, 283 (9th Cir. 2009) (applying Waller and

holding that a tribal intervenor lacked standing to challenge a

district court’s order approving a settlement agreement); Ball ex

rel. Burba v. Dewine, No. 20-3927, 2021 U.S. App. LEXIS 19556,

2021 WL 4047032, at *3 (6th Cir. June 30, 2021) (holding that

entities that had been granted intervention nonetheless did “not

have standing to challenge the settlement agreement on appeal”).

21a

Appendix A

agreement formally strips a non-settling party of a

legal claim or cause of action, such as a cross-claim for

contribution or indemnification, invalidates a non-settling

party’s contract rights, or the right to present relevant

evidence at a trial.” Bhatia v. Piedrahita, 756 F.3d 211,

218 (2d Cir. 2014); accord Waller, 828 F.2d at 582-83. It

is not enough for a non-settling entity to allege that the

settlement “effectively strips them of defenses” or claims

if nothing in the settlement agreement precludes the

non-settling entity “from asserting in the district court

or in other litigation any claims or defenses that may be

available to them.” Bhatia, 756 F.3d at 218.

Thus, for example, we held that a non-settling party

demonstrated formal legal prejudice where the settlement

approval order explicitly stated, “The non-settling parties

are permanently barred and enjoined from asserting or

continuing to prosecute, either directly or in any other

capacity, any and all Claims (as defined in the Settlement

Agreement). . . .” Smith, 421 F.3d at 1000. But we held

that a non-settling defendant did not demonstrate formal

legal prejudice where a settlement bound a settling party

to “cooperate” with other settling parties in prosecuting

claims against the intervenor but did not require the

disclosure of privileged communications. Waller, 828

F.2d at 584. “At most,” we said, “the settlement puts [the

intervenor] at something of a tactical disadvantage in the

continuing litigation. Such an injury does not constitute

plain legal prejudice.” Id.7

7. Because the Waller rule and its exception are closely

related to Federal Rule of Civil Procedure 41(a)(2) governing

voluntary dismissals, federal courts often use the terms “formal

22a

Appendix A

The Schools do not identify any provision in the

settlement agreement or settlement approval order that

formally strips them of any legal claim or defense, or any

contractual right. The settlement does not compromise

any of the Schools’ rights or impose any obligations or

liabilities on them. For class members’ BD applications

associated with Exhibit C schools, the settlement only

requires the Department to fully discharge the amount

that those borrowers owe the federal government. The

settlement does not entitle the Department to recoup any

funds from the schools.

Normally, when the Department approves a BD

application, the Department has the discretion to initiate a

separate proceeding against the school for recoupment. 34

C.F.R. § 668.125. But even when the Department initiates

a recoupment proceeding, the school is free to contest the

issue, and the school retains due process rights. See id.

§§ 668.125, 685.308(a)(3); see also id. §§ 685.206(c)(3)-(4),

685.222(e)(7). Moreover, as the district court explained,

a Group One BD application that is resolved pursuant to

the settlement is not “a successful or approved borrowerdefense claim” as a matter of law, and consequently, the

Department cannot initiate recoupment proceedings

against any Exhibit C schools as a result of the settlement.8

legal prejudice” and “plain legal prejudice” interchangeably—as

we did in Waller itself. See 828 F.2d at 583, 584.

8. The Department has repeatedly represented on the record

that it cannot and will not seek recoupment from any schools for

BD applications covered by the settlement, and it will not use a

school’s inclusion in Exhibit C as evidence against them in any

future BD proceedings. The district court explicitly noted this

23a

Appendix A

Although the alleged reputational harm to the Schools

is concrete enough to support Article III standing, it does

“not rise to the level of plain legal prejudice.” Agretti, 982

F.2d at 247; see also Quad/Graphics, Inc. v. Fass, 724

F.2d 1230, 1233 (7th Cir. 1983) (even when a settlement

causes “factual injury to a non-settling party,” “the court

should not intercede in the plaintiff’s decision to settle with

certain parties, unless a remaining party can demonstrate

plain legal prejudice”). Even if the Schools must file a

second lawsuit to remedy the alleged reputational harm,

that does not mean the Schools have standing to object

to the district court’s approval of the settlement in this

case. See Agretti, 982 F.2d at 247 (noting courts have

repeatedly held that a settlement does not cause formal

legal prejudice to a non-settling party even if it “may

force a second lawsuit” against settling parties); Waller,

828 F.2d at 584 (concluding non-settling party lacked

standing to object to settlement when it could “seek

injunctive relief” or other remedies to address the alleged

harm). Neither the settlement, nor the district court’s

order approving the settlement, bars the Schools from

bringing claims to remedy the alleged reputational harm

in a separate lawsuit.9

in its order approving the settlement, stating, “The Department

has also represented in the sworn declaration of [Deputy Under

Secretary] Benjamin Miller that it does not consider inclusion

on Exhibit C a finding of misconduct and that inclusion does not

constitute evidence that could or would be considered in an action

by the Department against a school. The Court relied upon, and

the Court expects the government to stand behind, the statements

made in the Miller Declaration.”

9. The Schools could have moved to seal the settlement or for

a protective order, but, apparently, they did not.

24a

Appendix A

Because the Schools do not have prudential standing to

object to the settlement, “we cannot review the settlement

approved by the district court.” Agretti, 982 F.2d at 248.10

III. Mootness

“To qualify as a case fit for federal-court adjudication,

an actual controversy must be extant at all stages of

review, not merely at the time the complaint is filed.”

Arizonans for Off. Eng. v. Arizona, 520 U.S. 43, 67, 117

S. Ct. 1055, 137 L. Ed. 2d 170 (1997) (internal quotation

marks omitted) (citation omitted). When Plaintiffs

originally filed their complaint, they requested that the

district court declare that the Department’s “policy of

inaction” on BD applications was unlawful. Under the

parties’ first settlement agreement, the Department

agreed to process all pending BD applications within 18

months. See supra Part I. But, because the Department

began issuing pro forma denial notices to the vast

majority of class members, the district court denied

final approval of the first settlement, and Plaintiffs

filed a supplemental complaint which added claims and

related allegations contending that the Department had

unlawfully transformed its “policy of inaction” into a policy

of “presumption of denial.”

10. Our conclusion that we lack jurisdiction to review the

district court’s order approving the settlement does not affect our

jurisdiction to review the district court’s separate order denying

the Schools’ motion to intervene as of right. See Waller, 828 F.2d

at 584 (holding non-settling defendant lacked standing to object to

settlement but district court erred in denying the entity’s motion

to intervene as of right). We address the Schools’ appeal of that

order below, in Part IV.

25a

Appendix A

Before the Department and Plaintiffs received

preliminar y approval of their second settlement

agreement, the Department moved for summary judgment

and argued, among other things, that its actions had

mooted the case. On appeal, only the Schools argue that

the case was moot before the district court approved the

settlement. Although we have concluded that the Schools

lack standing to object to the settlement, we address

mootness because we have an independent obligation to

confirm jurisdiction.

Below, the Department contended that it had mooted

Plaintiffs’ original claims by processing thousands of BD

applications. But under Rule 15(d), Plaintiffs’ supplemental

complaint merged with their then-operative complaint. See

Fed. R. Civ. P. 15(d); Keith v. Volpe, 858 F.2d 467, 473-76

(9th Cir. 1988). Thus, even assuming that the Department

mooted Plaintiffs’ original claims by processing many

(but not all) pending applications, that action did not moot

Plaintiffs’ supplemental claims.

The Department also argued below that Plaintiffs’

supplemental claims were moot because it had stopped

issuing pro forma denials. But the Department’s voluntary

cessation of the challenged practice did not render this

case moot. Friends of the Earth, Inc. v. Laidlaw Env’t

Servs. (TOC), Inc., 528 U.S. 167, 189, 120 S. Ct. 693, 145

L. Ed. 2d 610 (2000) (“It is well settled that ‘a defendant’s

voluntary cessation of a challenged practice does not

deprive a federal court of its power to determine the

legality of the practice.’” (citation omitted)); Rosebrock

v. Mathis, 745 F.3d 963, 971-72 (9th Cir. 2014). The

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Appendix A

Department could easily resume its conduct if the case

were dismissed. See Rosebrock, 745 F.3d at 971-72.

IV. Intervention as of Right

To qualify for intervention as of right under Rule

24(a)(2), a prospective intervenor must “show that: (1)

its motion is timely; (2) it has a significantly protectable

interest relating to the subject of the action; (3) it is

so situated that the disposition of the action may as a

practical matter impair or impede its ability to protect that

interest; and (4) its interest is inadequately represented

by the parties to the action.” Kalbers v. U.S. Dep’t of

Just., 22 F.4th 816, 822 (9th Cir. 2021) (cleaned up). “[A]

proposed intervenor ‘has a significant protectable interest

in an action if (1) it asserts an interest that is protected

under some law, and (2) there is a relationship between

its legally protected interest and the plaintiff’s claims.’”

Id. at 827 (citation omitted).

We review de novo the district court’s decision under

Rule 24(a) to deny the Schools intervention as a matter

of right. See Oakland Bulk & Oversized Terminal,

LLC v. City of Oakland, 960 F.3d 603, 620 (9th Cir.

2020). However, the harmless error doctrine applies to

intervention rulings, which means that we will reverse

only if any error affected the substantial rights of the

parties. Prete v. Bradbury, 438 F.3d 949, 959-60 (9th Cir.

2006).

Here, the district court did not err in denying the

Schools’ motion for intervention as of right. The Schools

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Appendix A

do not have a significantly protectable interest as required

by Rule 24(a), and they fail to explain how they were

prejudiced by the district court’s denial of intervention

as of right.

The Schools claim that they have significantly

protectable financial interests. But the Schools do not—

and cannot—face exposure to financial recoupment for

two reasons: First, the Schools do not have an independent

financial interest in a borrower’s BD relief because the

Department alone bears the cost of discharging that

debt, which is solely money owed by the student to the

federal government. See 20 U.S.C. § 1087e(h); 34 C.F.R.

§ 685.222(d)(1). As the district court summarized, the

schools have “already gotten the money and [they] don’t

have to pay it back” under the terms of the Department’s

settlement with the borrowers. Second, because a settled

BD application under this settlement does not constitute

a successful BD adjudication, the Department cannot

use the settled applications as a predicate for pursuing

recoupment from the Schools under its own regulations.

See 34 C.F.R. § 685.222(e)(7). And, as noted above, the

Department has sworn not to pursue any recoupment

proceedings against any Exhibit C school for any of the

loans discharged through the settlement, and the district

court further conditioned the settlement on that promise.

Recoupment of funds implicated by the settlement from

any of the Schools is thus a virtual impossibility.

The Schools also claim that the settlement interferes

with their rights under Department regulations. As

noted above, the Department first decides whether to

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Appendix A

grant a student’s application for repayment relief in a BD

proceeding. Supra Part I. If the Department grants the

student relief, the Department may (but is not required to)

try to recoup money from the school by initiating a second,

separate proceeding. 34 C.F.R. §§ 668.125, 685.308(a)

(3); see also id. §§ 685.206(c)(3)-(4), 685.222(e)(7). In the

recoupment proceeding, the school may contest the basis

on which the Department granted the student relief. See

§ 668.125.

In the settlement, the Department and Plaintiffs

agreed to summarily grant BD applications for Group

One borrowers (who attended schools listed in Exhibit

C) without further adjudication. Supra Part I. The

Schools argue that, by doing so, the settlement interfered

with their procedural right to participate in the BD

proceeding that the Department would normally conduct

to adjudicate a student’s application for relief. In a BD

proceeding, a school has, at most, the right to receive

notice that an application was filed and an opportunity to

submit a response to information that was provided by the

student. 34 C.F.R. §§ 685.206(e)(10)-(12)(i), 685.222(e)(3)

(i). The regulations do not prohibit the Department from

resolving a BD application through settlement instead of

an adjudication on the merits. The Department cannot

seek recoupment from schools for applications resolved by

the settlement, and, in any event, the settlement has no

effect on the Schools’ rights in recoupment proceedings.

Under these circumstances, the Schools’ interest in

participating in a BD proceeding (as opposed to a

recoupment proceeding) is not a sufficiently “significant

protectable interest” to support intervention as of right.

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Appendix A

United States v. Alisal Water Corp., 370 F.3d 915, 919 (9th

Cir. 2004) (citation omitted).

But even if we agreed that the district court erred

by denying the Schools intervention as of right, we would

decline to reverse because any error was harmless. The

district court allowed the Schools to intervene permissively

and carefully considered their objections to the settlement.

The Schools only discuss prejudice in their reply brief, and

even then, they only conclusorily assert that intervention

as of right would allow them to “file claims or assert

defenses, take discovery, move to decertify the class, or

participate in settlement negotiations, among other party

actions.” That broad assertion, standing alone, does not

show that the denial of intervention as of right prejudiced

the Schools’ “substantial rights.” Prete, 438 F.3d at 960.

***

For the foregoing reasons, this appeal is DISMISSED

in part, and the district court’s denial of intervention as

of right is AFFIRMED.

COLLINS, Circuit Judge, dissenting:

I agree with the majority that this case is not moot

and that Intervenors Everglades College, Inc.; Lincoln

Educational Services Corp.; and American National

University (“the Schools”) have Article III standing to

challenge the settlement in this case. But I disagree with

the majority’s further conclusion that the Schools lack socalled “prudential standing” to challenge the settlement.

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Appendix A

And although the majority thus does not directly address

the merits of the Schools’ objections, I would do so

and would reverse the district court’s approval of the

settlement. I therefore respectfully dissent.

In holding that the Schools lack prudential standing to

object to the settlement, the majority relies on Waller v.

Financial Corp. of America, 828 F.2d 579 (9th Cir. 1987),

which held that “a non-settling defendant, in general,

lacks standing to object to a partial settlement,” unless

“it can demonstrate that it will sustain some formal

legal prejudice as a result of the settlement.” Id. at 58283. Because Waller is not a special rule about appellate

standing, but is instead a rule that governs the ability to

make objections to a settlement both in the district court

and on appeal, see Opin. at 21-22, the majority’s Wallerbased ruling necessarily rests on the premise that the

district court should not have allowed the Schools to be

heard in objection to the settlement and should not have

addressed those objections on the merits. In effect, then,

the majority holds that the district court erred when it

granted permissive intervention to the Schools “for the

sole and express purpose of objecting to and opposing the

class action settlement.” In my view, the district court

did not abuse its discretion in allowing the Schools to

permissively intervene for the purpose of objecting to the

settlement. See Blum v. Merrill Lynch Pierce Fenner &

Smith Inc., 712 F.3d 1349, 1352 (9th Cir. 2013) (“We review

a decision whether to grant permissive intervention under

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Appendix A

an abuse of discretion standard.” (citation omitted)).1

And because the district court thus properly reached the

merits of the intervenor Schools’ objections, the Schools

have a right to appeal that adverse ruling, and we must

resolve those merits.

“We have often stated that permissive intervention

‘requires (1) an independent ground for jurisdiction; (2)

a timely motion; and (3) a common question of law and

fact between the movant’s claim or defense and the main

action.’” Freedom from Religion Found., Inc. v. Geithner,

644 F.3d 836, 843 (9th Cir. 2011) (citation omitted); see also

Fed. R. Civ. P. 24(b)(1)(B). The district court correctly held

that all of these requirements were satisfied here. With

respect to the first requirement, we have “clarif[ied] that

the independent jurisdictional grounds requirement does

not apply to proposed intervenors in federal-question cases

when the proposed intervenor is not raising new claims,”

including when the proposed intervenor is “an intervening

defendant.” Freedom from Religion Found., Inc., 644 F.3d

at 844 (citation omitted). More specifically, we held that the

jurisdictional component of the permissive-intervention

test “prevents the enlargement of federal jurisdiction in

such cases only where a proposed intervenor seeks to bring

new state-law claims.” Id. (emphasis added). Because the

1. I agree with the majority that the Plaintiffs and the

Government adequately preserved their objections on this score.

Both have consistently argued, in the district court and on appeal,

that the Schools lack a sufficient interest in the settlement to

warrant their being heard in objection.

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Appendix A

Schools did not seek to assert “new state-law claims”

on the merits, but merely sought to raise federal legal

objections to the settlement, the statutory “jurisdictional

concern drops away.” Id. The Schools’ motions were plainly

timely, because they were filed within weeks of the filing

of the amended settlement agreement. And whether the

settlement was lawful and should be approved obviously

involved “common question[s] of law or fact” with “the

main action.” Fed. R. Civ. P. 24(b)(1)(B).

But “[e]ven if an applicant satisfies those threshold

requirements, the district court has discretion to deny

permissive intervention.” Donnelly v. Glickman, 159

F.3d 405, 412 (9th Cir. 1998). We have recognized a wide

variety of non-exhaustive factors that may be relevant to

a district court’s exercise of such discretion:

These relevant factors include the nature

and extent of the intervenors’ interest, their

standing to raise relevant legal issues, the

legal position they seek to advance, and

its probable relation to the merits of the

case. The court may also consider whether

changes have occurred in the litigation so

that intervention that was once denied should

be reexamined, whether the intervenors’

interests are adequately represented by other

parties, whether intervention will prolong

or unduly delay the litigation, and whether

parties seeking intervention will significantly

contribute to full development of the underlying

factual issues in the suit and to the just and

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Appendix A

equitable adjudication of the legal questions

presented.

Spangler v. Pasadena City Bd. of Educ., 552 F.2d 1326,

1329 (9th Cir. 1977) (footnotes omitted). The record

confirms that the district court adequately considered the

factors that were relevant here, and its weighing of those

factors does not reflect any abuse of discretion. In granting

permissive intervention, the court noted that the Schools

had asserted that the settlement would implicate their

“procedural rights” under the applicable regulations and

that the settlement would also “cause reputational harm”

(internal quotation marks omitted). The order also noted

that the Schools had “explicitly disclaimed” any pursuit

of additional discovery, which confirmed that intervention

would not result in undue delay. At the hearing on the

motion, the court also added that allowing permissive

intervention would “keep the system honest” and thereby

contribute to the full development of the issues and their

just resolution. The district court thus acted well within

its discretion by allowing the Schools to permissively

intervene for purposes of objecting to the settlement.

The majority nonetheless holds that, in the absence

of a showing of “formal legal prejudice,” the Schools

should not have been allowed to intervene for purposes of

objecting to the settlement. See Opin. at 24 (citing Waller,

828 F.2d at 582-83). The majority notes that, absent such

a showing, we have generally not allowed non-settling

codefendants in a suit to be heard in objection to another

defendant’s settlement with the plaintiffs, see Waller, 828

F.2d at 582-83, and the majority concludes that the same

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Appendix A

rule should apply to “an intervenor who is not a party to

a settlement.” Opin. at 24 n.6. The majority asserts that

Waller itself supports extending that rule to permissive

intervenors, but an examination of Waller confirms that

that is wrong.

In Waller, a codefendant in consolidated securities

class actions settled separately with the plaintiffs, but the

settlement required an “expansion of the classes.” 828 F.2d

at 580. After a non-settling codefendant (the accounting

firm that had audited the challenged financial statements)

objected to changing the classes, the plaintiffs sought

to expedite matters by filing (with the district court’s

approval) duplicative actions on behalf of the expanded

classes, but omitting the non-settling codefendants.

Id. The accounting firm then sought to be heard in the

duplicative suits for the purpose of objecting to the

settlement, but the district court denied that motion. Id. at

581. On appeal, we construed that order as having denied

intervention “as of right” and as having held that the

objector lacked “standing as a non-settling party to offer

objections to the settlement.” Id. at 581-82. In holding that

the district court erred in denying intervention as of right,

we did not rely on the codefendant’s asserted interests

in objecting to the settlement. Rather, we noted that the

underlying allegations of false financial statements in

the complaint confirmed that the accounting firm had an

“obvious interest in defending against such allegations” on

the merits. Id. at 582. In effect, we held that the accounting

firm should have been added as a defendant with respect

to the merits of the duplicative action. The interventionas-of-right issue was thus independent of, and did not rest

35a

Appendix A

on, the accounting firm’s objections to the settlement.

Although we did not discuss permissive intervention, it

seems obvious from the district court’s ruling that, had

it been presented with a motion seeking only permissive

intervention for the limited purpose of objecting to the

settlement, that court would have exercised its discretion

to deny permissive intervention. Waller thus had no

occasion to address the specific question that confronts us

here, namely, whether a district court has discretion to

allow permissive intervention for the limited purpose of

objecting to a settlement, even in the absence of “formal

legal prejudice.” Apart from its inapposite reliance on

Waller, the majority cites no published precedent that

it claims addresses this specific issue, and I have found

none either.

In resolving this open question, I discern no reason

for imposing Waller’s “formal legal prejudice” standard

as an artificial constraint on a district court’s exercise

of its authority to allow permissive intervention for the

limited purpose of objecting to a settlement. Indeed,

requiring a showing of formal legal prejudice in order to

obtain permissive intervention would effectively require

the putative intervenor to establish that it qualifies

for intervention as of right. The sort of “formal legal

prejudice” discussed in Waller—e.g., a codefendant’s loss

of a “legal claim or cause of action” due to a settlement,

the invalidation of its “contract rights,” or the loss of the

“right to assert an in pari delicto defense,” see Waller,

828 F.2d at 583—would surely suffice to establish an

“interest relating to the property or transaction that

is the subject of the action” that is “impair[ed]” by the

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Appendix A

proposed disposition of the action, which is the standard

for intervention as of right. See Fed. R. Civ. P. 24(a)(2).

Applying the “formal legal prejudice” standard as a rigid

requirement for obtaining permissive intervention to

challenge a settlement would thus effectively eliminate

such “permissive” intervention altogether. 2

2. The “formal legal prejudice” standard is also stricter

than the zone-of-interests test that the Government argues on

appeal that the Schools must satisfy before they may assert

that the settlement violates administrative law principles or the

Administrative Procedure Act (“APA”). See Match-E-Be-NashShe-Wish Band of Pottawatomi Indians v. Patchak, 567 U.S.

209, 224, 132 S. Ct. 2199, 183 L. Ed. 2d 211 (2012) (stating that

the zone-of-interests test requires a plaintiff to show that its

asserted injury is “‘arguably within the zone of interests to be

protected or regulated by the statute’ that [it] says was violated”

(citation omitted)); see also Clarke v. Securities Indus. Ass’n,

479 U.S. 388, 399, 107 S. Ct. 750, 93 L. Ed. 2d 757 (1987) (noting

that this test “is not meant to be especially demanding”). Even

assuming arguendo that the Schools had to satisfy the zone-ofinterests test here even though they did not intervene to assert

affirmative claims for relief under the APA and instead only

sought to defend against the affirmative relief being granted

to Plaintiffs under the settlement, I think that the Schools have

satisfied that test here. The Government argues that, because

the Schools are the regulated parties whose alleged wrongdoing

is the subject of the borrower-defense provisions, the “statutory

and regulatory provisions” governing borrower defense and

discharge of student loans “are not designed to benefit” them, and

the Schools therefore “do not fall within the zone of interests” of

those provisions. But the relevant zone of interests is not defined

by the “overarching purpose” of the applicable statute, “but by

reference to the particular provisions of law” at issue. Bennett

v. Spear, 520 U.S. 154, 175-76, 117 S. Ct. 1154, 137 L. Ed. 2d 281

(1997) (unanimously rejecting the view that a party impacted by

37a

Appendix A

Moreover, I do not think that the underlying Waller

rule is quite as rigid as the majority seems to think. Waller

adopted the “general” rule that a non-settling defendant

“lacks standing to object to a partial settlement,” as

well as an “exception to th[is] general principle” where

the non-settling defendant “can demonstrate that it

will sustain some formal legal prejudice as a result of

the settlement.” 828 F.2d at 582-83. We said that the

resulting “standard strikes a balance between the desire

to promote settlements and the interests of justice.” Id. at

583. But we did not say that there are no other conceivable

circumstances in which the “interests of justice” might

permit a district court to exercise discretion to consider

objections from a non-settling party. Again, Waller

involved an effort, on appeal, to force the district court

to consider the non-settling defendant’s objections, and

it may be that, under Waller, a district court is never

required to consider such objections absent a showing of

implementation of the Endangered Species Act fell outside the

zone of interests of that statute simply because it did not seek

to “vindicate [that statute’s] overarching purpose of species

preservation”). It follows that a regulated party whose underlying

conduct is at issue in a regulatory legal regime will generally

fall within the zone of interests of the relevant provisions of law

that limit the Government’s power to take action based on such

alleged conduct. See, e.g., Hazardous Waste Treatment Council

v. Thomas, 885 F.2d 918, 922, 280 U.S. App. D.C. 296 (D.C. Cir.

1989) (noting that “those whom the agency regulates have the

incentive to guard against any administrative attempt to impose

a greater burden than that contemplated by Congress” and that

such entities therefore fall within the zone of interests of the

relevant laws under which that regulation is accomplished). The

Schools therefore satisfy the zone-of-interests test here, even if

one assumes that they cannot establish formal legal prejudice.

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Appendix A

formal legal prejudice. However, it is another matter to

say that a district court is forbidden from considering

objections from a non-settling party who is already in

the case or that it is forbidden from granting permissive

intervention to allow objections from particular nonsettling entities that otherwise meet the requirements of

Rule 24(b) and Article III.

Accordingly, I would hold that the district court

did not abuse its discretion in allowing the Schools to

permissively intervene for the limited purpose of objecting

to the settlement. And, having done so, the district court

therefore properly reached the merits of the Schools’

objections to the settlement in this case.

Having been properly granted intervention to object

to the settlement, and having obtained a merits ruling

from the district court concerning those objections, the

Schools are entitled to appeal that adverse decision, and

we must decide the merits of that appeal.

“An intervenor, whether by right or by permission,

normally has the right to appeal an adverse final judgment

by a trial court.” Stringfellow v. Concerned Neighbors in

Action, 480 U.S. 370, 375-76, 107 S. Ct. 1177, 94 L. Ed. 2d

389 (1987). Where, as here, intervention was granted for

a limited purpose, an intervenor may raise on appeal only

those issues that affect the interests of the intervenor

that formed the basis for that limited intervention. See

Shaff v. United States, 695 F.2d 1138, 1140 n.1 (9th Cir.

39a

Appendix A

1983); see also 7c Charles A lan Wright, A rthur R.

Miller, and M ary K ay K ane, Federal Practice and

Procedure § 1923 at pp. 643-44 (3d ed. 2007) (noting

that, although “[o]ne who has been allowed to intervene

in an action may appeal from subsequent orders in the

action,” an appeal by the intervenor will be allowed “only

if the subsequent orders affect the intervenor and only

to the extent of the interest that made it possible for

intervention” (footnote omitted)). And because, as the

majority correctly concludes, the Schools have Article III

standing and the case is not moot, the Schools are entitled

to appeal the district court’s rejection of their arguments

against approving the settlement. See Organized Vill. of

Kake v. USDA, 795 F.3d 956, 963 (9th Cir. 2015) (noting

that intervenors must have Article III standing to pursue

an appeal). We are therefore obligated to decide whether

the district court properly rejected the Schools’ objections.

Because the majority (erroneously) declines to reach

the merits of the Schools’ appeal, I will not exhaustively

address the Schools’ objections and will only briefly

summarize why I would conclude that the Schools are

correct in contending that the settlement should be set

aside. In particular, at least two of the objections raised

by the Schools require that the settlement be vacated.

First, the Government lacks the necessary statutory

authority to grant the relief contained in the settlement.

The Government concedes, for purposes of this appeal,

that the Department of Justice’s general authority to

40a

Appendix A

settle litigation “may not be used to require an agency

to take substantive action that exceeds its statutory

power.” See Brief for Defendants-Appellees at 31 (citing

Authority of the U.S. to Enter Settlements Limiting the

Future Exercise of Executive Branch Discretion, 23 Op.

O.L.C. 126, 136-38 (1999)). The Government proffers two

sources of the Education Department’s statutory authority

to justify the settlement’s loan forgiveness, but neither

suffices.

The Government cites the borrower-defense authority

granted under § 455(h) of the Higher Education Act of

1965 (“HEA”), but that provision requires that any such

defense to repayment must be “specif[ied] in regulations.”

See HEA § 455(h), 20 U.S.C. § 1087e(h). 3 However, the

loan forgiveness contained in the settlement—particularly

the portion relating to the schools on “Exhibit C” to the

settlement agreement—is not being done pursuant to,

or in accordance with, the applicable borrower-defense

regulations. Indeed, in upholding the settlement, both

the district court and the majority have placed great

weight on the fact that the monetary relief afforded to

a borrower attending an “Exhibit C” school “is not ‘a

successful or approved borrower-defense claim.’” See

Opin. at 26 (quoting district court order); see also id. at 31

3. Because title 20 of the U.S. Code has not been enacted

as positive law, I will cite the underlying text of the HEA,

together with a citation to the section of title 20 to which the

relevant provision has been classified. The current text of the

HEA is available on the website of the Government Publishing

Office at https://www.govinfo.gov/content/pkg/COMPS-765/pdf/

COMPS-765.pdf.

41a

Appendix A

(similar). But if full loan relief is being given to an entire

subclass of Plaintiffs outside the strictures and limitations

of the borrower-defense statute and regulations, then

that statute and those regulations cannot be invoked as

the authority for that action, which effectively replaces

the statutory borrower-defense system with something

entirely different. Cf. Por tland Gen. Elec. Co. v.

Bonneville Power Admin., 501 F.3d 1009, 1031 (9th Cir.

2007) (“A settlement agreement cannot be a means of

bypassing congressionally mandated requirements.”).

Indeed, the settlement here presumably eschewed reliance

on the borrower-defense provisions precisely because

invoking them would have implicated the procedural and

substantive rights of the Schools in a way that would likely

have allowed them to establish formal legal prejudice and

a basis for intervention as of right.

The Government also notes that, under § 432 of the

HEA, the Secretary may, in connection with the exercise

of his authority under “this part”—i.e., Part B of Title IV

of the HEA (which governs the “Federal Family Education

Loan Program” or “FFEL Program”)—”enforce, pay,

compromise, waive, or release any right, title, claim, lien,

or demand, however acquired, including any equity or

any right of redemption.” See HEA § 432(a)(6), 20 U.S.C.

§ 1082(a)(6). But even assuming arguendo that this general

grant of administrative authority includes the power to

forgive loans on the scale involved here—a question on

which I express no view—it is undisputed that the vast

majority of the loans covered by this settlement were

issued under Part D of Title IV (governing the “William

D. Ford Federal Direct Loan Program” or “Direct Loan

42a

Appendix A

Program”), not Part B. The Government’s only response to

this obvious textual problem is to note that, under § 455(a)

(1) of the HEA, direct loans under Part D “shall have the

same terms, conditions, and benefits, and be available in

the same amounts,” as loans issued under four specified

sections of Part B. HEA § 455(a)(1), 20 U.S.C. § 1087e(a)

(1). But a general administrative power granted to an

agency does not fall within the ordinary understanding

of the “terms, conditions, and benefits” of a “loan[]”

issued by a third party under the federal guarantees

afforded under the FFEL Program. Id. (emphasis added).

Accordingly, nothing in the text of § 455(a)(1) carries over,

into the Direct Loan Program, administrative authorities

applicable only under the FFEL Program. Given that

the relief granted by the Department in the settlement

exceeds its statutory authority, the settlement is unlawful

and should not have been approved.

Second, the settlement unlawfully grants individualized

monetary relief in a class action that was certified only

as an injunctive-relief class under Federal Rule of Civil

Procedure 23(b)(2). See Wal-Mart Stores, Inc. v. Dukes,

564 U.S. 338, 360-61, 131 S. Ct. 2541, 180 L. Ed. 2d 374

(2011) (stating that Rule 23(b)(2) “does not authorize class

certification when each class member would be entitled

to an individualized award of monetary damages”). The

settlement recognizes that individualized determinations

will be required to decide whether a particular borrower’s

loans are “associated with a program, school, or School

Group listed in Exhibit C” as well as to determine the

individualized monetary refunds to be made to each such

43a

Appendix A

borrower. The district court held that the individualized

restitution awards fell within the scope of the equitable

relief permitted in a Rule 23(b)(2) class action, but that is

wrong. See id. at 365 (holding that equitable restitutionary

awards of “backpay” are not authorized in “a (b)(2) class

action,” because Rule 23(b)(2) “does not speak of ‘equitable’

remedies generally but of injunctions and declaratory

judgments”); see also Richards v. Delta Air Lines, Inc.,

453 F.3d 525, 530-31, 372 U.S. App. D.C. 53 (D.C. Cir. 2006)

(holding that Rule 23(b)(2) did not authorize certification

of a class action seeking an injunction requiring Delta to

process and pay class members’ monetary claims for lost or

damaged baggage). Plaintiffs argue that the settlement is

comparable to the sort of injunctive relief that we allowed

to be pursued on a classwide basis in Fowler v. Guerin,

899 F.3d 1112 (9th Cir. 2018), but that is incorrect. At

issue in Fowler was an “indivisible injunction benefitting

all [class] members at once” by merely mandating the

defendant’s use of a “single formula” in calculating interest

in retirement accounts. Id. at 1120 (emphasis added)

(quoting Dukes, 564 U.S. at 362). In contrast to Fowler,

the settlement here bears no resemblance to a simple,

indivisible injunction that merely has indirect collateral

monetary consequences.

44a

Appendix A

Because these key features of the settlement

were invalid, the district court erred in approving the

settlement. I would therefore vacate the approval of the

settlement and remand for further proceedings.4

I respectfully dissent.

4. Because I would vacate the settlement as unlawful, I have

no occasion to address whether the district court erred in denying

the Schools’ request for intervention as of right. The Schools’

arguments in favor of intervention as of right (including their

arguments that their motions for such intervention were timely)

were all predicated on the specific features of the parties’ proposed

settlement agreement. A vacatur of that settlement agreement

as unlawful suffices to vitiate the Schools’ asserted grounds for

intervention as of right, thereby rendering it unnecessary for me

to reach that issue.

45a

APPENDIXAppendix

B — ORDER

OF THE

UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF

CALIFORNIA, FILED NOVEMBER 16, 2022

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

No. C 19-03674 WHA

THERESA SWEET, et al.,

Plaintiffs,

MIGUEL CARDONA, et al.,

Defendants.

November 16, 2022, Decided;

November 16, 2022, Filed

ORDER GRANTING FINAL

SETTLEMENT APPROVAL

INTRODUCTION

The United States Secretary of Education has reached

a settlement with a class of student-loan borrowers whose

complaint alleges that, for years, the Department of

Education unlawfully delayed processing, or perfunctorily

denied, hundreds of thousands of “borrower-defense”

applications — requests by students to discharge their

46a

Appendix B

loans in light of alleged wrongful acts and omissions of

the schools they attended. The settlement leaps over the

borrowers’ request to require administrative proceedings

and provides for the automatic discharge of billions of

dollars of student loans and streamlined claim processing.

This settlement is separate and apart from President

Biden’s broader program to forgive $430 billion in student

debt. The key question now at final approval concerns

whether the Secretary has the authority to enter into

such a settlement.

STATEMENT

Title IV of the Higher Education Act directs the

Secretary of Education “to assist in making available the

benefits of postsecondary education to eligible students”

through financial-assistance programs. The Student Loan

Reform Act of 1993 directed the Secretary to promulgate

legislative regulations for agency consideration of

discharges of loans due to the wrongful acts or omissions

of the schools attended by the borrowers. 20 U.S.C.

§§ 1070, 1087e(h); Pub. L. No. 103-66 (1993).

The Secretary established the first “borrower

defense” program for certain federal loans in 1994,

which allowed a borrower to “assert as a defense against

repayment of his or her loan any act or omission of the

school attended by the student that would give rise to a

cause of action against the school under applicable State

law.” 59 Fed. Reg. 61,664, 61,696 (Dec. 1, 1994); see also 60

Fed. Reg. 37,768 (July 21, 1995). These rules went largely

unused for the next twenty years (AR 590).

47a

Appendix B

That all changed in May 2015 with the collapse

of Corinthian Colleges, Inc., a for-profit college with

more than 100 campuses and over 70,000 students. The

Department faced a “flood of borrower defense claims

submitted by Corinthian students.” Secretary John B.

King, Jr. quickly moved to update the regulations for

handling these applications to expedite processing. 81

Fed. Reg. 39,330, 39,330, 39,335 (June 16, 2016); 81 Fed.

Reg. 75,926 (Nov. 1, 2016) (final regulation).1

The Secretar y recr uited an inter im “Special

Master” Joseph Smith to assess the influx of claims, and

eventually created a “Borrower Defense Unit” (“BDU”)

to address the backlog. In total, by the end of the Obama

Administration, the Secretary had approved 31,773

applications for discharge and found 245 ineligible, for

a 99.2% grant rate (a rate that includes both Corinthian

students and claimants who attended other schools).

Borrowers, however, had submitted many thousands more

which remained unexamined (AR 339-40, 347, 369, 384-85,

392-94, 502-03).

After the 2016 election and a change in administrations,

new Secretary Elisabeth DeVos paused claim adjudications

in order to review the overall procedure. She did, however,

honor 16,164 borrower-defense applications approved but

not yet finalized before the change in administrations,

albeit with “extreme displeasure” (Dkt. No. 66-3, Ex. 7).

1. Our action does not directly address issues related to

Corinthian, which proceeded in a separate action filed in our district,

Calvillo Manriquez v. DeVos, No. C 17-07210 (N.D. Cal. filed Dec.

20, 2017) (Judge Sallie Kim).

48a

Appendix B

Including all prior decisions, by June 2018 the Department

had granted in total 47,942 applications and denied or

closed 11,940, for an 80% grant rate for borrower defenseclaims. (The grant rate under Secretary DeVos alone was

58%.) By that point, borrowers had submitted, in total,

165,880 applications, leaving 105,998 still to be decided

(AR 401). The flood of applications continued.

Then, all adjudication stopped. For eighteen months,

well into this suit, the Secretary issued zero decisions. As

of June 2019, borrowers had filed (from day one) 272,721

applications and 210,168 of them remained pending (AR

350, 397-404, 587-88).

Named plaintiffs accordingly brought this suit to

require the Secretary to adjudicate these applications.

They argued the Secretary’s delay constituted unlawful

stonewalling. The complaint spelled out the relief sought:

“[Named plaintiffs] do not ask this Court to adjudicate

their borrower defenses. Nor do they ask this Court

to dictate how the Department should prioritize their

pending borrower defenses. Their request is simple:

they seek an order compelling the Department to start

granting or denying their borrower defenses and vacating

the Department’s policy of withholding resolution” (Compl.

¶¶ 1, 10).

A Rule 23(b)(2) class was eventually certified as

follows:

All people who borrowed a Direct Loan or

FFEL loan to pay for a program of higher

49a

Appendix B

education, who have asserted a borrower

defense to repayment to the U.S. Department

of Education, whose borrower defense has not

been granted or denied on the merits, and who

is not a class member in Calvillo Manriquez v.

DeVos, No. 17-7106 (N.D. Cal.) [the latter action

concerning Corinthian Colleges specifically]

(Dkt. No. 46 at 14). Afterwards, an administrative record

was lodged and cross-motions for summary judgment were

filed. At that point, the number of pending applications

was around 225,000 (AR 591).

Before an order issued on summary judgment, the

parties ostensibly reached a settlement (an earlier one

than the settlement now under consideration). A May 2020

order preliminarily approved that proposal as it appeared

to impose an eighteen-month deadline for the Secretary to

decide claims and a twenty-one-month deadline to effect

relief for claims filed by April 7, 2020. That settlement

also set reporting requirements and established hefty

penalties should the Secretary fail to uphold her end of

the bargain (Dkt. No. 103). The parties notified the class

and solicited comments for a fairness hearing scheduled

for October 2020.

However, unbeknownst to class counsel or the Court,

the Secretary had already adopted a practice of sending

alarmingly curt form-denial notices, in violation (as class

counsel put it) of both the spirit of the proposed settlement

and the Administrative Procedure Act. Upon inquiry

from the Court, the Secretary acknowledged that, since

50a

Appendix B

December 2019 (when decisions on borrower-defense

applications had resumed), the Department used four

templates to deny 118,300 of 131,800 applications reviewed

(for an 89.8% denial rate). This was so out of keeping with

the supposed settlement that the Court found there had

been no meeting of the minds. An October 2020 order

denied the class settlement and restarted discovery. The

Secretary thereafter agreed to abstain from those types

of form denials until further order (Dkt. Nos. 116, 146,

150).

Plaintiffs filed a supplemental complaint that alleged

the Secretary had not actually restarted adjudication

of borrower-defense claims. Rather, plaintiffs argued

she had violated the law and the settlement by sending

boilerplate denials without review. Plaintiffs asserted the

Secretary’s “presumption of denial” policy constituted

further violations of the Administrative Procedure Act

and the Due Process Clause of the Fifth Amendment.

After a trip to our court of appeals regarding the

extent of permissible discovery (In re Dep’t of Education,

25 F.4th 692 (9th Cir. 2022)), an order herein set a new

summary judgment schedule with a hearing planned

for July 28, 2022. During the pendency of the summary

judgment briefing schedule, and after another change

in administrations, the parties reached the instant

settlement and filed their second motion for preliminary

approval.

Separate from our litigation, President Biden

announced a different plan to cancel up to $10,000 of

51a

Appendix B

student debt for low- to middle-income borrowers. The

reader should keep in mind that this order does not

consider President Biden’s initiative but considers only a

discrete settlement for a specific group of borrowers who

have filed borrower-defense applications.

In brief, the settlement under consideration here sorts

class members into three groups.

For group one, approximately 200,000 borrowers

or 75% of the class as defined by the settlement, the

agreement provides for “full,” “automatic” relief, i.e.,

discharge of the borrower’s federal loans, cash refunds

of amounts paid to the Department, and credit repair.

This “up-front” relief would go to class members who

attended one of the 151 schools listed in Exhibit C to

the settlement (151 of the 6,000 colleges operating in the

United States). The relief provided for this group will

result in the discharge of approximately six billion dollars

of debt in the aggregate.

For group two, the remaining 25% of the class

as defined by the settlement (approximately 64,000

borrowers), the agreement provides for final written

decisions on their borrower-defense applications within

specified periods of time, correlated to how long they have

been waiting for a decision. The Department will make

those decisions according to a streamlined process that

provides certain presumptions in favor of the borrower.

Should the Department not issue a decision within a

specified time, the borrower will receive full, automatic

relief like the borrowers in group one. The Secretary

52a

Appendix B

estimates the relief provided for this group will result

in the discharge of a further $1.5 billion in cumulative

student debt.

For group three, those who submitted a borrowerdefense application after execution of the settlement on

June 22, 2022, and before final approval (approximately

179,000 borrowers), i.e., “post-class applicants” as defined

by the settlement, the agreement provides a streamlined

process for their borrower-defense applications. If the

Secretary does not render a decision within three years

of final approval, then the borrower would receive full,

automatic relief like the borrowers in group one. The

settlement also has reporting requirements and some

appeal procedures (Dkt. No. 246-1).

Four schools filed motions to intervene to oppose the

settlement: American National University (ANU), The

Chicago School of Professional Psychology, Everglades

College, Inc., and Lincoln Educational Ser v ices

Corporation. The schools take issue with their inclusion on

Exhibit C, which they label a scarlet letter. Argument on

their motions to intervene were heard during the hearing

on preliminary approval.

Preliminary approval was granted. After no further

interested parties moved to intervene, an order found

that the schools could not intervene as of right but could

permissively intervene to object to the settlement (Dkt.

Nos. 307, 322). This order follows full briefing and oral

argument.

53a

Appendix B

ANALYSIS

1. The Secretary Has Authority To Enter Into The

Settlement.

Let’s consider the central issue. The settlement

provides extensive relief for the class: complete and

automatic discharge of all loans for 75% of the settlement

class — about six billion dollars in loan forgiveness;

streamlined adjudication with a presumption towards

discharge for the rest of the settlement class; and

a presumption of discharge and borrower-friendly

procedures for “post-class applicants,” as defined by the

settlement. This bonanza raises the question whether the

Secretary has authority to provide such relief.

It is important to observe (again) that this settlement is

separate and apart from the significantly more expansive

loan-forgiveness plan recently announced by President

Biden. That plan will (potentially) affect 40 million

borrowers and cancel approximately $430 billion in student

debt. See The Congressional Budget Office, Re: Costs of

Suspending Student Loan Payments and Cancelling Debt

(Sept. 26, 2022); The White House, Assessing Debt Relief’s

Fiscal and Cash-Flow Effects (Aug. 26, 2022). The instant

settlement is anchored in separate authority. Even if the

broader loan-forgiveness plan recently announced by

President Biden lacks authority (and this order does not

so hold), this lesser litigation settlement lies within the

authority of the government.

“[T]he Attorney General has plenary discretion under

28 U.S.C. §§ 516 and 519 to settle litigation to which the

54a

Appendix B

federal government is a party.” United States v. Carpenter,

526 F.3d 1237, 1241 (9th Cir. 2008). The compromise and

settlement authority has long been considered an inherent

facet of the Attorney General’s charge to supervise

litigation for the United States. See Confiscation Cases,

74 U.S. 454, 7 Wall. 454, 19 L. Ed. 196 (1869); Power of the

Attorney General in Matters of Compromise, 38 U.S. Op.

Atty. Gen. 124 (1934). And, Section 5 of Executive Order

No. 6166 (June 10, 1933), transferred to the Department

of Justice the powers “to prosecute, or to defend, or to

compromise, or to appeal, or to abandon prosecution or

defense” of actions involving the United States. See also

28 U.S.C. § 510; see generally Authority of the United

States to Enter Set

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