Opinion
Case No. 2:22-cv-4255
01-27-2023
Amanda LATTA, Plaintiff, v. U.S. DEPARTMENT OF EDUCATION, et al., Defendants.
Jay R. Carson, Frantz Ward LLP, Cleveland, OH, David Christian Tryon, The Buckeye Institute, Columbus, OH, for Plaintiff.
Jay R. Carson, Frantz Ward LLP, Cleveland, OH, David Christian Tryon, The Buckeye Institute, Columbus, OH, for Plaintiff. OPINION AND ORDER MICHAEL H. WATSON, JUDGE
Amanda Latta ("Plaintiff") moves for a temporary restraining order ("TRO") and preliminary injunction precluding the implementation of President Biden's plan to discharge up to $20,000 in federal student loans per borrower ("the Program"). ECF No. 5. For the following reasons, the Court sua sponte STAYS this case and Plaintiff's motion for a TRO pending the Supreme Court's decision in Department of Education v. Myra Brown, Supreme Court No. 22-535 ("Brown") and Biden v. Nebraska, Supreme Court No. 22-506 ("Nebraska"). As such, the Court declines to consider Plaintiff's motion for TRO at this time.
I. BACKGROUND
A. The Program
Student loan forgiveness is undoubtedly a well-known, much discussed, and hotly debated central policy of the Biden Administration. On August 24, 2022, President Biden announced that the Department of Education would implement a forgiveness program for student loans. Ver. Compl. ¶¶ 8-9; The White House, FACT SHEET: President Biden Announces Student Loan Relief for Borrowers Who Need It Most, Aug. 24, 2022, https://www.whitehouse.gov/briefing-room/statements-releases/2022/08/24/fact-sheet-president-biden-announces-student-loan-relief-for-borrowers-who-need-it-most/ (last visited Jan. 25, 2023). In broad strokes, the Program would result in up to $10,000 in student loan forgiveness for certain borrowers who make less than $125,000 per year (up to $250,000 for married couples), and up to $20,000 in student loan forgiveness for certain borrowers who were the recipients of Pell Grant loans, with the same income caps. Id.
B. Other Challenges to the Program
The legality of the Program was quickly challenged in various courts, resulting in two injunctions being issued against implementation of the Program. See Nebraska v. Biden, 52 F.4th 1044, 1048 (8th Cir. 2022); Brown v. U.S. Department of Education, 640 F.Supp.3d 644, No. 4:22-cv-0908-P (N.D. Tex. Nov. 10, 2022).
In December 2022, the Supreme Court of the United States agreed to hear both Brown and Nebraska on an expedited basis and set oral argument in both cases for February 28, 2023. The Supreme Court ordered the parties to brief the following questions: "(1) Whether respondents have Article III standing; and (2) Whether the Department's plan is statutorily authorized and was adopted in a procedurally proper manner." Questions Presented, Supreme Court No. 22-535, Department of Education v. Brown. Both issues are pertinent to the case sub judice.
The Questions Presented in Nebraska are substantially the same, but question two is phrased instead as "whether the plan exceeds the Secretary's statutory authority or is arbitrary and capricious." Questions Presented, No. 22-506. At bottom, both cases ask the Supreme Court to resolve whether the respondents have standing and whether the Program is legal on the merits.
With regard to standing, only Brown is relevant to this Opinion and Order. In Brown, Respondents are individuals who have student loans. Brown, 640 F.Supp.3d at 654-56. One respondent, Brown, is ineligible for forgiveness under the Program because her loans are not federally held. Id. Another respondent, Taylor, is eligible for only $10,000 in forgiveness, not $20,000, because he did not receive a Pell Grant. Id. Both Respondents base their arguments for standing on a procedural injury under the Administrative Procedures Act ("APA"). Id. In short, because Respondents disagree with the lines that were drawn for the Program's eligibility and could not voice their disagreement with such eligibility because the Program did not undergo notice-and-comment rulemaking under the APA, Respondents were allegedly harmed by the deprivation of their procedural rights under the APA. Id. at 659-60.
Respondents in both Brown and Nebraska argue that the Program is illegal for various reasons, including: (1) the Program did not undergo proper notice-and-comment rulemaking procedures under the APA; (2) the Program is arbitrary and capricious under the APA; (3) the Secretary of Education (the "Secretary") lacks authority to implement the Program under the HEROES Act; and (4) the Secretary lacks authority to implement the Program under the Major Questions Doctrine. See generally, Brown, 640 F.Supp.3d 644; Response to Application, Nov. 23, 2022, Supreme Court Docket No. 22-506, Biden v. Nebraska; Response to Application, Dec. 7, 2022, Supreme Court Docket No. 22-535, Department of Education v. Brown.
C. Plaintiff's Legal Challenge to the Program
On December 1, 2022, Plaintiff filed suit in this Court against the Department of Education and Secretary Miguel Cardona challenging the legality of the Program. ECF No. 1.
Plaintiff argues that she has standing to challenge the Program because she applied for forgiveness under the Program, but she believes it is illegal. Id. ¶¶ 71-72. She argues that if the Program is implemented and she receives forgiveness now, but the Program is later judged to be illegal (as she thinks it will be) she will be charged penalties and interest, be subject to collection costs, and possibly be required to pay her entire loan balance in full. Id. ¶¶ 60-62, 65-70, ECF No. 1. Plaintiff argues that these are immediate harms because a Master Promissory Note that she signed when she first received her loans states that such penalties may accrue if she defaults or otherwise fails to repay her loans. Id. ¶¶ 58-74.
Plaintiff's legal challenges to the Program are nearly identical to those raised in Brown and Nebraska. Specifically, Plaintiff argues that the Program is unlawful because: (1) it did not undergo proper notice-and-comment rulemaking procedures under the APA; (2) the Program is unlawful under the APA because it is arbitrary and capricious; (3) the Secretary lacks authority to implement the Program under the HEROES Act; (4) the Secretary lacks authority to implement the Program under the Major Questions Doctrine; and (5) the Program is unlawful under the APA because it violates Article I § 9 and Article IV § 3 of the United States Constitution, which commit such acts to Congress. Ver. Compl., ¶¶ 99-158, ECF No. 1. Plaintiff also asks the Court to issue a declaratory judgment, pursuant to 28 U.S.C. § 2201, defining her rights and obligations under the MPN. Id. ¶¶ 159-164.
On January 6, 2023, Plaintiff moved for a TRO. ECF No. 5. After a review of the Complaint and the motion for TRO, the Court finds that the most prudent path is to stay this case pending a decision from the Supreme Court in Brown and Nebraska.
II. STANDARD OF REVIEW
A federal court's power to stay cases on its docket "is incidental to the power inherent in every court to control the disposition of . . . cases on its docket with economy of time and effort for itself, for counsel, and for litigants." Landis v. N. Am. Co., 299 U.S. 248, 254, 57 S.Ct. 163, 81 L.Ed. 153 (1936); see Clinton v. Jones, 520 U.S. 681, 706, 117 S.Ct. 1636, 137 L.Ed.2d 945 (1997) ("The District Court has broad discretion to stay proceedings as an incident to its power to control its own docket."). Inherent in this power is the Court's ability to consider sua sponte whether to issue a stay. See, e.g., Collins on Behalf of Collins v. Barry, 841 F.2d 1297, 1299 (6th Cir. 1988) (sua sponte staying appellate proceedings pending the outcome of a Supreme Court case); Bridging Cmtys., Inc. v. Top Flite Fin., Inc., No. 09-14971, 2013 WL 185397, at *1-2 (E.D. Mich. Jan. 17, 2013) (acknowledging a sua sponte stay of district court proceedings pending the outcome of a Supreme Court case); Ali v. Trump, 241 F. Supp. 3d 1147, 1152 (W.D. Wash. 2017) (sua sponte staying case and staying motion for TRO raising virtually the same issues because another TRO of equal scope was already in effect and because the issue was being appealed to the Supreme Court). Factors the Court considers in determining whether to stay a case are: (1) "the potentiality of another case having a dispositive effect on the case to be stayed," (2) "the judicial economy to be saved by waiting on a dispositive decision," (3) "the public welfare," and (4) "the hardship/prejudice to the party opposing the stay, given its duration." Michael v. Ghee, 325 F. Supp. 2d 829, 831 (N.D. Ohio 2004) (citing Landis, 299 U.S. at 255, 57 S.Ct. 163).
III. ANALYSIS
All four factors favor staying this case pending the outcomes of Brown and Nebraska.
As to the first factor, Brown and Nebraska clearly are potentially dispositive of this case. The merits issues Plaintiff raises here are virtually identical to the merits issues in Brown and Nebraska. Indeed, an answer on the merits question presented in Brown—whether the Department's plan is statutorily authorized and was adopted in a procedurally proper manner—could dispose of each of Plaintiff's merits arguments.
This situation is nearly identical to the situation confronting the court in Ali v. Trump, 241 F. Supp. 3d at 1147, 1153. In Ali, the court considered a challenge to what is colloquially known as President Trump's Muslim travel ban. Id. at 1149. Plaintiffs in Ali moved the court for a TRO preventing the travel ban from taking effect. Id. Before the court could rule on plaintiff's motion, at least two other district courts entered a nationwide injunction preventing the travel ban from taking effect. Id. Some circuit courts quickly affirmed the TROs, and President Trump expressed his intentions to appeal to the Supreme Court. Id. at 1151. Because the other appellate proceedings were likely to "have significant relevance to—and potentially control—the court's subsequent rulings," the court stayed the case pending the outcome of the appellate proceedings. Id. at 1153. As in Ali, the Supreme Court's decisions in Brown and Nebraska are likely to "have significant relevance to—and potentially control—the [C]ourt's subsequent rulings" here, and this factor favors a stay. Id.
The court in Ali applied slightly different factors in considering whether to stay the case, as required by binding Ninth Circuit case law. Relevant here, the Ninth Circuit requires courts to consider "the orderly course of justice measured in terms of the simplifying or complicating of issues, proof, and questions of law which could be expected from a stay." Ali, 241 F. Supp. 3d at 1153. This factor requires essentially the same analysis as the "potentially dispositive" factor relevant here.
Moreover, even if Brown and Nebraska are not decided on the merits and rather are decided on standing, they could still be dispositive because Plaintiff raises similar standing arguments to the Respondents in Brown. Although Plaintiff also raises additional standing arguments, Brown's resolution of standing could be dispositive of Plaintiff's arguments. If any remaining standing arguments remain after Brown, the Court can address those arguments at that time. Accordingly, because Brown and Nebraska have the potential to be completely dispositive of this case, both on standing and on the merits, the first factor weighs quite heavily in favor of a stay. See Michael, 325 F. Supp. 2d at 831-32.
As to the second factor, the Court finds that the interest of judicial economy favors a stay. Plaintiff argues that the Program implicates a variety of legal issues, and briefing on these issues will likely result in significant time and expense for both parties. Further, given the pending motion for a TRO, this case will likely require a significant amount of time and energy from the Court in the near future. Because these issues are squarely before the Supreme Court, a stay will promote judicial economy and prevent potentially inconsistent outcomes. Accordingly, the second factor weighs in favor of a stay. See id. at 832-33.
The third factor, the public's interest and welfare, also weighs in favor of a stay. As Plaintiff argues, the public has an interest in knowing its "rights and liabilities with respect to this conflict." Ver. Compl. ¶ 98, ECF No. 1. The Court agrees. However, given the current landscape, any decision by this Court could be abrogated by Brown and Nebraska within just several months. Thus, a decision from this Court on Plaintiff's motion for TRO or any other matters in this case, at this juncture, would only serve to potentially confuse the public regarding its rights and liabilities under the Program. Cf. Mazera v. Varsity Ford Svcs. LLC, No. 07-12970, 2008 WL 2223907, at *2 (E.D. Mich. May 29, 2008) (holding that the public interest is served both by a final determination as to the validity of an agreement and by expedient litigation that does not unnecessarily exhaust resources). Accordingly, the third factor also weighs in favor of staying this case.
Finally, there is no hardship or prejudice to Plaintiff in staying the case. As a result of the lower court decisions in Brown and Nebraska, the Program is currently enjoined. The Secretary is not accepting any additional applications, nor is the Secretary acting on any previously-submitted applications. See Student Loan Debt Relief Is Blocked, Federal Student Aid, https://studentaid.gov/debt-relief/application (last visited Jan. 26, 2022). Additionally, any penalties, interest, or other future economic harms Plaintiff fears could not accrue until the Program resumes, which will undoubtedly be, if at all, after the Supreme Court decides Brown and Nebraska. As Plaintiff recognizes, borrowers will not be harmed because payments on all federally held student loans continue to be paused, and no interest is accruing. Mot. 32, ECF No. 5. See COVID-19 Emergency Relief and Federal Student Aid, Federal Student Aid, https://studentaid.gov/announcements-events/covid-19 (last visited Jan. 26, 2022). Accordingly, the fourth factor weighs in favor of staying the case.
IV. CONCLUSION
Because each of the four factors the Court must consider in determining whether to stay this case weigh in favor of staying, this case is STAYED until the Supreme Court issues its decision(s) in Department of Education v. Myra Brown, Supreme Court No. 22-535 and Biden v. Nebraska, Supreme Court No. 22-506, and the Court declines to further consider Plaintiff's motion for TRO at this juncture. Plaintiff shall file a notice on a docket informing the Court when the Supreme Court issues decision(s) in these cases.
IT IS SO ORDERED.