American Federation of Teachers et al v. DeVos et al, No. 5:2020cv00455 - Document 33 (N.D. Cal. 2020)

Court Description: ORDER granting in part and denying in part (26) Motion to Dismiss for Lack of Jurisdiction in case 5:20-cv-00455-EJD; granting in part and denying in part (18) Motion to Dismiss for Lack of Jurisdiction in case 5:20-cv-01889-EJD. Signed by Judge Edward J. Davila on September 3, 2020. (ejdlc2S, COURT STAFF) (Filed on 9/3/2020)

Download PDF

American Federation of Teachers et al v. DeVos et al Doc. 33 1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 SAN JOSE DIVISION 7 8 AMERICAN FEDERATION OF TEACHERS, et al., Plaintiffs, 9 10 United States District Court Northern District of California 11 ELISABETH DEVOS, et al., Defendants. PEOPLE OF THE STATE OF CALIFORNIA, 14 15 16 17 Re: Dkt. No. 26 v. 12 13 Case No. 5:20-cv-00455-EJD Plaintiff, v. ELISABETH DEVOS, et al., Case No. 5:20-cv-01889-EJD Re: Dkt. No. 18 ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS’ MOTIONS TO DISMISS Defendants. 18 19 Under Title IV of the Higher Education Act of 1965 (“HEA”), see 20 U.S.C. § 1070 et seq. 20 (1988), students may receive “Guaranteed Student Loans” (“GSLs”) to pay for their postsecondary 21 tuition and expenses. However, in order for the postsecondary institutions to be eligible to accept 22 these GSLs, the institutions must “prepare students for gainful employment in a recognized 23 occupation.” 20 U.S.C. §§ 1001(b)(1), 1002(b)(1)(A)(i), (c)(1)(A) (emphasis added). The 24 Secretary of the Department of Education (“the Secretary”) has broad authority to prescribe any 25 rules and regulations that she deems necessary or appropriate to administer the HEA. See 20 26 U.S.C. § 1221e-3; see also id. § 3474. 27 28 Case Nos.: 5:20-cv-00455-EJD; 5:20-cv-01889-EJD ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS’ MOTIONS TO DISMISS 1 Dockets.Justia.com 1 2 this broad authority did not specifically address the meaning of “gainful employment” or impose 3 any obligations on postsecondary institutions in connection with this language. This changed in 4 2010 when the DOE issued a series of new Title IV disclosure and eligibility requirements aimed 5 at ensuring certain educational programs actually “prepared students for gainful employment.” 6 See Program Integrity Issues, 75 Fed. Reg. 34,806 (June 18, 2020); Program Integrity Issues, 75 7 Fed. Reg. 66,832 (Oct. 29, 2010). Most of these regulations were struck down in 2012. See Ass’n 8 of Private Sector Colls. & Univs. v. Duncan (“APSCU III”), 110 F. Supp. 3d 176, 182 (D.D.C. 9 2015) (finding that the DOE could interpret the term “gainful employment,” but striking down the 10 11 United States District Court Northern District of California For nearly 45 years after the HEA’s enactment, the regulations promulgated pursuant to regulations because the DOE failed to provide adequate explanations). In 2014, the DOE promulgated a series of revised regulations, which were designed to 12 counteract the deceptive marketing practices that certain for-profit postsecondary institutions used 13 to entice students to take on large amounts of debt to pursue worthless degrees or credentials. See 14 Program Integrity: Gainful Employment, 79 Fed. Reg. 64,890 (Oct. 31, 2014). These regulations 15 became effective on July 1, 2015, but were not immediately implemented. Following the 2016 16 presidential election, the DOE further delayed implementing the regulations. Then, on June 16, 17 2017, the DOE announced its intent to initiate a new negotiated rulemaking committee to 18 reconsider the Gainful Employment regulations. Intent to Establish Negotiated Rulemaking 19 Committees, 82 Fed. Reg. 27,640 (June 16, 2017). After the committee failed to reach a 20 consensus, the DOE issued a notice of proposed rulemaking. Program Integrity: Gainful 21 Employment, 83 Fed. Reg. 40,167 (August 14, 2018). Thereafter, the DOE issued a final rule that 22 rescinded the 2014 rule. Program Integrity: Gainful Employment, 84 Fed. Reg. 31,392 (July 1, 23 2019) (hereinafter “the 2019 Rescission Rule”). 24 The 2019 Rescission Rule forms the basis of the two above-captioned actions. Plaintiffs in 25 each action challenge the lawfulness of the repeal, both substantively and procedurally. The DOE 26 and its Secretary, Elisabeth DeVos (collectively “Defendants”) argue that Plaintiffs in each action 27 28 Case Nos.: 5:20-cv-00455-EJD; 5:20-cv-01889-EJD ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS’ MOTIONS TO DISMISS 2 1 lack standing. Having considered the Parties’ briefs and having had the benefit of oral argument 2 on August 27, 2020, the Court agrees and GRANTS in part and DENIES in part Defendants’ 3 motions to dismiss the respective complaints. 4 5 United States District Court Northern District of California 6 I. BACKGROUND A. Factual Background 1. The Gainful Employment Rule 7 The HEA authorizes the federal government to provide financial aid to students at 8 postsecondary institutions. Under this program, more than $150 billion in federal aid is provided 9 annually to students at postsecondary schools. See Ass’n of Private Sector Colls. & Univs. v. 10 Duncan (“APSCU I”), 681 F.3d 427, 425 (D.C. Cir. 2012). That money supports students who 11 attend a wide array of institutions, including “private for-profit institutions, public institutions, and 12 private nonprofit institutions.” Id. Loan recipients must eventually repay their debt to the federal 13 government, otherwise taxpayers bear the burden of student tuition. Id. Of course, the institutions 14 receive their tuition dollars regardless of whether a loan recipient repays their debt—the money is 15 “fronted” by the federal government. To “guard against abuse by schools[,]” various statutory 16 requirements exist to discourage postsecondary institutions from taking federal monies without 17 providing students with quality education. Id. The basic idea is simple: if students receive quality 18 education, they will be better able to repay their loans in the future as they will have a higher 19 likelihood of increased earning potential. 20 One of these statutory protections is the Gainful Employment (“GE”) provision, which 21 limits institutions that can receive federal loans to those that provide “an eligible program of 22 training to prepare students for gainful employment in a recognized occupation[.]” 20 U.S.C. 23 § 1002(b)(1)(A)(i), (c)(1)(A) (emphasis added). The statute does not define “gainful 24 employment.” Instead, it vests the Secretary with the authority to “make, promulgate, issue, 25 rescind, and amend rules and regulations governing” Title IV programs. See id. § 1221e-3. This 26 includes the authority to define “gainful employment” by regulation. Ass’n of Private Sector 27 28 Case Nos.: 5:20-cv-00455-EJD; 5:20-cv-01889-EJD ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS’ MOTIONS TO DISMISS 3 1 United States District Court Northern District of California 2 Colls. & Univs. v. Duncan (“APSCU IV”), 110 F. Supp. 3d 176, 182 (D.D.C. 2015). 2. The 2014 Gainful Employment Rule 3 In 2014, the DOE announced its intention to define “gainful employment.” Program 4 Integrity: Gainful Employment, 79 Fed. Reg. 16,426, 16,433 (Mar. 25, 2014). The proposed 5 regulations were intended to address growing concerns about postsecondary programs that leave 6 “students with unaffordable levels of loan debt in relation to their earnings, or leading to default.” 7 Id. (discussing how a number of programs do not adequately train students, provide expensive 8 training in low-wage occupations such that the costs of training are unjustified, and produce only a 9 few number of graduates, despite high enrollment numbers). The DOE found that 10 underperforming GE Programs charged “excessive costs;” possessed “low completion rates;” 11 “fail[ed] to satisfy requirements that are necessary for students to obtain higher paying jobs in a 12 field;” exhibited a “lack of transparency regarding program outcomes;” and engaged in 13 “aggressive or deceptive marketing practices.” Id. 14 In its March 2014 notice of proposed rulemaking, the DOE included statistics that showed 15 that students who complete certain GE programs often had low incomes, despite their significant 16 investment into postsecondary education. Id. at 16,433–34. Of particular concern to the DOE was 17 the lack of information available about these poor-performing GE programs. Thus, in the March 18 2014 notice of proposed rulemaking, the DOE noticed its intent to make rules about access to 19 information. Id. at 16,435 (“[S]tudents seeking to enroll in these programs do not have access to 20 reliable information that will enable them to compare programs in order to make informed 21 decisions about where to invest their time and limited educational funding.”); see also id. at 22 16,436 (“[W]ithout accurate and comparable information, the public, taxpayers, and the 23 Government are in the dark as to the performance of these programs and the return on the Federal 24 investment in these programs.”). The DOE was particularly concerned by the mounting evidence 25 of “high-pressure and deceptive recruiting practices at some for-profit institutions.” Id. at 16,435. 26 27 28 Case Nos.: 5:20-cv-00455-EJD; 5:20-cv-01889-EJD ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS’ MOTIONS TO DISMISS 4 To address the lack of transparency and inadequacy of certain GE Programs, the DOE 1 2 proposed the Gainful Employment Rule (“the GE Rule”).1 The final version of the GE Rule was 3 published in October 2014. 79 Fed. Reg. 64,890. The final GE Rule subjects all GE Programs to 4 (1) an affirmative disclosure duty (“the Disclosure Requirements”) and (2) punishes those GE 5 Programs that regularly leave low-income graduates with overwhelming debt loads (“the 6 Eligibility Framework”). See APSCU IV, 110 F. Supp. 3d at 182–83. The affirmative disclosure duty requires the DOE to design a “disclosure template” that United States District Court Northern District of California 7 8 GE Programs must complete. 34 C.F.R. § 668.412(a)–(b) (2014). The Rule also tasks the 9 Secretary with “identif[ying] the information that must be included in the template in a notice 10 published in the Federal Register[,]” and specifies that, among other things, the Secretary can 11 require: “[t]he primary occupations . . . that the program prepares students to enter”; “the 12 program’s completion rates”; and/or “[t]he length of the program in calendar time.” Id. Each 13 institution that offers GE Programs must: post the completed disclosure template on the GE 14 Program’s web page, include the template in any promotional materials for the program, and 15 require students to sign an enrollment agreement or make a financial commitment that includes the 16 GE Program’s disclosures. Id. § 668.412(c), (d), (e) (2014). The debt-load punishment rule is more complex. To prevent GE Programs from selling 17 18 students a low-return education at a high price, the DOE enacted a series of punitive measures to 19 weed out poor-performing programs. The rule relies on a “debt-to-earnings rate,” which 20 determines whether a GE program remains eligible for Title IV program funds. See 79 Fed. Reg. 21 at 64,891. Debt-to-earning rates measure (1) how much of a GE Program graduate’s annual 22 income is spent on student loans and (2) how much (if any) of a graduate’s discretionary income 23 goes towards paying off the loans. Under the GE Rule, a GE Program provides its students with 24 25 26 27 28 1 As noted above, the agency first attempted to promulgate this rule in 2011, but it never went into effect because the district court concluded that the DOE failed to engage in reasoned decisionmaking. See Ass’n of Private Sector Colls. & Univs. v. Duncan (“APSCU II”), 870 F. Supp. 2d 133, 149–55 (D.D.C. 2012). The 2014 GE Rule was also challenged, but it survived judicial review. APSCU IV, 110 F. Supp. 3d at 204, aff’d 640 F. App’x 5 (D.C. Cir. 2016). Case Nos.: 5:20-cv-00455-EJD; 5:20-cv-01889-EJD ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS’ MOTIONS TO DISMISS 5 1 “sufficiently gainful employment” if the student’s “discretionary income rate [is] less than or 2 equal to 20 percent” or their “annual earnings rate [is] less than or equal to 8 percent.” Id. (“GE 3 programs with a discretionary income rate over 30 percent and an annual earnings rate over 12 4 percent will fail the [debt-to earnings] rates measure.”). To calculate the debt-to-earnings rate for a given GE Program, the DOE used data from the United States District Court Northern District of California 5 6 Social Security Administration (“SSA”). The regulation worked as follows, the DOE would: 7 (1) collect information from GE Program graduates who received Title IV funds; (2) create a list 8 of the students who competed the Program during the relevant cohort period, (3) allow Programs 9 the chance to correct information about students on the list, (4) obtain from the SSA the mean and 10 median annual earnings of the students on the list, (5) calculate draft debt-to-earnings rates, 11 (6) allow Programs a chance to challenge the median loan debt used to calculate these rates, 12 (7) calculate final debt-to-earnings rates, and (8) allow the institution to appeal the final debt-to- 13 earnings rates. 34 C.F.R. §§ 668.404–668.405 (2014). 14 Based on these rates, Programs received a “passing,” “in the zone,” or “failing” score. Id. 15 § 668.403(c) (2014). If a Program “failed” the debt-to-earnings rates measure for two out of three 16 consecutive years or had a combination “in the zone” and “failing” rates for four consecutive 17 years, the Program could not receive Title IV funds. Id. Any Program at risk of becoming 18 ineligible the next award year had to (1) warn prospective students and (2) inform students that 19 they may be unable to use federal funding to pay for the school the next year and that other, less- 20 risky programs exist. Id. § 668.410(a)(1), (2)(i) (2014). Practically, “ineligibility” would have 21 limited the number of students enrolled in failing postsecondary programs and would have 22 indicated to other students that a Program did not offer “gainful employment.” Id. § 668.410(b)(1) 23 (2014). 24 25 26 27 28 3. The DOE’s Implementation of the 2014 GE Rule Once the DOE successfully defended these 2014 regulations in court, see supra n.1, it began to implement the disclosure requirement and calculate the debt-to-earnings rates for GE Case Nos.: 5:20-cv-00455-EJD; 5:20-cv-01889-EJD ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS’ MOTIONS TO DISMISS 6 1 Programs. On January 9, 2017, the DOE posted the final debt-to-earnings rates for 2015. Gainful 2 Employment Electronic Announcement #100 — Upcoming Release of Final Gainful Employment 3 Debt-to-Earnings (D/E) Rates, Federal Student Aid (Jan. 9, 2017), https://ifap.ed.gov/electronic- 4 announcements/01-06-2017-general-subject-gainful-employment-electronic-announcement-100. 5 On January 19, 2017, the DOE released its disclosure template. See Gainful Employment 6 Electronic Announcement #103 – Release of the 2017 GE Disclosure Template, Federal Student 7 Aid (Jan. 19, 2017), https://ifap.ed.gov/electronic-announcements/01-19-2017-general-subject- 8 gainful-employment-electronic-announcement-103.2 However, in March 2017, DOE changed course. Under new leadership, the agency United States District Court Northern District of California 9 10 decided to postpone the deadlines for implementing the disclosure requirements. Gainful 11 Employment Electronic Announcement #105 — Additional Time for Submission of an Alternate 12 Earnings Appeal and to Comply with Gainful Employment (GE) Disclosure Requirements, Federal 13 Student Aid (Mar. 6, 2017), https://ifap.ed.gov/electronic-announcements/03-06-2017-gainful- 14 employment-subject-gainful-employment-electronic. Then, on June 30, 2017, the DOE again 15 delayed the deadlines. See Program Integrity: Gainful Employment: Announcement of Applicable 16 Dates, Request for Comments, 82 Fed. Reg. 30,975 (July 5, 2017) (delaying deadlines until July 1, 17 2018). And, on June 18, 2018, the DOE announced a further delay of the deadline for GE 18 Programs to include disclosure information in promotional materials and in direct distributions to 19 prospective students. Program Integrity: Gainful Employment, 83 Fed. Reg. 28,177 (June 18, 20 2018) (giving GE Programs until July 1, 2019). 4. The 2019 Rescission Rule 21 Ultimately, the DOE published a notice of proposed rulemaking that indicated the DOE’s 22 23 intent to rescind the 2014 GE Rule. See Program Integrity: Gainful Employment, 83 Fed. Reg. 24 25 26 27 28 2 Defendants requests that the Court take judicial notice of this website. The Court can take judicial notice of the “undisputed and publicly available information displayed on government websites.” King v. Cty. of L.A., 885 F.3d 548, 555 (9th Cir. 2018). The Court thus GRANTS Defendants’ request for judicial notice. Case Nos.: 5:20-cv-00455-EJD; 5:20-cv-01889-EJD ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS’ MOTIONS TO DISMISS 7 1 40,167 (Aug. 14, 2018). The rescission was promulgated as a rule on July 1, 2019, with an 2 effective date of July 1, 2020. See 84 Fed. Reg. at 31,392. The 2019 Rescission Rule eliminated 3 the debt-to-earnings rates measure and the need for schools to publish disclosures and issue 4 warnings to students about possible ineligibility. Id. at 31,395. The Secretary exercised her 5 discretion to designate nearly all of the rescission rule for early implementation, which allowed 6 institutions to stop complying with the 2014 GE Rule immediately. See id. at 31,395–96. 7 5. Plaintiffs’ Claims a. The AFT, CFT, and Individual Plaintiffs United States District Court Northern District of California 8 9 The American Federation of Teachers (“AFT”), California Federation of Teachers 10 (“CFT”), and Individual Plaintiffs Isai Baltezar and Julie Cho (collectively “AFT Plaintiffs”) filed 11 an action alleging that the Rescission Rule harmed them. See Complaint for Declaratory and 12 Injunctive Relief (“AFT Compl.”), Dkt. 1. 13 Plaintiff Baltezar is a fifth-grade teacher and plans to apply to and enroll in a certificate 14 program in K-12 School Administration (i.e., a GE Program) to boost his earning potential. Id. 15 ¶ 28. He is researching programs and plans to borrow federal student loans to finance his 16 postsecondary education. Id. He is a member of AFT and CFT. Id. ¶ 27. 17 Plaintiff Cho is a part-time university lecturer, but is planning to change careers into either 18 disability services counseling or teaching students with special needs. Id. ¶¶ 35–36. To facilitate 19 this program, she intends to pursue a Special Education postsecondary program and plans to use 20 federal student loans to finance her attendance. Id. ¶ 36. Plaintiff Cho is also a member of AFT 21 and CFT. Id. ¶ 35. 22 AFT has filed claims on behalf of itself and on behalf of its members. Id. ¶¶ 22, 53. AFT 23 maintains that the rescission has impaired its ability to fight for the financial rights of its members 24 because its members (including Individual Plaintiffs) are at a substantially higher risk of incurring 25 debt that they cannot replay. Id. ¶¶ 57–64. AFT has been forced to divert resources to protect 26 members from incurring “bad” debt. Id. 27 28 Case Nos.: 5:20-cv-00455-EJD; 5:20-cv-01889-EJD ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS’ MOTIONS TO DISMISS 8 1 2 3 is affiliated with AFT that also fights for the financial rights of its members. Id. ¶ 24. Plaintiffs bring their action pursuant to the APA and raise eleven separate challenges to 4 various aspects of the Rescission Rule. Id. ¶¶ 350–446. They seek declaratory and injunctive 5 relief, including an order setting aside and prohibiting implementation of the 2019 Rescission 6 Rule. Id., Prayer for Relief at 121–22. 7 8 9 United States District Court Northern District of California CFT has filed claims on behalf of its members. Id. ¶ 25. CFT is a labor organization that b. California State Claims California brings this action on behalf of its citizens. See Complaint for Declaratory and Injunctive Relief (“Cal. Compl.”), Dkt. 1. California argues that the 2019 Rescission Rule will 10 incentivize predatory behavior by underperforming GE Programs, raise tuition of those programs, 11 and allow programs to deliver low-quality instruction. Id. ¶ 1. California argues the rescission 12 violates the Administrative Procedure Act (“APA”) and must be set aside. Id. California sets 13 forth four categories of alleged injuries that it seeks to attribute to the rescission: (1) harm to its 14 public colleges and universities, id. ¶¶ 78–94; (2) harm to the State’s fisc, id. ¶¶ 95–105; (3) harm 15 to its residents, id. ¶¶ 106–14; and (4) harm to California’s “quasi-sovereign” interests in the 16 “health and well-being—both physical and economic—of its residents,” id. ¶¶ 115–28. California 17 asserts only one claim under the APA. It argues that the rescission was arbitrary, capricious, and 18 not in accordance with law. Id. ¶¶ 130–43. California asks the Court to set aside the rescission 19 and issue an order that requires the DOE to “implement and enforce the 2014 GE Rule.” Id. at 25. 20 21 B. Procedural History In each action, Defendants filed motions to dismiss for lack of standing. See Defendants’ 22 Motion to Dismiss (“AFT MTD”), Dkt. 26; Defendants’ Motion to Dismiss (“Cal. MTD”), Dkt. 23 18. In each action, Plaintiffs have filed opposition briefs. See Plaintiffs’ Brief in Opposition to 24 Defendants’ Motion to Dismiss (“AFT Opp.”), Dkt. 27; California’s Opposition to Defendants’ 25 Motion to Dismiss (“Cal. Opp.”), Dkt. 22. Thereafter, Defendants filed reply briefs. See 26 Defendants’ Reply in Support of Motion to Dismiss (“AFT Reply”), Dkt. 28; Defendants’ Reply 27 28 Case Nos.: 5:20-cv-00455-EJD; 5:20-cv-01889-EJD ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS’ MOTIONS TO DISMISS 9 1 2 3 II. LEGAL STANDARD To contest a plaintiff’s showing of subject-matter jurisdiction, a defendant may file a Rule 4 12(b)(1) motion. Fed. R. Civ. P. 12(b)(1). A defendant may either challenge jurisdiction 5 “facially” by arguing the complaint “on its face” lacks jurisdiction or “factually” by presenting 6 extrinsic evidence (affidavits, etc.) demonstrating the lack of jurisdiction on the facts of the case. 7 Wolfe v. Strankman, 392 F.3d 358, 362 (9th Cir. 2004); Safe Air for Everyone v. Meyer, 373 F.3d 8 1035, 1039 (9th Cir. 2004). 9 United States District Court Northern District of California in Support of Motion to Dismiss (“Cal. Reply”), Dkt. 24. “In a facial attack, the challenger asserts that the allegations contained in a complaint are 10 insufficient on their face to invoke federal jurisdiction.” Safe Air, 373 F.3d at 1039. During a 11 facial attack, the court examines the complaint as a whole to determine if the plaintiff has “alleged 12 a proper basis of jurisdiction.” Watson v. Chessman, 362 F. Supp. 2d 1190, 1194 (S.D. Cal. 13 2005). When evaluating a facial attack, the court assumes the complaint’s allegations truth and 14 draws all reasonable inferences in the plaintiff’s favor. Wolfe, 392 F.3d at 362. The court may not 15 consider evidence outside the pleadings when deciding a facial attack. See, e.g., MVP Asset 16 Mgmt. (USA) LLC v. Vestbirk, 2011 WL 1457424, at *1 (E.D. Cal. Apr. 14, 2011). By contrast, in 17 a factual attack, the challenger disputes the truth of the allegations that, by themselves, would 18 otherwise invoke federal jurisdiction. Safe Air, 373 F.3d at 1039. 19 Federal courts are courts of limited jurisdiction; they are authorized only to exercise 20 jurisdiction pursuant to Article III of the U.S. Constitution and federal laws enacted thereunder. 21 Gregory Vill. Partners, L.P. v. Chevron U.S.A., Inc., 805 F. Supp. 2d 888, 896 (N.D. Cal. 2011); 22 see also Henderson ex rel. Henderson v. Shinseki, 562 U.S. 428, 434 (2011) (“[F]ederal courts 23 have an independent obligation to ensure that they do not exceed the scope of their jurisdiction, 24 and therefore they must raise and decide jurisdictional questions that the parties either overlook or 25 elect not to press.”). Hence, an Article III federal court must ask whether a plaintiff has suffered 26 sufficient injury to satisfy the “case or controversy” requirement of Article III of the U.S. 27 28 Case Nos.: 5:20-cv-00455-EJD; 5:20-cv-01889-EJD ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS’ MOTIONS TO DISMISS 10 1 United States District Court Northern District of California 2 Constitution. In re LinkedIn User Privacy Litig., 932 F. Supp. 2d 1089, 1092 (N.D. Cal. 2013). To satisfy Article III standing, a plaintiff must allege: (1) an injury in fact that is concrete 3 and particularized, as well as actual or imminent; (2) that the injury is fairly traceable to the 4 challenged action of the defendant; and (3) that it is likely (not merely speculative) that injury will 5 be redressed by a favorable decision. Friends of the Earth, Inc. v. Laidlaw Envtl. Servs. (TOC), 6 Inc., 528 U.S. 167, 180–81 (2000); Lujan v. Defenders of Wildlife, 504 U.S. 555, 561–62 (1992). 7 To establish an injury in fact, a plaintiff must show that he or she suffered “an invasion of a 8 legally protected interest” that is “concrete and particularized” and “actual or imminent, not 9 conjectural or hypothetical.” Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1548 (2016) (quotation 10 marks and citation omitted). To establish a traceable injury, there must be “a causal connection 11 between the injury and the conduct complained of—the injury has to be fairly traceable to the 12 challenged action of the defendant, and not the result of the independent action of some third party 13 not before the court.” Lujan, 504 U.S. at 560 (quotation marks and citation omitted) (alteration 14 omitted). Finally, it must be “likely” as opposed to merely “speculative” that the injury will be 15 “redressed by a favorable decision.” Id. at 561 (quotation marks and citation omitted). If a 16 plaintiff is seeking injunctive or declaratory relief, the plaintiff must demonstrate “a sufficient 17 likelihood that [they] will again be wronged in a similar way.” City of L.A. v. Lyons, 461 U.S. 95, 18 111 (1983). 19 If a plaintiff cannot allege Article III standing, then the federal court lacks jurisdiction over 20 the case and must dismiss the action pursuant to Federal Rule of Civil Procedure 12(b)(1). 21 Spencer Enters., Inc. v. United States, 345 F.3d 683, 687 (9th Cir. 2003); Steel Co. v. Citizens for 22 a Better Env't, 523 U.S. 83, 101, 109–10 (1998). Indeed, “[a]t the pleading stage, the plaintiff 23 must clearly allege facts demonstrating each element.” In re Apple Processor Litig., 366 F. Supp. 24 3d 1103, 1107 (N.D. Cal. 2019) (quoting Spokeo, 136 S. Ct. at 1547). “When ‘[s]peculative 25 inferences’ are necessary . . . to establish either injury or the connection between the alleged injury 26 and the act challenged, standing will not be found.” Johnson v. Weinberger, 851 F.2d 233, 235 27 28 Case Nos.: 5:20-cv-00455-EJD; 5:20-cv-01889-EJD ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS’ MOTIONS TO DISMISS 11 1 2 3 United States District Court Northern District of California 4 (9th Cir. 1988) (quoting Simon v. E. Ky. Welfare Rights Org., 426 U.S. 26, 45 (1976)). III. DISCUSSION A. Defendants’ Motion to Dismiss AFT Plaintiffs’ Complaint AFT Plaintiffs assert eleven separate challenges to the 2019 Rescission Rule. The Court 5 must first decide whether Plaintiffs need to allege standing for each claim. In Plaintiffs’ view, 6 because their claims (and injuries) all flow from the 2019 Rescission Rule, they need not 7 separately allege standing as to each claim. AFT Opp. at 7. Plaintiffs maintain that their three 8 alleged injuries—(1) the substantial risk of making poor educational investments/having resultant 9 economic harms; (2) loss of information due to the loss of student warnings and disclosures; and 10 (3) an increased burden of seeking out information that interests them—provide standing to 11 address the entire Rescission Rule. 12 The Court disagrees. “A plaintiff must establish standing for every claim it wishes to 13 challenge, even where a plaintiff raises the same legal challenge to multiple sections of the same 14 statute.” Ctr. For Biological Diversity v. Bernhardt, 946 F.3d 553, 560 (9th Cir. 2019). Despite 15 recognizing this rule, Plaintiffs contend that because they challenge various aspects of the 16 Rescission Rule, any harm caused by any aspect of the rule confers standing. Not so. “Standing is 17 not dispensed in gross.” Rather, it must be proven for each claim and each form of relief sought. 18 Lewis v. Casey, 518 U.S. 343, 358 n.6 (1996). A federal court’s ability to grant a remedy is 19 limited to the scope of a plaintiff’s injury. See United Food & Commercial Workers Union, Local 20 No. 663 v. USDA, 2020 WL 2603501, at *6 (D. Minn. Apr. 1, 2020). “If the right to complain 21 of one administrative deficiency automatically conferred the right to complain of all administrative 22 deficiencies, any citizen aggrieved in one respect could bring the whole structure of state 23 administration before the courts for review.” Lewis, 518 U.S. at 358 n.6; see also Davis v. Fed. 24 Election Comm’n, 554 U.S. 724, 734 (2008) (noting that a plaintiff with standing to challenge one 25 statutory subsection may not have standing to challenge the rest of the statute). 26 27 28 Case Nos.: 5:20-cv-00455-EJD; 5:20-cv-01889-EJD ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS’ MOTIONS TO DISMISS 12 United States District Court Northern District of California 1 At issue in this action is the rescission of two distinct regulatory frameworks. First, 2 Plaintiffs challenge the rescission of the “Disclosure Requirements.” See AFT Compl. ¶¶ 374–89 3 (“the Disclosure Claims”); 34 C.F.R. § 668.412. Second, Plaintiffs challenge the rescission of the 4 Eligibility Framework. See AFT Compl. ¶¶ 390–441 (“the Eligibility Claims”); 34 C.F.R. 5 §§ 403–10. Plaintiffs’ Disclosure and Eligibility Claims are legally distinct; nothing in the 2014 6 GE Rule’s Disclosure Requirements impacts the Eligibility Framework, or vice versa. Indeed, a 7 violation of one does not result in a violation of the other. To the contrary, under the 2014 GE 8 Rule, programs were obligated to disclose information outside of debt-to-earnings metrics. And, 9 only if a GE Program was found to be ineligible was it obligated to make separate disclosures. 10 These frameworks are thus not derivative of each other. Cf. Mozilla Corp. v. FCC, 940 F.3d 1, 11 46–47 (D.C. Cir. 2019) (allowing the plaintiffs to challenge an aspect of an agency rule that 12 “derivatively support[ed] other rules” that caused them injury). 13 The case law that Plaintiffs rely on does not change this analysis. Plaintiffs cite to 14 WildEarth Guardians v. Jewell, 738 F.3d 298 (D.C. Cir. 2013) for the proposition that standing 15 can be premised on any harm flowing from the 2019 Rescission Rule. See AFT Opp. at 8. 16 However, the facts of WildEarth are markedly different. There, the plaintiffs claimed that the 17 Bureau of Land Management committed procedural error when it failed to adequately consider 18 environmental concerns. WildEarth, 738 F.3d at 305. The plaintiffs argued that the agency’s 19 action should be vacated. The plaintiffs advanced several arguments in support of vacatur. The 20 defendants argued that the plaintiffs had to establish standing as to each argument. The court 21 disagreed. Vacating the Bureau’s action would remedy each harm. Thus, the plaintiffs were not 22 seeking various forms of relief. Rather, the plaintiffs sought one remedy and advanced reasons to 23 support their one claim. Id. at 305–308 & n.3. 24 Here, Plaintiffs are not advancing several arguments in support of one claim. To the 25 contrary, Plaintiffs are advancing arguments in support of two distinct claims. Unlike WildEarth, 26 where any ground would have remedied each harm, if the Court vacated the 2019 Rescission Rule 27 28 Case Nos.: 5:20-cv-00455-EJD; 5:20-cv-01889-EJD ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS’ MOTIONS TO DISMISS 13 1 based on Plaintiffs’ Disclosure Claims, Plaintiffs’ Eligibility Claims would not be redressed. This 2 confirms that Plaintiffs are pursuing separate claims and must allege standing as to each claim. 3 Cf. WildEarth, 738 F.3d at 305–08 & n.3 (noting that the plaintiffs advanced several arguments in 4 support of one claim). 5 United States District Court Northern District of California 6 1. Disclosure Claims Plaintiffs allege that the repeal of GE Programs’ disclosure obligations resulted in three 7 distinct injuries that satisfy Article III: (1) the substantial risk of making poor educational 8 investments, along with the resultant economic harms; (2) an informational injury due to the loss 9 of required disclosures; and (3) an increased burden of seeking out information that would have 10 been disclosed but-for the rescission. AFT Opp. at 9. Defendant argues that Disclosure Claims 11 contained in the Complaint are insufficient on their face to invoke federal jurisdiction. See Safe 12 Air for Everyone, 373 F.3d at 1039. The Court first focuses on Plaintiffs’ second alleged injury— 13 their purported informational injury. 14 Plaintiffs claim an “informational injury-in-fact” on the grounds that the 2019 Rescission 15 Rule deprived them of information that they would otherwise have received: namely, disclosures 16 from GE Programs with information about the Program’s length, success-rate, and costs. 17 According to the Complaint, “[b]y repealing the Disclosure Requirements without a reasonable 18 explanation, the Department is depriving prospective and enrolled students, including Individual 19 Plaintiffs, of critical information about the programs they are attending or considering attending, 20 which is required to be disclosed under the Gainful Employment Rule.” AFT Compl. ¶ 377. 21 Where a plaintiff’s claimed injury-in-fact is based on the deprivation of information, a 22 plaintiff must allege that: “(1) it has been deprived of information that, on its interpretation, a 23 statute [or regulation] requires the government or a third party to disclose,” and “(2) it suffers, by 24 being denied access to that information, the type of harm Congress sought to prevent by requiring 25 disclosure.” Marino v. Nat’l Oceanic & Atmospheric Admin., 2020 WL 1479515, at *4 (D.D.C. 26 2020) (quotation marks and citation omitted); see also Nat’l Educ. Ass’n v. DeVos, 345 F. Supp. 27 28 Case Nos.: 5:20-cv-00455-EJD; 5:20-cv-01889-EJD ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS’ MOTIONS TO DISMISS 14 1 3d 1127, 1142 (N.D. Cal. 2018) (“The D.C. Circuit has recognized that the deprivation of 2 information to which plaintiffs have a regulatory right (as opposed to a statutory right) can 3 constitute an injury in fact for the purposes of standing.” (citing Action Alliance of Senior Citizens 4 v. Heckler, 789 F.2d 931 (D.C. Cir. 1986))). United States District Court Northern District of California 5 Some examples are helpful. In Friends of Animals v. Jewell, the plaintiff sought to compel 6 the Secretary of the Interior to comply with a section of the Endangered Species Act that the 7 plaintiff alleged mandated the Secretary to make various findings within a 12-month period. 828 8 F.3d 989, 990, 993 (D.C. Cir. 2016). Once the Secretary made a specific finding, various 9 disclosure requirements ensued. Id. at 992. The D.C. Circuit found that the plaintiff did not yet 10 have a right to information. Pursuant to the statute, only after the Secretary made certain findings 11 did the right to information form. Id. at 993. Because the Secretary had not made any findings, 12 the plaintiff did not yet have a right to information. Id. 13 Likewise, in American Society for the Prevention of Cruelty to Animals v. Feld 14 Entertainment, Inc., the D.C. Circuit again rejected the plaintiff’s claim for information. 659 F.3d 15 13 (D.C. Cir. 2011). There, the plaintiff argued that the defendant’s treatment of elephants 16 constituted a “take” under section 9 of the Endangered Species Act. Id. at 17. Because the 17 defendant’s conduct violated section 9, the plaintiff contended that the defendant had to apply for 18 and obtain a permit. Id. at 22. Information contained in permit applications is public. Id. The 19 plaintiff argued that this possible right to information conferred informational standing. The D.C. 20 Circuit disagreed. If the plaintiff won, the defendant would only be obligated to cease its 21 practices. Id. It would not be obligated to disclose any information to the plaintiff. The 22 possibility that the defendant might disclose information in the future was too speculative. Id. 23 Finally, in Marino, the court rejected the plaintiffs’ asserted informational injury. 2020 24 WL 1479515, at *4. The relevant statute vested the agency with discretion to decide what 25 information should be disclosed. Id. (“The . . . Provisions that the plaintiffs identify as the source 26 of their alleged injuries are not creatures of statute, but instead consequences of [the defendant’s] 27 28 Case Nos.: 5:20-cv-00455-EJD; 5:20-cv-01889-EJD ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS’ MOTIONS TO DISMISS 15 1 discretionary decision to include those provisions in the permits it issued, as well as its 2 discretionary decision to issue those permits in the first place.”). Because the agency controlled 3 the decision about what information it had to disclose in the first place, the plaintiffs could not 4 show that the agency had a “duty” to disclose the information that the plaintiffs sought. Thus, the 5 plaintiffs had no cognizable informational injury. Id. 6 7 contrast. There, the court found that the plaintiffs had a right to the information that they sought 8 because the regulation at issue “required” certain “public and individualized disclosures” to be 9 made. National Education Association, 345 F. Supp. 3d at 1133. This contrast is informative: 10 11 United States District Court Northern District of California National Education Association v. Devos, 345 F. Supp. 3d 1127 (N.D. Cal. 2018) stands in absent a specific disclosure requirement, a plaintiff cannot have an informational injury. The Court need only consider the first prong of the informational injury test to conclude 12 that Plaintiffs’ allegations fall short. None of the plaintiffs have alleged that they have “been 13 deprived of information” that “a statute requires the government or a third party to disclose” to 14 them. Elec. Privacy Info. Ctr. v. U.S. Dep’t of Commerce, 928 F.3d 95, 103 (D.C. Cir. 2019). Nor 15 could they. Nothing in 34 C.F.R. § 668.412 (the 2014 GE Rule’s Disclosure Requirements) 16 requires the DOE or Secretary DeVos to collect specific information. To the contrary, the 17 regulation is clear that “the Secretary identifies the information that must be included in the 18 template.” Thus, the type of information collected is within the Secretary’s discretion. See 34 19 C.F.R. § 668.412(a) (“That information may include, but is not limited to:” (emphasis added)). 20 Much like Marino, the information required to be disclosed by GE Programs rests within 21 Secretary DeVos’s discretion. That the DOE required certain disclosures in the past does not 22 obligate the DOE to require those disclosures in the future. See Marino, 2020 WL 1479515, at *4 23 (finding that even while certain disclosures were required in the past, because the defendant had 24 discretion over those disclosures in the first place, the plaintiffs did not have a right to continued 25 disclosures). 26 27 28 Case Nos.: 5:20-cv-00455-EJD; 5:20-cv-01889-EJD ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS’ MOTIONS TO DISMISS 16 Moreover, to the extent 34 C.F.R. § 668.412 requires the DOE to issue a disclosure 1 2 template, there is no information about how often or even when the template has to be issued. 3 And, even if the Court ordered the DOE to issue a template, the Court has no power to mandate 4 that the template include specific information—that decision has been placed with the Secretary. 5 Any order mandating the Secretary to exercise her discretion in a specific way implicates obvious 6 separation of powers issues. This is to say, Plaintiffs also have a redressability problem. Because 7 the Court cannot order the Secretary to provide specific information, the Court cannot remedy the 8 harm caused by the deprivation of information. See AFT Compl. ¶ 377. For these reasons, AFT 9 Plaintiffs lack standing to pursue their disclosure claims. Plaintiffs resist this conclusion by pointing to their other two alleged harms. They argue United States District Court Northern District of California 10 11 that these harms are “distinct.” Not so. Injury one and three are premised on injury two. 12 Plaintiffs maintain that because they no longer have access to GE Programs’ disclosures, they are 13 at risk of making poor educational decisions and have the increased burden of seeking out 14 information. Injuries one and three are thus derivative Plaintiffs’ informational injury. These 15 harms are “inextricably linked” to and “second-order consequences” of the above informational 16 injury. See Marino, 2020 WL 1479515, at *5. Because Plaintiffs’ first and third injuries are 17 “unavoidably informational in nature,” Plaintiffs cannot establish standing without meeting the 18 informational injury standard. Id. (collecting cases). Plaintiffs cannot meet the requirements of 19 this test and thus lack standing to pursue their Disclosure Claims.3 Accordingly, the Court 20 GRANTS Defendants’ motion to dismiss the disclosure claims. 21 22 23 24 25 26 27 28 3 Because AFT and CFT Plaintiffs have not shown that their members would have standing in their own right, AFT and CFT Plaintiffs cannot pursue associational standing. See Hunt v. Wash. State Apple Adver. Comm’n, 432 U.S. 333, 343 (1977) (“[A]n association has standing to bring suit on behalf of its members when: (a) its members would otherwise have standing in their own right . . . .”). For clarity, the above analysis also bars AFT from pursuing the Disclosure Claims in its own right. See AFT Opp. at 23. Case Nos.: 5:20-cv-00455-EJD; 5:20-cv-01889-EJD ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS’ MOTIONS TO DISMISS 17 1 2 As discussed above, the 2014 GE Rule also has a provision designed to target poor- 3 performing programs. The Rule used a “debt-to-earnings” rate that measured how much of GE 4 Program graduate’s earnings go towards servicing student loans. Based on that rate, the DOE 5 determined whether a Program “gainfully employed” graduates. 6 United States District Court Northern District of California 2. Eligibility Claims To calculate the debt-to-earnings rates for a given GE Program, the regulation required the 7 DOE to use aggregate data obtained from the SSA. Only after receiving this data does the DOE 8 publish information about final debt-to-earnings rates for the various GE Programs. See 34 C.F.R. 9 § 668.404(c)(1). The DOE does not have access to individual earnings information for students 10 who complete postsecondary educational programs. This is why the 2014 GE Rule contemplated 11 that the DOE would secure information from the SSA. See 79 Fed. Reg. at 65,009. 12 In order to obtain the aggregate earnings information needed to support the 2014 GE Rule, 13 the DOE entered into a Memorandum of Understanding (“MOU”) with the SSA that would allow 14 the SSA to provide GE Program graduates’ earnings data. The MOU expired on May 24, 2018. 15 In order for the DOE to continue to receive earnings data past this date, it would have to renew the 16 MOU with the SSA. 17 In March 2018, an action was filed in this district that claimed the DOE’s use of income 18 data from the SSA violated the Privacy Act of 1974 (5 U.S.C. § 552(a)). Manriquez v. DeVos, 19 Case No. 3:17-cv-07210 (N.D. Cal.) (ECF No. 33); see also Manriquez v. DeVos, 345 F. Supp. 3d 20 1077, 1099 (N.D. Cal. 2018) (“Plaintiffs have met their burden to show that they are likely to 21 succeed on the merits of their argument that the Privacy Act bars the [DOE’s] disclosure of 22 information about applicants to the Social Security Administration and the receipt and use of 23 information from the Social Security Administration.” (emphasis added)). News reports also 24 indicated that at least one member of Congress called for an Inspector General investigation into 25 the DOE’s use of earnings data. See Danielle Douglas-Gabriel, Elizabeth Warren Wants the 26 Education Earnings Data Investigated, WASH. POST (Jan 2, 2018), https://www.washingtonpost. 27 28 Case Nos.: 5:20-cv-00455-EJD; 5:20-cv-01889-EJD ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS’ MOTIONS TO DISMISS 18 1 com/news/grade-point/wp/2018/01/02/elizabeth-warren-wants-the-education-dept-s-use-of- 2 earnings-data-investigated. 3 After these events, the SSA decided not to renew the MOU. See Declaration of Diane 4 Auer Jones (“Jones Decl.”) ¶ 6, Dkt. 26-1. Accordingly, the MOU expired in May 2018. The 5 DOE requested that the SSA agree to renew the MOU, but the SSA declined to do so. Id. 6 Because the MOU expired, the DOE was unable to complete the debt-to-earnings rate calculations 7 for a second year. Id. ¶ 7. The 2019 Rule explained that because the SSA had not signed a new MOU, the DOE could 8 United States District Court Northern District of California 9 not calculate new debt-to-earnings rates. See 84 Fed. Reg. at 31,392. The use of SSA data was 10 essential to the debt-to-earnings calculations, and the 2014 GE Rule did not allow the Secretary to 11 replace the SSA data with information from other sources. See 34 C.F.R. §§ 668.404(c)(1). Once 12 the MOU terminated, the DEO had no way to identify which GE Programs would qualify as 13 “failing” or “in the zone” for a second year under the 2014 GE Rule. Hence, even if the Court 14 were to set aside the 2019 Rescission Rule (as Plaintiffs request), the DOE could not calculate 15 debt-to-earnings rates as prescribed by the 2014 GE Rule. Further, Plaintiffs cite no authority that 16 would allow this Court to compel the SSA, a non-party to this suit, to disclose information 17 (particularly information found by another court to violate the Privacy Act). Therefore, even if the 18 Court granted Plaintiffs’ request to set aside the 2019 Rescission Rule, it would not redress 19 Plaintiffs’ alleged informational injury4 because reinstatement of the 2014 GE Rule would not 20 result in new debt-to-earnings rate calculations. Without these calculations, Plaintiffs would not 21 gain any new information about GE Program’s eligibility. See Jones Decl. ¶ 7. In response, Plaintiffs argue that the 2014 GE Rule can still function without SSA data. 22 23 AFT Opp. at 20. They maintain that if the Court reinstated the 2014 GE Rule, GE Programs 24 would (1) maintain the same status as the previous year, (2) be obligated to warn prospective and 25 enrolled students about their failure to meet DOE standards, and (3) still be at risk of possible 26 27 28 4 Plaintiffs rely on the same three injuries identified above. See III.A. Case Nos.: 5:20-cv-00455-EJD; 5:20-cv-01889-EJD ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS’ MOTIONS TO DISMISS 19 1 ineligibility. But, the requirement to provide students with already-known information neither 2 redresses Plaintiffs’ informational injury nor lessens the risk that Plaintiffs or their members might 3 make poor educational decisions.5 Accordingly, Plaintiffs’ have not shown that their Eligibility 4 Claims are “likely” to be redressed by a favorable outcome. Plaintiffs last suggest that Ms. Jones’ declaration should be ignored because she provides United States District Court Northern District of California 5 6 “new facts” regarding the SSA’s decision not to renew the MOU and attempts to “buttress the 7 Repeal in ways not set forth in the Repeal itself.” AFT Opp. at 21 n.15. The Court disagrees; the 8 DOE informed the public in its 2019 Rescission Rule that it was unable to enter into an updated 9 MOU agreement with the SSA. 84 Fed. Reg. At 31,392. Ms. Jones’ statements are consistent 10 with publicly available information and are entitled to a presumption of good faith. See also Am. 11 Cargo Transport, Inc. v. U.S., 625 F.3d 1176, 1180 (9th Cir. 2010) (“[W]e presume the 12 government is acting in good faith.”) (collecting cases). Plaintiffs further suggest that the Court should permit Plaintiffs leave to conduct discovery 13 14 into Ms. Jones’ declaration. AFT Opp. at 21 n.15. Discovery should be granted when “the 15 jurisdictional facts are contested or more facts are needed.” Laub v. U.S. Dep’t of Interior, 342 16 F.3d 1080, 1093 (9th Cir. 2003). To obtain jurisdictional discovery, a defendant must show more 17 than a “hunch” that discovery might yield jurisdictionally relevant facts. See Kellman v. Whole 18 Foods Market, Inc., 2018 WL 5014191, at *1 (N.D. Cal. Oct. 16, 2018). Plaintiffs provide no 19 reason to believe that the SSA might again provide the DOE with data. Thus, Plaintiffs have not 20 cleared the “hunch” threshold and are not entitled to jurisdictional discovery. Id. For these reasons, the Court finds that Plaintiffs have failed to show that their Eligibility 21 22 Claims are likely to be redressed by a favorable outcome and the Court GRANTS Defendants’ 23 motion to dismiss these claims. 24 25 26 27 28 5 Plaintiffs further suggest that redress would be provided by reinstating the certification in 34 C.F.R. § 668.414. Certifications contemplated by that regulation only informed the DOE that eligible GE Programs are properly licensed and accredited. Nothing in this section contemplated the dissemination of information to individuals. Case Nos.: 5:20-cv-00455-EJD; 5:20-cv-01889-EJD ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS’ MOTIONS TO DISMISS 20 1 2 In Count 11, Plaintiffs allege a procedural injury. Specifically, Plaintiffs maintain that 3 Defendants deprived them of an adequate opportunity to comment on parts of the 2019 Rescission 4 Rule. See AFT Compl. ¶ 445; see also id. ¶ 446 (“By failing to provide adequate notice and 5 comment, the Department has violated the APA’s procedural requirements, 5 U.S.C. § 553, and, 6 as a result, has acted in a manner that is arbitrary, capricious, and contrary to law within the 7 meaning of APA, 5 U.S.C. ¶ 706.”). Defendants do not argue that this claim should be dismissed 8 on standing grounds. Rather, they argue that Plaintiffs have failed to state a claim upon which 9 relief can be granted. 10 United States District Court Northern District of California 3. Count 11 Procedural Claim Pursuant to the APA, a final agency action must be set aside if it is “arbitrary, capricious, 11 an abuse of discretion, or otherwise not in accordance with the law,” or if it is taken “without 12 observance of procedure required by law.” 5 U.S.C. § 706. While the arbitrary and capricious 13 standard is “highly deferential,” and requires courts to “presume the agency action [is] valid,” the 14 review of an agency’s procedural compliance is more limited. See Kern Cty. Farm Bureau v. 15 Allen, 450 F.3d 1072, 1075–76 (9th Cir. 2006). Integral to an agency’s notice requirement is its 16 duty to “identify and make available technical studies and data that it has employed in reaching the 17 decisions to propose particular rules. An agency commits serious procedural error when it fails to 18 reveal portions of the technical basis for a proposed rule in time to allow for meaningful 19 commentary.” Solite Corp. v. EPA, 952 F.2d 473, 484 (D.C. Cir. 1991). Of course, “[n]othing 20 prohibits [an a]gency from adding supporting documentation for a final rule in response to public 21 comments.” Rybachek v. EPA, 904 F.2d 1276, 1286 (9th Cir. 1990); see also BASF Wyandotte 22 Corp. v. Costle, 598 F.2d 637, 644–45 (1st Cir. 1979) (“It is perfectly predictable that new data 23 will come in during the comment period . . . . The agency should be encouraged to use such 24 information in its final calculations without thereby risking the requirement of a new comment 25 period.”). The public is not entitled to review and comment on every piece of information used 26 during rule making. Kern Cty., 450 F.3d at 1076. 27 28 Case Nos.: 5:20-cv-00455-EJD; 5:20-cv-01889-EJD ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS’ MOTIONS TO DISMISS 21 Count 11 alleges that Defendants failed to afford Plaintiffs an adequate opportunity to United States District Court Northern District of California 1 2 comment on the 2019 Rescission Rule. Plaintiffs point to the proposed and final Rule’s repeated 3 citations to unnamed sources and unclarified “analyses.” AFT Compl. ¶ 445; see also id. ¶¶ 217, 4 218. For instance, in the 2018 notice of proposed rulemaking, Defendants asserted that 5 “[r]esearch published subsequent to the promulgation of the GE regulations adds to the 6 Department’s concern about the validity of using [debt-to-earnings] rates as to determine whether 7 or not a program should be allowed to continue to participate in title IV programs. 83 Fed. Reg. at 8 40,171. The research supporting this conclusion was not cited. The failure to provide a citation 9 was challenged under the Information Quality Act. See 84 Fed. Reg. at 31,426. The DOE 10 maintained that it used “well-respected, peer-reviewed references to substantiate its reasons 11 throughout these final regulations for believing that [debt-to-earnings] rates could be influenced by 12 a number of factors other than program quality.” Id. at 31,427. Of course, these references were 13 not identified. In other places, the DOE cites to its own “analysis,” but never clarifies what that 14 analysis entails. See e.g., id. at 31,398 & n.27. Defendants maintain that the 2019 Rescission Rule disclosed the relevant analysis and 15 16 research. They point the Court toward footnote 14 of the final regulation. This footnote takes the 17 Court to a speech by Secretary DeVos. Yet, nowhere in this speech can the Court locate an 18 analysis explaining the rescission. Moreover, Defendants do not identify any specific references 19 in the proposed or final rule that support their contention that the DOE disclosed the relevant 20 research. See Keenan v. Allan, 91 F.3d 1275, 1279 (9th Cir. 1996) (“As other courts have noted, 21 [i]t is not our task, or that of the district court, to scour the record in search of a genuine issue of 22 triable fact.” (quotation marks and citation omitted)). Accordingly, because Plaintiffs have plead facts showing that Defendants did not disclose 23 24 the research and analysis that the DOE relied on in rescinding the 2014 GE Rule, Plaintiffs have 25 stated a claim for relief and the Court DENIES Defendants’ motion to dismiss this procedural 26 claim. 27 28 Case Nos.: 5:20-cv-00455-EJD; 5:20-cv-01889-EJD ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS’ MOTIONS TO DISMISS 22 B. Defendants’ Motion to Dismiss California’s Complaint 1 California establishes four categories of alleged injuries that it seeks to attribute to the 2 3 2019 Rescission Rule: (1) alleged harms to its public colleges and universities, Cal. Compl. ¶¶ 78– 4 94; (2) alleged harms to the State’s fisc, id. ¶¶ 95–105; (3) alleged harm to the State’s residents, id. 5 ¶¶ 106–14; and (4) alleged harms to the State’s “quasi-sovereign” interests in “the health and well- 6 being—both physical and economic—of its residents, id. ¶¶ 115–28. California attempts to establish an injury-in-fact through (1) parens patriae standing; (2) United States District Court Northern District of California 7 8 its propriety interests as the operator of a public higher education system; and (3) an alleged 9 financial injury. The Court declines to assess these alleged harms—even if the State could 10 establish parens patriae standing or an injury based on the two other asserted-harms, the State 11 cannot establish redressability.6 California also bases its claim on the 2014 GE Rule’s disclosure obligations and eligibility 12 13 requirements. As established, the 2014 Rule did not require the disclosure of any specific 14 information. While schools had to use a specific template, the information contained therein was 15 decided by the Secretary. Thus, any decision regarding what the template must include is within 16 the Secretary’s discretion. This is to say, even if the Court set aside the rescission of Section 17 668.412, the Secretary would still have full discretion to determine what information should be 18 included in GE Program’s disclosures. Accordingly, the Court cannot redress California’s harm; 19 only the Secretary can by again mandating specific disclosures. Likewise, because the DOE can 20 no longer obtain information necessary to calculate debt-to-earnings rates, California cannot 21 establish redressability as to its Eligibility Claims. For these reasons, the Court GRANTS in part 22 Defendants’ motion to dismiss California’s Complaint. California also asserts a procedural harm. See Cal. Compl. ¶¶ 134–43. They allege that 23 24 the DOE rescinded the 2014 GE Rule without adequate reasoning. See supra III.A.3. This claim 25 26 27 28 6 While cases like Massachusetts v. EPA, 549 U.S. 497 (2007) may have relaxed the prohibition on generalized grievances for states, it did not eradicate the redressability standing requirement. Case Nos.: 5:20-cv-00455-EJD; 5:20-cv-01889-EJD ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS’ MOTIONS TO DISMISS 23 1 can proceed. See Cal. Compl. ¶¶ 106–14 (premising standing on California citizens’ loss of 2 information about GE programs’ costs and eligibility). United States District Court Northern District of California 3 IV. LEAVE TO AMEND 4 In determining whether leave to amend is appropriate, the district court considers “the 5 presence of any of four factors: bad faith, undue delay, prejudice to the opposing party, and/or 6 futility.” Owens v. Kaiser Found. Health Plan, Inc., 244 F.3d 708, 712 (9th Cir. 2001) (noting 7 amendments should be granted with “extreme liberality”); Fed. R. Civ. Pro. 15(a) (2) (court 8 should freely allow amendment when “justice so requires”). If leave to amend would be futile, the 9 court may deny leave. See Reddy v. Litton Indus., Inc., 912 F.2d 291, 296 (9th Cir. 1990) (“It is 10 not an abuse of discretion to deny leave to amend when any proposed amendment would be 11 futile.”). Here, the Court finds that leave to amend would be futile. The 2014 GE Rule did not 12 13 prescribe mandatory disclosure obligations. Thus, nothing in the regulation entitles AFT Plaintiffs 14 or California to specific information. The Court thus cannot remedy the deprivation of that 15 information. Likewise, the Rule’s eligibility requirements are premised on the receipt of SSA 16 data. Because the DOE can no longer access SSA data (and there is no indication that is subject to 17 change), this Court cannot provide Plaintiffs relief. The Court’s inability to remedy Plaintiffs’ 18 alleged harm is prescribed by the regulation. Thus, Plaintiffs cannot cure the standing deficiency 19 identified in this order. For these reasons, leave to amend would be futile. 20 21 22 23 24 25 26 27 28 V. CONCLUSION For the foregoing reasons, the Court GRANTS in part and DENIES in part Defendants’ motions to dismiss. IT IS SO ORDERED. Dated: September 3, 2020 ______________________________________ EDWARD J. DAVILA United States District Judge Case Nos.: 5:20-cv-00455-EJD; 5:20-cv-01889-EJD ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS’ MOTIONS TO DISMISS 24

Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.