344 F. Supp. 3d 158
D.C. Cir.2018Background
- In November 2016 the Department of Education promulgated a rule (the 2016 Rule) revising Direct Loan Program conditions, including: (1) prohibiting certain predispute arbitration clauses and class-action waivers; (2) new financial-responsibility triggers requiring letters of credit; (3) a repayment-rate warning requirement; and (4) revised borrower-defense and recoupment procedures.
- CAPPS (an association of private postsecondary schools) sued to set the 2016 Rule aside and renewed a motion for a preliminary injunction seeking to block those four provisions.
- The Department previously stayed the Rule’s effective date; related litigation (consolidated Bauer actions) resulted in opinions finding parts of the Department’s delay unlawful and vacating the stay and final delay rule.
- CAPPS submitted declarations from member schools asserting harms (compliance costs, litigation burdens, reputational injury), but most declarations lack specifics tying an identified member to an imminent, concrete injury from each challenged provision.
- The court evaluated CAPPS’s renewed preliminary-injunction motion under Winter and related standing/irreparable-harm precedent and denied the motion on the principal ground that CAPPS failed to show a likelihood of irreparable injury (and, for several claims, failed to show associational standing or ripeness).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Arbitration & Class Action Waiver: validity and preemption by FAA / due process / APA | CAPPS: provision conflicts with FAA, exceeds HEA authority, violates APA and due process; members will incur notice/amendment costs and face litigation burdens | DoEd: Condition on Program Participation is lawful; schools could decline Title IV if they wish to preserve arbitration; costs are speculative or remediable | Court: CAPPS has associational standing as to this provision but failed to show likely irreparable injury; injunction denied |
| Financial Responsibility Provision: triggers for letters of credit and composite-score recalculation | CAPPS: exceeds Secretary’s authority, arbitrary and capricious, violates due process; will force letters of credit and severe financial harm | DoEd: triggers identify institutions at risk; procedures exist to contest some triggers; injuries speculative and APA review is available | Court: CAPPS failed to identify any specific member likely to suffer injury (no associational standing) and failed to show irreparable harm; injunction denied |
| Repayment Rate Provision: mandated loan-repayment warnings in promotional materials | CAPPS: lack statutory authority, APA and First Amendment violations; reputational and financial harm | DoEd: warning form/place/manner not yet issued and will be subject to notice-and-comment; no enforcement before that notice | Court: No identified member facing imminent obligation; DoEd represented it will not enforce before notice; CAPPS lacks standing and cannot show irreparable harm; injunction denied |
| Borrower Defense & Recoupment: new borrower-defense standard; Department recoupment from schools | CAPPS: exceeds authority, arbitrary and capricious; procedural and constitutional violations (agency prosecutor/adjudicator, Seventh Amendment, Article III) | DoEd: borrower-defense remedies and recoupment procedures still being developed; recoupment procedures will afford hearings and APA review; many challenges unripe | Court: Challenges to borrower–Secretary proceedings not shown to injure identified members; recoupment challenge suffers standing and ripeness defects; no irreparable harm shown; injunction denied |
Key Cases Cited
- Winter v. Natural Res. Def. Council, 555 U.S. 7 (2008) (preliminary injunction standard requires likely success and likely irreparable harm)
- Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992) (constitutional standing requirements)
- Food & Water Watch, Inc. v. Vilsack, 808 F.3d 905 (D.C. Cir. 2015) (associational standing standard at preliminary-injunction stage)
- Chaplaincy of Full Gospel Churches v. England, 454 F.3d 290 (D.C. Cir. 2006) (high standard for irreparable injury)
- Sherley v. Sebelius, 644 F.3d 388 (D.C. Cir. 2011) (discussion of preliminary-injunction framework post-Winter)
- Bauer v. DeVos, 325 F. Supp. 3d 74 (D.D.C. 2018) (prior decision addressing Department’s stay and delay rules)