Court Opinion

ID: 4543044
Source: CourtListenerOpinion
Date Created: 2020-06-22 16:00:42.062268+00
Date Added: 2024-06-11T08:49:38.103340
License: Public Domain

UNITED STATES DISTRICT COURT
                              FOR THE DISTRICT OF COLUMBIA

 RANDI WEINGARTEN, President,
 American Federation of Teachers, AFL-CIO,
 et al.,

                Plaintiffs,
                                                           No. 19-cv-2056 (DLF)
        v.

 ELISABETH DEVOS, Secretary, United
 States Department of Education, et al.,

                Defendants.

                                  MEMORANDUM OPINION

       In this action, the American Federation of Teachers and its president, Randi Weingarten,

(collectively, the “American Federation of Teachers” or “Federation”) join six individual

plaintiffs to challenge the Department of Education’s alleged mismanagement of the Public

Service Loan Forgiveness Program and the Temporary Expanded Public Service Loan

Forgiveness Program. The plaintiffs allege violations of the Administrative Procedure Act and

the Fifth Amendment’s Due Process Clause. They seek declaratory and injunctive relief

ordering the Department to provide “a decision-making process that minimizes the risk of

erroneous denials” of loan forgiveness applications, “a meaningful opportunity to contest

denials, and a written, reasoned explanation for its decisions.” Compl. at 1, Dkt. 1. The

individual plaintiffs “also seek loan forgiveness in their specific cases.” Id. Before the Court is

the Department’s Partial Motion to Dismiss the American Federation of Teachers and to dismiss

Counts III, IV, and V. See Defs.’ Mot. to Dismiss at 1, Dkt. 19. For the following reasons, the

Court will grant in part and deny in part the Department’s motion.
I.     BACKGROUND

       A.      Statutory and Regulatory Background

               1.      Public Service Loan Forgiveness Program

       Congress created the Public Service Loan Forgiveness Program (the “Loan Forgiveness

Program”) in 2007 with the College Cost Reduction and Access Act. Compl. ¶¶ 60, 66. That

Act requires that “[t]he Secretary shall cancel the balance of interest and principal due . . . on any

eligible Federal Direct Loan not in default for a borrower who” meets three main qualifications.

20 U.S.C. § 1087e(m). The borrower must have “made 120 monthly payments on [an] eligible

Federal Direct Loan after October 1, 2007, pursuant to [an income-driven repayment plan, the

standard repayment plan, or a plan with a monthly payment at least equal to the standard plan].”
Id. The borrower must be “employed in a public service job at the time of such forgiveness.”

And the borrower must have “been employed in a public service job during the period in which

the borrower makes each of the 120 payments described” above. Id.

       Loans must originate under the Direct Loan Program to qualify for forgiveness. The

Direct Loan Program did not exist until 1993. Compl.¶ 52. Before then, all federal loans

originated under the Federal Family Education Loan Program. Id. Those loans were privately

originated and funded, and the federal government simply acted as a reinsurer to the guaranty

agencies that directly insured the loans. Id. But in 1993, the “federal government began

originating loans directly to borrowers” under the Direct Loan Program. Id. The two programs

“operated in tandem until 2008, at which point the [Federal Family Education Loan] Program

was terminated and the Direct Loan Program expanded.” Id. Though “borrowers are still

repaying [Federal Family Education] Loans, no new [Federal Family Education] Loans have

been issued since June 30, 2010.” Id.

                                                  2
       Though the Department “retains ultimate responsibility” for administering the Public

Service Loan Forgiveness Program, it has designated FedLoan Servicing as “the” servicer for the

program. Id. ¶ 69. A borrower who is “declared on track for [forgiveness]—as explained in step

three below—will be transferred to” FedLoan Servicing. Id. (internal quotation marks omitted).

Until then, any of the federal loan servicers may service the borrower’s loans. Id.

       A borrower must clear several hurdles to qualify for forgiveness. First, at the borrower’s

request, “FedLoan Servicing must provide the borrower with an [Employment Certification

Form], an overview of [Public Service Loan Forgiveness Program] eligibility requirements, and

instructions for completing the [form].” Id. ¶ 70. The borrower submits a completed form, and

the Department reviews it for errors. Id.

       Second, FedLoan Servicing confirms that the employer is listed in the Department’s

database of qualifying public service organizations. Id. ¶ 71. If FedLoan Servicing cannot so

confirm, the Department determines whether the employer qualifies. Id. ¶ 72.

       Third, FedLoan Servicing “determines whether the borrower worked the requisite

number of hours in a public service job” to be considered “on track” for forgiveness. Id. ¶ 73–

74. If so, “that borrower’s loans are transferred to FedLoan Servicing,” if they are not already

there. Id. ¶ 74. At this point, “FedLoan Servicing is to process all forms and handle all

communications regarding [Public Service Loan Forgiveness], as well as perform all non-[Public

Service Loan Forgiveness] related servicing functions on a borrower portfolio, as required of all

federal loan servicers.” Id. (internal quotation marks omitted). The Department “requires

FedLoan Servicing to track the number of qualifying payments made by all of the borrowers it

services,” and the Department and FedLoan Servicing both “recommend that [Employment

Certification Forms] be submitted annually so that the number of qualifying payments can be

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updated.” Id. ¶ 75. As borrowers submit those forms, FedLoan Servicing reviews them “and

notifies the borrower of the number of qualifying payments the borrower has made and the

remaining number the borrower must make in order to be eligible for [forgiveness].” Id. ¶ 76

(internal quotation marks omitted).

       Fourth, the borrower then “must make 120 qualifying payments toward Direct Loans to

qualify for [forgiveness].” Id. ¶ 77. As mentioned, no Federal Family Education Loans qualify

for forgiveness, so the borrower must consolidate them “into a Direct Consolidation Loan,” and

“[a]ny payments made prior to consolidation do not qualify” toward forgiveness. Id. ¶ 78. In

addition, not all payments made on Direct Loans qualify. To qualify, they “must have been

made after October 1, 2007, under a qualifying repayment plan, for the full amount shown on the

invoice, within fifteen days of the due date, and while employed full-time by a qualifying

employer.” Id. ¶ 79. And “borrowers cannot make qualifying payments while their Direct Loans

are in forbearance.” Id.

       Fifth, a borrower who “has made 120 qualifying payments” will then “complete a [Public

Service Loan] Application for Forgiveness.” Id. ¶ 80. The borrower “must be working full-time

for a qualifying employer” both “at the time the application is submitted and at the time the

remaining balance on the loan is forgiven.” Id. FedLoan Servicing reviews the application, and

“[i]f the borrower meets all of the above requirements, [it] forwards the application to [the

Department] for final review.” Id. ¶ 81. If the Department agrees that the borrower has met all

requirements, the borrower’s remaining principal and interest balance on the loan is forgiven. Id.

If the Department does not agree, the Department “notifies the borrower that the application has

been denied, provides the basis for the denial, and informs the borrower that [the Department]

will resume collection of the loan.” Id. ¶ 82.

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       The Department has “what is known as Compromise and Settlement authority, which

allows [it] to compromise or waive any title or claim.” Id. ¶ 91. This authority covers Federal

Family Education Loans and Direct Loans alike. Id. ¶ 92. The Department can use this authority

“to settle with student loan borrowers who are not eligible for forgiveness” on account of

“incorrect information” from the Department and its servicers “about how to qualify” for

forgiveness. Id. ¶ 91.

       But the Department “provides no process for a borrower to challenge or appeal the denial

of [forgiveness].” Id. ¶ 84. Nor does it “have any process by which it reviews and corrects

mistakes made by [itself] or [its] servicers regarding [forgiveness].” Id.

               2.        Temporary Expanded Public Service Loan Forgiveness Program

       The Public Service Loan Forgiveness Program has forgiven relatively few loans. There

were “more than 32 million borrowers” repaying potentially eligible loans by the end of 2016.
Id. ¶ 85. But “as of March 2019,” just “73,554 unique borrowers had submitted 86,006

applications for [forgiveness], and only 864 applications had been approved for forgiveness.” Id.

¶ 86 (emphasis added). And “[o]nly 518 borrowers—fewer than 1% of unique borrowers

submitting applications—have had their loans forgiven.” Id.

       This situation motivated Congress to create the Temporary Expanded Public Service

Loan Forgiveness Program (the “Temporary Program”) in January 2018. Id. ¶ 87. This program

“authorized $350 million to be available on a first-come, first-served basis . . . to borrowers who

hold Direct Loans but made some or all of their 120 payments on a nonqualifying repayment

plan,” so long as the borrower’s “last 12 payments were greater or equal to what they would have

paid on [a qualifying] income-driven repayment plan.” Id. This “expansion requires forgiveness

if the statutory qualifications are met.” Id. And the authorizing statute directed the Department

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to “develop and make available a simple method for borrowers to apply for loan cancellation

under this section within 60 days of enactment of this Act.” Id.

       To apply for forgiveness under the Temporary Program, FedLoan Servicing and the

Department instruct borrowers to send an email to FedLoan Servicing requesting that the

Department reconsider the borrower’s Public Service Loan Forgiveness eligibility. Id. ¶ 88. The

Department, “through FedLoan Servicing, then reviews the application and determines whether

to grant [forgiveness under the Temporary Program].” Id. The Department has no process for

borrowers to challenge or appeal a Temporary Program denial. Id. ¶ 89. Nor does it have a

process for reviewing or correcting its or its loan servicers’ mistakes. Id.

       Like the Public Service Loan Forgiveness Program, the Temporary Program has forgiven

a relatively small amount of debt. By “the end of March 2019, only 442 requests out of 12,429

requests considered—3.6%—were approved for [forgiveness under the Temporary Program].”
Id. ¶ 90. These approvals totaled about $17.6 million in debt relief. Id.

       B.      The Department’s Alleged Mishandling of These Programs

               1.      Administrative Processing Errors

       The Department allegedly “has done nothing to ensure that borrowers’ [120 qualifying]

payments are correctly counted despite documented knowledge of repeated errors—with

disastrous consequences for borrowers.” Id. ¶ 95. For instance, the Government Accountability

Office (GAO) determined that the Department has not ensured that its loan servicers are

“receiving consistent loan payment history information from other loan servicers, increasing the

risk of inaccurate qualifying payment counts.” Id. ¶ 97. “The GAO further found that the

[Department] has failed to provide FedLoan Servicing and borrowers with sufficient information

to determine whether a borrower’s employer qualifies as a public service employer.” Id. ¶ 98.

And “[t]he GAO found similar inconsistencies in the information used for counting borrowers’

                                                  6
qualifying loan payments, raising the risk of errors in the [Public Service Loan Forgiveness]

application review process.” Id. ¶ 99 (internal quotation marks omitted) (alteration adopted).

       The Consumer Financial Protection Bureau (CFPB) has made related findings. For

instance, the CFPB reported that “borrowers have complained that their servicer provides

inaccurate counts of qualified payments and that their previous qualifying payments may not be

reflected in the payment histories maintained by FedLoan Servicing.” Id. ¶ 100 (internal

quotation marks omitted) (alteration adopted). “The CFPB has also found that borrowers

struggle to get their servicer to correct payment counting errors or explain why payments were

not qualified.” Id. ¶ 102 (internal quotation marks omitted) (alteration adopted).

       These problems, which also “plague the [Temporary Program] application process,” id.

¶ 104, have caused and continue to cause borrowers “to make more payments than necessary

before receiving loan forgiveness,” id. ¶ 105 (internal quotation marks omitted). They “result in

numerous qualified borrowers being wrongfully denied their right to [forgiveness].” Id. ¶ 106.

       Plaintiff Cynthia Miller alleges that she is among the “many victims” of such

administrative errors.1 Id. ¶ 107; see id. ¶¶ 108–152. Miller is a full-time teacher for the

Chicago Public Schools. Id. ¶ 108. She “took out two [Federal Family Education] Loans in

1995 to pay for her undergraduate degree” and “consolidated her loans in 1998 under the Direct

Loan Program.” Id. ¶ 109. She “then took out two Direct Loans in 2003 to complete her

undergraduate degree.” Id.

       Miller alleges that although she has made “at least 120 qualifying payments,” id. ¶ 110,

she has been unable to obtain forgiveness under either program, id. ¶ 5. She claims that the

1
 Two other individual plaintiffs, Crystal Adams and Connie Wakefield, alleged similar claims.
See id. ¶ 5. Adams and Wakefield have since voluntarily dismissed their claims without
prejudice. See Notice of Voluntary Dismissal of Pls. Adams and Wakefield at 1, Dkt. 32.

                                                 7
Department “delayed consideration of her . . . application repeatedly because” her loan servicer

“erroneously claimed her application was ‘incomplete.’” Id. ¶ 5. The Department “eventually

denied [her application] for failure to make 120 qualifying payments” and also “denied [her]

[Temporary Program] application.” Id. She made “repeated inquiries about the reason for the

denials,” and she “received at least a dozen responses with completely different—and in-

correct—counts of her qualifying payments (including one count of 128 payments—eight more

than the requisite number).” Id. Her servicer ultimately “mailed her multiple envelopes

containing over 160 pages of indecipherable numbers and codes and informed her that her

inquiry had been closed.” Id.

        Miller claims that the Department “failed to institute an adequate process . . . that would

have . . . identified and accounted for [its] errors . . . in determining [her] eligibility for loan

forgiveness.” Id. ¶ 150. She asserts that her loan forgiveness denial was “arbitrary and

capricious” because it ignored the Department’s “payment counting errors” and “provided no

meaningful explanation of the reasons why [the Department] did not count her payments as

qualifying.” Id. ¶ 151.

                2.      Disregard of Servicer Misconduct

        On top of these alleged administrative processing errors, the Department also allegedly

“knows of—but completely disregards—repeated misrepresentations made by [loan] servicers to

borrowers who are attempting to qualify for [forgiveness], resulting in unwarranted denials of

loan forgiveness.” Id. ¶ 236. In particular, the Department “has refused to exercise its oversight

responsibilities, has obstructed attempts by agencies like the [Consumer Financial Protection

Bureau] to rein in servicer misconduct, has failed to institute a process that allows borrowers to

raise servicer misconduct in their [Public Service Loan Forgiveness] applications, and has

                                                    8
refused to account for [the] servicers’ misrepresentations in the [forgiveness] review process.”
Id. ¶ 250. And it has done all this despite being “responsible for and obligated to address [loan]

servicers’ misconduct that harms [forgiveness]-seeking borrowers.” Id. ¶ 239.

       Plaintiffs Deborah Baker, Janelle Menzel, Kelly Finlaw, Gloria Nolan, and Michael

Giambona allege they were victims of this uncontrolled servicer misconduct. See id. ¶ 6; see

also id. ¶¶ 251–394 Their “servicers misinformed [them] that they were ‘on track’ for [Public

Service Loan Forgiveness] and making ‘qualifying’ payments for [forgiveness], even though

they did not actually have qualifying loans or were not in qualifying repayment plans.” Id. ¶ 6.

Not until “years later, after they had made 120 payments and applied for forgiveness, did [they]

learn for the first time that their payments” were not qualifying payments and thus “did not

count.” Id. They allege that “[h]ad the loan servicers given [them] the correct information, they

easily could have consolidated their loans, entered qualifying repayment plans, and been eligible

for forgiveness under [the Public Service Loan Forgiveness Program].” Id. And they claim that

rather than “acknowledging the [loan] servicers’ misrepresentations and using its loan discharge

authority to redress these errors,” the Department “has turned a blind eye to this misconduct,

even though it is well-documented, including in government reports.” Id. ¶ 7.

       These “Servicer Misconduct” plaintiffs allege that the Department’s decisions to deny

them loan forgiveness were arbitrary and capricious because the Department failed to consider

that their loan servicers had “engaged in misconduct that precluded [them] from satisfying the

[forgiveness] requirements.” Id. ¶ 422.

       C.      This Case

       The plaintiffs filed this action on July 11, 2019. The complaint asserts five counts. In

Count I, Miller alleges that the Department’s decision denying her forgiveness applications “was

contrary to the evidence before it,” id. ¶ 399, and thus arbitrarily, capriciously, and unlawfully

                                                  9
deprived her of a federal entitlement in violation of 5 U.S.C. § 706(2)(A) of the Administrative

Procedure Act (APA), see id. ¶¶ 395–400. She asks the Court to vacate the denial and to either

remand to the Department with specific instructions to approve her application or retain

jurisdiction and remand to the Department for further action consistent with the APA. Id. ¶ 400.

       In Count II, Miller alleges that the Department’s failure “to explain why [her] 120

payments did not qualify for loan forgiveness” violated the APA’s requirement under 5 U.S.C.

§ 555(e) to provide “a brief statement of the grounds for denial.” Id. ¶ 405. She asks the Court

to vacate her denial on this alternative ground. Id. ¶ 406.

       In Count III, Miller, the American Federation of Teachers, and Weingarten, the President

of the American Federation of Teachers, allege that the Department’s application processes

provide applicants with neither “adequate notice of the reasons for their denial” nor “a

meaningful process to contest the denial, present additional evidence of their eligibility,” and

ensure that the Department “will take account of its errors.” Id. ¶ 414. They allege that these

deficiencies violate the Fifth Amendment Due Process Clause’s requirement “that, at a

minimum, individuals receive notice and an opportunity to be heard before they are deprived of

property.” Id. ¶ 408. While Miller brings this constitutional claim on her own behalf, the

American Federation of Teachers brings the claim on its behalf and its members’ behalf. Id.

¶ 410. To remedy these alleged constitutional violations, these plaintiffs ask the Court to vacate

the denial of Miller’s application and order the Department to provide applicants with: “adequate

notice of the grounds for denial”; “a meaningful decision-making process that minimizes the risk

of erroneous determinations”; an opportunity to “contest their denial and introduce evidence

rebutting [the Department’s] determination”; and “a written and reasoned explanation for [the]

determination within a reasonable time period.” Id. ¶ 417.

                                                 10
       In Count IV, the Servicer Misconduct plaintiffs allege that the Department acted

arbitrarily and capriciously in violation of 5 U.S.C. § 706(2) of the APA when it failed to

consider that loan servicer misconduct precluded these plaintiffs from satisfying the forgiveness

requirements. Id. ¶ 422. They seek an order vacating their denials and remanding to the

Department “with specific instructions to discharge their student loan debt pursuant to [the

Department’s] general discharge authority.” Id. ¶ 423. They alternatively seek “an order

retaining jurisdiction and remanding to [the Department] for further action with respect to each

Servicer Misconduct [p]laintiff named herein, consistent with the APA.” Id.

       And in Count V, the Servicer Misconduct plaintiffs, the American Federation of

Teachers, and Weingarten allege Due Process Clause claims that are substantially similar to

those raised in Count III. See id. ¶¶ 424–434. They accordingly seek an order vacating the

Servicer Misconduct plaintiffs’ denials and an order requiring the Department to introduce

additional processes that would, among other things, “account for misrepresentations” from the

Department and servicers and allow applicants to demonstrate that the Department “should

exercise its general discharge authority to issue forgiveness.” Id. ¶ 434.

       On October 4, 2019, the Department moved to dismiss these claims in part under Rules

12(b)(1) and 12(b)(6) of the Federal Rules of Civil Procedure. See Defs.’ Mot. to Dismiss at 1.

They move to dismiss the American Federation of Teachers for lack of standing. See Defs.’

Mem. in Supp. of Mot. to Dismiss (“Defs.’ Br.”) at 30, Dkt. 19-1. They move to dismiss Counts

III and V as impermissible programmatic challenges. See id. at 16. And they move to dismiss

Count IV for lack of standing and failure to state a claim. See id. at 29. In addition to the briefs

of the parties, the Court also considered the two briefs for amici curiae filed in this case. See

Dkts. 21, 35.

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II.     LEGAL STANDARDS

       Rule 12(b)(1) of the Federal Rules of Civil Procedure allows a defendant to move to

dismiss an action for lack of subject-matter jurisdiction. Fed. R. Civ. P. 12(b)(1). Federal law

empowers federal district courts to hear only certain kinds of cases, and it is “presumed that a

cause lies outside this limited jurisdiction.” Kokkonen v. Guardian Life Ins., 511 U.S. 375, 377

(1994). When deciding a Rule 12(b)(1) motion, the court must “assume the truth of all material

factual allegations in the complaint and construe the complaint liberally, granting plaintiff the

benefit of all inferences that can be derived from the facts alleged, and upon such facts determine

[the] jurisdictional questions.” Am. Nat. Ins. Co. v. FDIC, 642 F.3d 1137, 1139 (D.C. Cir. 2011)

(internal quotation marks omitted). But the court “may undertake an independent investigation”

that examines “facts developed in the record beyond the complaint” to “assure itself of its own

subject matter jurisdiction.” Settles v. U.S. Parole Comm’n, 429 F.3d 1098, 1107 (D.C. Cir.

2005) (internal quotation marks omitted). A court that lacks jurisdiction must dismiss the action.

Fed. R. Civ. P. 12(b)(1); id. 12(h)(3).

       Rule 12(b)(6) of the Federal Rules of Civil Procedure allows a defendant to move to

dismiss a complaint for failure to state a claim upon which relief can be granted. Fed. R. Civ. P.

12(b)(6). To survive a Rule 12(b)(6) motion, a complaint must contain factual matter sufficient

to “state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544,

570 (2007). A plaintiff’s well-pleaded factual allegations are “entitled to [an] assumption of

truth.” Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009). And the court construes the complaint “in

favor of the plaintiff, who must be granted the benefit of all inferences that can be derived from

the facts alleged.” Hettinga v. United States, 677 F.3d 471, 476 (D.C. Cir. 2012) (internal

quotation marks omitted).

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III.   ANALYSIS

       A.      Motion to Dismiss the American Federation of Teachers

       The Department moves to dismiss the American Federation of Teachers for lack of

standing. A federal court formed under Article III of the Constitution may decide nothing but

“cases and controversies.” Whitmore v. Arkansas, 495 U.S. 149, 155 (1990). The “standing”

doctrine “serves to identify those disputes which are appropriately resolved through the judicial

process.” Id. Thus, standing “is an essential and unchanging part of the case-or-controversy

requirement of Article III.” Lujan v. Defs. of Wildlife, 504 U.S. 555, 560 (1992).

       To satisfy Article III’s standing requirement, a party must show: (1) “an injury in fact”—

i.e., “an invasion of a legally protected interest” that is “concrete and particularized” and is either

“actual or imminent”; (2) “a causal connection between the injury and the conduct complained

of”; and (3) that the injury “likely . . . will be redressed by a favorable decision.” Id. A common

shorthand for these three requirements is injury, causation, and redressability. These Article III

standing requirements apply to organizations as well as to individuals. See Equal Rights Ctr. v.

Post Properties, 633 F.3d 1136, 1138 (D.C. Cir. 2011).

       An organization may assert claims “on its own behalf” through organizational

standing “or on behalf of its members” through associational standing. Abigail All. for Better

Access to Developmental Drugs v. Eschenbach, 469 F.3d 129, 132 (D.C. Cir. 2006). The

American Federation of Teachers asserts both forms of standing but establishes neither. The

Court will therefore dismiss it and its president from this case without prejudice.

               1.      Organizational Standing

       To satisfy the injury-in-fact requirement of Article III standing, an organization “must

allege more than a frustration of its purpose.” Food & Water Watch, Inc. v. Vilsack, 808 F.3d
905, 919 (D.C. Cir. 2015). The D.C. Circuit “has distinguished between organizations that

                                                  13
allege that their activities have been impeded”—which might have suffered an injury-in-fact—

and “those that merely allege that their mission has been compromised”—which have not. Id.

Thus, for the American Federation of Teachers to establish organizational standing, “it must

have ‘suffered a concrete and demonstrable injury to its activities.’” Id. (quoting People for the

Ethical Treatment of Animals v. U.S. Dep’t of Agriculture (“PETA”), 797 F.3d 1087, 1093 (D.C.

Cir. 2015)) (alterations adopted).

        This determination turns on “a two-part inquiry—‘we ask, first, whether the agency’s

action or omission to act injured the organization’s interest and, second, whether the organization

used its resources to counteract that harm.’” Id. (quoting PETA, 797 F.3d at 1094) (alterations

adopted); accord Elec. Privacy Info. Ctr. v. Presidential Advisory Comm’n on Election Integrity,

878 F.3d 371 (D.C. Cir. 2017). The first step tests whether “the defendant’s conduct perceptibly

impaired the organization’s ability to provide services.” Turlock Irrigation Dist. v. FERC, 786
F.3d 18, 24 (D.C. Cir. 2015) (internal quotation marks omitted). The D.C. Circuit has expressed

this test in various ways, “but they all focus on the same point: the organization’s tasks must be

impeded” by the agency’s action or omission. Ctr. for Responsible Sci. v. Gottlieb, 346 F. Supp.
3d 29, 37 (D.D.C. 2018) (citing cases). The Court does not proceed to the second step—whether

the organization used its resources to counteract the agency’s action—unless the organization

satisfies the first step. See id. at 40 (observing “settled law in this Circuit that an organizational

plaintiff must first show that the challenged conduct made its activities more difficult”).

        The American Federation of Teachers tries to satisfy this inquiry by alleging that its

“mission and purpose is to promote fairness, democracy, economic opportunity, and high-quality

public education, healthcare, and public services for students, their families, and communities,

including ensuring access to affordable education for public servants.” Compl. ¶ 42(a). It

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further alleges that the Department’s “denials of borrowers’ applications for [forgiveness] and

the deprivation of borrowers’ property interests in [forgiveness] without due process of law

directly conflict with [its] organizational mission.” Id. ¶ 42(b). And it alleges that the

Department’s “challenged actions have caused [the American Federation of Teachers] to redirect

its resources from other projects to assist its members in seeking and obtaining the loan

forgiveness to which they are statutorily entitled.” Id. ¶ 42(c).

       These allegations fail at step one because they do not identify any organizational

activities the Department’s actions have impeded directly. The Federation’s allegation that the

Department’s actions directly conflict with its organizational mission is plainly insufficient

because organizations “that merely allege that their mission has been compromised” have not

suffered an injury-in-fact. Food & Water Watch, Inc., 808 F.3d at 919 (internal quotation marks

omitted).

       Its allegation that it has had to redirect its resources from other projects fares no better.

Here, it “confuses the two prongs of the injury-in-fact inquiry.” Ctr. for Responsible Sci., 346 F.

Supp. 3d at 41. A diversion of resources “is certainly relevant to step two”—whether the

American Federation of Teachers used resources to counteract the alleged harm to its activities.
Id. But step two is irrelevant unless the organization can show harm to its activities distinct from

the diversion of resources. “The diversion itself cannot alone constitute the harm” because an

organization can divert resources to counteract harm to its activities only after there is such harm

to counteract. Id. It “would be hopelessly circular” to hold that the diversion of resources

itself—necessary for establishing step two—also inflicts the harm necessary for establishing step

one. Id. The current complaint fails to allege that “something about the challenged action

itself—rather than the organization’s response to it—makes the organization’s task more

                                                 15
difficult.” Id. The Federation merely “directed its resources to[ward] mitigating a risk that it

thought the government should have exercised more diligence in preventing.” Id. at 42. This

“mere diversion of resources to advance the advocacy mission of an organization is insufficient

to confer standing.” Id. (citing cases).

       For all these reasons and based on the current complaint, the American Federation of

Teachers has failed to assert organizational standing.

               2.      Associational Standing

       Though organizations may not always have standing to assert claims on their own behalf,

they can sometimes use “associational standing” to assert claims on their members’ behalf. To

assert associational standing, an organization must show that “(a) its members would otherwise

have standing to sue in their own right; (b) the interests it seeks to protect are germane to the

organization’s purpose; and (c) neither the claim asserted nor the relief requested requires the

participation of individual members in the lawsuit.” Hunt v. Wash. State Apple Advert. Comm’n,

432 U.S. 333, 343 (1977); see also Sierra Club v. Envtl. Prot. Agency, 754 F.3d 995, 999 (D.C.

Cir. 2014). The Department appears to concede the first two requirements and challenges only

the third. See Defs.’ Br. at 32–34.

       The American Federation of Teachers fails to show that member participation is

unnecessary to resolve the Due Process claims alleged in Counts III and V. To prevail on these

claims, it must show that the Department deprived its members of a “liberty or property interest”

in which they had a “legitimate claim of entitlement” and that “the procedures attendant upon the

deprivation were [not] constitutionally sufficient.” Ky. Dep’t of Corr. v. Thompson, 490 U.S.
454, 460 (1989). The Federation argues that the constitutional violations here are “systemic” and

that the evidence thus would consist largely of the Department’s “own internal procedures,” the

organization’s own “extensive surveys,” and other “investigations of [the Department’s] failures

                                                 16
in implementing the [Public Service Loan Forgiveness] program.” Pls.’ Opp’n at 22, Dkt. 24.

Yet the Federation acknowledges that the evidence also would include “testimony from various

[Federation] members . . . whose experiences evidence [the Department’s] violations,” thus

conceding that at least some individual participation is required. Id.

       Based on this concession, the Federation of Teachers must move the goalposts. It argues

that because no “substantial individual participation” of its members “is required,” it has

“sufficiently alleged associational standing.” Id. at 23 (emphasis added). Yet even if it is correct

that less-than-substantial individual participation would not violate the member participation

rule, the complaint itself demonstrates that this case requires substantial individual participation.

The deficiencies alleged here are unlike the “standardized,” automatically generated “form

letters” at issue in Ass’n of Cmty. Orgs. for Reform Now (ACORN) v. Fed. Emergency Mgmt.

Agency (FEMA), 463 F. Supp. 2d 26, 32 (D.D.C. 2006), which presented a uniform

constitutional deficiency that the court could evaluate without member participation. Here, close

to 190 paragraphs of the complaint contain detailed allegations about the distinctly different

types and different amounts of process that each applicant received. See Compl. ¶¶ 108–152

(Miller); id. ¶¶ 251–394 (Servicer Misconduct plaintiffs). The Court cannot evaluate whether the

Federation’s members received constitutionally sufficient process without evaluating the

particular, fact-specific experiences of numerous individual members. Cf. Cmty. Fin. Servs.

Ass’n of Am., Ltd. v. Fed. Deposit Ins. Corp., No. 14-cv-953 (GK), 2016 WL 7376847, at *4

(D.D.C. Dec. 19, 2016).

       As a fallback, the Federation suggests that because it seeks declaratory and injunctive

relief, rather than damages, individual participation is not required. See Pls.’ Opp’n at 21–22.

This argument is misplaced. To start, the Federation derives this proposition from the Supreme

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Court’s observation that “individual participation is not normally necessary when an association

seeks prospective or injunctive relief for its members.” United Food & Commercial Works

Union Local 751 v. Brown Group, Inc., 517 U.S. 544, 546 (1996); see also ACORN v. FEMA,
463 F. Supp. 2d at 32. But not normally necessary does not mean not ever necessary, and the

Federation itself has conceded that at least some individual participation is required here even

though it does not seek damages. Pls.’ Opp’n at 22. In addition, the Supreme Court’s holding in

Hunt plainly precludes this argument because Hunt requires courts “to look not only at the type

of relief requested but also at the nature of ‘the claim asserted’ to determine whether member

participation is required.” Cmty. Fin. Servs. Ass’n of Am., Ltd., 2016 WL 7376847, at *4

(quoting Hunt, 433 U.S. at 343). Thus, although the plaintiffs seek only injunctive relief, the

nature of their due process claims requires individual member participation.

        For all these reasons, the American Federation of Teachers has failed to assert

associational standing. The Court accordingly will dismiss it and Weingarten from this case.

        B.       Motion to Dismiss Count IV

        The Department moves to dismiss Count IV both because the Servicer Misconduct

plaintiffs lack standing to assert Count IV and because Count IV fails to state a claim. Though

the Court will not dismiss Count IV for lack of standing, it will dismiss Count IV for failure to

state a claim.

                 1.    Standing

        The Department concedes that the Servicer Misconduct plaintiffs can meet the injury in

fact and causation standing requirements but argues that they fail to show redressability and thus

lack standing to bring Count IV. Defs.’ Br. at 26. As explained, the redressability element tests

whether the plaintiff’s injury “likely . . . will be redressed by a favorable decision.” Lujan, 504
U.S. at 560. This element can turn on “whether a federal court has the power to grant” the relief

                                                 18
sought. Swan v. Clinton, 100 F.3d 973, 976 (D.C. Cir. 1996). The D.C. Circuit cautions courts

to be “careful not to require too much from a plaintiff attempting to show redressability, lest it

abdicate its responsibility of granting relief to those injured by illegal government action.” Cmty.

Nutrition Inst. v. Block, 698 F.2d 1239, 1248 (D.C. Cir. 1983), rev’d on other grounds, 467 U.S.
340 (1984). To remedy Count IV, the Servicer Misconduct plaintiffs request: (1) an order

vacating their application denials; and (2) an order either (a) remanding to the Department and

ordering the Secretary of Education to discharge their debt under her general discharge authority,

or (b) retaining jurisdiction and remanding to the Department for further action consistent with

the APA. Compl. ¶ 423.

       The Court has the power to grant at least some of the relief requested. The Court cannot

order the Secretary of Education to discharge these plaintiffs’ debt because Congress has

instructed that “no attachment, injunction, garnishment, or other similar process, mesne or final,

shall be issued against the Secretary or property under the Secretary’s control . . . .” 20 U.S.C.

§ 1082(a)(2) (emphasis added); see also Bank of Am. NT & SA v. Riley, 940 F. Supp. 348, 350

(D.D.C. 1996), aff’d, 132 F.3d 1480 (D.C. Cir. 1997). But, as the Department concedes, the

Court at least can vacate an arbitrary and capricious decision, declare the action unlawful, and

remand to the agency for further proceedings consistent with the APA and the Court’s ruling.

See Defs.’ Reply at 19–22; see also United States v. Microsoft Corp., 253 F.3d 34, 105 (D.C. Cir.

2001) (recognizing a district court’s “broad discretion to enter that relief it calculates will best

remedy the conduct it has found to be unlawful”). And to establish redressability, a plaintiff

need only show that some of the relief requested would redress some of the injuries alleged. Cf.

Larson v. Valente, 456 U.S. 228, 243 n.15 (1982) (holding that to establish redressability a

plaintiff must show only that a favorable decision is likely to redress “an injury,” not “every

                                                  19
injury”); Consumer Data Indus. Ass’n v. King, 678 F.3d 898, 902 (10th Cir. 2012) (observing

that “[t]he Supreme Court has rejected interpretations of the [standing] rule that demand

complete redressability”).

        The question then is whether a decision to vacate the plaintiffs’ application denials and

remand to the agency is likely to redress the plaintiffs’ alleged injuries. The Department answers

“no” because vacatur, declaratory relief, and remand “would not serve a useful purpose.” Defs.’

Reply at 20. This argument is unavailing. First, the Department did not raise this “useful

purpose” argument until its reply brief, and so the Court need not consider it. See, e.g., Russell v.

Harman Int’l Indus., Inc., 773 F.3d 253, 255 n.1 (D.C. Cir. 2014) (arguments made for the first

time in a reply brief are forfeited).

        Second, Bank of Am. NT & SA v. Riley, the authority on which the Department relies,

makes clear that the “useful purpose” test relates not to Article III redressability but to the

doctrine of prudential mootness. See 940 F. Supp. at 350; id. at 351 n.5 (noting that “the

discretionary nature of declaratory relief makes it appropriate to consider, not only the

jurisdictional question presented by the government's motion, but also whether the issuance of

declaratory relief in this case would serve a useful purpose” (emphasis added)). And as

Penthouse Int’l, Ltd. v. Meese, 939 F.2d 1011 (D.C. Cir. 1991), explains, the concept of

prudential mootness “is concerned, not with the court’s power under Article III to provide relief,

but with the court’s discretion in exercising that power.” Id. at 1019. Because the Department

has not raised prudential mootness at all, let alone in its opening brief, the Court need not address

it here. See Russell, 773 F.3d at 255 n.1.

        But even if this issue were properly before the Court, the Department is incorrect that the

relief the Court is empowered to grant—vacatur, a declaratory judgment, and remand—would

                                                  20
not serve a useful purpose. The Department argues that such relief is useless because it would

require the Secretary to evaluate servicer misconduct and flout Congress’s supposed conclusion

that servicer misconduct should not affect loan forgiveness decisions. Defs.’ Reply at 20–21.

But this argument requires the Court to assume that the plaintiffs will lose on the merits of their

claim that the Secretary acted unlawfully by failing to take servicer misconduct into account in

making loan forgiveness decisions. And that assumption is backwards. When evaluating Article

III standing, “a federal court must assume, arguendo, the merits of [the plaintiff’s] legal claim.”

Estate of Boyland v. United States Dep’t of Agric., 913 F.3d 117, 123 (D.C. Cir. 2019), cert.

denied sub nom., 140 S. Ct. 947, 205 L. Ed. 2d 530 (2020) (quoting Parker v. District of

Columbia, 478 F.3d 370 (D.C. Cir. 2007)). So the Court must assume that the Department erred

in failing to consider servicer misconduct before denying these loan applications. And under that

assumption, vacating the denials, declaring the Department’s failure arbitrary and capricious, and

remanding for further proceedings consistent with the APA, surely would serve a useful purpose.

       For these reasons, the Court will deny the Department’s motion to dismiss Count IV for

lack of standing.

               2.      Failure to State A Claim

       Though the Servicer Misconduct plaintiffs have standing to assert Count IV, they fail to

state a claim for which relief can be granted. Each Servicer Misconduct plaintiff concedes that

he or she has not made the required 120 qualifying payments and is thus currently ineligible for

loan forgiveness. Compl. ¶¶ 420(a)-(e). Thus, they do not contend that the Department erred in

denying their loans in the first instance. See Pls.’ Opp’n at 36 (clarifying that any argument

based on their ineligibility “wholly misses the point”). They argue instead that the Secretary’s

failure to take servicer misconduct into account and to consider whether to exercise her

Compromise and Settlement Authority to forgive the Servicer Misconduct plaintiffs’ debt was

                                                  21
arbitrary and capricious. See id. And they argue that the Department’s failure to provide any

explanation for the Secretary’s decision not to exercise that authority was arbitrary and

capricious too. See id.

       But the Secretary’s matters concerning the Secretary’s Compromise and Settlement

authority are presumptively unreviewable. With this authority, “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.” 20 U.S.C. § 1082(a)(6) (emphasis added).

The word “may” means that this authority is discretionary. The Secretary’s “decision not to

exercise [such] authority, or to exercise it in a particular way, is committed to [her] absolute

discretion. Such matters are not subject to judicial review,” absent certain exceptions. Balt. Gas

& Elec. Co. v. F.E.R.C., 252 F.3d 456, 459 (D.C. Cir. 2001).

       And this case presents none of those exceptions. The “substantive statute has [not]

provided guidelines for the agency to follow in exercising its enforcement powers.” Heckler v.

Chaney, 470 U.S. 821, 833 (1985). The Secretary has not declined to use this authority “based

solely on the belief that [she] lacks jurisdiction.” Id. at 833 n.4. And the Department has not

“consciously and expressly adopted a general policy that is so extreme as to amount to an

abdication of its statutory responsibilities.” Id. (internal quotation marks omitted). The plaintiffs

have not argued that any exception applies. The Court thus may not review matters concerning

the Secretary’s exercise or failure to exercise of her settlement authority, and the Court will

therefore grant the Department’s motion to dismiss Count IV.

       C.      Motion to Dismiss Counts III and V

       The Department moves to dismiss Counts III and V solely because they are “broad

programmatic challenges” that seek wholesale agency change. Defs.’ Br. at 16. The Department

asserts that Supreme Court precedent forecloses such claims. Id. But, as the Department

                                                 22
concedes, the limits it raises apply only to claims brought under the APA. And Circuit precedent

forecloses the Department’s argument that a plaintiff may not bring under the Due Process

Clause a claim that the plaintiff could not also bring under the APA. Thus, the Court will deny

the motion to dismiss Counts III and V.

       The cases upon which the Department relies make clear that the programmatic challenge

bar derives from the APA’s text. For example, in Lujan v. Nat’l Wildlife Fed’n, the Supreme

Court considered whether the plaintiff’s APA challenge had targeted “agency action” as the APA

defines it in 5 U.S.C. § 551(13). See 497 U.S. 871, 890 (1990). It concluded that a plaintiff

“cannot seek wholesale improvement of [an agency] program by court decree, rather than in the

offices of the Department or the halls of Congress, where programmatic improvements are

normally made.” Id. at 891. But this is because “[u]nder the terms of the APA, [a plaintiff] must

direct its attack against some particular ‘agency action’ that causes it harm.” Id. (emphasis

added). Indeed, the Court in Lujan recognized that statutes may displace this general rule and

“permit broad regulations to serve as the ‘agency action,’ and thus to be the object of judicial

review directly, even before the concrete effects normally required for APA review are felt.” Id.

       The Department’s other Supreme Court case, Norton v. S. Utah Wilderness All., 542 U.S.
55 (2004), reaffirms that the programmatic challenge bar comes from the APA. There, the

Supreme Court held that the phrase “failure to act” under the APA means “a failure to take an

agency action—that is, a failure to take one of the agency actions . . . defined in § 551(13).” 542
U.S. at 62 (emphasis in original). It added that “[a] second point central to the analysis of the

present case is that the only agency action that can be compelled under the APA is action legally

required.” Id. at 63 (emphasis added). And when noting the rationales behind the programmatic

                                                 23
challenge bar, it explained that these purposes motivate “the APA limitations we have

discussed.” Id. at 66 (emphasis added).2

       While essentially conceding that this programmatic challenge bar applies only to APA

claims, see Defs.’ Reply at 10, the Department nonetheless maintains that if this bar would

foreclose plaintiffs “from bringing their claims under Counts III and V as APA claims, they

should be unable to succeed under any other vehicle,” id. at 13. The Department contends that

holding otherwise would permit an “obvious end-run around the APA.” Id. at 11.

       But D.C. Circuit precedent forecloses this argument. In evaluating the waiver of

sovereign immunity found at 5 U.S.C. § 702, this Circuit concluded that nothing in § 702

“restricts its waiver to suits brought under the APA.” Trudeau v. Fed. Trade Comm’n, 456 F.3d
178, 186 (D.C. Cir. 2006). The Circuit determined that Congress expected the sovereign

immunity “waiver to apply to nonstatutory actions, and thus not only to actions under the APA.”
Id. Thus, § 702’s sovereign immunity waiver applies “regardless of whether [the challenged

action] constitutes final agency action.” See id. at 187 (internal quotation marks omitted).

Congress expected—and expressly permitted—non-APA claims that did not satisfy the APA’s

limits of “final agency action.” The Department’s argument that the APA’s programmatic

challenge bar extends to non-APA claims does not square with this conclusion.

       The Department also argues that allowing Counts III and V to proceed would allow the

American Federation of Teachers to skirt “the rigors of class certification and the APA’s bar on

programmatic challenges” and would expose “a vast hole in the limitations established by the

2
  Norton suggests that the APA derived aspects of the programmatic challenge bar from those
“traditional limitations upon mandamus,” such as those set forth in the All Writs Act, now
codified at 28 U.S.C. § 1651(a). Id. at 63, 66. But the Department’s motion raises no such
limits, so the Court does not consider them here.

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