Arguments for Standing in Student Loan Cases

Last month co-blogger Sam Bray and I filed an amicus brief arguing that states lacked standing to challenge the Biden administration’s illegal student loan forgiveness program. (Previous post here.) The briefs below are now in, and of course they don’t agree with us on that.

The summary of state respondents is interesting for several reasons:

First, the brief does not even cite Massachusetts v. EPA and does not expressly argue for any form of “special solicitability” for state claims. Instead, the brief focuses primarily on a specific theory of standing — that the state of Missouri has standing due to injury to MOHELA, a quasi-governmental organization that issues student loans. It’s the least compelling theory standing in the case, and it’s nice to see the analysis focus on that theory rather than amplifying the broader trend.

Second, that said, I’m still not convinced that the state should have sued because Mohela was injured. States cite a variety of cases about the relationship between government-created corporations and the government, but one thing I haven’t seen in tracking down all of their citations is a direct case: a Supreme Court case in which the government had standing to sue for an injury to a separate party that is itself a litigant. – Can sue. Maybe I missed it, but some weird precedent about Restructuring Finance Corporation and the like doesn’t seem to work.

Third, on the other hand, there is a more basic example that is not discussed in the state brief. Soon after its founding, the United States created a corporation called the Bank of the United States, famously discussed in McCulloch v. Maryland, et al. In a series of famous cases concerning federal jurisdiction, the Supreme Court distinguished between the power to sue and the power of government. Bank’s power to sue. Here is the opinion of Chief Justice Marshall of the Court in Bank of the US v. Planter’s Bank of Georgia:

The State of Georgia, by empowering the bank to sue and be sued, voluntarily divests itself of its sovereign character, so far as respects bank transactions, and waives all privileges of that character. As a member of a corporation, a government never exercises its sovereignty. It acts merely as corporator, and exercises no other power in the management of the affairs of the corporation, except as expressly provided by the organizing laws.

The Union government held shares in the old Bank of the United States; But in that situation the government facility was not given to the bank. The United States was not a party to the suit brought by or against the bank within the meaning of the Constitution. So respect the current bank. Cases brought for or against it are not understood to be brought for or against the United States. The Government, being the corporator, asserts its sovereignty respecting the transactions of the corporation and exercises any power or privilege not derived from the charter.

That’s why our amicus brief focuses on MOHELA’s specific status, such as its ability to sue and be sued, which seems to put it on all fours with founding-era banks.

The states’ brief cites a more modern case, LeBron, which distinguished Planters Bank, but in part because “government obligation” (i.e., the state action doctrine) raises a different question than “government privilege” (i.e., to sue). and power to sue):

Respondent appeals from a statement made by this Court in a case involving Second Bank of the United States, Bank of the United States v. Planters Bank of Georgia, 9 Wheat. 904 (1824). There we allowed the Planters’ Bank, in which the State of Georgia had a noncontrolling interest, see Acts of Dec. 19, 1810, §1, reprinted in Digest of Laws of the State of Georgia 34-35 (O. Prince ed. 1822); Acts of December 3, 1811, §1, Id35, would be sued in federal court despite the Eleventh Amendment, arguing that “[t]He does not identify himself with the Corporation by being the State Corporator.” IdAt 907. “The Union government,” we said, “had shares in the old bank of the United States; but the privileges of the government in that situation were not given to the bank. The United States was not a party. Suits brought by or against the bank within the meaning of the Constitution.” IdAt 908. But holding that a corporation is an agency of the government for purposes of the constitutional obligation of the government rather than a “privilege of the government” does not contradict these statements. When the state has specifically created that corporation to further governmental objectives, and not only holds some shares but also controls the activities of the corporation through its employers.

So I’m still not convinced that invoking MOHELA really solves the fundamental problem here. But I was pleased to see the briefing focus on that issue, and I hope the Court will too.

Additionally, several amicus briefs also back up the States’ standing. Most poignantly, there is this brief from the Empire Justice Center (Misha Seitlin, former Wisconsin SG, as counsel of record). My favorite title is “The Approach That Certain Amici Urge With Leads to a Separation-of-Powers Calamity That Has No Rationale in Article III’s Text, Structure, or Original Public Meaning.” There is also a 17-state amicus brief that argues (as opposed to the respondent states) that states should receive special solicitation in the standing analysis. Finally, there is an amicus brief from the Liberty Justice Center that relies heavily on a 1935 case called Hopkins Federal Savings and Loan v. Cleary. Hopkins captures this line: “There are many situations in which no one but the state is to be aggrieved, so that the power to sue is either there or nowhere.” This echoes the due-group analysis we propose in our brief. Finally, there is this brief by Professor J. Sugarman, opposing both the permanence and meritocracy of administration, which I find particularly admirable in its willingness to argue against partisan fashion.

Finally, there are many interesting amicus briefs supporting respondents on the merits, which I think make many good points. This brief by Michael McConnell and others is particularly noteworthy.

Co-host Dan Epps and I will probably talk more about this case in an episode of our podcast next week, and I’ll try to link to it when we do.