State of Nebraska v. Joseph Biden, Jr. ( 2022 )


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  •                   United States Court of Appeals
    For the Eighth Circuit
    ___________________________
    No. 22-3179
    ___________________________
    State of Nebraska; State of Missouri; State of Arkansas;
    State of Iowa; State of Kansas; State of South Carolina
    Plaintiffs - Appellants
    v.
    Joseph R. Biden, Jr., in his official capacity as the President of the United States of
    America; Miguel Cardona, in his official capacity as Secretary, United States
    Department of Education; United States Department of Education
    Defendants - Appellees
    ------------------------------
    Hamilton Lincoln Law Institute; Americans for Prosperity Foundation; New Civil
    Liberties Alliance
    Amici on Behalf of Appellants
    ____________
    Appeal from United States District Court
    for the Eastern District of Missouri
    ____________
    Submitted: October 24, 2022
    Filed: November 14, 2022
    [Published]
    ____________
    Before SHEPHERD, ERICKSON, and GRASZ, Circuit Judges.
    ____________
    PER CURIAM.
    Whatever the eventual outcome of this case, it will affect the finances of
    millions of Americans with student loan debt as well as those Americans who pay
    taxes to finance the government and indeed everyone who is affected by such far-
    reaching fiscal decisions. As such, we approach the motion before us with great
    care.
    This case centers on the plaintiff States’ request to preliminarily enjoin the
    United States Secretary of Education (“Secretary”) from implementing a plan to
    discharge student loan debt under the Higher Education Relief Opportunities for
    Students Act of 2003, 
    Pub. L. No. 108-76, 117
     Stat. 904 (codified at 20 U.S.C.
    §§ 1098aa–1098ee) (“HEROES Act”). See Federal Student Aid Programs (Federal
    Perkins Loan Program, Federal Family Education Loan Program, and William D.
    Ford Federal Direct Loan Program), 
    87 Fed. Reg. 61,512
    , 61,514 (Oct. 12, 2022) (to
    be codified at 34 C.F.R. pts. 674, 682, 685). The States contend the student loan
    debt relief plan contravenes the separation of powers and violates the Administrative
    Procedure Act because it exceeds the Secretary’s authority and is arbitrary and
    capricious.
    The district court denied the States’ motion for a preliminary injunction and
    dismissed the case for lack of jurisdiction after determining none of the States had
    standing to bring the lawsuit. Key to the district court’s rationale was its conclusion
    that the State of Missouri could not rely on any harm the Missouri Higher Education
    Loan Authority (“MOHELA”) might suffer on account of the Secretary’s
    cancellation of debt. The States appealed and moved for a preliminary injunction
    pending appeal. We grant the motion for the following reasons.
    “In ruling on a request for an injunction pending appeal, the court must engage
    in the same inquiry as when it reviews the grant or denial of a preliminary
    injunction.” Walker v. Lockhart, 
    678 F.2d 68
    , 70 (8th Cir. 1982). This inquiry
    includes “balancing the equities between the parties.” 
    Id.
     We ask “whether the
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    balance of equities so favors the movant that justice requires the court to intervene
    to preserve the status quo until the merits are determined.” Glenwood Bridge, Inc.
    v. City of Minneapolis, 
    940 F.2d 367
    , 370 (8th Cir. 1991) (quoting Dataphase Sys.,
    Inc. v. C L Sys., Inc., 
    640 F.2d 109
    , 113 (8th Cir. 1981) (en banc)). In circumstances
    “where the movant has raised a substantial question and the equities are otherwise
    strongly in his favor, the showing of success on the merits can be less.” Dataphase,
    640 F.3d at 113; see also Fennell v. Butler, 
    570 F.2d 263
    , 264 (8th Cir. 1978) (“If
    the balance tips decidedly towards the plaintiffs and the plaintiffs have raised
    questions serious enough to require litigation, ordinarily the injunction should
    issue.”).
    The district court’s analysis began and ended with standing. Standing is a
    threshold issue since it is essential to our jurisdiction. United States v. One Lincoln
    Navigator 1998, 
    328 F.3d 1011
    , 1013 (8th Cir. 2003). We begin by examining the
    standing of the State of Missouri and, like the district court, focus on MOHELA.
    MOHELA’s unique mix of legal attributes and authority have led to differing
    opinions as to whether it is an “arm of the state” of Missouri for purposes of being
    entitled to sovereign immunity. The core issue before this court, however, is whether
    the alleged harm from the Secretary’s debt discharge plan, considering the role of
    MOHELA, is sufficient to meet the requirements for Article III standing for
    Missouri.
    The relationship between MOHELA and the State of Missouri is relevant to
    the standing analysis. MOHELA was created by the General Assembly of Missouri.
    See 
    Mo. Rev. Stat. § 173.360
    . It is governed by a seven-member board composed
    of five members appointed by the Governor of Missouri, as well as the Missouri
    State Commissioner of Higher Education and a member of the Missouri State
    Coordinating Board of Higher Education. 
    Id.
     After its creation, the Missouri
    General Assembly expanded MOHELA’s purpose to include “support[ing] the
    efforts of public colleges and universities to create and fund capital projects.”
    
    Id.
     Relatedly, the General Assembly established the Lewis and Clark Discovery
    Fund (“LCD Fund”) from which the General Assembly may annually appropriate
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    moneys for certain purposes, including “funding of capital projects at public colleges
    and universities.” 
    Id.
     § 173.392. Most significantly, Missouri law, id. § 173.385.2,
    specifically directs MOHELA to distribute $350 million “into a fund in the State
    Treasury” for this program. MOHELA FY 2022 Financial Statements, at 20,
    available at https://tinyurl.com/4chp295x. MOHELA has met part of its obligation
    to the State treasury, but the “remaining unfunded amount . . . was $105.1 million as
    of June 30, 2022.” Id.
    Given this statutory framework, MOHELA may well be an arm of the State
    of Missouri under the reasoning of our precedent. See Pub. Sch. Ret. Sys. of Mo. v.
    St. Bank & Trust Co., 
    640 F.3d 821
    , 826–27, 833 (8th Cir. 2011) (applying the test
    to determine whether sovereign immunity applies and holding Missouri public
    school employment retirement systems were arms of the state). In fact, a number of
    district courts have concluded that MOHELA is an arm of the state. See, e.g., Good
    v. U.S. Dep’t of Educ., No. 21-CV-2539-JAR-ADM, 
    2022 WL 2191758
    , at *4 (D.
    Kan. June 16, 2022); Gowens v. Capella Univ., Inc., No. 4:19-CV-362-CLM, 
    2020 WL 10180669
    , at *4 (N.D. Ala. June 1, 2020); see also In re Stout, 
    231 B.R. 313
    ,
    316–17 (Bankr. W.D. Mo. 1999). But see Dykes v. Mo. Higher Educ. Loan Auth.,
    No. 4:21-CV-00083-RWS, 
    2021 WL 3206691
    , at *4 (E.D. Mo. July 29, 2021);
    Perkins v. Equifax Info. Servs., LLC, No. SA-19-CA-1281-FB (HJB), 
    2020 WL 13120600
    , at *5 (W.D. Tex. May 1, 2020).
    But even if MOHELA is not an arm of the State of Missouri, the financial
    impact on MOHELA due to the Secretary’s debt discharge threatens to
    independently impact Missouri through the LCD Fund. It is alleged MOHELA
    obtains revenue from the accounts it services, and the total revenue MOHELA
    recovers will decrease if a substantial portion of its accounts are no longer active
    under the Secretary’s plan. This unanticipated financial downturn will prevent or
    delay Missouri from funding higher education at its public colleges and universities.
    After all, MOHELA contributes to the LCD Fund but has not yet met its statutory
    obligation.
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    Due to MOHELA’s financial obligations to the State treasury, the challenged
    student loan debt cancellation presents a threatened financial harm to the State of
    Missouri. See Dep’t of Com. v. New York, 
    139 S. Ct. 2551
    , 2566 (2019); Czyzewski
    v. Jevic Holding Corp., 
    137 S. Ct. 973
    , 983 (2017). Consequently, we conclude
    Missouri has shown a likely injury in fact that is concrete and particularized, and
    which is actual or imminent, traceable to the challenged action of the Secretary, and
    redressable by a favorable decision. Missouri, therefore, likely has legal standing to
    bring its claim. And since at least one party likely has standing, we need not address
    the standing of the other States. See Nat’l Wildlife Fed’n v. Agric. Stabilization &
    Conservation Serv., 
    955 F.2d 1199
    , 1203 (8th Cir. 1992). Likewise, we need not
    decide whether the Secretary’s standing argument as to harm alleged to Arkansas
    and Nebraska is actually better viewed as a mootness argument. See West Virginia
    v. EPA, 
    142 S. Ct. 2587
    , 2607 (2022) (discussing the importance of the distinction
    and the heavy burden of establishing mootness once a live case has allegedly become
    moot due to voluntary cessation of conduct).
    Having addressed the threshold standing issue, we turn to the balancing of the
    equities and the probability of success on the merits. Not only do the “merits of the
    appeal before this court involve substantial questions of law which remain to be
    resolved,” Walker, 
    678 F.2d at 71
    , but the equities strongly favor an injunction
    considering the irreversible impact the Secretary’s debt forgiveness action would
    have as compared to the lack of harm an injunction would presently impose. Among
    the considerations is the fact that collection of student loan payments as well as
    accrual of interest on student loans have both been suspended. We conclude “the
    equities of this case require the court to intervene to preserve the status quo pending
    the outcome” of the States’ appeal, 
    id.,
     and that the States have satisfied the standard
    for injunctive relief pending review, see D.M. by Bao Xiong v. Minn. State High Sch.
    League, 
    917 F.3d 994
    , 999−1001 (8th Cir. 2019) (discussing the standard for
    preliminary injunctive relief).
    Finally, we have carefully considered the Secretary’s request that we limit the
    scope of any temporary relief. “Crafting a preliminary injunction is an exercise of
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    discretion and judgment, often dependent as much on the equities of a given case as
    the substance of the legal issues it presents.” Trump v. Int’l Refugee Assistance
    Project, 
    137 S. Ct. 2080
    , 2087 (2017) (per curiam). As the Supreme Court has
    explained, “one of the ‘principles of equity jurisprudence’ is that ‘the scope of
    injunctive relief is dictated by the extent of the violation established, not by the
    geographical extent of the plaintiff class.’” Rodgers v. Bryant, 
    942 F.3d 451
    , 458
    (8th Cir. 2019) (quoting Califano v. Yamasaki, 
    442 U.S. 682
    , 702 (1979)). Part of
    our consideration is whether the injunctive relief is “no more burdensome to the
    defendant than necessary to provide complete relief to the plaintiffs,” Madsen v.
    Women’s Health Ctr., Inc., 
    512 U.S. 753
    , 765 (1994), and “workable,” North
    Carolina v. Covington, 
    137 S. Ct. 1624
    , 1625 (2017) (per curiam).
    We conclude that, at this stage of the litigation, an injunction limited to the
    plaintiff States, or even more broadly to student loans affecting the States, would be
    impractical and would fail to provide complete relief to the plaintiffs. MOHELA is
    purportedly one of the largest nonprofit student loan secondary markets in America.
    It services accounts nationwide and had $168.1 billion in student loan assets serviced
    as of June 30, 2022. See Rodgers, 942 F.3d at 458. Given MOHELA’s national role
    in servicing accounts, we discern no workable path in this emergency posture for
    narrowing the scope of relief. And beyond Missouri, tailoring an injunction to
    address the alleged harms to the remaining States would entail delving into complex
    issues and contested facts that would make any limits uncertain in their application
    and effectiveness. Although such complexities may not counsel against limiting the
    scope of an injunction in other contexts, here the Secretary’s universal suspension
    of both loan payments and interest on student loans weighs against delving into such
    uncertainty at this stage.
    We GRANT the Emergency Motion for Injunction Pending Appeal. The
    injunction will remain in effect until further order of this court or the Supreme Court
    of the United States.
    ______________________________
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