Cardona v. U.S. Dist. Court for the N. Dist. of Cal. (In re U.S. Dep't of Educ.)

• Decision Date: 04 February 2022
• Docket Number: No. 21-71108, No. 21-71109,21-71108
• Parties: IN RE U.S. DEPARTMENT OF EDUCATION; Miguel A. Cardona, in his official capacity as Secretary of the Department of Education, U.S. Department of Education; Miguel A. Cardona, in his official capacity as Secretary of the Department of Education, Petitioners, v. United States District Court for the Northern District of California, San Francisco, Respondent, Theresa Sweet; Alicia Davis; Tresa Apodaca; Chenelle Archibald; Jessica Deegan; Samuel Hood; Jessica Jacobson, on behalf of themselves and all others similarly situated; Elisabeth Devos, Former U.S. Secretary of Education, Real Parties in Interest. In re Elisabeth Devos, Former U.S. Secretary of Education, Elisabeth Devos, Former U.S. Secretary of Education, Petitioner, v. United States District Court for the Northern District of California, San Francisco, Respondent, Chenelle Archibald; Tresa Apodaca; Alicia Davis; Jessica Deegan; Samuel Hood; Jessica Jacobson; Theresa Sweet; U.S. Department of Education; Miguel A. Cardona, in his official capacity as Secretary of the Department of Education, Real Parties in Interest.
• Court: U.S. Court of Appeals — Ninth Circuit

25 F.4th 692

IN RE U.S. DEPARTMENT OF EDUCATION; Miguel A. Cardona, in his official capacity as Secretary of the Department of Education,

U.S. Department of Education; Miguel A. Cardona, in his official capacity as Secretary of the Department of Education, Petitioners,

v.United States District Court for the Northern District of California, San Francisco, Respondent,Theresa Sweet; Alicia Davis; Tresa Apodaca; Chenelle Archibald; Jessica Deegan; Samuel Hood; Jessica Jacobson, on behalf of themselves and all others similarly situated; Elisabeth Devos, Former U.S. Secretary of Education, Real Parties in Interest.

In re Elisabeth Devos, Former U.S. Secretary of Education,

Elisabeth Devos, Former U.S. Secretary of Education, Petitioner,

v.United States District Court for the Northern District of California, San Francisco, Respondent,Chenelle Archibald; Tresa Apodaca; Alicia Davis; Jessica Deegan; Samuel Hood; Jessica Jacobson; Theresa Sweet; U.S. Department of Education; Miguel A. Cardona, in his official capacity as Secretary of the Department of Education, Real Parties in Interest.

No. 21-71108

No. 21-71109

United States Court of Appeals, Ninth Circuit.

Argued and Submitted October 6, 2021 Seattle, Washington

Filed February 4, 2022

Sean Janda (argued), Mark R. Freeman, Mark B. Stern, and Joshua M. Salzman, Appellate Staff; Sarah E. Harrington, Deputy Assistant Attorney General; United States Department of Justice, Civil Division; Washington, D.C.; for Petitioners United States Department of Education and Miguel A. Cardona.

Jesse Panuccio (argued), Boies Schiller Flexner LLP, Fort Lauderdale, Florida; David Boies, Boies Schiller Flexner LLP, Armonk, New York; for Petitioner Elisabeth Devos.

Margaret E. O'Grady (argued) and Rebecca C. Ellis, Harvard Law School Federal Tax Clinic at Legal Services Center, Jamaica Plain, Massachusetts; Joseph Jaramillo, Housing and Economic Rights Advocates, Oakland, California; for Real Parties in Interest.

Before: RICHARD A. PAEZ, MILAN D. SMITH, JR., and JACQUELINE H. NGUYEN, Circuit Judges.

OPINION

M. SMITH, Circuit Judge:

This case presents an important question concerning the appropriate separation and balance of power between two branches of our government: When can the judicial branch compel a cabinet secretary to submit to a deposition in which questions are propounded regarding her official actions? Former United States Secretary of Education Elisabeth DeVos, as well as the U.S. Department of Education (Department), and the current Secretary of Education, ask us to direct the United States District Court for the Northern District of California (district court) to quash a subpoena for the deposition of former Secretary DeVos. Although granting this request is an extraordinary action, so too is compelling the testimony of a cabinet secretary about the actions she took as a leader in the executive branch. Such questioning can only occur in extraordinary circumstances. The circumstances demonstrated here fail to meet that standard, so we grant the writ of mandamus, and direct the district court to quash the subpoena. We also deny DeVos's petition to direct the district court to transfer the motion to quash back to the Southern District of Florida.

FACTUAL AND PROCEDURAL BACKGROUND

This case arises out of a lawsuit alleging that the Department of Education unlawfully delayed making decisions on student loans during DeVos's tenure as Secretary of Education. The federal government assists students with higher education loans in various ways. Congress has allowed for the cancellation of federal student loans in certain cases of school misconduct. 20 U.S.C. § 1087e(h). This loan cancellation process is called borrower defense. In 2015, the number of borrower defense applications dramatically increased when Corinthian Colleges, Inc., a large for-profit institution, shut down after incurring a $30 million fine from the Department for misleading students concerning job placement success.

By the end of President Barack Obama's administration in January 2017, the Department had granted 99.2% of the borrower defense applications it had evaluated, many of which were from Corinthian College students. When President Donald Trump took office, he appointed DeVos to head the Department. Starting in December 2017, the Department began using a new methodology to decide borrower defense claims. In May 2018, the Department was preliminarily enjoined from using this methodology because a federal district court concluded that it resulted in likely violations of the Privacy Act, 5 U.S.C. § 552a. See Calvillo Manriquez v. Devos , 345 F. Supp. 3d 1077, 1109 (N.D. Cal. 2018). From June 2018 through December 2019, the Department issued no borrower defense decisions.

In June 2019, several persons with pending borrower defense applications brought suit against the Department and then-Secretary DeVos in the district court pursuant to Section 706 of the Administrative Procedure Act. They alleged unlawful withholding, or unreasonably delayed action, on their borrower defense applications. At the time the suit was filed, over 210,000 such applications were pending. Plaintiffs asked the district court to compel defendants to restart the process of adjudicating their applications. The district court certified a class of 160,000 borrower defense applicants, and the Department compiled an administrative record of documents that supported its decision making. The parties filed cross motions for summary judgment. Defendants claimed that the agency inaction was not a "policy" but rather a lawful result of staffing shortages, competing priorities, and that the delays were unavoidable because "[i]ssuing final decisions on such claims is time-consuming and complex, with many steps in the adjudicatory process, and agencies must be given, within reason, the time necessary to analyze the issues presented so that they can reach considered results."

Before the district court ruled on the summary judgment motions, the parties negotiated a proposed settlement that included an eighteen-month deadline to resolve all outstanding claims. The district court preliminarily approved the settlement, but before the class fairness hearing was held, the Department sent out form letters denying 118,000 borrower defense applications at a denial rate of 89.8%. The letters were brief and offered no reasoning for the Department's decisions.

The district court denied final approval of the settlement after finding no "meeting of the minds." The district court ordered updated written discovery and depositions of up to five Department officials to inquire into topics including "[t]he development and use of the form denial letters" and "[t]he extent to which the difficulty of reviewing borrower-defense applications actually caused or justified the Secretary's eighteen-month delay." The district court did not authorize the deposition of then-secretary DeVos, stating "class counsel may not yet depose the Secretary... Extraordinary circumstances, however—for example, if the Secretary has unique first-hand knowledge or necessary information [that] cannot be obtained through other, less intrusive means—may justify such a deposition at a later date."

Plaintiffs took four depositions of current and former high-ranking Department officials involved in borrower defense policy and received about 2,500 documents from defendants. On January 6, 2021, plaintiffs informed defendants that they would be asking the district court for leave to depose DeVos. DeVos resigned as secretary on January 7, for unrelated reasons, and on January 12, the district court authorized class counsel to take her deposition. The court reasoned that its "prior order restricted deposition of ‘the Secretary ’ ... [but] imposed no such restriction regarding Citizen DeVos." The court instructed counsel to "subpoena Ms. DeVos" for any such deposition. Plaintiffs then served a subpoena for a nonparty deposition on DeVos pursuant to Federal Rule of Civil Procedure 45.

DeVos and the Department moved to quash the subpoena in the Southern District of Florida. That court referred the matter to a magistrate judge, and no party objected. Plaintiffs moved to transfer the motion to quash to the Northern District of California, where the parties are litigating the underlying class action. DeVos and the Department opposed the motion, but the magistrate judge in Florida granted the transfer. Before the Department or DeVos sought review of the transfer order by the Florida district court judge, the case was electronically transferred to California. DeVos and the Department asked the Florida district court to stay the transfer pending an opportunity to object to the magistrate judge's order pursuant to Federal Rule of Civil Procedure 72. The Florida district court denied the motion because the case had already been transferred. The Florida district court noted, however, that "applying the review standards of Rule 72(a), the Court agrees that ‘exceptional circumstances’ exist here and warrant a transfer to the Northern District of California ... Put differently, although the transfer was effectuated prior to the objections period, the same result would follow—rendering [DeVos's] procedural concern harmless."

DeVos petitioned the Eleventh Circuit for a writ of mandamus, arguing that the magistrate judge exceeded his authority in transferring the case before the district judge considered her Rule 72(a) objections and that the Florida district judge erred in failing to stay the transfer. The Eleventh Circuit denied her petition because she had not established that her right to relief was clear and indisputable.

The Department and DeVos filed motions to quash the subpoena in the Northern District of California. The district court denied the motions, finding that "exceptional circumstances" warranted the taking of DeVos's deposition. Drafting what it believed to be the appropriate test that must be met before a cabinet...