Summary
The Ninth Circuit denied the Department of Education’s emergency motion for a stay pending appeal concerning deadlines for adjudicating post-class borrower-defense applications under a class-action settlement. The court held that the Department had not shown a strong likelihood of success in establishing that the district court clearly abused its discretion in denying relief under Federal Rule of Civil Procedure 60(b)(5). The court also concluded that the remaining stay factors did not outweigh the Department’s weak showing on the merits.
Topics
Practice areas
Questions Presented
- Whether the Department of Education was entitled to a stay pending appeal of the district court's denial of its Rule 60(b) motion seeking modification of settlement-imposed adjudication deadlines.
- Whether the Department demonstrated a likelihood of success on the merits by showing that the district courts clearly abused their discretion in refusing to modify the settlement judgment under Rule 60(b).
Holdings
- The Department of Education was not entitled to a stay pending appeal because it failed to make a strong showing of likely success on the merits, and the remaining stay factors were not sufficiently strong to overcome that weak showing.
- The denial of a Rule 60(b) motion is reversed only upon a clear showing that the district court abused its discretion.
- Modification was not warranted where the Department relied on circumstances it had anticipated or knew about and identified no changed circumstances making application of the settlement inequitable.
Key quotations
“We reverse the district court’s denial of a Rule 60(b) motion “only upon a clear showing of abuse of discretion.”” (at 4)
“The DOE’s motion for a stay pending appeal fails for several reasons. Most fundamentally, the DOE has not demonstrated that it is likely to succeed in showing that two district courts clearly abused their discretion in finding that no modification to the Settlement Agreement incorporated into the judgment was warranted under Rule 60(b).” (at 5)
Factual background
The plaintiffs are a certified class of federal student loan borrowers seeking borrower-defense loan forgiveness based on alleged fraudulent misconduct by their educational institutions. The settlement required the Department of Education to adjudicate post-class borrower-defense applications by January 28, 2026, with full settlement relief if it failed to do so. The Department knew by February 27, 2023, that the post-class applicant group exceeded 205,000 borrowers but sought an eighteen-month extension only in November 2025. The district court found no extraordinary circumstances preventing timely compliance, and the Ninth Circuit concluded that the Department had not shown a likelihood of success in establishing clear abuse of discretion.
Procedural history
Plaintiffs filed an Administrative Procedure Act class action in the Northern District of California in May 2019, and the district court certified the class on October 30, 2019. The parties entered a settlement in June 2022, and the district court granted final approval and entered judgment on November 16, 2022. The Department of Education filed two Rule 60(b) motions seeking extensions of post-class application deadlines; the district court granted partial relief on the first motion but denied the second motion on February 24, 2026. The Ninth Circuit denied the Department's emergency motion for a stay pending appeal and ordered expedited merits briefing.