Arguments for Standing in the Student Loan Cases

A few thoughts on the states' brief and their amici

Last month co-blogger Sam Bray and I filed an amicus brief arguing that the states did not have standing to challenge the Biden administration's unlawful student loan forgiveness program. (Previous post here.) The bottom-side briefs are now in and of course they disagree with us on that.

The brief of the state respondents is interesting for a couple reasons:

First, the brief does not even cite Massachusetts v. EPA, and does not explicitly argue for any kind of "special solicitude" for state claims of standing. Instead, the brief focuses primarily on one specific theory of standing -- that the state of Missouri has standing because of an injury to MOHELA, a quasi-governmental entity that services student loans. This is the least indefensible theory of standing in the case, and it's heartening to see analysis focus on that theory rather than exacerbating the broader trend.

Second, that said, I am still not convinced the state should have standing to sue because MOHELA is injured. The states cite various cases about the relationships between government-created corporations and the government, but one thing I did not see in tracking down all of their citations is a case directly on point: a Supreme Court case where the government had standing to sue based on injuries to a separate party that could sue-and-be-sued on its own. Maybe I missed it, but some of the quirky precedents about the Reconstruction Finance Corporation and such didn't quite seem to do that.

Third, on the other hand, there is a more fundamental example that the state briefs didn't discuss. Shortly after the founding, the United States created a corporation called the Bank of the United States, famously discussed in McCulloch v. Maryland etc. In a series of famous cases about federal jurisdiction, the Supreme Court distinguished between the government's power to sue and the bank's power to sue. Here is Chief Justice Marshall's opinion of the Court in Bank of the U.S. v. Planter' Bank of Georgia:

The State of Georgia, by giving to the Bank the capacity to sue and be sued, voluntarily strips itself of its sovereign character, so far as respects the transactions of the Bank, and waives all the privileges of that character. As a member of a corporation, a government never exercises its sovereignty. It acts merely as a corporator, and exercises no other power in the management of the affairs of the corporation, than are expressly given by the incorporating act.

The government of the Union held shares in the old Bank of the United States; but the privileges of the government were not imparted by that circumstance to the Bank. The United States was not a party to suits brought by or against the Bank in the sense of the constitution. So with respect to the present Bank. Suits brought by or against it are not understood to be brought by or against the United States. The government, by becoming a corporator, lays down its sovereignty, so far as respects the transactions of the corporation, and exercises no power or privilege which is not derived from the charter.

This is why our amicus brief focused on the specific status of MOHELA such as its ability to sue and be sued, which seems to place it on all fours with the Founding Era banks.

The states' brief does cite a more modern case called Lebron, which distinguished Planters Bank, but in part on the grounds that the "obligations of government" (i.e., the state action doctrine) raise different questions than the "privileges of government" (i.e. the ability to sue and be sued):

Respondent appeals to statements this Court made in a case involving the second Bank of the United States, Bank of United States v. Planters' Bank of Georgia, 9 Wheat. 904 (1824). There we allowed the Planters' Bank, in which the State of Georgia held a noncontrolling interest, see Act of Dec. 19, 1810, §1, reprinted in Digest of Laws of State of Georgia 34-35 (O. Prince ed. 1822); Act of Dec. 3, 1811, §1, id., at 35, to be sued in federal court despite the Eleventh Amendment, reasoning that "[t]he State does not, by becoming a corporator, identify itself with the corporation," id., at 907. "The government of the Union," we said, "held shares in the old Bank of the United States; but the privileges of the government were not imparted by that circumstance to the Bank. The United States was not a party to suits brought by or against the Bank in the sense of the constitution." Id., at 908. But it does not contradict those statements to hold that a corporation is an agency of the Government, for purposes of the constitutional obligations of Government rather than the "privileges of the government," when the state has specifically created that corporation for the furtherance of governmental objectives, and not merely holds some shares but controls the operation of the corporation through its appointees.

So I am still not convinced that the invocation of MOHELA really solves the fundamental problem here. But I am pleased to see the briefing focus on that, and I hope the Court does too.

Additionally, several amicus briefs also back up the states on standing. Most emphatically, there is this brief by the Empire Center (with Misha Tseytlin, former Wisconsin SG, as counsel of record). My favorite heading is "The Approach That Certain Amici Urge Would Lead To A Separation-Of-Powers Calamity With No Justification In Article III's Text, Structure, Or Original Public Meaning." There is also a 17-state amicus brief which does argue (unlike the respondent states) that states should get special solicitude 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 contains this line: "there are many situations where no one other than the state will be held to be aggrieved, with the result that capacity to sue is either there or nowhere." This echoes the proper-party analysis we propose in our brief. Finally, there is this brief by Professor Jed Shugerman, opposing the administration both standing and the merits, which I find especially admirable for being willing to argue against partisan fashion.

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

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