DeVos ordered to testify June 3 on actions as Cabinet member

Former U.S. education secretary Betsy DeVos must testify next month in a class action accusing her of mishandling student loan forgiveness applications, a federal judge in San Francisco ruled this week.

DeVos attempted to quash a testimony subpoena last month but U.S. District Judge William Alsup denied it Wednesday, saying in a 12-page order that a failed settlement reached earlier in the suit had, "delayed the just resolution of this case long enough already."

A summons order issued Thursday called DeVos to testify June 3. She had argued that she could not be compelled to testify about her actions as a Cabinet officer.

While Alsup recognized that the 9th U.S. Circuit Court of Appeals cautioned that "heads of government agencies are not normally subject to deposition," it has established several categories of "exceptional circumstances" that warrant the deposition of a Cabinet secretary.

"Simply put, while rare, courts do authorize depositions of cabinet secretaries and similar high-level officials where appropriate, and have authorized examination," Alsup wrote.

Filed in 2019, the suit concerns the lawfulness of the Department of Education's 18-month halt in issuing decisions on some 200,000 applications students file as a defense against repayment of their loans when schools commit certain misconduct.

A class of student loan borrowers sued to compel Devos to restart the halted loan forgiveness adjudication process after the number of applicants reached 160,000. The applications came flooding in after the large for-profit Corinthian Colleges Inc. collapsed in 2015.

In November 2019, DeVos justified the 18-month delay by pointing to staffing shortages and competing priorities. "Issuing final decisions on such claims is time-consuming and complex, with many steps in the adjudicatory process," she said.

However, before Alsup could rule, the parties reached a proposed settlement, imposing an 18-month deadline for the former secretary to decide outstanding claims.

Preliminary approval of the settlement followed, but as a class fairness hearing approached, "major problems emerged," Alsup wrote.

The parties had already learned at summary judgment that in December 2019, with claims mounting to 225,000, DeVos had released an updated "tiered relief methodology" and issued 16,045 decisions. Under this new processing methodology 789 applications were granted and the rest were denied.

"We had little indication, however, how matters would progress. Not well, we learned," Alsup wrote.

While negotiating the proposed settlement, and awaiting the court's approval, Devos had been issuing denial notices characterized by class counsel as a violation of "both the spirit of the proposed settlement and the Administrative Procedure Act."

One of the exceptional circumstances which allow for the compelled deposition of a Cabinet member include when there is "a strong showing of bad faith or improper behavior," Alsup wrote. He found when DeVos suddenly processed thousands of loan forgiveness applications at "breakneck pace," only months after arguing that the adjudication process was time consuming, that was an example of bad faith behavior.

In re: Elisabeth Devos, 21-MC80075 (N.D. Cal., filed April 7, 2021)