USA Group Loan Services, Inc. v. Riley

82 F.3d 708 (7th Cir. 1996)


The Department of Education decided not to honor its official negotiated agreement and proposed instead a liability cap, which was rejected by the loan servicers. The Department eventually negotiated with itself, proposed, and promulgated no immunity and no cap on liability. Ps sought judicial review based on violations of procedure for rulemaking and negotiating. The District Court rejected the challenge, and the Court of Appeals affirmed. Ps claims were based on the 1992 amendment to the Higher Education Act, which made negotiated rulemaking mandatory in proceedings implementing the amendment. Ps argue that D negotiated in bad faith. Neither the 1992 Amendment nor the Negotiated Rulemaking Act has any remedies for such acts, and the latter act strongly implies there is none. An official during negotiations promised that D would abide by what was reached during the proceedings and a consensus was reached that Ps should not be liable for their mistakes. When the final deal was submitted, D refused to honor the promises of its negotiator. D even removed its own initial provision capping liability at the fees received to a position of no limits on liability at all.