Rebuffed by Congress and this Court in its attempts to cancel student-loan debt en masse, the Biden Administration transmogrified a narrow procedural lawsuit into a sweeping class-action settlement that eliminated $7.5 billion in debt and rewrote student-loan regulations without Congressional Authorization. Worse still, the government used the settlement to label 150 nonparty educational institutions guilty of "substantial misconduct" without providing those schools notice or an opportunity to be heard. This settlement was an egregious example of "sue and settle"—i.e., "collusion between advocacy groups and executive officials who want to bind the hands of future policymakers." Horne v. Flores, 557 U.S. 433, 449 (2009).

Several schools injured by their surprise inclusion in the settlement intervened in the district court to challenge the settlement's legality. After the district court rejected those challenges and approved the settlement, the schools appealed. A split panel of the Ninth Circuit—over a dissent from Judge Collins—held that although the schools suffered Article III injury, they lacked so-called "prudential standing" to challenge or appeal the settlement because it did not inflict "formal legal prejudice."

The question presented is: Whether federal courts may impose a judge-made "prudential standing" bar to block non-settling intervenors from redressing Article III injury imposed on them by a government class-action settlement simply because the injury does not create "formal legal prejudice."

Whether federal courts may impose a judge-made 'prudential standing' bar to block non-settling intervenors from redressing Article III injury imposed on them by a government class-action settlement simply because the injury does not create 'formal legal prejudice'