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'

Rebuffed by Congress and this Court in its attempt s to cancel student -loan debt en masse , the Biden Administration transmogrif ied a narrow procedural lawsuit into a sweeping class -action settlement that eliminate d $7.5 billion in debt and rewr ote 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 t he Ninth Circuit —over a dissent from Judge Collins — held that although the schools suffered Article III injury , they lacked so -called “prudential standing” to challen ge 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 ii class -action settlement simply because the injury does not create “formal legal prejudice .”