In 2016, ITT Technical Institute — a for-profit college that had engaged in aggressive and predatory marketing and lending tactics — collapsed. In 2020, three former ITT students brought a class action against a company that ITT had assigned its loan servicing responsibilities to, and related entities, alleging a conspiracy with respect to ITT’s loan product, bringing claims under RICO and a variety of other laws. The thrust of their claims was that the loan product at issue “was designed to generate non-federal revenue for ITT in order to preserve ITT’s facial compliance with the 90/10 Rule,” which limits what portion of an institution’s revenue can derive from federal financial aid programs, “and that Defendants knowingly serviced and collected on loans arising from that scheme.”
The district court rejected the defendants’ summary judgment arguments about timeliness and proximate causation, and a jury ruled in the borrowers’ favor — awarding them $12 million in damages. After the district court denied a Rule 50(b) motion, the defendants appealed.
Yesterday, in Turrey v. Vervent, the Ninth Circuit affirmed. As to proximate causation, the Court held that the defendants failed to preserve the issue. The majority of the opinion focuses on the statute-of-limitations analysis. Applying the discovery rule, the Court rejected the argument that the statute of limitations period began to run from the moment the students began making loan payments, or from the time the government began investigating the loan program. Rather, the court held that the students “were reasonably not aware of the fraudulent nature of their loan payment injuries until after ITT’s high profile collapse in September 2016,” thus rendering their claims timely. In reaching this conclusion,
