11:00 AM EST

Maxine Waters, D-CA 43rd

Ms. MAXINE WATERS of California. Mr. Chairman, I rise in support of my amendment to H.R. 1927, the Fairness in Class Action Litigation Act.

My amendment would protect students, servicemembers, and veterans who are seeking monetary relief from fraudulent institutions of higher education by exempting them from the onerous requirements for class certification outlined in the bill.

H.R. 1927 requires Federal courts to certify a class only when all class members demonstrate they have suffered the same type and scope of injury. This additional requirement would be unduly burdensome to students, servicemembers, and veterans who have been fraudulently misled by the for-profit college industry.

For example, recently the Department of Education conducted a joint investigation with California Attorney General Kamala Harris. They concluded that for-profit college Corinthian Colleges misrepresented its job placement rates to prospective and enrolled students.

Specifically, the investigation found that, among other abuses, a Corinthian accounting program reported a job placement rate of 92 percent of its graduates in accounting-related fields, but that, in reality, only 12 percent of the graduates of this program had secured jobs in accounting.

For a separate business associate program, Corinthian reported a 95 percent job placement rate, but the Department of Education determined that, in reality, only 14 percent of the program's graduates had jobs in the relevant field.

It is clear that, with job placement rate errors of 80 and 81 percent respectively, students enrolled in both programs were intentionally and fraudulently misled by Corinthian Colleges.

Yet, under H.R. 1927, these defrauded students arguably would not be able to form a class to seek relief because they have been injured by a mere 1 percent degree of difference or because they were lied to about job placement rates in different careers. This is totally illogical and unfair, and it defeats the purpose of the class action.

As the example demonstrates, particularly in the context of higher education, H.R. 1927 essentially makes class certification impossible to achieve and, thus, impractical to pursue. The inability to bring forth class actions will selectively shield for-profit colleges from accountability and will significantly reduce access to our court system for deserving students and veterans.

We only need to look further at Corinthian Colleges to understand the harm that ensues when these schools are left unaccountable. For decades, Corinthian Colleges defrauded its students by inflating job placement rates, [Page: H195]

by engaging in unfair marketing practices and illegal debt collection tactics, and by requiring students to take out private loans at high interest rates.

According to the California attorney general, it likewise unlawfully used military seals in its advertising materials to lure an increasing number of our active servicemen and veterans. Worse yet, by including bans on class actions as a prerequisite to enrollment, Corinthian Colleges protected itself from liability while engaging in these awful predatory tactics.

As a result of its decades of predatory conduct, Corinthian Colleges was finally forced to close its doors in April 2015, leaving thousands of students with tens of thousands of dollars in debt, with worthless degrees, and with no job opportunities to show for their time and hard work.

Hundreds of veterans forfeited their GI benefits, which were earned on the battlefield in service to our country. One veteran of the wars in Iraq and Afghanistan told Politico that the months he had spent studying auto mechanics at a Corinthian school was wasted time because of the poor equipment and the training he received.

In October, a Federal judge ruled that Corinthian Colleges was operating a predatory lending scheme and ordered the school to pay back $531 million in damages to all students who attended the network of colleges before it closed its doors.

Yet, in reality, because the school has filed for bankruptcy, executives will walk away with millions while students and veterans will never see any of the money owed to them. Meanwhile, taxpayers will be expected to pick up the tab for this and any other future Corinthian judgments.

11:06 AM EST

Blake Randolph Farenthold, R-TX 27th

Mr. FARENTHOLD. Madam Chair, I oppose this amendment for the same reason that I have opposed almost every amendment so far in that it exempts a certain class from the bill that is designed to help those who are most injured.

First, the base bill only applies to classes that are seeking monetary relief for personal injury or economic loss. Insofar as education-related cases do not seek monetary damages, they are completely unaffected by the bill and would proceed just as they do today. If money damages are being sought, then, of course, they should be subject to the procedures in this bill.

The purpose of a class action is to provide a fair means of evaluating like claims, not to provide a means of artificially inflating the size of a class to extort a larger settlement. The other side is continually saying that these groups or classes must be exactly the same. The language is of the same scope. The bill is designed to keep from grossly inflating the size of a class.

The students of the college that the gentlewoman is citing were all in the same class and would appear to be similarly injured. I cannot predict what a court would do. I believe, under this bill, even without the gentlewoman's amendment, they would continue to be certified as a class because the scope of their injuries would be the same.

It is not designed to make it exact. It is the same scope. And that is where we are trying to go. Claimants who are seeking monetary relief need to be grouped in classes in which the most injured receive the most compensation, but it doesn't have to be the exact same injury.

I don't see any need for this amendment. I think it actually would unfairly hurt those folks from the college because they would not be subject to the protections of this bill in that an attorney could inflate the class to include folks, let's say, who didn't have as many damages and who were from other colleges. I can think of a wide variety of hypotheticals here.

The idea behind this bill is, regardless of the class, if you are the most injured, you should be the most compensated, and there is a lot of area in which the judges can determine what the scope of those injuries is.

I urge my colleagues to oppose the amendment.

Madam Chair, I yield back the balance of my time.

The Acting CHAIR. The question is on the amendment offered by the gentlewoman from California (Ms. Maxine Waters).

The question was taken; and the Acting Chair announced that the noes appeared to have it.