Court grants $12 million final judgment but denies prejudgment interest in RICO class action

Courts RICO California Class Action Student Loans Consumer Finance

On June 18, the U.S. District Court for the Southern District of California entered an order granting plaintiffs’ motion for entry of final judgment against a large for-profit educational institution that has since gone bankrupt. According to the 2020 complaint, plaintiffs were left with debt for what they claimed to be a worthless education. After the school’s bankruptcy in 2016, plaintiffs alleged that they continue to be victimized by defendants’ student loan operation. Plaintiffs filed the motion following a jury trial where defendants were found liable under the Racketeer Influenced and Corrupt Organizations Act (RICO). The jury awarded plaintiffs $4 million in compensatory damages, which was trebled to $12 million under the RICO statute.

In addition to the judgment, plaintiffs applied for an additional $4 million in prejudgment interest. In denying the application for prejudgment interest, the court declined to award the discretionary interest based on allegations that defendants “repeatedly attempted to pick off the class representatives for the very purpose of eliminating this action, or at the very least, delaying it.” The court recognized that defendants’ tactics may have delayed the litigation but did not find them to be unreasonable or unfair to a degree that would warrant prejudgment interest, noting that the plaintiffs’ own post-trial motions contributed to the delay in judgment.

The court entered final judgment against the defendants in the amount of $12 million, with attorneys’ fees and costs to be determined later.