Reported / Citable
Background
Former ITT Technical Institute students alleged that loan servicers participated in an elaborate scheme that saddled them with fraudulent private student loans. A Southern District of California jury found for the borrowers and awarded relief under the Racketeer Influenced and Corrupt Organizations Act.
The servicers argued that the four-year limitations period had expired and also challenged proximate causation. The timing issue depended on when each borrower knew or reasonably should have known of the fraud-based injury.
The Court’s Holding
The Ninth Circuit affirmed the roughly $12 million judgment. Trial evidence permitted the jury to find that the borrowers lacked actual or constructive knowledge of their RICO injuries more than four years before filing in April 2020.
The causation challenge was not preserved. Because the summary-judgment ruling rested on disputed facts, defendants had to renew the sufficiency argument after the evidence closed at trial and did not do so.
Key Takeaways
- Civil RICO accrual focuses on discovery of the injury, not merely the existence of loan documents or payment obligations.
- Whether a borrower should have discovered fraud can remain a jury question.
- A denied summary-judgment sufficiency argument generally must be renewed after trial.
- Post-trial motion practice is essential to preserve appellate review of evidentiary sufficiency.
Why It Matters
The ruling affects California lenders, servicers, consumer lawyers, and class-action counsel. It underscores that opaque loan structures may delay accrual and that litigation teams must carry dispositive sufficiency arguments through Rule 50 practice after the jury hears the evidence.