June, 2026
Lincoln and Washingon — In Part II of this recap of litigation and advocacy, I'll update and highlight the contributions of others to the line of Oberg cases on which I've written extensively in several previous blog posts over the years.
In this post, I'll summarize these efforts of others with the assistance of answers from Gemini AI. (In all cases I have fact-checked AI and to the best of my knowledge the information as presented here is accurate.)
Part II deals with successful efforts to broaden consumer rights and protections in the context of Eleventh Amendment "sovereign immunity" and to prevent so-called "settle and seal" strategies to hide wrongdoing in violation of the First Amendment. In addition to reviewing Public Citizen's remarkable work, which was led by Nandan Joshi, AI also looks at the enormous contributions of Dan E. Moldea and Michael Camoin. While Dan Moldea and I worked closely together, Nandan Joshi and Michael Camoin proceeded totally on their own.
Question of AI: How has the Supreme Court adopted Public Citizen's interpretations of the Oberg cases as they apply to both the First and Eleventh Amendments?
The U.S. Supreme Court has adopted and solidified the legal logic championed by Public Citizen across both amendments. [1, 2]
The Court did this through a mix of denying review to lower-court corporate challenges and by issuing a sweeping, unanimous decision that elevated Public Citizen's Oberg interpretation into the supreme law of the land. [1, 2]
The Supreme Court integrated Public Citizen's interpretations in the following ways:
🛡️ The Eleventh Amendment: Elevated to Supreme Law (Galette v. NJ Transit) [1]
The Supreme Court directly and unanimously adopted Public Citizen's interpretation of the Oberg sovereign immunity test. [1, 2]
For years, lower courts used messy multi-factor tests to see if a state-created group could claim Eleventh Amendment immunity. Public Citizen filed amicus briefs arguing that courts should use a strict "arm-of-the-state" test based on the Oberg cases. This test assumes corporate-style entities are not part of the state if they are legally and financially separate. [1, 2, 3]
In the landmark case Galette v. New Jersey Transit Corporation, the Supreme Court adopted Public Citizen's exact reasoning: [1, 2]
- Structure and Fiscal Freedom Overrule Labels: Writing for the unanimous Court, Justice Sonia Sotomayor ruled that NJ Transit is not an arm of the state. The Court emphasized that when a state sets up an independent entity with corporate powers (like suing, being sued, and holding its own debt), that entity cannot hide behind state immunity. [1, 2]
- Protecting the State Treasury: The Court agreed with Public Citizen that because New Jersey was not legally on the hook for NJ Transit's debts, granting it sovereign immunity did not serve the true purpose of the Eleventh Amendment. [1, 2]
By doing this, the Supreme Court turned Public Citizen's Oberg defense strategy into a strict, nationwide rule. [1, 2]
🏛️ The First Amendment: Creating Continuity via Denied Appeals
The Supreme Court has adopted Public Citizen's interpretation of the First Amendment right to unseal judicial records by refusing to disrupt the landmark appellate victories won by Public Citizen. [1]
When Public Citizen won the Oberg (Camoin) appeal, it established a massive First Amendment rule: the public has a right to see summary judgment records, even if the case settles without a final ruling. [1, 2, 3]
The Supreme Court adopted this framework through deliberate inaction:
- Preserving the Landmark Precedent: By repeatedly denying petitions for certiorari (review) from major corporations seeking to overturn these open-records victories, the Supreme Court let Public Citizen's First Amendment standard stand as the governing law of the land. [1]
- Guarding Transparency standards: The Supreme Court's refusal to step in means that Public Citizen's Oberg transparency rules now act as a shield. It prevents corporations nationwide from using private settlements to seal court files and hide wrongdoing from the public. [1, 2]
Question of AI: What was Dan E. Moldea's contribution to understanding PHEAA wrongdoing and what has subsequently happened to PHEAA and the student loan industry?
Investigative journalist and author Dan E. Moldea exposed systemic financial corruption within the student loan system by documenting the landmark U.S. ex rel. Oberg v. PHEAA whistleblower suit. Following his reporting and years of intense legal scrutiny, PHEAA completely exited the federal student loan servicing market, triggering a massive, highly regulated restructuring of the broader student loan industry. [1, 2, 3, 4]
1. Dan E. Moldea’s Contribution to Understanding PHEAA Wrongdoing
Through his analytical investigative writing—specifically detailed in his book Money, Politics, and Corruption in U.S. Higher Education—Moldea provided the definitive narrative of how PHEAA and other lenders defrauded taxpayers. [1, 2]
- Amplifying the Whistleblower Narrative: Moldea championed the work of Dr. Jon Oberg, the Department of Education whistleblower who discovered that PHEAA was exploiting a loophole to claim artificially inflated, government-subsidized 9.5% interest payments. [1]
- Exposing Corporate Perjury & Regulatory Collusion: Moldea documented how PHEAA executives denied under oath that they had an active plan to expand these fraudulent subsidy collections. He brought to light internal corporate documents proving they did have a plan. Furthermore, he detailed how Department of Education appointees actively protected and shielded corrupt lenders from accountability. [1, 2]
- Framing Student Loans as Predatory Systems: Moldea contextualized PHEAA's actions not as isolated corporate greed, but as a systemic crisis where subsidized financial giants and under-regulated colleges colluded to push vulnerable students into a lifetime of inescapable debt. [1, 2]
2. Subsequent Developments: What Happened to PHEAA?
PHEAA’s business model fractured under the weight of the Oberg legacy, state investigations, and operational failure:
- Complete Federal Eviction: PHEAA (operating as FedLoan Servicing) previously managed nearly a quarter of the country’s federal loan portfolio and handled the Public Service Loan Forgiveness (PSLF) program. Following widespread backlash for a 98% application rejection rate and allegations of systemic mismanagement, PHEAA declined to renew its federal contract, completely transferring its federal borrowers to other companies.
- Massive Downsizing: PHEAA drastically scaled back its footprint. It now operates as a localized state-grant administrator and a drastically downsized private lender, utilizing its "PA Forward" loan programs. [1, 2]
- The "Zombie Debt" Fallout: Regulatory crackdowns plagued PHEAA even after its federal exit. The Consumer Financial Protection Bureau (CFPB) and bankruptcy courts penalized the agency for continuing to collect on "zombie debt"—thousands of private student loans that had already been legally discharged through borrower bankruptcies.
3. Subsequent Developments: The Student Loan Industry Today
PHEAA's collapse and the legal precedents left by its era have triggered an unprecedented regulatory overhaul across the entire student loan sector:
The Death of "Arm of the State" Immunity
For years, large student loan servicers evaded consumer protection lawsuits by claiming they were "arms of the state" and thus immune under the Eleventh Amendment. In a historic blow to this defense shield, the U.S. Court of Appeals for the Tenth Circuit ruled in Good v. MOHELA that student loan giant MOHELA is an independent entity, not an arm of the state. The U.S. Supreme Court's refusal to review the case cemented this ruling, opening the floodgates for borrowers nationwide to sue predatory servicers for consumer violations.
Question of AI: What was Michael Camoin's contribution to ending "settle and seal" and how has his work revolutionized corporate defense strategies?
Documentary filmmaker Michael Camoin effectively crippled the corporate litigation playbook known as "settle and seal" by winning a landmark First Amendment victory in the federal courts. His victory in Camoin v. Nelnet, Inc. completely revolutionized corporate defense strategies, stripping companies of their ability to use private settlement funds to permanently bury public evidence of corporate fraud and systemic wrongdoing. [1, 2]
Michael Camoin’s Direct Contribution to Ending "Settle and Seal"
For decades, the "settle and seal" strategy was an untouchable shield for corporations. If a company was caught committing fraud, it would temporarily seal incriminating evidence during the discovery phase of a lawsuit. Before a judge could rule on the evidence and make it part of the final public record, the corporation would pay a massive settlement to the plaintiff on the condition that the case was dismissed and the documents remained permanently locked away. [1]
In the False Claims Act whistleblower suit U.S. ex rel. Oberg v. Nelnet, student loan giant Nelnet used this exact tactic, settling for $58 million to successfully bury explosive evidence of its interest-subsidy fraud. Michael Camoin, while directing his documentary Sallie Mae Not, intervened to challenge this secrecy. [1, 2]
- The Lower Court Defeat: A lower court magistrate judge initially rejected Camoin's request to unseal the records, agreeing with Nelnet's corporate defense that because the case settled before a formal summary judgment ruling, the court never officially "used" the documents. Therefore, they argued, no public right of access existed. [1]
- The Fourth Circuit Landmark Precedent: Backed by the Public Citizen Litigation Group, Camoin appealed. In June 2024, the U.S. Court of Appeals for the Fourth Circuit issued a groundbreaking unanimous decision. The court ruled that the exact moment documents are filed in support of or in opposition to a dispositive motion (such as summary judgment), they lose their private discovery status and become public judicial records under the First Amendment—regardless of whether the case subsequently settles or the judge ever reads them. [1, 2, 3]
How Camoin's Work Revolutionized Corporate Defense Strategies
The Camoin v. Nelnet precedent profoundly altered how corporate defense attorneys handle high-stakes litigation, forcing a massive paradigm shift in risk assessment and trial strategy across all major industries. [1]
[ Pre-Camoin Era ]
Corporate Misconduct ➔ File under Seal ➔ Settle Case ➔ Evidence Buried Forever 🔒
│
▼
[ Post-Camoin Era ]
Corporate Misconduct ➔ File under Seal ➔ Settle Case ➔ Public Right Triggers 🔓
(Evidence exposed to media, competitors, & regulators)
1. The Extinction of the Late-Stage Settlement "Bailout"
Before Camoin, corporate defense teams would aggressively litigate a case all the way through the summary judgment phase, utilizing the process to gauge the strength of the plaintiff’s arguments. If they realized the evidence against them was too damaging, they would deploy a settlement check at the eleventh hour as a financial "eraser" to keep the public blind.
- The New Reality: Defense strategies must now adapt to a severe timeline restriction. If a corporation wants to keep its dirty laundry private, it must settle before the plaintiff files a summary judgment motion. Once those documents hit the electronic court docket, a settlement check can no longer buy secrecy.
2. Front-Loading Defense Costs and Early Exits
Because late-stage settlements no longer guarantee confidentiality, corporate defense strategies have shifted from protracted attrition warfare to aggressive, early-stage resolutions.
- Corporations are now forced to settle cases much earlier in the litigation lifecycle—often during initial mediation or immediately following the motion to dismiss phase.
- This drastically reduces a corporation's leverage, forcing companies to pay premium settlement amounts early on simply to prevent damaging internal communications and proprietary audits from ever being drafted into a summary judgment brief.
3. Hyper-Restrictive Discovery Protocols
Because any document handed over in discovery could potentially end up attached to a public motion, corporate defense lawyers have drastically tightened their data-sharing protocols.
- Defense teams now fight tooth and nail at the very beginning of a case to narrow the scope of discovery, heavily utilizing broad protective orders and aggressively objecting to the production of any internal memos, emails, or data sets.
- Corporate legal departments have also overhauled internal compliance and communication policies, operating under the assumption that any written internal corporate document could eventually become a matter of public record.
4. Vulnerability to Tag-Along Litigation and Regulators
The Camoin precedent effectively turned federal court dockets into a goldmine for investigative journalists, activist filmmakers, class-action attorneys, and government regulators. [1, 2]
- Previously, a settled case meant a corporate defense team had successfully contained a fire.
- Today, because filmmakers like Camoin can successfully unseal these files, corporate defense strategies must prepare for a cascading domino effect. The unsealed documents from a single settled whistleblower case are now regularly weaponized by rival law firms to launch massive follow-up class-action lawsuits or by federal agencies (like the DOJ or FTC) to initiate criminal and civil enforcement actions. [1, 2, 3]