IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF GEORGIA ATLANTA DIVISION ) ) ) ) ) ) ) ) ) ) ) ) )

Transcription

1 Case 1:19-cv TCB Document 15 Filed 06/04/19 Page 1 of 12 IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF GEORGIA ATLANTA DIVISION EILEEN CARR, CLAYTON KOLB, SAMUEL STANTON, DONRICH YOUNG, JANE DOE I, JANE DOE II, and JANE DOE III, on behalf of themselves and all others similarly situated, v. Plaintiffs, GRAND CANYON UNIVERSITY, INC., and GRAND CANYON EDUCATION, INC. d/b/a GRAND CANYON UNIVERSITY, Defendants. CIVIL ACTION FILE NO. 1:19-cv GRAND CANYON UNIVERSITY, INC. AND GRAND CANYON EDUCATION, INC. S REPLY IN SUPPORT OF THEIR MOTION TO COMPEL ARBITRATION

2 Case 1:19-cv TCB Document 15 Filed 06/04/19 Page 2 of 12 Plaintiffs Eileen Carr, Samuel Stanton, and Donrich Young 1 are required to arbitrate their claims against Defendants Grand Canyon University, Inc. and Grand Canyon Education, Inc. (collectively, Defendants. Plaintiffs claims fall within the scope of their arbitration agreements, and those agreements are enforceable. In response to Defendants Motion, Plaintiffs make only one argument they claim that the Borrower Defense Regulations foreclose any attempt by Defendants to compel arbitration in this case. But Plaintiffs claim is belied by the plain language of the Borrower Defense Regulations. The Regulations do not apply to the types of claims that Plaintiffs bring and thus have no impact on Defendants Motion. I. The Borrower Defense Regulations Do Not Apply to Plaintiffs Claims. Plaintiffs sound alarm bells in their response brief because Defendants did not preemptively argue that the Borrower Defense Regulations do not apply. But Defendants are under no duty to anticipate and brief fully arguments that Plaintiffs 1 After Defendants filed their Motion to Compel Arbitration, Plaintiffs filed an Amended Complaint adding Plaintiff Donrich Young. Plaintiff Young, like Plaintiffs Carr and Stanton, agreed to arbitrate his claims pursuant to his signed Enrollment Agreement with Defendants. Accordingly, Defendants refiled their Motion to Compel Arbitration to encompass claims asserted by Young. Defendants are concurrently filing this reply in support of their original Motion to Compel Arbitration because Plaintiffs responded to that Motion rather than deeming it mooted by the Amended Complaint.

3 Case 1:19-cv TCB Document 15 Filed 06/04/19 Page 3 of 12 might raise in opposition to their Motion. And Defendants certainly are not obligated to argue points of law that are inapplicable to this case. The Borrower Defense Regulations might prevent an institution of higher education from enforcing agreements to arbitrate as to certain claims brought against it, but not the claims in this case. Plaintiffs feign outrage that they are left to guess as to what arguments Defendants may make in their reply as to why the Borrower Defense regulations are not applicable while simultaneously anticipating correctly that GCU will argue that Plaintiffs claims are not subject to the prohibition on pre-dispute agreements. See Plaintiffs Response, Dkt. 12 at 12, 8. In fact, Plaintiffs apparently identified the precise argument as Plaintiffs conspicuously omitted the operative language from their excerpt of the borrower defense claim definition. Plaintiffs purport to quote the definition in their brief, but they conveniently omit the very language that proves that Plaintiffs claims do not fall within the scope of the regulation. To correct the record, the complete definition of borrower defense claim is as follows: (i Definitions. For the purposes of paragraphs (d through (h of this section, the term (1 Borrower defense claim means a claim that is or could be asserted as a borrower defense as defined in (a(5, including a claim other than one based on (c or (d that may be asserted under (b if reduced to judgment[.] - 2 -

4 Case 1:19-cv TCB Document 15 Filed 06/04/19 Page 4 of C.F.R (i(1. 2 The language omitted from Plaintiffs response brief is emphasized in bold text. If the definition of borrower defense claim ended after the first clause of the definition, as Plaintiffs brief would lead one to believe, then Plaintiffs argument might have merit. But it does not. Instead, the definition specifies that a borrower defense claim includ[es] a claim other than one based on (c or (d. 34 C.F.R (i(1 (emphasis added. Put another way, any claims falling under (c or (d are not borrower defense claims. Importantly, section (c includes breach of contract claims in which the student alleges that the school failed to perform its obligations under the terms of a contract with the student, and section (d includes any claim involving a substantial misrepresentation that the borrower reasonably relied on to the borrower's detriment when the borrower decided to attend, or to continue attending, the school or decided to take out a Direct Loan. 2 Section (a(5 defines a borrower defense as a defense to repayment of amounts owed on a Direct Loan or a right to recover amounts previously paid based on an act or omission of the school attended by the student that relates to the making of a Direct Loan for enrollment at the school or the provision of educational services for which the loan was provided. 34 C.F.R (a(

5 Case 1:19-cv TCB Document 15 Filed 06/04/19 Page 5 of 12 The claims asserted by Plaintiffs are not borrower defense claims because they clearly fall within the carve-outs in (c and (d. The first claim in Plaintiffs complaint is for breach of contract. In their breach of contract claim, Plaintiffs allege that GCU breaches these contractual obligations by failing to ensure that its dissertation chairs and committee members provide students with prompt and meaningful feedback. (Amended Complaint ( Am. Compl. at 103. Accordingly, this claim is not a borrower defense claim as that term is defined in 34 C.F.R (i(1. Plaintiffs statutory fraud and intentional misrepresentation claims fall within the second exclusion from section (i(1 s definition of borrower defense claim claims alleging a misrepresentation that the student relied upon in deciding to attend or continue attending the school. For example, Plaintiffs allege that GCU made certain misrepresentations leading Plaintiffs to choose to enroll in a GCU doctoral program instead of a comparable program offered by another institution that could be completed in less time and for less money. (Am. Compl. at 122; see also (Am. Compl. at 132 ( Plaintiffs and members would not have enrolled in a GCU doctoral program had they known GCU s representation was false.. Accordingly, these claims are likewise not borrower defense claims as that term is defined in 34 C.F.R (i(

6 Case 1:19-cv TCB Document 15 Filed 06/04/19 Page 6 of 12 While the scope of borrower defenses available to students to avoid repayment of their student loans may be broad, see , the scope of borrower defense claims for which institutions participating in the Direct Loan program agree not to arbitrate pursuant to a pre-dispute arbitration agreement is much more limited. See 34 C.F.R Plaintiffs would have the Court interpret the definitions to be identical despite the express exclusions in Section An identical interpretation of the two distinct definitions would be improper as statutes ought to be read so that every provision has a purpose and field of operation. Bracewell v. Kelley (In re Bracewell, 454 F.3d 1234, 1240 (11th Cir. 2006; see id. (noting that the Supreme Court and this Court have warned on countless occasions against judges improving plain statutory language in order to better carry out what they perceive to be the legislative purposes. Had the Department of Education intended for the definitions to be interpreted identically, it could have drafted them in the same way without the exclusions in section Thus, the borrower defense rules prohibiting enforcement of arbitration agreements and class action waivers apply only to borrower defense claims as defined in 34 C.F.R (i(1, as demonstrated by the plain language of the regulation. When interpreting a statute (or regulation, the first step is to determine whether the statutory language has a plain and unambiguous meaning by referring - 5 -

7 Case 1:19-cv TCB Document 15 Filed 06/04/19 Page 7 of 12 to the language itself, the specific context in which that language is used, and the broader context of the statute as a whole. " Bautista v. Star Cruises, 396 F.3d 1289, 1295 (11th Cir (citing Robinson v. Shell Oil Co., 519 U.S. 337, 341 (1997. The inquiry ceases if the language is clear and the statutory scheme is coherent and consistent. Id. (citing Robinson, 519 U.S. at 340. The plain language of the Borrower Defense Regulations makes clear that Plaintiffs claims are not borrower defense claims, as defined in 34 C.F.R (i(1 for the specific purpose of 34 C.F.R (d through (h. Accordingly, the borrower defense regulations do not prohibit Defendants from enforcing Plaintiffs arbitration agreements and class action waivers. Plaintiffs must arbitrate on an individual basis the claims they pursue in this litigation. II. GCU s Has Taken a Consistent Position with Its Interpretation. Plaintiffs point to GCU s letter to its students and Ward v. GCU, another case Plaintiffs counsel filed against GCU, suggesting that GCU has taken inconsistent positions on the impact of the Borrower Defense Regulations. See Plaintiffs Response at Exhibits 2, 3. To the contrary, GCU s position has remained the same. The restrictions on pre-dispute arbitration agreements and class action waivers do not apply to claims predicated on alleged breaches of contract or misrepresentations

8 Case 1:19-cv TCB Document 15 Filed 06/04/19 Page 8 of 12 Pursuant to the requirements of the Borrower Defense Regulations, GCU notified students who signed enrollment agreements prior to June 2017 when GCU removed predispute arbitration language from those agreements that GCU would not use the predispute arbitration language to foreclose class actions or compel arbitration if you assert a borrower defense claim, as that term is defined in 34 CFR (i. See Plaintiffs Response at Exhibit 2 (emphasis added. GCU will not enforce arbitration agreements against students who assert borrower defense claims under (i. But for those who raise non-borrower defense claims, as Plaintiffs do in this case, GCU has the right to enforce those agreements. Likewise, GCU s position in Ward is also consistent with its stance that the Borrower Defense Regulations do not close the door on arbitration of all types of claims, such as those brought by Plaintiffs. And the court in Ward did not hold to the contrary. The Borrower Defense Regulations were not in effect when GCU s motion to compel arbitration was granted in the Ward case. Consequently, the Georgia Court of Appeals vacated the order and remanded the case to give the superior court an opportunity to consider the effect of the regulations. See Plaintiffs Response at Exhibit 3, Dkt at 5. GCU has not had the opportunity to set forth its position in that case. But to the extent the claims in that litigation are - 7 -

9 Case 1:19-cv TCB Document 15 Filed 06/04/19 Page 9 of 12 excluded from Section s definition of borrower defense claims, the Borrower Defense Regulations do not apply. III. The Arbitration Agreements are Binding and Enforceable. Plaintiffs do not dispute that they signed arbitration agreements or that their claims falls within those agreements. Instead, they argue only that those agreements are barred by the Borrower Defense Regulations. While Plaintiffs are correct that it us up to the court to determine if Plaintiffs claims are borrower defense claims under Section (i(1, the plain language of the regulations confirms that they are not. Any other issues of arbitrability must be delegated to and decided by the arbitrator. Because Plaintiffs do not bring borrower defense claims against GCU, this Court should grant Defendants Motion to Compel Arbitration

10 Case 1:19-cv TCB Document 15 Filed 06/04/19 Page 10 of 12 Respectfully submitted this 4th day of June, /s/ Derin B. Dickerson Derin B. Dickerson Georgia Bar No Caroline Rawls Strumph Georgia Bar No Kristi Ramsay Georgia Bar No Alston & Bird LLP 1201 West Peachtree Street Atlanta, GA Telephone: Facsimile: Attorneys for Defendants Grand Canyon University, Inc. and Grand Canyon Education, Inc

11 Case 1:19-cv TCB Document 15 Filed 06/04/19 Page 11 of 12 CERTIFICATE OF COMPLIANCE WITH LOCAL RULE 5.1 I hereby certify that the foregoing was prepared in Times New Roman 14 point font, double-spaced, with a top margin of not less of 1.5 inches and a left margin of not less than 1 inch. This 4th day of June, /s/ Derin B. Dickerson Derin B. Dickerson

12 Case 1:19-cv TCB Document 15 Filed 06/04/19 Page 12 of 12 CERTIFICATE OF SERVICE I hereby certify that on this day I filed a true and correct copy of the within and foregoing with the Clerk of Court using the Court s CM/ECF system, which will automatically serve all counsel of record. On this 4th day of June, /s/ Derin B. Dickerson Derin B. Dickerson