Thursday, June 23, 2011
Students in Colorado sued Westwood College for misrepresenting its tuition costs, accreditation status, and job prospects for graduates. The school, however, had placed an arbitration clause in its enrollment documents. The school moved to dismiss the case and compel arbitration. The court granted the motion, saying:
There is no doubt that Concepcion was a serious blow to consumer class actions and likely foreclosed the possibility of any recovery for many wronged individuals. The dissent in Concepcion recognized the impact of the majority's decision and argued that it would effectively end the ability to prosecute small-dollar claims and that those claims would slip through the legal system. Id. at 1761. Countering this argument, the majority wrote: “States cannot require a procedure that is inconsistent with the FAA, even if it is desirable for unrelated reasons.” Id. at 1753. Thus, the Supreme Court considered the fact that the Concepcions and other class plaintiffs would be denied any recovery by its ruling, and ruled against the class plaintiffs nonetheless. The Court is bound by this ruling and, therefore, cannot be persuaded in this case by the fact that ordering the parties to arbitration may impact Plaintiffs' ability to recover.
Ultimately, there is no dispute that the agreement to arbitrate was prominently written in the enrollment documents, including an entirely separate document entitled “Agreement to Binding Arbitration and Waiver of Jury Trial”. (ECF No. 15–2.) There is also no evidence that Plaintiffs were subject to significant external pressure driving them to sign the documents without taking time to review them and/or have someone else review them. The Arbitration Agreements here appear to contain relatively standard terms, which would suggest that they are substantively fair. Plaintiffs had to ability to cancel the contracts and receive a substantial refund. Finally, there is a competitive market for education programs such as those offered by Defendants and Plaintiffs could have chosen to pursue their education elsewhere. All of these factors weigh against a finding of unconscionability. (footnotes omitted)
Will law schools, some of which also have been criticized for misrepresenting tuition costs and jplacement statistics, add arbitration and no-class-action clauses to their enrollment documents?
The case is Bernal v. Burnett (D. Colo., June 06, 2011) 2011 WL 2182903.
Here's an interesting addition. The very first page of the Westwood College webiste contains the following "employment pledge":
We’re so confident that you’ll receive the right skills to launch your career and get your first job that if you haven’t found employment within six months of graduation, we’ll help pay your bills. Simple as that.
Hat tip: Carol Furnish.