Eleventh Circuit Says University Cannot Arbitrate Student Breach of Contract and Misrepresentation Claims | Carlton Fields

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In Young vs. Grand Canyon University, the Eleventh Circuit Court of Appeals ruled that the United States District Court for the Northern District of Georgia erred in requiring a student to arbitrate a student’s breach of contract and misrepresentation claims against a university, such as Federal Rule 34 CFR § 685.300 (e) – (f) prohibits a college or university that accepts federal student loans from enforcing pre-dispute arbitration agreements when a student presents a claim. “Borrower’s defense request”.

Plaintiff Donrich Young was enrolled in a doctoral program at Grand Canyon University in Arizona and took out federal loans to pay for the program. As part of Young’s admission process, GCU asked him to sign a comprehensive arbitration agreement, which stipulated that any disputes arising from his listing would be resolved through binding arbitration.

Young and seven other students filed a class action lawsuit against GCU claiming that GCU misrepresented students that they could complete a doctorate in 60 credit hours – but in reality, GCU designed their program to finish in 60. credit hours are unlikely, which then students must take and pay for additional continuing research courses. Young and the other students brought forward claims for breach of contract, intentional misrepresentation, unjust enrichment, and violations of the Arizona Consumer Fraud Act. The district court dismissed the claims made by all of the plaintiffs, except Young, on the grounds of personal jurisdiction.

GCU then decided to force arbitration in accordance with the agreement Young had signed as part of his application for admission. District Court allowed GCU’s motion to compel, ruling that Young’s breach of contract, misrepresentation and statutory fraud claims were not “borrower’s defense claims” within the meaning of the settlement. federal law in question and, therefore, were not subject to the prohibition of the regulation on the various arbitration agreements.

The regulation defines “borrower’s defense claim” as “a claim that is or could be raised as a borrower’s defense within the meaning of section 685.222 (a) (5), including a complaint other than one based on § 685.222 (c) or (d) which can be invoked under § 685.222 (b) if reduced to a judgment. The main disagreement between the parties was whether the expression “including a claim other than” means to include or exclude claims based on Article 685.222 (c) or (d) – that is, claims alleging breach of contract and material misrepresentation. The district court interpreted the sentence as exclude claims for breach of contract and for material misrepresentation of the settlement definition of “borrower’s defense claim” and ordered Young’s claims to arbitration.

On appeal, the Eleventh Circuit disagreed, arguing that the settlement’s definition of “borrower’s defense claim” includes claims for breach of contract and for material misrepresentation and therefore protects these claims from arbitration. The panel noted that the district court’s interpretation defies common sense, asking, “Why would a settlement that everyone admits was designed to protect student loan borrowers exclude the most basic and fundamental claims?” that they are likely to present? ” The panel also recognized that the district court’s tense interpretation would only include non-contractual and unmistakable claims if they were reduced to judgment, which would make the “so reduced to judgment” aspect of the protection of claims. meaningless borrower defense. As a result, the panel overturned the district court’s decision.

Young v. Grand Canyon University, Inc., N ° 19-13639 (11th Cir. 16 November 2020).

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