Kourembanas v. Intercoast Colleges

          ORDER ON MOTION TO STAY

          JOHN A. WOODCOCK, JR. UNITED STATES DISTRICT JUDGE.

         The Court concludes that it should not stay this case to allow another District Court time to decide dispositive motions based on a similar, though not identical, issue in another federal case.

         I. BACKGROUND

         On August 29, 2017, the Plaintiffs initiated a class action lawsuit against InterCoast Colleges (InterCoast), alleging under various theories that InterCoast engaged in fraud in inducing students to borrow money through federally-funded financial aid programs to pay for a Licensed Practical Nursing (LPN) program operated by InterCoast in Maine, when in fact the quality of the education in the InterCoast LPN program was deficient and deceptively below its advertised quality. Class Action Compl. (ECF No. 1). On November 7, 2017, InterCoast moved to compel arbitration and to dismiss the lawsuit. Def.'s Mot. to Compel Arbitration and Dismiss the Case (ECF No. 7).

         On December 6, 2017, the Plaintiffs moved to stay all proceedings and to extend time within which to respond to InterCoast's motion to compel arbitration. Pls.' Mot. to Stay Proceedings and for Extension of Time to File Opp'n to Mot. to Compel Arbitration (ECF No. 14) (Pls.' Mot.). On December 12, 2017, InterCoast responded to the Plaintiffs' motion to stay and extend time. Def.'s Opp'n to Pls.' Mot. to Stay Proceedings and for Extension of Time to File Opp'n to Mot. to Compel Arbitration (ECF No. 17) (Defs.' Opp'n). On December 15, 2017, the Plaintiffs filed a reply. Pls.' Reply to Def.'s Opp'n to Mot. to Stay Proceedings and for Extension of Time to File Opp'n to Mot. to Compel Arbitration (ECF No. 18) (Pls.' Reply).

         II. THE POSITIONS OF THE PARTIES

         A. The Plaintiffs' Position

         The Plaintiffs provide the background on other pending litigation that they contend justifies their motion to stay. Pls.' Mot. at 3-5. In their motion, the Plaintiffs say that the resolution of summary judgment proceedings in three cases, California Association of Private Postsecondary Schools v. DeVos, No. 1:17-cv-0999 (D.D.C.) (CAPPS), Commonwealth of Massachusetts v. Department of Education, No. 1:17-cv-01331 (D.D.C.) (State AGs'), and Bauer v. DeVos, No. 1:17-cv-01330 (D.D.C.) (Bauer), will impact the pending motion to compel arbitration because they will resolve the enforceability of arbitration clauses in the enrollment agreements for for-profit colleges like InterCoast. Id. The Plaintiffs represent that dispositive motions would be decided quickly and that their request for a stay would be only “a few weeks” after the completion of briefing in these cases set to close January 19, 2018. Id. at 7.

         B. InterCoast's Opposition

         InterCoast opposes the Plaintiffs' motion for a stay, which it says is “for an indefinite period.” Def.'s Opp'n at 1. InterCoast observes that the Plaintiffs had earlier filed and dismissed a similar lawsuit because of uncertainty about the implementation of the same proposed federal regulation. Id. But InterCoast says that the Plaintiffs chose to file this lawsuit when they did, instead of waiting for the other litigation to run its course. Id. InterCoast points out that the pendency of this litigation is burdensome because it is required to report Plaintiffs' claims to regulators and others. Id. at 2. InterCoast urges the Court to deny the motion to stay as the Plaintiffs should not be allowed to “keep it hanging over InterCoast's head for an indefinite period in the hope that the law may change.” Id.

         C. The Plaintiffs' Reply

         In their reply, the Plaintiffs emphasize that they are seeking only a “temporary stay”. Pls.' Reply at 1-2 (emphasis in Plaintiffs' reply). Even though they acknowledge that the summary judgment ruling at the district court could be appealed, they stress that they are seeking a stay only until the district court rules. Id. at 3. They note that “[b]ut for the CAPPS litigation, the Borrower Defense regulations would have been implemented on July 1, 2017” so they are not looking for the law to change, only for existing regulations to be enforced. Id. at 4. The Plaintiffs dispute InterCoast's contention that the pendency of this case, particularly as occasioned by a short stay, will have an adverse impact on InterCoast. Id. at 5.

         D. Current Status

         On August 21, 2018, the Court asked counsel for an update on the status of the District of Columbia lawsuits. On August 22, 2018, Plaintiffs' counsel responded with a description of developments in the D.C. litigation since January 2018 and on August 27, 2018, InterCoast responded. The parties agree that the D.C. Court has not issued a decision on the CAPPS, State AGs', and Bauer cases before it. The D.C. Court formally consolidated the State AGs' and Bauer cases, but delays in complex cases are common, typically for complex reasons. Here, the delay in the disposition of these three cases appears interrelated with supplemental proposed rules from the Department of Education. It is not necessary for purposes of this Order to describe the exact state of the Department of Education position on arbitration clauses for class ...