United States District Court, D. Maine
ORDER ON MOTION TO STAY
A. WOODCOCK, JR. UNITED STATES DISTRICT JUDGE.
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
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).
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).
THE POSITIONS OF THE PARTIES
The Plaintiffs' Position
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.
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.
The Plaintiffs' Reply
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.
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