Arbitration Provisions in College Enrollment Application Held Enforceable Against Students Who Sued Over College’s Alleged Misrepresentations

A federal court in Colorado recently ruled that students claiming that a college misrepresented its tuition costs, accreditation status, and job prospects for graduates, would have to pursue their claims in arbitration instead of in court.  Bernal v. Burnett, No. 1:10-cv-01917-WJM -KMT (D. Colo., June 06, 2011). The court relied upon provisions in defendant Westwood College’s enrollment application documents, which provided, among other things, that the signer “agree[s] that any dispute arising from my enrollment at Westwood College, no matter how described, pleaded or styled, shall be resolved by binding arbitration under the Federal Arbitration Act conducted by the American Arbitration Association (‘AAA’) under its Commercial Rules.”

The court found that the arbitration provisions were valid and enforceable pursuant to the Federal Arbitration Act. The plaintiffs objected that the arbitration provisions were unconscionable because they were contained in standardized agreements prepared by the college and were not available for the plaintiffs to review until they started the enrollment process. The court disagreed, citing AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740 (2011), where the U.S. Supreme Court rejected the idea that arbitration agreements are per se unconscionable when found in adhesion contracts. The court also found unpersuasive the plaintiffs’ contention that the arbitration clauses were unenforceable because they did not permit arbitration on a class-wide basis.

In granting the college’s motion to compel arbitration, the court summed up the relevant facts as follows:

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.’ 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.

 

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