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Ferguson v. Corinthian Colleges, Inc.

United States Court of Appeals for the Ninth Circuit

August 8, 2013, Argued and Submitted, Pasadena, California; October 28, 2013, Filed

No. 11-56965

Opinion

SUMMARY1

Arbitration

The panel reversed the district court's partial denial  [**2] of the motion of Corinthian Colleges, Inc., and related entities, which own and operate for-profit academic institutions, to compel arbitration in a putative class action on behalf of current and former students, alleging that Corinthian engaged in a deceptive scheme to entice the enrollment of prospective students in violation of California law.

Pursuant to arbitration clauses in plaintiffs' enrollment agreements, Corinthian moved to compel arbitration. The district court granted the motion in part but denied the motion regarding plaintiffs' claims for injunctive relief under California's unfair competition law, false advertising law, and Consumer Legal Remedies Act. The court relied on decisions by the California Supreme Court establishing the so-called Broughton-Cruz rule, which exempts claims for "public injunctive relief" from arbitration.

The panel held that the Broughton-Cruz rule was preempted by the Federal Arbitration Act. The panel concluded that prior circuit authority, Davis v. O'Melveny & Myers, 485 F.3d 1066 (9th Cir. 2007) (applying Broughton-Cruz rule), was not controlling because it was clearly irreconcilable with subsequent United States Supreme Court decisions concerning  [**3] the FAA. The panel held that under AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740, 179 L. Ed. 2d 742 (2011), and Marmet Health Care Center, Inc. v. Brown, 132 S. Ct. 1201, 182 L. Ed. 2d 42 (2012) (per curiam), the Broughton-Cruz rule was preempted because it prohibits outright arbitration of a particular type of claim.

The panel rejected the plaintiffs' alternative argument that they should not be required to arbitrate their public injunction claims because those claims did not fall within the scope of their arbitration agreements. The panel remanded with the instruction that the district court direct all of the plaintiffs' claims to arbitration and stay the action pending arbitration.

 [*930]  OPINION

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733 F.3d 928 *; 2013 U.S. App. LEXIS 21961 **; 2013 WL 5779514

KEVIN FERGUSON, on behalf of himself and all others similarly situated; SANDRA L. MUNIZ, on behalf of herself and all others similarly situated, Plaintiffs-Appellees, v. CORINTHIAN COLLEGES, INC.; CORINTHIAN COLLEGES, INC., DBA Everest College; CORINTHIAN COLLEGES, INC., DBA Everest University; CORINTHIAN COLLEGES, INC., DBA Everest Institute; CORINTHIAN COLLEGES, INC., DBA Everest College of Business; TECHNOLOGY AND HEALTH CARE; HEALD COLLEGE, LLC; HEALD CAPITAL, LLC, Defendants-Appellants.

Prior History:  [**1] Appeal from the United States District Court for the Central District of California. D.C. Nos. 8:11-cv-00127-DOC-AJW, 8:11-cv-00259-DOC-AJW. David O. Carter, District Judge, Presiding.

Ferguson v. Corinthian Colleges, 823 F. Supp. 2d 1025, 2011 U.S. Dist. LEXIS 119261 (C.D. Cal., 2011)

Disposition: REVERSED and REMANDED.

CORE TERMS

arbitration, Plaintiffs', enrollment, injunction, arbitration agreement, injunctive relief, district court, preempted, state law, decisions, compel arbitration, inherent conflict, deceptive, outright, damages, binding arbitration, per curiam, state rule, irreconcilable, invalidated, vindication, enjoining, prohibits, unfair

Business & Corporate Compliance, Pretrial Matters, Alternative Dispute Resolution, Judicial Review, Civil Procedure, Appeals, Standards of Review, De Novo Review, Arbitration, Federal Arbitration Act, Orders to Compel Arbitration, Arbitrability, Arbitration Agreements, Constitutional Law, Supremacy Clause, Federal Preemption, Antitrust & Trade Law, Trade Practices & Unfair Competition, State Regulation, Scope, Consumer Protection, Deceptive & Unfair Trade Practices, State Regulation, Regulated Practices, Private Actions, False Advertising, Governments, Courts, Judicial Precedent, General Overview, Remedies, Injunctions, Appellate Jurisdiction, Interlocutory Orders, Contracts Law, Contract Conditions & Provisions, Arbitration Clauses