980 F.3d 814
11th Cir.2020Background:
- Donrich Young took Direct Student Loans to attend Grand Canyon University and signed a pre-dispute arbitration agreement as part of admission.
- Young sued Grand Canyon alleging breach of contract and substantial misrepresentation (claiming the doctoral program could not realistically be completed in 60 credit hours, forcing extra paid courses).
- The Obama-era regulations: 34 C.F.R. § 685.222 defines "borrower defenses," including § 685.222(c) (breach of contract) and § 685.222(d) (substantial misrepresentation); § 685.300(e)–(f) prohibits schools from enforcing pre-dispute arbitration agreements and class waivers with respect to any "borrower defense claim."
- § 685.300(i)(1) defines "borrower defense claim" as a claim that is or could be asserted as a borrower defense under § 685.222(a)(5), "including a claim other than one based on § 685.222(c) or (d) that may be asserted under § 685.222(b) if reduced to judgment," creating ambiguity over whether (c)/(d) claims are included or excluded.
- The district court held the phrase excluded (c)/(d) claims and compelled arbitration; the Eleventh Circuit reversed, holding the clause includes breach-of-contract and misrepresentation claims and thus bars enforcement of the arbitration agreement for those claims.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether § 685.300(i)(1)'s "including a claim other than..." language makes breach-of-contract (§685.222(c)) and misrepresentation (§685.222(d)) claims "borrower defense claims" protected from enforcement of pre-dispute arbitration agreements | Young: "Including" is inclusive; (c)/(d) claims are covered, and (b)-type claims need not be reduced to judgment to be "borrower defense claims" | Grand Canyon: The phrase is exclusionary; (c)/(d) claims are excluded and (b)-type claims qualify only if reduced to judgment | Court: The phrase is inclusive; (c)/(d) claims are borrower-defense claims; arbitration enforcement barred as to those claims; reversed and remanded |
Key Cases Cited
- Washington v. Comm’r of Soc. Sec., 906 F.3d 1353 (11th Cir. 2018) (regulations construed like statutes)
- Cruz v. Cingular Wireless, LLC, 648 F.3d 1205 (11th Cir. 2011) (standard of review for orders compelling arbitration)
- Cal. Ass’n of Priv. Postsecondary Sch. v. DeVos, 436 F. Supp. 3d 333 (D.D.C. 2020) (discussing borrower-defense regulation's aim to limit enforcement of arbitration/class-waiver provisions)
- United States v. Jernigan, 341 F.3d 1273 (11th Cir. 2003) (waiver doctrine for unpreserved arguments)
- Sapuppo v. Allstate Floridian Ins. Co., 739 F.3d 678 (11th Cir. 2014) (failure to adequately brief an argument constitutes abandonment)