Grasty v. Colorado Technical University, 599 F. App'x 596

Grasty, an Illinois resident and former student at Colorado Technical University (CTU), enrolled under a written enrollment agreement containing a broad arbitration clause.
She registered for two courses (3-credit and 5-credit) for January 2013, dropped the 5-credit course after being told she would still be eligible for financial aid, but was later told she was ineligible with only 3 credits.
Grasty alleges a CTU advisor called her a racial epithet and that CTU refused financial aid because she is black; she seeks $3 million under Title VI.
CTU moved to compel arbitration and dismiss the suit, relying on the enrollment agreement’s arbitration provision and arguing no promise of financial aid was made.
The district court found the signed enrollment agreement valid and supported by consideration (CTU’s promise of educational services for payment), held Grasty’s discrimination claim fell within the arbitration clause’s scope, and concluded it lacked jurisdiction to hear the claim.
The Seventh Circuit affirmed, enforcing the arbitration clause and rejecting Grasty’s contract-formation, consideration, and procedural-waiver arguments.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether a valid, enforceable arbitration agreement exists	Grasty: no valid contract/consideration because CTU promised financial aid and then failed to provide it; anticipatory breach	CTU: Grasty signed enrollment agreement; CTU promised educational services in exchange for payment — valid consideration	Court: Agreement valid and supported by consideration; district court properly enforced it
Whether Grasty’s Title VI discrimination claim is subject to the arbitration clause	Grasty: claim falls outside scope or she waived arbitration defense by relying on non-contractual grounds	CTU: clause broadly covers disputes related to enrollment, attendance, and financial aid, so Title VI claim falls within scope	Court: Claim falls within the arbitration clause’s broad scope; arbitrable
Whether arbitrability gateway questions can be decided by arbitrator or court	Grasty: challenged arbitrability and contract formation	CTU: parties agreed to arbitrate gateway issues	Court: Enforce parties’ agreement to arbitrate gateway questions; Grasty’s new appellate arguments waived because not raised below
Proper procedural vehicle for motion to compel arbitration	Grasty: N/A	CTU: moved under Rule 12(b)(1) but arbitration motions concern venue and are Rule 12(b)(3) matters	Court: Agreement that Rule 12(b)(1) was incorrect but the error was harmless; court may consider submitted materials and still compel arbitration

Druco Rests. v. Steak n Shake Enters., 765 F.3d 776 (7th Cir. 2014) (standard of review for arbitration orders)
Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614 (1985) (arbitration clause is a forum-selection clause)
Sherwood v. Marquette Transp. Co., 587 F.3d 841 (7th Cir. 2009) (arbitration clause characterization)
Jackson v. Payday Fin., LLC, 764 F.3d 765 (7th Cir. 2014) (motions to compel arbitration under Rule 12(b)(3))
Faulkenberg v. CB Tax Franchise Sys., LP, 637 F.3d 801 (7th Cir. 2011) (consideration of materials attached to motions to compel arbitration)
Rent-A-Center, West, Inc. v. Jackson, 561 U.S. 63 (2010) (parties can agree to arbitrate gateway questions of arbitrability)
Circuit City Stores, Inc. v. Adams, 532 U.S. 105 (2001) (federal discrimination claims may be arbitrable)
Steinberg v. Chi. Med. Sch., 69 Ill.2d 320 (Ill. 1977) (consideration in student–university contracts)
Boomer v. AT & T Corp., 309 F.3d 404 (7th Cir. 2002) (consideration upheld where services exchanged for promise to arbitrate)
Carter v. SSC Odin Operating Co., 976 N.E.2d 344 (Ill. App. Ct.) (consideration for arbitration clauses upheld in exchange for payment and services)
Johnson v. Lincoln Christian Coll., 150 Ill.App.3d 733 (Ill. App. Ct.) (student payments and university performance imply contractual obligations)