769 F. Supp. 2d 1336
D. Utah2011Background
- Plaintiffs are former Everest College students who allege UCSPA violations and common-law misrepresentation claims against Corinthian Colleges and related entities.
- Defendant seeks to compel individual arbitration under FAA and stay proceedings pending arbitration, based on enrollment agreements signed by each Plaintiff that include arbitration provisions.
- Two of the enrollment agreements include class-action waivers; one does not.
- Plaintiffs oppose, arguing UCSPA bars arbitration and that waivers are unconscionable, and request discovery/trial if a factual dispute exists about unconscionability.
- The court evaluates FAA preemption, UCSPA provisions, unconscionability, scope for class treatment, and whether a stay is warranted pending Concepcion.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does UCSPA bar enforcement of arbitration agreements under the FAA? | UCSPA provisions prohibit waivers and class relief applicable to plaintiffs. | FAA permits arbitration and UCSPA does not preclude arbitration clauses in consumer transactions. | UCSPA does not bar arbitration; FAA preempts conflicting UCSPA provisions. |
| Are the arbitration clauses unconscionable under Utah law? | Arbitration and class-waiver terms are procedurally/substantively unconscionable and deprive class relief. | Terms are not substantively unconscionable and procedural factors do not render them unconscionable overall. | Arbitration agreements are not unconscionable; neither substantive nor procedural unconscionability is shown to render them invalid. |
| Do UCSPA's class-action provisions permit class treatment given arbitration? | UCSPA class provisions could enable class actions despite arbitration. | Stolt-Nielsen requires a contractual basis to authorize class arbitration; waivers here do not permit class arbitration. | UCSPA class-action provisions do not compel class arbitration; class waivers may be enforced under FAA. |
| Is the UCSPA claim time-barred and/or tolled before filing? | Deceptive acts occurred over time; tolling or continuing violations may keep claims alive. | Claims were filed beyond two-year limitation unless tolling/applicable extensions apply. | Not conclusively time-barred; issues of tolling/continuing violations potentially apply, not resolved here. |
| Should the matter be stayed pending Concepcion ruling? | Concepcion may affect class-waiver enforceability in California; stay pending guidance could be warranted. | Differences in law and facts between Utah and California justify proceeding now. | Stay denied; decision issued despite Concepcion, with possibility for reconsideration if Concepcion impacts this case. |
Key Cases Cited
- Sosa v. Paulos, 924 P.2d 357 (Utah 1996) (arbitration clause can be substantively unconscionable when costs shift to patient)
- Ryan v. Dan's Food Stores, Inc., 972 P.2d 395 (Utah 1998) (factors for procedural unconscionability; meaningful choice matters)
- Casarotto v. Discover Bank, 517 U.S. 681 (1996) (arbitration clause validity under FAA; state law cannot single out arbitration)
- Southland Corp. v. Keating, 465 U.S. 1 (1984) (FAA preempts state effort to deny arbitration agreements)
- Stolt-Nielsen S.A. v. AnimalFeeds Int'l Corp., 130 S. Ct. 1758 (2010) (no class arbitration without contractual basis)
- Ting v. AT&T, 319 F.3d 1126 (9th Cir. 2003) (FAA preemption and scope in California-like consumer laws)
- Discover Bank v. Superior Court, 36 Cal.4th 148 (Cal. 2005) (public policy supporting class-action waivers under certain statutes)
- Laster v. AT&T Mobility, 584 F.3d 849 (9th Cir. 2009) (California-style unconscionability approach to class waivers)