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Appellate court affirms arbitration on claims against college

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With one judge frustrated that Indiana residents and students may have been “hornswoggled” by a college’s advertisements about being accredited, the Indiana Court of Appeals has upheld an order compelling arbitration on a claim that three students were fraudulently induced to enroll because of misrepresentation about that accreditation.

The order comes in the case of Connie Brumley, et al. v. Commonwealth Business College Education Corp., No. 45A04-1002-CT-66, a case from Lake Superior Court.

Three student plaintiffs alleged they were fraudulently induced to enroll in a surgical technology program at Brown Mackie’s Merrillville location by the college’s misrepresentation of its accreditation. Each signed an enrollment agreement and supplemental arbitration form, both of which contained arbitration clauses, and they paid tuition and attended the courses. But at some point they learned of the accreditation issue, and later filed suit alleging breach of express and implied contract, intentional and negligent misrepresentation, and fraud –- on the grounds they wouldn’t be able to obtain the type of surgical jobs they were being trained for.

Brown Mackie moved to compel arbitration based on the signed documents, and the original judge on the case denied the college’s motion to compel arbitration based on the enrollment agreement stating the institution was accredited when it was not. But after the case was consolidated with a similar action and transferred to Superior Judge Gerald Svetanoff, he readdressed the issue and granted the motion to compel arbitration. Though he agreed with his colleague about the enrollment agreement not being able to mandate arbitration based on its validity, Judge Svetanoff found that the rationale didn’t extend to the separate arbitration form that none of the student plaintiffs alleged was false or fraudulent.

The plaintiffs asked for interlocutory appeal, the trial court granted that certification, and the Court of Appeals accepted the appeal and heard arguments March 2.

Even though the Federal Arbitration Act and caselaw allows for arbitration agreements to be invalidated by issues such as fraud or unconscionability, the Indiana appellate panel found that the language of this Brown Mackie arbitration agreement didn’t cross any of those lines.

“We conclude that, because plaintiffs’ action challenges the enrollment agreements in their entirety rather than the arbitration clauses in particular, the plaintiffs’ claims remain subject to arbitration,” Judge Nancy Vaidik wrote.

The appellate panel also ruled on other matters that came up in the appeal, such as Brown Mackie’s need or ability to file a cross-appeal relating to the trial judge’s rationale.

Judge Michael Barnes concurred with a separate opinion, finding the majority was correct and he agreed with the arbitration provisions per se based on precedent from the Supreme Court of the United States. However, he pointed out his concerns with what possibly happened in this case, even though the students’ allegations are still unproven at this point.

“Still, if true, it is plainly evident that Brown Mackie at best was disingenuous in its advertising, and at worst was actively dishonest in touting the surgical technology degree it offered,” he wrote. “Although Brown Mackie trumpeted being ‘accredited’ in its advertising and materials, that ‘accreditation’ allegedly was insufficient to allow graduates to take the required exam for surgical technology certification. Indiana residents likely were hornswoggled here, and I am frustrated that we are powerless to intervene. I must trust that an arbitrator will fairly consider the students’ claims. I concur fully, but grudgingly.”

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  2. As one of the many consumers affected by this breach, I found my bank data had been lifted and used to buy over $200 of various merchandise in New York. I did a pretty good job of tracing the purchases to stores around a college campus just from the info on my bank statement. Hm. Mr. Hill, I would like my $200 back! It doesn't belong to the state, in my opinion. Give it back to the consumers affected. I had to freeze my credit and take out data protection, order a new debit card and wait until it arrived. I deserve something for my trouble!

  3. Don't we have bigger issues to concern ourselves with?

  4. Anyone who takes the time to study disciplinary and bar admission cases in Indiana ... much of which is, as a matter of course and by intent, off the record, would have a very difficult time drawing lines that did not take into account things which are not supposed to matter, such as affiliations, associations, associates and the like. Justice Hoosier style is a far departure than what issues in most other parts of North America. (More like Central America, in fact.) See, e.g., http://www.theindianalawyer.com/indiana-attorney-illegally-practicing-in-florida-suspended-for-18-months/PARAMS/article/42200 When while the Indiana court system end the cruel practice of killing prophets of due process and those advocating for blind justice?

  5. Wouldn't this call for an investigation of Government corruption? Chief Justice Loretta Rush, wrote that the case warranted the high court’s review because the method the Indiana Court of Appeals used to reach its decision was “a significant departure from the law.” Specifically, David wrote that the appellate panel ruled after reweighing of the evidence, which is NOT permissible at the appellate level. **But yet, they look the other way while an innocent child was taken by a loving mother who did nothing wrong"

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