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Title: Kevin Ferguson v. Corinthian Colleges

January 5, 2012

TITLE: KEVIN FERGUSON
v.
CORINTHIAN COLLEGES, ET AL
SANDRA L. MUNIZ
v.
CORINTHIAN COLLEGES, ET AL



The opinion of the court was delivered by: The Honorable David O. Carter, Judge

CIVIL MINUTES - GENERAL

Julie Barrera Not Present Courtroom Clerk Court Reporter

ATTORNEYS PRESENT FOR PLAINTIFFS: ATTORNEYS PRESENT FOR DEFENDANTS:

NONE PRESENT NONE PRESENT

PROCEEDING (IN CHAMBERS): ORDER DENYING DEFENDANTS' MOTIONS TO STAY PROCEEDINGS PENDING APPEAL

Before the Court is Defendants' Motion to Stay Proceedings Pending Appeal [Dkt. 60]. The Court finds this matter appropriate for decision without oral argument. Fed. R. Civ. P. 78; Local Rule 7-15. Accordingly, the hearing set for January 9, 2012 at 8:30 a.m. is VACATED. After considering the moving, opposing, and replying papers, the Court hereby DENIES the Motion.

I. Background

Plaintiff Kevin Ferguson ("Ferguson") brings his action (SACV 11-127) ("Ferguson action") on behalf of himself and two classes consisting of persons who enrolled in and/or attended classes at one of Defendant Corinthian Colleges' ("Corinthian") academic institutions. The "Everest Class" consists of those who attended Everest College, Everest Institute, Everest University, Everest University Online, or Everest College of Business Technology and Healthcare (collectively, "Everest") from January 24, 2005 to present, and the "Heald Class" consists of those who attended Heald College, LLC ("Heald") from January 24, 2009 to present. On April 15, 2011, the Court consolidated the Ferguson action with Plaintiff Sandra Muniz's ("Muniz") action. Muniz also brings her action on behalf of herself as well as an Everest Subclass and a Heald Subclass.

Plaintiffs allege that students enroll in Corinthian institutions believing they are receiving a quality education at an affordable price, when, in fact, they pay some of the highest tuition rates in the country, incur crippling student loans, and graduate with a degree that never qualifies nor prepares them for any job placement other than low-wage, low-skill employment. Based on these allegations, Plaintiffs bring the following claims against Defendants Corinthian, Everest, Heald, and Heald Capital, LLC, (collectively, "Defendants"): (1) breach of implied contract; (2) breach of the implied covenant of good faith and fair dealing; (3) violation of Cal. Bus. & Prof. Code § 17200; (4) violation of Cal. Bus. & Prof. Code § 17500; (5) violation of the Consumer Legal Remedies Act; (6) negligent misrepresentation; and (6) fraud.*fn1 Plaintiffs each seek restitution, punitive damages, disgorgement of profits, and a permanent injunction.

In May 2011, Defendants filed a motion to compel individual arbitration of each Plaintiff's claims. On October 6, 2011, the Court granted in part and denied in part that motion. Although the Court granted the motion with respect to most of Plaintiffs' claims, the Court concluded that Plaintiffs' claims seeking public injunctive relief under various California consumer statutes were not subject to arbitration. Under these claims, Plaintiffs seek to prevent Defendants from deceiving vulnerable consumers, such as former military service personnel and low-income individuals, about what it means to enroll at one of Defendants' institutions, namely, the true cost of attendance, quality of education, nature of accreditations, and job prospects upon graduation. In denying this part of the motion to compel, the Court reasoned that the California Legislature's decision to allow citizens to bring injunctive relief claims under the Consumer Legal Remedies Act ("CLRA"), Unfair Competition Law ("UCL"), and False Advertising Law ("FAL") on behalf of the public is not inconsistent with the Federal Arbitration Act ("FAA"). Ferguson v. Corinthian Colleges, --- F. Supp. 2d ----, No. SACV 11--0127 DOC (AJWx), 2011 WL 4852339, at *7 (C.D. Cal. Oct. 6, 2011). The Court concluded that because Plaintiffs' injunctive relief claims seek to enforce a public right, there would be an inherent conflict in sending these claims to arbitration. Id. at *9. The Court also noted that this ruing was not in apparent conflict with the FAA and that the Supreme Court's recent decision in Concepcion did not address the abitrability of public injunctive relief actions. In light of these considerations, the Court denied the motion to compel arbitration as to Plaintiffs' UCL, CLRA, and FAL claims, to the extent they seek public injunctive relief. The Court stayed the claims that were sent to arbitration and stated that the public injunctive relief claims could proceed before the Court. Id. at *10.

On November 4, 2011, Defendants appealed the Court's decision to the Ninth Circuit. Defendants now bring the instant Motion in an attempt to have the public injunctive relief claims stayed while the Ninth Circuit considers their appeal.

II. Legal Standard

The power to stay proceedings is soundly within the Court's discretion and is incidental to the "power inherent in every court to manage the schedule of cases on its docket to ensure fair and efficient adjudication." Landis v. North Am. Co., 299 U.S. 248, 254-55 (1936). In determining whether to grant a stay pending appeal, the Court considers: "'(1) whether the stay applicant has made a strong showing that he is likely to succeed on the merits; (2) whether the applicant will be irreparably injured absent a stay; (3) whether issuance of the stay will substantially injure the other parties interested in the proceeding; and (4) where the public interest lies.'" Nken v. Holder, 556 U.S. 418, 129 S. Ct. 1749, 1756 (2009) (quoting Hilton v. Braunskill, 481 U.S. 770, 776 (1987)). These factors substantially overlap with the preliminary injunction factors set forth by the Supreme Court in Winter v. Natural Resources Defense Council, Inc., 555 U.S. 7, ...


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