Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—N.D. Cal.: Educational accreditation dispute ruled inappropriate for federal jurisdiction, (Nov 6, 2013)

By Edward L. Puzzo, J.D.

In a challenge to the termination of a community college’s accreditation under the California Unfair Competition Law, federal jurisdiction was not obtained because of federal preemption of certain aspects of educational accreditation, nor because violations of federal law could be used to support the unfair competition allegations, the federal district court in San Francisco has ruled (California v. Accrediting Commission, November 4, 2013, Illston, S.).

The State of California brought a lawsuit against the Accrediting Commission for Community and Junior Colleges (ACCJC), arising from the latter’s termination of accreditation of the City College of San Francisco. The state alleged that the ACCJC, during the period it was evaluating City College’s accreditation, was an outspoken advocate for elimination of California’s open access mandate for community colleges, followed by City College, in favor of a narrower junior college model focused on degree completion. The conflict of interest between its role as advocate and its role as impartial evaluator of accreditation requirements, it was alleged, violated the state’s unfair competition law (UCL).

The ACCJC asserted federal jurisdiction and removed the lawsuit to federal district court. The State then moved to remand the case back to state court for lack of federal jurisdiction. The court granted the motion for remand.

Higher Education Act. The ACCJC argued that removal to federal court was proper because the federal Higher Education Act, 20 U.S.C. Sec. 1099b(f), was intended to channel accreditation challenges to the federal courts in order to ensure objectivity and uniformity.

The court rejected this argument. Under Ninth Circuit precedent, the court stated, the HEA does not completely preempt state law claims against accreditors. Keams v. Tempe Technical Institute, 39 F.3d 222 (9th Cir. 1994) held that, while the HEA does specifically preempt state law in certain subject areas, it neither expressly nor implicitly preempts state tort claims against accreditors. In the absence of complete preemption, federal preemption is a defense and does not authorize removal to federal court, it was noted.

Federal law issues. The ACCJC also argued that removal to federal court was necessary because the complaint alleged various federal law violations regarding accreditation. In response, the court stated that when a claim could be supported by alternate theories, one of which is a state law theory and one of which is a federal law theory, then federal question jurisdiction does not attach because federal law is not a necessary element of the claim.

That is the case here, the court stated. The state may establish liability under the unfair and fraudulent prongs of the UCL by showing violation of federal regulations, but it may also do so by alternate and independent state law theories. Thus resolution of the UCL claim did not require resolution of a federal issue, the court ruled.

The case is Civil Action No. C 13-4379 SI.

Attorneys: Sara Jennifer Eisenberg, San Francisco City Attorney’s Office, for State of California. Philip Stephen Ward (Hassard Bonnington LLP) for Accrediting Commission for Community and Junior Colleges.

Companies: Accrediting Commission for Community and Junior Colleges

Cases: StateUnfairTradePractices CaliforniaNews