Facts

Plaintiff Institute of Medical Education Inc. was established in 2003 and operated as a private, post-secondary educational institution. The institute's office and campus was located in San Jose. The institute provided career-oriented education in the areas of vocational nursing, phlebotomy, medical assisting, certified nurse assisting, dental hygiene, medical laboratory technician, ultrasound technology, and magnetic resonance imaging technology. As of October 2008, the institute received Title IV funding from the federal government.

Defendant Western Association of Schools and Colleges. or WASC, is one of six regional associations that accredit public and private schools, colleges, and universities in the United States. Three separate WASC Commissions conduct the accrediting activities of WASC. The Accrediting Commission for Schools accredited schools below the college level including adult schools.

As of June 2007, the Accrediting Commission accredited the Institute of Medical Education.

In 2010, after consulting with its member institutions, the Accrediting Commission determined that it would no longer seek federal recognition status from the U.S. Department of Education. The withdrawal became effective on Oct. 26, 2010. The DOE provided the Accrediting Commission member institutions up until April 26, 2012 to find another federally recognized accreditation agency so that they would remain eligible for Title IV funding. The Institute was unable to obtain accreditation from another federally recognized accrediting agency.

WASC filed a Motion for Summary Judgment and disputed all claims asserted by the institute. The institute opposed and filed a cross-motion for summary judgment.

PLAINTIFF'S CONTENTIONS:
Plaintiff alleged the Accrediting Commission's decision to withdraw from recognition by the DOE, resulted in plaintiff being no longer accredited by a DOE-approved accrediting commission as of Oct. 26, 2010 and as a result of the loss of accreditation, plaintiff lost its students, faculty, and its entire school.

The institute filed its complaint and alleged denial of common law due process, breach of contract, breach of the implied covenant of good faith and fair dealing, intentional interference with contract, negligent interference with prospective business or economic advantage, and promissory estoppel.

DEFENDANT'S CONTENTIONS:
The Accrediting Commission denied the institute's allegations and argued that its loss of DOE-approved accreditation was unrelated to the Accrediting Commission's decision that it would no longer seek federal recognition status from the DOE.

Settlement Discussions

Defendant rejected plaintiff's demand for $24 million.

Damages

The institute claimed $70 million in damages.

Result

The court granted WASC's Motion for Summary Judgment. In regard to the Institute of Medical Education's due process claim, the court ruled WASC's decision to withdraw from the department of education's recognition did not constitute a termination of the institute's accreditation under the Higher Education Act or any other federal law. The court dismissed without prejudice the remaining causes of action brought by plaintiff under California law, as it refused to exercise supplemental jurisdiction.

Other Information

Defendant WASC is seeking to recover all costs related to the litigation. FILING DATE: Nov. 30, 2011.