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District of Columbia v. American University

August 12, 2010

DISTRICT OF COLUMBIA AND THE AMERICAN UNIVERSITY IN DUBAI, APPELLANTS,
v.
THE AMERICAN UNIVERSITY, APPELLEE.



Appeals from the Superior Court of the District of Columbia (CAB-8215-07) (Hon. Odessa F. Vincent, Trial Judge).

Per curiam.

Argued March 23, 2010

Before GLICKMAN, THOMPSON, and OBERLY, Associate Judges.

Opinion concurring in part and dissenting in part by Associate Judge THOMPSON at page 33.

This litigation represents the continuation of an effort by appellee American University ("AU") to stop appellant American University in Dubai ("AUD") from holding a license from the District of Columbia Educational Licensure Commission ("the Commission") while AUD continues to have the word "American" in its name. The underpinning for the litigation is D.C. Code § 29-618 (Supp. 2009), which generally prohibits an educational institution that is organized under District of Columbia law or that "shall undertake to do business in the District of Columbia or to confer degrees or certificates therein" from using "as its title, in whole or in part the words United States, federal, American, national, or civil service, or any other words which might reasonably imply an official connection with the government of the United States...."*fn1 For reasons that we shall explain, we conclude that AU's challenge to AUD's (former) District licensure is moot. We affirm, however, the trial court's order insofar as it directs the Commission to revoke the license of AUD's agent. Judge Thompson dissents from the latter conclusion.

I. Legal and Factual Background

The District of Columbia laws governing the licensure of post-secondary educational institutions are found in Title 29, Chapter 6 and Title 38, Chapter 13 of the D.C. Code. See D.C. Code §§ 29-615 to -619 (2001 & Supp. 2009) and 38-1301 to -1313 (2001 & Supp. 2009). They provide that no person or entity may undertake to confer any degree or operate a post-secondary educational institution in the District of Columbia without first obtaining a license from the Commission.*fn2 See D.C. Code §§ 29-615, 38-1309 (a) (Supp. 2009). Commission licensure of an educational institution "shall be contingent upon said educational institution's compliance with all rules, regulations and criteria promulgated by the Commission, as well as compliance with all other applicable D.C. laws and regulations." D.C. Code § 38-1302 (12) (Supp. 2009).*fn3 One such applicable law is D.C. Code § 29-618, enacted by Congress in 1929 as part of legislation known as the Diploma Mill Act.*fn4

D.C. Code § 38-1310 (a) describes several "exclu[sions] from the coverage of this chapter [i.e., D.C. Code §§ 38-1301 to -1313]," including an exclusion for any "educational institution that is organized or chartered outside of the District of Columbia and does not operate in the District...." D.C. Code § 38-1310 (a)(6) (2001). Thus, an educational institution that is not organized under District law and that does not operate in the District is exempt from licensure by the Commission, "except that any agent of an institution who operates in the District shall not be exempt, and the Commission may apply the standards of this chapter to the institution in determining whether to license an agent." Id. D.C. Code § 38-1302 (1) defines "agent" as "any person owning any interest in, employed by, or representing for remuneration, an educational institution, whether such institution is located within or outside the District, and who solicits or offers to enroll in the District students or enrollees for such institution, or who holds himself or herself out to residents of the District... as representing an educational institution for any such purpose." D.C. Code § 38-1302 (1).

Appellee AUD is a private, for-profit, accredited degree-granting institution with its campus in Dubai, United Arab Emirates. AUD has no facilities and provides no educational instruction in the District, but does provide information about its programs in Dubai and enrolls students for its Dubai campus through an agent, Michael Goldstein, who, for remuneration, acts on AUD's behalf from an office on New Hampshire Avenue, N.W.*fn5

In past years, the Commission licensed AUD directly. However, by early 2008, the Commission began to apply an interpretation that an educational institution without a physical presence in the District could not be licensed by the Commission. In addition, in August 2008, the Council of the District of Columbia enacted the Education Licensure Commission Amendment Act of 2008 ("the 2008 Amendment Act"),*fn6 legislation that made revisions to Chapter 13 of Title 38 that affect whether an educational institution may "operate" - and thus whether it is eligible for licensure - in the District. As modified by the 2008 Amendment Act, D.C. Code § 38-1309 provides that an educational institution may not "operate" in the District - and thus, it may not obtain a Commission license, which constitutes "approval to operate," see D.C. Code § 38-1302 (12) - unless it maintains in the District a "facility" from or through which "education is offered or given, or educational credentials are offered or granted." D.C. Code §§ 38-1309, -1302 (11). The 2008 Amendment Act also added to section 38-1302 a definition of the term "facility" that specifies that the term means "a physical structure located in the District, including suitable housing, classrooms, laboratories, and library resources, as required by the nature of the program or the student body. " D.C. Code § 38-1302 (14).

AUD does not maintain a "facility" in the District within the meaning of section 38-1302 (14). Since February 28, 2008, Mr. Goldstein has been licensed as AUD's agent,*fn7 and, effective the same date, AUD withdrew its application for renewal of its Commission license.

II. Procedural Background

This appeal follows our decision in American Univ. in Dubai, a case that arose out of a 2003 suit in which AU complained that the Commission had renewed AUD's degree-granting license despite what AU alleged was AUD's violation of the prohibition set out in D.C. Code § 29-618, by having "American" in its name. AU sought a judgment "prohibiting AUD from using 'American' in its title[,]" a declaration that it was unlawful for the Commission to license AUD so long as the school remained in violation of section 29-618, and an order requiring the Commission to revoke AUD's license. 930 A.2d at 204. The trial court entered summary judgment in favor of AU and ordered the Commission to revoke AUD's license within 30 days unless, prior to that deadline, AUD changed its name to comport with section 29-618. After learning of the court's order, and instead of changing its name, AUD filed a motion to intervene, which the trial court denied. Id. at 204-05. In compliance with the trial court's order, the Commission revoked AUD's license. AUD sought review by this court, and we vacated the trial court's order and the Commission order revoking AUD's license. We did so on the ground that AUD was an indispensable party and that AU should not have been allowed to proceed with its suit without naming AUD as a party. Id. at 210. We directed the trial court to dismiss AU's complaint. Id.

In December 2007, AU filed a new complaint, naming both the Commission and AUD as defendants, seeking virtually the same relief as in the earlier litigation except that AU did not request a declaration that AUD is precluded from using the word "American" in its title.*fn8 In December 2008, the trial court entered summary judgment in favor of AU. The court reasoned that AUD was in violation of section 29-618 because the "statute prohibits the use of... the word 'American' in the title of an institution[, and] AUD is a for-profit institution with the word 'American' in its title." The court ordered the Commission to revoke both AUD's license and the agent's license of Mr. Goldstein (who, having obtained the license months after AU filed its complaint, was not a party to the suit), within 30 days of the order. This appeal followed.

III. Analysis

We address the issues on appeal as follows. First, we conclude that AU's challenge to AUD's licensure is moot. Second, we hold - contrary to the District's argument - that AU's ability to obtain review of the Commission's licensure of AUD and Goldstein does not hinge on whether the Diploma Mill Act creates a private right of action. Third, we reject AUD's argument that the trial court should have dismissed AU's complaint under Super. Ct. Civ. R. 19 for failure to join necessary parties. Fourth, and finally, we hold that the Commission abused its discretion by granting a license to AUD's agent.

A. AU's Challenge to AUD's Licensure

Appellants argue that, even before the trial court issued its order, the dispute about AUD's licensure by the Commission was rendered moot by the 2008 Amendment Act, the legislation that clarified that an educational institution may be licensed to "operate" in the District only if it maintains a "facility" here, i.e., "a physical structure... including suitable housing, classrooms, laboratories, and library resources, as required by the nature of the program or the student body." D.C. Code §§ 38-1302 (11), (14) and 38-1309 (a)(2). Both the District and AUD take the position that the 2008 Amendment Act rendered AUD ineligible for licensing, since AUD "has no physical presence in the District of Columbia... [i.e.,] it has no facilities, no employees, leases no space and provides no educational services [within] the District of Columbia"; both acknowledge that AUD's license has expired; and AUD affirms that it is "no longer even qualified for a Degree Granting License as of August 16, 2008," the effective date of the 2008 Amendment Act. We accept the District's interpretation (which also is AUD's interpretation) that AUD is ineligible for licensure, inasmuch as the interpretation is a reasonable construction of the statutory language, contravenes nothing in the (scant) legislative history,*fn9 and represents the position of the Commission, the agency charged with implementing the relevant statutory provisions. See Nova Univ. v. Educational Inst. Licensure Comm'n, 483 A.2d 1172, 1190-91 (D.C. 1984) (applying, in evaluating Commission's position, principle that "when an agency's decision is based on an 'interpretation of the statute and regulations it administers, [that interpretation] will be sustained unless shown to be unreasonable or in contravention of the language or legislative history of the statute.'") (citation omitted). Although AU appears to be correct that the Commission rather abruptly changed its interpretation even prior to enactment of the 2008 Amendment Act, and even though an agency's changed interpretation of a statute may command less deference than a longstanding interpretation,*fn10 the amendments to Chapter 13 effected through the 2008 Amendment Act amply explain and justify the Commission's changed interpretation. Those amendments effectively nullified AUD's license. We conclude therefore that the 2008 legislation deprived the trial court of the ability to grant, and that this court has no power to sustain, the initial relief that AU sought - an order that the Commission revoke AUD's license.*fn11 Accordingly, we agree with appellants that the issue of AUD's licensure is moot. See Settlemire v. District of Columbia Office of Emp. Appeals, 898 A.2d 902, 905 (D.C. 2006) (explaining that an event that renders relief unnecessary renders a matter moot); Thorn v. Walker, 912 A.2d 1192, 1195 (D.C. 2006) ("[I]f... the appellate court can provide no effective relief, the case is moot.").*fn12 Consequently, we vacate that portion of the court's order requiring the Commission to revoke AUD's license. See U.S. Bancorp Mortg. Co. v. Bonner Mall P'ship, 513 U.S. 18, 21 (1994) (explaining that if a judgment has become moot while awaiting review, an appellate court may not consider its merits, but should reverse or vacate the judgment below and remand with a direction to dismiss.)

B. The Private Right of Action Argument

The District's principal argument is that AU cannot obtain review of the Commission's licensing decisions because the "Diploma Mill Act does not create a private right of action to enforce D.C. Code § 29-618." This argument fails for two reasons.

As a threshold matter, the District's "private right of action" argument is squarely foreclosed by our holding nearly fifteen years ago that "[j]udicial reviewability of agency action does not depend on the creation of a private right of action in the statute sought to be enforced." District of Columbia v. Sierra Club,670 A.2d 354, 359 (D.C. 1996) (citing Japan Whaling Ass'n v. American Cetacean Soc'y, 478 U.S. 221, 230-31 n.4 (1986)). As then-Judge Breyer explained in a case involving the federal Administrative Procedures Act, "it is difficult to understand why a court would ever hold that Congress, in enacting a statute that creates federal obligations, has implicitly created a private right of action against the federal government, for there is hardly ever any need for Congress to do so. That is because federal action is nearly always reviewable for conformity with statutory obligations without any such 'private right of action.'" NAACP v. Secretary of Hous. & Urban Dev., 817 F.2d 149, 152 (1st Cir. 1987) (quoted in Sierra Club, 670 A.2d at 359).

What is true of suits against federal agencies for alleged violations of federal duties is true of suits against District agencies for alleged violations of duties imposed by District law. Thus, in Sierra Club, we held that Sierra Club, an environmental organization, had a right to judicial review of its allegation that the District suspended its recycling program in violation of District law; following NAACP (and other cases), we emphatically rejected the District's contention that a private right of action analysis had any bearing on the question whether the District's actions were reviewable by a private party that was aggrieved by those actions. Sierra Club, 670 A.2d at 356, 357-61. Similarly in this case, AU's complaint involves a routine challenge to agency action. Thus, AU's ability to obtain review of the Commission's actions does not depend on the existence of a private right of action.

The District's claim that § 29-618 - the Diploma Mill Act provision that bars educational institutions from using the word "American" in their titles - does not create privately enforceable rights also overlooks the fact that AU is not suing anybody for violating § 29-618. Rather, AU is suing the Commission for violating the ELC Act by granting a license to AUD and to Goldstein. True, AU's theory for why the Commission abused its discretion under the ELC Act is that the Commission could not issue a license to AUD so long as the latter was in violation of § 29-618. But AU does not allege (how could it?) that the ...


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