United States District Court, District of Columbia
BERMAN JACKSON UNITED STATES DISTRICT JUDGE.
William Loveland College (“WLC” or “the
College”) has brought this lawsuit against defendant
Distance Education Accrediting Commission (“DEAC,
” “the agency, ” or “the
Commission”). DEAC is authorized by the United States
Department of Education to accredit institutions that offer
distance or online post-secondary degree programs. The
College received accreditation from DEAC in 2001 to offer
online education to students.
February 2017, DEAC issued a Show Cause Directive informing
the College that it had concerns about the institution's
ability to comply with DEAC's accreditation standards and
policies, and ordering it to show cause why its accreditation
should not be withdrawn. WLC's accreditation remained in
effect in the interim, but it was directed to take corrective
action in order to vacate the order, and it was required to
file a new application for accreditation within thirty days.
College then brought this lawsuit in federal court alleging
five causes of action: denial of due process (Count I);
breach of contract (Count II); defamation (Count III);
tortious interference with prospective business or economic
advantage (Count IV); and negligence (Count V). See
Compl. ¶¶ 18-50. Because the College did not
attempt to invoke the procedures or address any of the
concerns outlined in the Show Cause Directive, its
accreditation eventually lapsed.
before the Court is DEAC's motion to dismiss.
See Notice of DEAC's Mot. to Dismiss [Dkt. #
25-1] (“Def.'s Mot.”); DEAC's Mem. of Law
in Supp. of Def.'s Mot. [Dkt. # 25-2] (“Def.'s
Mem.”). Because the College failed to exhaust its
administrative remedies before bringing the due process
claim, and because none of the state law counts states a
claim upon which relief can be granted, the Court will grant
is a not-for-profit degree-granting institution located in
Loveland, Colorado, Compl. ¶¶ 1, 9. The
College's original mission was to provide training in the
emerging field of traffic management, but in 1996, it
transitioned “to a distance based education model to
leverage emerging technological opportunities” in
education markets. Id. ¶ 9. Distance education
or distance-based education is also commonly referred to as
online education. See Id. ¶ 10.
is a private, not-for-profit organization that operates as an
institutional accreditor of distance education institutions.
Compl. ¶ 10; see Distance Educ. Accrediting
Comm'n, http://www.deac.org (last visited Sept. 5, 2018).
It was first recognized by the United States Department of
Education in 1959, and it continues to be an accreditor of
“postsecondary institutions in the United States that
offer degree and/or non-degree programs primarily by the
distance or correspondence education method up to and
including the professional doctoral degree.” Compl.
¶ 14; Accreditation in the United States, U.S.
Dep't of Educ., https://www2.ed.
gov/admins/finaid/accred/accreditation-pg6.html (last visited
Sept. 26, 2018).
must comply with the Higher Education Act
(“HEA”), 20 U.S.C. § 1001 et seq.,
the statute governing accrediting agencies, as well as
Department of Education regulations. This framework requires
each accrediting agency to maintain and make available to the
public: written materials describing the accreditation
process; the procedures institutions must follow to apply;
the standards used to make accreditation decisions; the
institutions and programs the agency currently accredits; and
information about members of the agency's decision-making
bodies and principal administrative staff. 20 U.S.C. §
1099b; 34 C.F.R. § 602.23(a). The agency must afford
certain due process protections to each educational
institution it accredits, which include, among other things,
providing written statements of agency requirements and
standards, written notice of any “adverse accrediting
action or action to place the institution or program on
probation or show cause, ” and an opportunity to appeal
any adverse action prior to the action becoming final. 20
U.S.C. § 1099b(a)(6); 34 C.F.R. § 602.25. The
accrediting agency must also have procedures in place for
providing written notice about certain accrediting decisions
to the public, the Secretary of Education, and the
appropriate State licensing or authorizing agency. 20 U.S.C.
§ 1099b(a)(7)- (8); 34 C.F.R. § 602.26.
accredited by DEAC, an institution has the burden of proving
that it is in compliance with all of the standards set out in
the agency's accreditation handbook. See Compl.
¶ 19; Decl. of Joshua N. Ruby in Supp. of DEAC's
Mot., Ex. C to Def.'s Mot. [Dkt. # 25-3] (“Ruby
Decl.”); DEAC Accreditation Handbook, Ex. 1 to Ruby
Decl. [Dkt. # 25-3] (“Handbook”). The Handbook is a
manual published by DEAC that sets forth the requirements of
accreditation, and member schools agree to be bound by those
standards if they receive accreditation. Compl. ¶¶
application process includes a self-evaluation by the
applicant, a curricular review by DEAC-engaged subject matter
specialists with an opportunity for the institution to
respond, and an on-site evaluation of the institution's
compliance with DEAC accreditation standards. Handbook at
12-20. Following the on-site evaluation, the Chair of the
on-site team prepares a report, and the institution has
thirty-days to submit a response. Id. at 19.
Commission usually meets twice a year, in January and June,
to review applications for initial accreditation or renewal
of accreditation. Handbook at 20. After reviewing all
submitted materials, the Commission may take one of four
courses of action: (1) accredit a new applicant institution
for up to three years, or continue an institution's
accredited status for up to five years; (2) defer a decision
pending receipt of a Progress Report, submission of
additional information, and/or the results of a
follow-up-on-site evaluation; (3) direct the institution to
Show Cause as to why its accreditation should not be
withdrawn; or (4) deny accreditation to an applicant or
withdraw accreditation from an accredited institution.
Id. at 20-23.
particular relevance to this case are the steps DEAC and the
institution must take if the Commission decides to issue a
Show Cause Directive to an institution. “In cases where
the Commission has reason to believe that an institution is
not in compliance with accreditation standards and other
requirements, the Commission may direct the institution to
Show Cause as to why its accreditation should not be
withdrawn.” Handbook at 21. An institution must receive
written notice of a Show Cause Directive, and the notice
must: (1) state the reasons why the directive was issued; (2)
identify the standards or accreditation requirements for
which compliance is a concern; (3) recite the reasons for and
the evidence supporting the claim that the institution may
not be in compliance with accreditation requirements; and (4)
advise the institution of its obligations under the directive
and of the deadline for its response. Id. at 22.
institution receives a Show Cause Directive, it is
“required to demonstrate corrective action and
compliance with accrediting standards or procedures.”
Handbook at 21. The “burden of proof rests with the
institution to demonstrate that it is meeting DEAC's
accreditation standards.” Id. Once the time
for an institution to respond or comply with the requirements
in the directive has expired, the Commission may do one of
four things: (1) vacate the Show Cause Directive if the
response demonstrates that removal of the order is warranted
or that the institution is in compliance with the cited
accreditation standards and requirements; (2) continue the
Show Cause Directive, pending the receipt of additional
information or further institutional reports; (3) order a
special visit to the institution; or (4) withdraw the
institution's accreditation, an action “that would
be subject to an appeal by the institution.”
Id. at 22. The Commission must notify the
institution of its decision within thirty days, and in all
cases, the Commission must “allow the institution
sufficient time to respond to any findings before making any
final decision regarding the institution's accredited
status.” Id. at 23.
Commission decides to deny or withdraw accreditation, the
institution has the right to appeal that decision by
submitting an Application for Appeal to the Executive
Director of the Commission. Handbook at 23-24. The
institution must appeal within ten days of receipt of the
letter advising it of the denial or withdrawal of
accreditation, or the right to appeal will be deemed waived
and the “Commission's action [will] become
final.” Id. The institutional appeal “is
heard by an independent appeals panel that is separate from
the Commission and serves as an additional level of due
process for the institution.” Id. at 24. The
panel may affirm, remand, amend, or reverse the
Commission's decision. Id. at 25-26.
being notified that its appeal did not change an adverse
Commission decision, an institution has five business days to
request arbitration, during which no public notification of
the Commission action will be made.” Handbook at 27. If
the institution's arbitration proceeding is unsuccessful,
and the accreditation decision becomes final, the institution
may file suit in the District Court for the District of
Columbia. Id. at 150 (“An institution which
seeks to overturn an adverse arbitration decision, or to file
suit against the Corporation for any other reason, must bring
the suit in the Federal District Court for the District of
Columbia.”); see also Id. at 20 (noting that a
decision becomes final only after the time for requesting an
appeal has expired or the appeal itself is denied).
WLC's Application to Renew Accreditation
received its first accreditation from DEAC in
2001. Compl. ¶ 9. In the later proceedings
relevant to this matter, the College filed an application to
renew its accreditation,  see Pl.'s Opp. at 1, and
DEAC began the process associated with reviewing the
application pursuant to the Handbook's procedures.
alleges that in September 2016,  a team of individuals
conducted an on-site review of the College. Compl. ¶ 21.
Then, at its meeting in January 2017, DEAC determined that
the College did not meet its accreditation criteria. Show
Cause Directive at 1. As a result, DEAC issued a Show Cause
Directive in a letter dated February 27, 2017, asking the
College to “show cause why its accreditation should not
be withdrawn.” Id.; Compl. ¶ 27.
letter informed the College that the Show Cause Directive was
“not an adverse action but a statement of concern . . .
about the institution's ability to document compliance
with DEAC's accreditation standards and policies.”
Show Cause Directive at 1. It expressly stated that the
“[a]ccreditation for WLC remain[ed] in effect during
the period of Show Cause, ” id., and it
outlined the corrective action the College needed to take
within a twelve-month period in order to vacate the order.
Show Cause Directive at 1-12; see also Handbook at
21-23. According to the order, WLC was required to submit a
new application for accreditation by March 27, 2017, and the
College was informed that the Commission's staff would
then set up a Fall 2017 visit. Show Cause Directive at 2.
DEAC announced the issuance of the Show Cause Directive on
its website within twenty-four hours of giving notice to the
College. See Compl. ¶ 19 (alleging
that the show cause letter was published); Ex M. to Compl.
[Dkt. # 2-14] (screenshot of website listing William Loveland
College as an institution that had received a show cause
directive); see also Def.'s Mem. at 3; Pl.'s
Opp. at 2.
responded to the Show Cause Directive via email on March 9,
2017, and it disagreed with many of the concerns the
Commission had identified. Compl. ¶ 40; Ex. N to Compl.
[Dkt. # 2-15] (“Email Exchange”). The College
undertook to provide a “clear and accurate timeline of
what actually transpired” in its past in the hope that
DEAC would withdraw the Show Cause Directive and grant
reaccreditation. See Compl. ¶ 40; Email
Exchange. It also requested a response from the DEAC by March
17, 2017 so that it would have enough time to file the
reaccreditation paperwork by March 27, 2017. See
Email Exchange. On March 17, 2017, the Executive Director of
DEAC, Leah Matthews, responded to the College's email and
explained that the Show Cause Directive was not based on
previously approved changes that had taken place throughout
the College's history. See Id. She reiterated
that the Commission “found that the institution did not
meet accreditation standards, ” and that WLC's new
application was due on March 27, 2017. Id.
March 19, 2017, WLC emailed DEAC and accused the agency, and
Matthews specifically, of making false statements in the Show
Cause Directive. See Compl. ¶ 40; Email
Exchange. Matthews responded by email a few days later,
stating that the College had made “a very, very serious
accusation.” See Compl. ¶ 40; Email
Exchange. She informed WLC that for that reason, she had been
recused from the matter, and DEAC's legal counsel and
members of the Executive Committee would contact the
institution. See Compl. ¶ 40; Email Exchange.
The College expressed frustration with Matthews' recusal,
complaining that it had “exhausted almost every avenue
giving [DEAC] all of the accurate data, ” and that it
needed DEAC's continued cooperation so that it could meet
the March 27, 2017 renewal application deadline. See
the complaint provides no additional facts, WLC states in its
brief that at that point, it “decided not to continue
with the process, ” and that it filed this lawsuit
instead. Pl.'s Opp. at 2; see also Def.'s
Mem. at 5 (“Instead, without responding to the Show
Cause Directive and without availing itself of its procedural
rights under the Handbook, WLC filed this lawsuit . . .
complaint includes five causes of action:
• Count 1 - Denial of Due Process and Failure to Apply
• Count 2 - Breach of Contract
• Count 3 - Defamation
• Count 4 - Tortious Interference with Prospective
Business or Economic Advantage
• Count 5 - Negligence (in alternative to Breach of
alleges that by issuing a public Show Cause Directive to the
College, DEAC violated federal laws and regulations, as well
as its own protocols, because the “standard practice is
to defer any negative findings” until another team
visits the school. Compl. ¶ 19. According to the
College, DEAC violated the school's right to due process
when it “skipped these steps[, ] . . . [and] did not
provide the College with any time to address the myriad of
alleged defects [it] claimed to find.” Id.
II alleges that after WLC applied and received accreditation
and continued to pay annual dues to DEAC, the parties
“agreed to be bound by DEAC's Standards of
Accreditation as set forth in its handbook, as a formal
contract.” Compl. ¶¶ 33-35. According to the
College, “DEAC materially breached the contract by . .
. refusing to apply its standards of accreditation to the
school in a fair and impartial manner, ” and by issuing
the Show Cause Directive, “which was based upon
unverified false data and was replete with defamatory
falsehoods.” Id. ¶ 37.
College also brings a defamation claim in Count III, alleging
that the Show Cause Directive was “false and
defamatory, ” and that the publication of the directive
caused the College to “incur damages to its
reputation” as well as a loss of good will and other
monetary damages. Compl. ¶¶ 46-47.
IV alleges that DEAC willfully and intentionally interfered
with the College's business by issuing, and making
public, the Show Cause Directive. Compl. ¶¶ 49-50.
The College claims that “DEAC knew, or should have
known, that by issuing its fraudulent public Show Cause
Letter, it would materially impact the current and future
prospects of the College by inhibiting student enrollment,
revenue collection, staff recruitment, and donations.”
Id. ¶ 49.
as an alternative to the breach of contract claim, Count V
alleges negligence. Compl. ¶¶ 52-56. According to
the complaint, DEAC had “a legal duty to fairly and
properly consider the College's application for
reaccreditation, ” and it “breached its
duties” when it “relied on the phony, fraudulent
and defamatory fact finding” of its site-visiting team,
and then published the Show Cause Directive. Id.
prayer for relief, the College asked for a “preliminary
injunction” against DEAC requiring it to rescind the
Show Cause Directive and/or remove it from its website,
and it requested a permanent injunction requiring DEAC to
follow all of the procedures set forth in its Handbook.
Compl. at 26-27 (demand for relief). In addition, plaintiff
asks the Court to award it compensatory, consequential, and
punitive damages. Id.
survive a [Rule 12(b)(6)] motion to dismiss, a complaint must
contain sufficient factual matter, accepted as true, to state
a claim to relief that is plausible on its face.”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009), quoting
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570
(2007). In Iqbal, the Supreme Court reiterated the
two principles underlying its decision in Twombly:
“First, the tenet that a court must accept as true all
of the allegations contained in a complaint is inapplicable
to legal conclusions.” Iqbal, 556 U.S. at 678.
And “[s]econd, only a complaint that states a plausible
claim for relief survives a motion to dismiss.”
Id. at 679, citing Twombly, 550 U.S. at
is facially plausible when the pleaded factual content
“allows the court to draw the reasonable inference that
the defendant is liable for the misconduct alleged.”
Iqbal, 556 U.S. at 678. “The plausibility
standard is not akin to a ‘probability
requirement,' but it asks for more than a sheer
possibility that a defendant has acted unlawfully.”
Id. A pleading must offer more than “labels
and conclusions” or a “formulaic recitation of
the elements of a cause of action, ” id.,
quoting Twombly, 550 ...