Mass. Ass'n of Private Career Sch. v. Healey

159 F.Supp.3d 173

Massachusetts Association of Private Career Schools, Plaintiff,

v.Maura Healey, in her official capacity as the Massachusetts Attorney General, Defendant.

Civil Action No. 14-13706-FDS

United States District Court, D. Massachusetts.

Signed January 25, 2016

Adam S. Gershenson, Robert B. Lovett, Cooley LLP, Boston, MA, for Plaintiff.

Bryan F. Bertram, Office of Attorney General Martha Coakley, Boston, MA, for Defendant.

MEMORANDUM AND ORDER ON CROSS-MOTIONS FOR SUMMARY JUDGMENT

SAYLOR, District Judge

This is an action challenging regulations promulgated by the Massachusetts Attorney General concerning for-profit schools. Plaintiff Massachusetts Association of Private Career Schools (“MAPCS”) has brought suit against defendant Maura Healey, in her official capacity as the Massachusetts Attorney General, challenging nine recently adopted regulations that are generally intended to prevent unfair practices in the recruiting and enrollment of students at for-profit schools. The amended complaint alleges claims for violation of the First Amendment, violation of the Due Process Clause of the Fourteenth Amendment, and federal preemption.

The allegations of the amended complaint fall into three separate groups. First, the complaint alleges that seven of the regulations facially violate the First Amendment because they impose content-based restrictions that target disfavored speech from disfavored speakers. Second, it alleges that two other regulations are unconstitutionally vague and therefore fail to provide fair notice in violation of the Due Process Clause and chill free speech in violation of the First Amendment. Finally, it alleges that one of the regulations (which it also challenges on First Amendment grounds) is preempted by federal laws regulating telemarketing. MAPCS seeks an order from the Court vacating the regulations and enjoining the Attorney General from implementing or taking enforcement action pursuant to them.

The parties have filed cross-motions for summary judgment. For the following reasons, both motions will be granted in part and denied in part.

I. Background

A. Factual Background

1. MAPCS

MAPCS is a non-profit membership organization of more than forty for-profit and occupational schools. (Pl. SMF ¶¶ 1-2). Its stated goal is to help member schools provide professional training for Massachusetts students who are eager to advance their careers. (Id. ). MAPCS member institutions provide training in a variety of areas, including allied medical, automotive servicing, broadcasting, construction, cosmetology, culinary management, photography, and web design. (Id. at Ex. 15).

2. Regulatory Framework

Chapter 93A prohibits “[u]nfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce.” Mass. Gen. Laws ch. 93A, § 2(a). Conduct is unfair or deceptive under Chapter 93A if it falls “within any recognized or established common law or statutory concept of unfairness.” VMark Software v. EMC Corp. , 37 Mass.App.Ct. 610, 620, 642 N.E.2d 587 (1994) ; see also Cummings v. HPG Int'l Inc. , 244 F.3d 16, 25 (1st Cir.2001) (“Conduct is unfair or deceptive if it is ‘within at least the penumbra of some common-law, statutory, or other established concept of unfairness' or ‘immoral, unethical, oppressive, or unscrupulous.’ ” (quoting PMP Assocs. , Inc. v. Globe Newspaper Co. , 366 Mass. 593, 596, 321 N.E.2d 915 (1975) )). Under Chapter 93A, the Attorney General has the authority to “make rules and regulations interpreting the provisions of subsection 2(a).” Mass. Gen. Laws ch. 93A, § 2(c).

Pursuant to that authority, former Attorney General Martha Coakley published draft regulations on November 20, 2013, that modified existing regulations concerning for-profit schools. See 940 Mass. Code Regs. § 3.10 (1978) (since superseded). The stated purpose of the existing regulations was to:

[P]rotect Massachusetts consumers seeking to enroll in any course of instruction or educational service offered by certain private business, vocational, and career schools, and to ensure that the private career school industry was operating fairly and honestly by means of legitimate and responsible business acts and practices that [were] neither unfair nor deceptive.

Id. The Attorney General sought to “update[ ] and amend[ ] the 1978 regulations” in order to “address problems experienced by consumers when they seek or are enrolled in for-profit schools or occupational programs.” 940 Mass. Code Regs. § 31.01 (2014). Among those problems, according to the regulations, are “widespread acts and practices in the for-profit and occupational school industry [that] continue to unfairly harm consumers.” Id.

The Attorney General received extensive written comments and evidence in response to the draft regulations. (Def. SMF ¶ 7). In addition, she heard testimony from for-profit schools, current and former students of for-profit schools, trade groups, and consumer organizations during two public hearings in January 2014. (Id. at ¶¶ 6, 8).

After amending the draft regulations in response to public comment, the Attorney General published the regulations, effective June 20, 2014.

3. The Challenged Regulations

MAPCS challenges nine of the regulations for a variety of reasons. The nine regulations are the following:

• Deceptive Language in General : 940 Mass. Code Regs. § 31.04(2) :

It is an unfair or deceptive act or practice for a school to use language or make a claim or representation in any form, including but not limited to spoken, electronic, or printed form, which has the tendency or capacity to mislead or deceive students, prospective students, or any other person.

• Time to Complete Program : 940 Mass. Code Regs. § 31.04(9) :

It is an unfair or deceptive act or practice for a school to misrepresent the amount of time it takes to finish a program, including a representation that a program can be completed “in weeks” or similar language suggesting that the length of time to complete the program is shorter than the actual median completion time to obtain a certificate, diploma, or degree.

• Failure to Disclose Facts : 940 Mass. Code Regs. § 31.05(1) :

It is an unfair or deceptive act or practice for a school to conceal or fail to disclose to a prospective student any fact relating to the school or program, disclosure of which is likely to influence the prospective student not to enter into the transaction with the school.

• Graduation-Rate Disclosure : 940 Mass. Code Regs. § 31.05(2)(b) :

It is an unfair or deceptive act or practice to fail to make the following disclosure to consumers and prospective students, clearly and conspicuously, at least 72 hours prior to entering into an enrollment agreement with a consumer or prospective student:

....

(b) Graduation. [Graduation rate¹ ] of students graduated from the program during [the last two calendar years for which data are available].

• Consequences of Loan Default : 940 Mass. Code Regs. § 31.05(3) :

For any school that accepts federal Title IV funds, or that provides institutional loans, it is an unfair or deceptive act or practice for a school to fail to make the following disclosure to consumers and prospective students, clearly and conspicuously, at least 72 hours prior to entering into an enrollment agreement with such consumer or prospective student:

(a) Your Loan Debt. You must repay money that you borrow as student loans to pay for this program, including interest. You must repay any portion of the money you borrow to pay for this program, even if you fail to complete or drop out of the program. Failure to repay student loans is likely to have a serious negative effect on your credit, future earnings, and your ability to obtain future student loans.

(b) Loan Nonpayment Statistics. [loan nonpayment percentage] of [school name] students defaulted on, or failed to repay, their loans during the period [years covered in corresponding federal cohort default rate used to calculate loan nonpayment rate].

• Total Placement-Rate Calculus : 940 Mass. Code Regs. § 31.05(4)(b)(1) :

For any occupational program that: ... (b) refers in advertising, recruiting or promotional materials to statements to employment prospects or job placement, it is an unfair or deceptive act or practice for a school to fail to make the following disclosure to consumers and prospective students, clearly and conspicuously, at least 72 hours prior to entering into an enrollment agreement with such consumer or prospective student:

(1) Placement Rates. [Graduation placement rate² ] of graduates during [latest two calendar years] obtained full-time, non-temporary jobs in the field of study. [Total placement rate³ ] of students that enrolled in the program during [latest two calendar years] obtained full-time, non-temporary jobs in their field of study.

• Credit Transfer : 940 Mass. Code Regs. § 31.05(7) :

It is an unfair or deceptive act or practice for a school to represent to a student or prospective student or to any other person that its credits are or may be transferable to another educational institution without:

(a) identifying the school(s) with which it has written agreements or other documentation verifying that credits can be transferred to said school(s); and

(b) indicating it is aware of no other schools that accept the transfer of its credits.

• Enrolling Unqualified Students : 940 Mass. Code Regs. § 31.06(6) :

It is an unfair or deceptive act or practice for a school to enroll or induce retention of a student in any program when the school knows, or should know, that due to the student's educational level, training, experience, physical condition, lack of language proficiency, or other material qualification, the student will not or is unlikely to:

(a) graduate from the program; or

(b) meet the requirements for employment in the occupation to which the program is represented to lead. If a student has a disability, the determination shall be made based on the student's ability to graduate

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