Professional Massage Training Center, Inc. v. Accreditation Alliance of Career Schools & Colleges

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 14-1086
PROFESSIONAL MASSAGE TRAINING CENTER, INCORPORATED, a
Missouri Corporation,
Plaintiff - Appellee,
v.
ACCREDITATION ALLIANCE OF CAREER SCHOOLS AND COLLEGES, d/b/a
Accrediting Commission of Career Schools and Colleges, a
Virginia Corporation,
Defendant - Appellant.
------------------------
ACCREDITATION REVIEW COMMISSION ON EDUCATION FOR THE
PHYSICIAN ASSISTANT; ACCREDITATION COMMISSION FOR
ACUPUNCTURE AND ORIENTAL MEDICINE; ACCREDITATION COUNCIL FOR
PHARMACY EDUCATION; ACCREDITING BUREAU OF HEALTH EDUCATION
SCHOOLS, INCORPORATED; ACCREDITING COMMISSION FOR COMMUNITY
AND JUNIOR COLLEGES, WESTERN ASSOCIATION OF SCHOOLS AND
COLLEGES; ACCREDITING COUNCIL FOR CONTINUING EDUCATION &
TRAINING; ACCREDITING COUNCIL FOR INDEPENDENT SCHOOLS AND
COLLEGES; AMERICAN COUNCIL ON EDUCATION; ASSOCIATION OF
SPECIALIZED AND PROFESSIONAL ACCREDITORS; ASSOCIATION OF
TECHNOLOGY, MANAGEMENT, AND APPLIED ENGINEERING; COMMISSION
ON INSTITUTIONS OF HIGHER EDUCATION OF THE NEW ENGLAND
ASSOCIATION OF SCHOOLS AND COLLEGES; COUNCIL FOR
ACCREDITATION OF COUNSELING AND RELATED EDUCATIONAL
PROGRAMS; COUNCIL FOR HIGHER EDUCATION ACCREDITATION;
COUNCIL FOR PODIATRIC MEDICATION EDUCATION; COUNCIL ON
EDUCATION FOR PUBLIC HEALTH; COUNCIL ON OCCUPATIONAL
EDUCATION; DISTANCE EDUCATION AND TRAINING COUNCIL; MIDDLE
STATES COMMISSION ON HIGHER EDUCATION, THE; NATIONAL
ARCHITECTURAL ACCREDITING BOARD; SOUTHERN ASSOCIATION OF
COLLEGES AND SCHOOLS COMMISSION ON COLLEGES; WESTERN
ASSOCIATION OF SCHOOLS AND COLLEGES SENIOR COLLEGE
COMMISSION; HIGHER LEARNING COMMISSION,
Amici Supporting Appellant,
AMERICAN COUNCIL OF TRUSTEES AND ALUMNI; THE JOHN WILLIAM
POPE CENTER FOR HIGHER EDUCATION POLICY; JUDICIAL EDUCATION
PROJECT,
Amici Supporting Appellee.
No. 14-1136
PROFESSIONAL MASSAGE TRAINING CENTER, INCORPORATED, a
Missouri Corporation,
Plaintiff - Appellant,
v.
ACCREDITATION ALLIANCE OF CAREER SCHOOLS AND COLLEGES, d/b/a
Accrediting Commission of Career Schools and Colleges, a
Virginia Corporation,
Defendant - Appellee.
------------------------
ASSOCIATION OF SPECIALIZED AND PROFESSIONAL ACCREDITORS;
ACCREDITING BUREAU OF HEALTH EDUCATION SCHOOLS,
INCORPORATED; ACCREDITING COUNCIL FOR CONTINUING EDUCATION &
TRAINING; ACCREDITING COUNCIL FOR INDEPENDENT SCHOOLS AND
COLLEGES; COUNCIL ON OCCUPATIONAL EDUCATION; DISTANCE
EDUCATION AND TRAINING COUNCIL; COUNCIL FOR HIGHER EDUCATION
ACCREDITATION; ACCREDITING COMMISSION FOR COMMUNITY AND
JUNIOR COLLEGES, WESTERN ASSOCIATION OF SCHOOLS AND
COLLEGES; ACCREDITATION COUNCIL FOR PHARMACY EDUCATION;
ASSOCIATION OF TECHNOLOGY, MANAGEMENT, AND APPLIED
ENGINEERING; COUNCIL ON EDUCATION FOR PUBLIC HEALTH; COUNCIL
FOR PODIATRIC MEDICATION EDUCATION; MIDDLE STATES COMMISSION
ON HIGHER EDUCATION, THE; NATIONAL ARCHITECTURAL ACCREDITING
BOARD; COMMISSION ON INSTITUTIONS OF HIGHER EDUCATION OF THE
NEW ENGLAND ASSOCIATION OF SCHOOLS AND COLLEGES; SOUTHERN
ASSOCIATION OF COLLEGES AND SCHOOLS COMMISSION ON COLLEGES;
2
AMERICAN COUNCIL ON EDUCATION; ACCREDITATION REVIEW
COMMISSION ON EDUCATION FOR THE PHYSICIAN ASSISTANT; COUNCIL
FOR ACCREDITATION OF COUNSELING AND RELATED EDUCATIONAL
PROGRAMS; WESTERN ASSOCIATION OF SCHOOLS AND COLLEGES SENIOR
COLLEGE COMMISSION; ACCREDITATION COMMISSION FOR ACUPUNCTURE
AND ORIENTAL MEDICINE,
Amici Supporting Appellee,
AMERICAN COUNCIL OF TRUSTEES AND ALUMNI; THE JOHN WILLIAM
POPE CENTER FOR HIGHER EDUCATION POLICY; JUDICIAL EDUCATION
PROJECT,
Amici Supporting Appellant.
Appeals from the United States District Court for the Eastern
District of Virginia, at Alexandria. Liam O'Grady, District
Judge. (1:12-cv-00911-LO-IDD)
Argued: January 28, 2015 Decided: March 24, 2015
Before WILKINSON, AGEE, and HARRIS, Circuit Judges.
Affirmed in part, reversed in part, and remanded with
instructions by published opinion. Judge Wilkinson wrote the
opinion, in which Judge Agee and Judge Harris joined.
ARGUED: Craig C. Martin, Michael Anthony Scodro, JENNER & BLOCK,
LLP, Chicago, Illinois, for Appellant/Cross-Appellee. Matthew
Lorn Hoppock, DUNN & DAVISON LLC, Kansas City, Missouri, for
Appellee/Cross-Appellant. ON BRIEF: Sarah A. Palmer, JENNER &
BLOCK, LLP, Chicago, Illinois, for Appellant/Cross-Appellee.
Ronald L. Holt, Julie G. Gibson, DUNN & DAVISON LLC, Kansas
City, Missouri, for Appellee/Cross-Appellant. Mary E. Kohart,
Dean R. Phillips, Gregory S. Voshell, Michelle L. Modery,
ELLIOTT GREENLEAF & SIEDZIKOWSKI, P.C., Blue Bell, Pennsylvania;
Kenneth J. Ingram, Thomas Mugavero, WHITEFORD TAYLOR PRESTON,
LLP, Washington, D.C.; Ada Meloy, AMERICAN COUNCIL ON EDUCATION,
Washington, D.C., for Amici Accreditation Review Commission on
Education for the Physician Assistant, Accreditation Commission
for Acupuncture and Oriental Medicine, Accreditation Council for
3
Pharmacy Education, Accrediting Bureau of Health Education
Schools, Incorporated, Accrediting Commission for Community and
Junior Colleges-Western Association of Schools and Colleges,
Accrediting Council for Continuing Education & Training,
Accrediting Council for Independent Schools and Colleges,
American Council on Education, Association of Specialized and
Professional Accreditors, Association of Technology, Management,
and Applied Engineering, Commission on Institutions of Higher
Education of the New England Association of Schools and
Colleges, Council for Accreditation of Counseling and Related
Educational Programs, Council for Higher Education
Accreditation, Council for Podiatric Medication Education,
Council on Education for Public Health, Council on Occupational
Education, Distance Education and Training Council, Higher
Learning Commission, The Middle States Commission on Higher
Education, National Architectural Accrediting Board, Southern
Association of Colleges and Schools Commission on Colleges, and
Western Association of Schools and Colleges Senior College
Commission. Shannen W. Coffin, Jeffrey M. Theodore, STEPTOE &
JOHNSON LLP, Washington, D.C., for Amici American Council of
Trustees and Alumni, Judicial Education Project, and The John
William Pope Center for Higher Education Policy.
4
WILKINSON, Circuit Judge:
The Professional Massage Training Center (PMTC) brought
this suit against the Accreditation Alliance of Career Schools
and Colleges (ACCSC or the Commission) for violation of its due
process rights after ACCSC denied the school’s application for
re-accreditation in 2010. Following a four-day bench trial, the
district court awarded PMTC more than $400,000 in damages and
reinstated the school’s accreditation.
The proper standard of review of actions by private
accrediting agencies considers only whether the accreditation
decision was supported by substantial evidence or otherwise
arbitrary and capricious. What the district court conducted here
amounted to a de novo approach to the accreditation process that
resulted in a wholesale substitution of the judgment of the
court for that of the agency. Judged by the correct standard of
review, the accreditation decision here was well supported, not
arbitrary or capricious, and we thus reverse the judgment of the
district court in that regard. We affirm, however, its dismissal
of PMTC’s state law claims for breach of contract, negligence,
and tortious interference. We remand to the district court with
directions to enter judgment in favor of ACCSC on PMTC’s due
process claim and to dismiss the case.
5
I.
ACCSC is a non-profit, non-stock corporation established in
Virginia that accredits private schools of higher education
offering career-oriented programs. It is recognized by the
Secretary of Education as an accrediting agency, see 20 U.S.C.
§ 1099b, and it accredits nearly 750 institutions nationwide.
Accreditation, among other things, entitles educational
institutions to access Title IV federal student aid funding. See
20 U.S.C. §§ 1070 et seq. PMTC is a single-discipline massage
therapy training school in Springfield, MO. It has been owned
and operated by Juliet Mee since 1994. ACCSC first accredited
the school in 2000 and renewed its accreditation in 2005. The
case at bar arose from PMTC’s application for renewal of
accreditation in 2010.
ACCSC has set Standards of Accreditation that define both
the process for schools to seek or renew accreditation as well
as the substantive criteria schools must meet to be accredited.
See J.A. 4729-4858. ACCSC’s accreditation process begins when a
school sends a full-time on-site management representative to an
informational accreditation workshop, id. at 4747, which PMTC
did in December of 2009, id. at 1448. The school then submits an
application and a self-evaluation report. Id. at 4747-48. The
application is followed by an on-site evaluation, led by a team
6
from ACCSC, which then provides to the school a Team Summary
Report.
The Team Summary Report is a factual report and summary of
the team’s compliance findings, and does not include any final
recommendation for the Commission’s action on accreditation. Id.
at 4752. A team from ACCSC visited PMTC on August 9-10, 2010.
The team was led by Michael Ackerman, the Director of ATI
Enterprises, which operates for-profit career schools. Id. at
1455. The team also included other education and massage therapy
professionals and ACCSC staffers Courtney Kiesel Moraites and
Lisa Miles. Moraites, supervised by Miles, wrote the subsequent
Team Summary Report issued on September 23, 2010. Id. The report
detailed a number of areas of concern, including problems with
management capability and retention of administrative staff,
failures in strategic planning, lack of ongoing faculty
assessment and professional development, failure to demonstrate
adequate student achievement and employment rates, failure to
comply with federal financial requirements, as well as
deficiencies in the learning resource system and processes for
verification of faculty credentials. See id. at 1460-64.
Pursuant to the ACCSC Standards, PMTC had 30 days to submit
additional material in response to the report. It did so
following a brief deadline extension, at which point the entire
record was reviewed by a preliminary school action panel of
7
three Commissioners, and then by the full Commission. See id. at
435-37. Within ACCSC, the Commission is composed of four public
Commissioners and nine private Commissioners. Id. at 4848.
Public Commissioners are those “[p]ersons with an interest and
expertise in employment, education and training” who are not
connected to an institution accredited by ACCSC. Id. Private, or
School, Commissioners are “[p]roprietors or bona fide
executives” of institutions accredited by ACCSC. Id. In December
2010, the Commission issued a Probation Order listing eleven
areas in which PMTC had failed to establish compliance, and gave
PMTC until March 2011 to respond and demonstrate improvements in
areas of concern. Id. at 1781-91. PMTC submitted a response
including documentation in March of 2011, seven days after the
March 8 deadline. Id. at 1792-1867.
In June 2011, the Commission notified PMTC that it had
vacated the Probation Order, “defer[ing] final action on the
school’s Application for Renewal of Accreditation until the
November 2011 meeting in order to provide PMTC with an
additional opportunity to demonstrate compliance.” Id. at 1868.
ACCSC conducted a second on-site visit to focus on PMTC’s
Institutional Assessment and Improvement Plan (IAIP),
specifically with regard to management issues, the learning
resource system, faculty qualification verification, and
financial stability. See id. at 1868-73.
8
The second on-site team was led by Mollie Hager and ACCSC
staff member Lisa Miles. Id. at 1874. Miles wrote the Team
Summary Report, which identified five areas in which PMTC was
still failing to meet ACCSC Standards, specifically including
management, learning resources, and faculty qualification
verification. Id. at 1878-99. PMTC submitted a number of
documents in response, and notably provided Miles with two
binders full of documents as part of the on-site visit, which
Miles took to her home and did not share directly with the
Commission. In December 2011, following PMTC’s submission, the
Commission issued a second Probation Order instructing PMTC to
provide evidence of compliance with accrediting standards on
management continuity and capacity, institutional assessment and
improvement activities, the learning resource system, and
faculty qualifications and verification. Id. at 2156-67. PMTC
submitted its response in January 2012. Id. at 2169-2373.
In February 2012, a school action panel met and recommended
that ACCSC not renew PMTC’s accreditation. The panel expressed
concern with PMTC’s continued compliance failures, especially
relating to management turnover. Id. at 855, 858-60. The full
Commission voted 12-0 not to renew accreditation on the grounds
that PMTC had failed to demonstrate “continuity of management
and administrative capacity,” id. at 2377, had failed to bring
the learning resource system into compliance with accrediting
9
standards, and had failed to demonstrate compliance with
standards on faculty qualifications and verification, id. at
2374-84. On April 5, 2012, PMTC appealed the denial decision to
an independent ACCSC appeals panel, which affirmed the
Commission’s denial. Id. at 2574-92. The denial decision became
final on July 11, 2012 and the Department of Education began
withholding Title IV funds on July 27, 2012. Id. at 2574, 4030.
On August 16, 2012, PMTC filed a six-count complaint
against ACCSC in the Eastern District of Virginia, sounding in
common law due process, breach of contract, negligence and
tortious interference with various business and contractual
relations. The district court granted a preliminary injunction
requiring ACCSC to reinstate PMTC’s accreditation. In its
Amended Complaint, PMTC added allegations of bias by ACCSC’s
staff against PMTC.
After a four-day bench trial, the court entered judgment in
favor of PMTC, finding that ACCSC had violated the school’s due
process rights. It awarded the school $429,016.62 in damages,
and ordered ACCSC to fully reinstate its accreditation, but
dismissed the remaining state law claims. The court found that
ACCSC’s Standards were not clearly defined and did not provide
guidance and metrics for schools to ascertain how to meet the
Standards. In addition, it found the agency had violated PMTC’s
due process rights by denying accreditation in a manner that was
10
arbitrary and unreasonable. It reasoned that Juliet Mee, PMTC’s
owner and director, provided sufficient continuity of management
to meet ACCSC’s performance Standards and that bias had
impermissibly influenced the agency’s denial of accreditation.
ACCSC appealed the finding that PMTC was denied due process of
law and PMTC cross-appealed the dismissal of its state law
claims for breach of contract, negligence, and tortious
interference.
II.
ACCSC contends that the district court erred in not
according sufficient, if any, deference to the decision of the
accrediting agency. We agree that elementary principles of
administrative law call for significant, though not total,
deference to decisionmaking by accreditation agencies. See
Thomas M. Cooley Law Sch. V. Am. Bar Ass’n, 459 F.3d 705 (6th
Cir. 2006); Wilfred Acad. of Hair & Beauty Culture v. S. Ass’n
of Colls. & Schs., 957 F.2d 210 (5th Cir. 1992); see also Chi.
Sch. of Automatic Transmissions, Inc. v. Accreditation Alliance
of Career Schs. & Colls., 44 F.3d 447, 450 (7th Cir. 1994).
Unfortunately, the district court applied this deferential
standard in name only -- instead conducting what amounted to an
improper de novo approach to the accreditation process.
11
A.
We begin the inquiry by considering the underlying claim at
issue: that ACCSC violated PMTC’s right to due process of law.
Accreditation agencies are private entities, not state actors,
and as such are not subject to the strictures of constitutional
due process requirements. See e.g., Med. Inst. of Minn. v. Nat’l
Ass’n of Trade & Technical Schs., 817 F.2d 1310, 1314 (8th Cir.
1987) (finding that accreditation agency was “not governed by
constitutional guidelines”); cf. Moore v. Williamsburg Reg’l
Hosp., 560 F.3d 166, 179 (4th Cir. 2009) (setting framework for
private entity’s actions to be considered state action).
Moreover, “nearly every court to consider the issue” in the
last three decades agrees that there is no express private right
of action available to enforce the Higher Education Act (“HEA”),
which governs the administration of federal student aid programs
and the accreditation of institutions of higher education.
McCulloch v. PNC Bank Inc., 298 F.3d 1217, 1221 (11th Cir. 2002)
(finding that the HEA “does not expressly confer a private right
of action,” but only provides for suit by or against the
Secretary of Education); see also Cooley, 459 F.3d at 710.
This is not to say however that accreditation agencies are
wholly free of judicial oversight. They, like all other
bureaucratic entities, can run off the rails. We thus recognize,
along with our sister circuits, that there exists a “common law
12
duty on the part of ‘quasi-public’ private professional
organizations or accreditation associations to employ fair
procedures when making decisions affecting their members.”
McKeesport Hosp. v. Accreditation Council for Graduate Med.
Educ., 24 F.3d 519, 534-35 (3d Cir. 1994); see also Cooley, 459
F.3d at 711-12; Wilfred, 957 F.2d at 214; Med. Inst. of Minn.,
817 F.2d at 1314 (finding that accreditation agencies
“nevertheless must conform [their] actions to fundamental
principles of fairness”); Marjorie Webster Jr. Coll., Inc. v.
Middle States Ass’n of Colls. & Secondary Schs., Inc., 432 F.2d
650, 655-58 (D.C. Cir. 1970).
Courts began to recognize this common law duty as early as
1938. See Found. for Interior Design Educ. Research v. Savannah
Coll. of Art & Design, 244 F.3d 521, 527 (6th Cir. 2001)
(quoting North Dakota v. N. Cen. Ass’n of Colls. & Secondary
Schs., 99 F.2d 697, 700 (7th Cir. 1938) (noting that courts will
not uphold accreditation decisions if “arrived at arbitrarily
and without sufficient evidence”)). The duty was meant to
operate as a “check on organizations that exercise significant
authority in areas of public concern such as accreditation and
professional licensing.” Cooley, 459 F.3d at 712.
The common law duty has several underpinnings. Congress,
in the Higher Education Act, delegated to accreditation agencies
a decisionmaking power that affects student access to federal
13
education funding. Accreditation, as noted, is a prerequisite to
Title IV funding and it provides assurance that the federal
loans and grants are awarded to students who will get the
education for which they are paying. By the same token, the
cost to an educational institution and its students of denial of
accreditation can be steep. An institution denied accreditation
is likely to “promptly [go] out of business -- as very few
people [are] willing [or able] to pay” tuition out of their own
pockets. Chi. Sch., 44 F.3d at 448. The denial of accreditation
to an institution may also diminish the value of a degree earned
there by students in past years. So the accreditors wield
enormous power over institutions -- life and death power, some
might say -- which argues against allowing such agencies free
rein to pursue personal agendas or go off on some ideological
toot. Their duty, put simply, is to play it straight.
The federal common law duty on accreditation agencies also
derives in part from the fact that Congress has given exclusive
jurisdiction to United States district courts over “any civil
action brought by an institution of higher education seeking
accreditation from, or accredited by, an accrediting
agency . . . involving the denial, withdrawal, or termination of
accreditation.” 20 U.S.C. § 1099b(f). We recognize that “the
vesting of jurisdiction in the federal courts does not in and of
itself give rise to authority to formulate federal common law.”
14
Tex. Indus., Inc. v. Radcliff Materials, Inc., 451 U.S. 630,
640-41 (1981); see also United States v. Little Lake Misere Land
Co., 412 U.S. 580, 591 (1973). However, it is hard to imagine
that Congress intended federal courts to adjudicate only state
law claims at the same time it prohibited state courts from
participating. We are not alone in this supposition. See Cooley,
459 F.3d at 712 (“This grant of exclusive federal jurisdiction
necessarily implies that federal law should govern disputes
relating to decisions made by [accrediting agencies].” (citation
omitted)); Chi. Sch., 44 F.3d at 449 (“If a grant of federal
jurisdiction sometimes justifies creation of federal common law,
a grant of exclusive federal jurisdiction necessarily implies
the application of federal law.”).
However, recognition that such a common law duty exists
does not authorize courts to undertake a wide-ranging review of
decisionmaking by accreditation agencies. The other circuits
that have recognized this common law claim have consistently
limited the judicial inquiry, drawing on principles of
administrative law and judicial deference. See Cooley, 459 F.3d
at 712; Chi. Sch., 44 F.3d at 449-50; Wilfred, 957 F.2d at 214;
Med. Inst. of Minn., 817 F.2d at 1314-15. Of course, we do not
go so far as to say the ACCSC is equivalent to a federal agency.
See Cooley, 459 F.3d at 712. But, “while the [APA] does not
specifically apply to [the accrediting agency], principles of
15
administrative law are useful in determining the standard by
which we review the [agency’s] decision-making process.” Id.;
see also Chi. Sch., 44 F.3d at 450. Furthermore, while the
amendments to the HEA in 2008 and 2010 made changes to the
accreditation process, by strengthening, inter alia, the level
of independent agency review, nothing in those amendments
purported to alter the level of judicial scrutiny established by
the above decisions. See Higher Education Opportunity Act, Pub.
L. No. 110-315, 122 Stat. 3078 (2008)(codified as amended 20
U.S.C. § 1099b(a)(6)(2008)).
The most familiar standard of review is one in which the
court is authorized to consider “only whether the decision of an
accrediting agency such as [ACCSC] is arbitrary and unreasonable
or an abuse of discretion and whether the decision is based on
substantial evidence.” Cooley, 459 F.3d at 712. Under this
standard, courts are “not free to conduct a de novo review or to
substitute their judgment for the professional judgment of the
educators involved in the accreditation process.” Wilfred, 957
F.2d at 214.
B.
We adopt the above standard, in part, because there is
value to be gained in the uniformity of standards of review
throughout the circuits. However, while we think our sister
circuits correct, we do not embrace uniformity for uniformity’s
16
sake. The quasi-public nature of the accrediting institutions
and their wide-ranging expertise in what may be highly technical
and specialized fields of education also provide justification
for a deferential standard.
Although accreditation agencies do serve an important
quasi-public role in the dispersal of federal student aid
funding, they are also private entities. The U.S. Department of
Education does not itself accredit educational institutions,
instead relying on a number of select nationally recognized
accrediting agencies that the Secretary of Education deems to be
“reliable authorit[ies] regarding the quality of the education
or training provided by” schools. 34 C.F.R. § 602.16(a).
Accrediting agencies must go through a certification process set
up by the Department. The procedures and standards of
accreditation set by the agency must “meet[] criteria
established by the Secretary” in order to ensure they are a
“reliable authority.” 20 U.S.C. § 1099b(a).
In totality, the accreditation process operates as an
instrument of quality control on educational institutions. While
the visit of the accreditor may be as unwelcome as that of the
auditor, accreditation does encourage institutional self-
examination and the attainment of high standards. It also gives
the public some assurance that professionals have received the
17
training commensurate with their responsibilities in the
workplace.
As with federal administrative agencies, the accreditation
agency’s expertise and knowledge merits a measure of deference
from generalist federal courts. See, e.g., Chevron U. S. A.,
Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837 (1984).
ACCSC provides a representative example; staff members,
Commissioners, and volunteers have significant knowledge not
just about the accreditation process and education generally but
also in the specialized fields under review. The Commission
itself is comprised of proprietors and executives of career-
oriented institutions of higher education as well as individuals
with expertise in education, training, and employment.
The agency’s executive staff have experience with the
accreditation process as well as with higher education,
including but not limited to “curriculum development, faculty
and academic administration, and distance learning,” “regulatory
issues . . . including changes to, and interpretations of,
federal regulations that pertain to accrediting agency
recognition,” and “nonprofit management experience.” J.A. 3019-
21. ACCSC also relies on occupational specialists with training
and involvement in the field of study for each school as part of
the on-site visits. Here, for example, the 2010 on-site
evaluation team included the director of for-profit career
18
training schools, an associate professor from the University of
North Texas, a massage therapist and esthetician, a
representative from the Missouri Department of Higher Education,
and representatives from ACCSC staff with expertise in the
accreditation process and compliance with ACCSC Standards. In
the accreditation process, these experts perform important fact-
finding missions akin to investigative undertakings at federal
agencies. They review self-evaluations from applicants, conduct
on-site visits, and work with institutions to improve areas of
weakness in order to meet accreditation standards.
Although judicial oversight of the accreditation process
surely has its place, it is not realistic to think courts
possess either the expertise or the resources to perform the
accreditation function ab initio. The range of specialized
subjects taught at all levels of higher education is vast, and
the prospect that courts can replicate the required knowledge on
the bench is dim. We thus do not presume to be equipped to
“substitute [our own] judgment for the professional judgment of
the educators involved in the accreditation process.” Wilfred,
957 F.2d at 214. As the Fifth Circuit noted, the “standards of
accreditation are not guides for the layman but for
professionals in the field of education.” Id. (quoting Parsons
Coll. v. N. Cent. Ass’n of Colls. & Secondary Schs., 271 F.
Supp. 65, 73 (N.D. Ill. 1967)). In fact, due process claims
19
dovetail nicely with administrative law concepts of substantial
evidence and arbitrary and capricious review because the
prominent point of emphasis of due process is one of procedure.
When adjudicating common law due process claims against
accreditation agencies, courts should “focus primarily on
whether the accrediting body’s internal rules provide[d] a fair
and impartial procedure and whether it [followed] its rules in
reaching its decision.” Id.
III.
The district court’s review here did not adhere to the
appropriate standard in a number of regards. The court greatly
expanded the administrative record, held a full multi-day bench
trial, received depositions and live testimony in a way that
sought to make itself the primary investigator and finder of
fact, and went far beyond the focus on procedural fairness to
refashion the accreditation decision on the merits. To that end,
the district court was remedially aggressive not only in its
awarding of a large amount of damages, but also in ordering that
the institution in question be reaccredited, thereby overturning
the judgment and expertise of an agency that in this case rested
on a sound and supportable basis. All in all, and without
question, the district court conducted an impermissible de novo
review.
20
A.
Judged by the appropriate standards, the accreditation
denial was in fact a permissible one. Indeed, we hold that the
agency did not act in an arbitrary and capricious manner but
rather “conform[ed] its actions to fundamental principles of
fairness” through both the procedural and substantive standards
it employed in making the accreditation decision. Med. Inst. of
Minn., 817 F.2d at 1314.
ACCSC provided PMTC with significant procedural
opportunities to make its case over the course of almost two
years prior to the revocation of accreditation. Following the
first on-site visit in 2010, the Commission issued a Probation
Order even though it was not required prior to denial. J.A.
4781. It then conducted a second on-site evaluation to give PMTC
an additional opportunity to demonstrate that the school was
meeting the Commission’s metrics for accreditation. Following
that visit, the Commission issued a second Probation Order. PMTC
was given the opportunity to, and did, respond in writing to
each of the reports detailing the school’s deficiencies
following both on-site visits and both Probation Orders. The
school submitted hundreds of pages of documentation for the
agency to consider. ACCSC also repeatedly granted the school’s
requests for additional time to submit its responses. The
decision to revoke PMTC’s accreditation was unanimous and the
21
rationale was provided to PMTC. Subsequent to the revocation,
Mee, accompanied by an attorney, filed a written appeal and
appeared before an independent appeals panel, which affirmed the
denial.
In addition to providing numerous procedural safeguards,
ACCSC measured PMTC’s performance against discernible
substantive standards embodied in the Standards of
Accreditation. Most importantly in this case, ACCSC’s Standards
of Accreditation require that accredited schools “have adequate
management and administrative capacity in place” that includes:
a. Full-time on-site supervision by an individual or
team with the appropriate combination of education,
experience, and demonstrated ability to lead and
manage a post-secondary educational institution;
b. Owners, members of school management, and
administrative employees who are qualified for their
particular roles and who possess the appropriate
education, training, and experience commensurate with
the level of their responsibilities;
c. A sufficient number of managers and administrative
employees necessary to support the school’s
operations, student services, and educational
programs; and
d. Appropriate administrative and operational
policies and procedures to which the school adheres
and reviews and updates as needed.
J.A. 4799 (ACCSC Standards Ch. 2 § I(A)(1)(a)-(d)). In addition,
the Standards require that the school ensure “the continuity of
management and administrative capacity” through “the reasonable
retention of management and administrative staff.” Id. (ACCSC
Standards Ch. 2 § I(A)(4)).
22
Also at issue here, the Standards necessitate that to be
accredited a school must provide a learning resource system that
“include[s] material commensurate with the level of education
provided and appropriate to the courses of study in sufficient
quantity and scope to meet the educational objectives of each
program.” Id. at 4805 (ACCSC Standards Ch. 2 § II(A)(6)(a)).
More specifically, such resources “must be integrated into a
school’s curriculum and program requirements” and “must be
managed by qualified school personnel with sufficient experience
to provide oversight and supervision.” Id. (ACCSC Standards Ch.
2 § II(A)(6)(b), (c)). In addition, the Standards outline
faculty and administrator qualifications and require that “[t]he
school must verify prior work experience and maintain
documentation of academic credentials of all faculty members and
administrators . . . to demonstrate compliance with applicable
[qualification] Standards.” Id. at 4814 (ACCSC Standards Ch. 2
§ III(A)(4)).
Furthermore, the Commission outlines additional Standards
in strategic planning, financial stability and responsibility,
tuition, admissions and recruiting policies, degree program
qualifications, student achievement metrics, student loan
repayment programs, and physical facilities, among others. See
id. at 4799-4834.
23
The district court took issue with the generality of these
Standards, particularly the management requirements, finding
Chapter 2, Section I(A)(1)(c) to be “internally inconsistent,”
especially with regard to how a school can predict what
constitutes a “sufficient” number of management staff
“necessary” to support the school’s operations. Prof’l Massage
Training Ctr., Inc. v. Accreditation Alliance of Career Schs. &
Colls., No. 1-12-cv-911, 2014 WL 201879, at *7 (E.D. Va. Jan.
17, 2014). The district court explained that it “[could not]
imagine how a school seeking to gain or maintain accreditation
would obtain practical guidance” from the Standards. Id.
The Standards are often general in nature, but we do not
think to the point of invalidity. It was not necessary, or
indeed practical, for the Standards to outline more specific
numerical goals for management and staff. Instead, it was
permissible for the Standards to retain some element of
flexibility. ACCSC accredits nearly 750 educational institutions
nationwide of many different sizes and types. A more specific
numerical requirement with regard to how many management
personnel are sufficient would be nearly impossible to dictate.
ACCSC must maintain a balance between specificity, to provide
notice to those seeking accreditation, and generality, to allow
itself flexibility in accrediting varied institutions ranging
over many different fields and disciplines. Rewriting the
24
Standards to contain more specific numerical requirements could
actually harm educational institutions themselves, requiring
many fine programs and good colleges to reach targets that are
financially not sustainable, especially if tuition is to remain
at affordable levels. See Ambrose v. New England Ass’n of Schs.
& Colls., Inc., 252 F.3d 488, 495 (1st Cir. 2001) (“In
constructing such benchmarks, standards that are definitive in
theory easily may become arbitrary in application. Flexibility
blunts the sharp edges of this potential hazard.”); Med. Inst.
of Minn., 817 F.2d at 1314 (“Strict guidelines would strip . . .
[the accreditor of] the discretion necessary to adequately
assess the multitude of variables presented by different
schools.”).
Given the procedures afforded to PMTC, including the
opportunities it had to demonstrate compliance and the time it
was given to make improvements and meet ACCSC’s Standards, we
cannot say the accreditation revocation was arbitrary and
capricious. PMTC was afforded ample notice that it was not in
compliance with ACCSC’s Standards and numerous opportunities to
remedy identified deficiencies. We do not think due process
required more than that.
B.
Furthermore, the denial decision was clearly supported by
substantial evidence. The Supreme Court has defined substantial
25
evidence to be anything “more than a mere scintilla” provided
that a “reasonable mind might accept [the evidence] as adequate
to support a conclusion.” Almy v. Sebelius, 679 F.3d 297, 301
(4th Cir. 2012) (internal quotations omitted) (quoting Consol.
Edison Co. v. NLRB, 305 U.S. 197, 229 (1938)). Federal courts do
not undertake to “re-weigh conflicting evidence, make
credibility determinations, or substitute [their] judgment” for
that of the agency. Craig v. Chater, 76 F.3d 585, 589 (4th Cir.
1996). In considering whether the denial was supported by
substantial evidence, we confine ourselves to the record that
was considered by the accrediting agency at the time of the
final decision.
Under the ACCSC Standards, accreditation can be revoked in
a case of “[f]ailure to demonstrate compliance with the
Standards of Accreditation or other accreditation requirements.”
J.A. 4783 (ACCSC Standards Ch. 1 § VII(P)(1)(b)). Here, PMTC
demonstrated multiple and continued failures in a number of
areas. The 2010 on-site evaluation Team Summary Report listed
thirteen areas in which the school failed to comply with ACCSC
Standards. Although the school made progress in some areas, it
continued to fall short with regard to sufficiency and
continuity of management, as well as with its learning resource
system and the verification of faculty credentials. See id. at
2377-83.
26
The continuity and sufficiency of management and staff
presents the most obvious deficiency in PMTC’s application for
accreditation. The ACCSC Standards require “adequate management
and administrative capacity” that includes “[f]ull-time on-site
supervision by an individual or team with the appropriate
combination of education, experience, and demonstrated ability
to lead and manage.” Id. at 4799. In addition, “the continuity
of management and administrative capacity [must be] ensured
through the reasonable retention of management and
administrative staff.” Id. The record is replete with evidence
that PMTC failed to comply with these requirements.
In response to the 2010 Probation Order, PMTC acknowledged
that eight of its sixteen administrative employees had been
employed at the school for less than a year, that in the
previous year it had fired two School Administrators within
their first ninety days, and that three other employees had been
terminated recently. Id. at 1809. In August 2011, the 2011 Team
Summary Report following the second on-site visit noted that the
school had “had three administrators in the previous nine
months” and found that while Juliet Mee provided “a constant
influence as the school’s director,” the “shifting management
structures [had] had a negative impact on the operation of the
school.” Id. at 1886.
27
At the time of the 2011 on-site visit, PMTC again presented
a new management team which included Juliet Mee, Rebecca Cox
(who was hired as School Director in June of 2011), and April
Durnell (hired as School Administrator in March of 2011) and
argued the new team would help to rectify ACCSC’s concerns
regarding the management and administration of the school. Id.
at 1884; see also id. at 2378. However, by December 2011, as
explained in PMTC’s response to the Commission’s second
Probation Order, both Cox and Durnell had already been
terminated due to a “poor job match” and the “evasion of
relevant information” respectively. Id. at 2225; 2378.
Despite this upheaval, the Commission extended the
evaluation period for PMTC twice, placing the school on
probation following both the 2010 and 2011 on-site evaluations
on the grounds that “additional information was necessary in
order to determine the school’s compliance with accrediting
standards.” Id. at 2377. In response, PMTC repeatedly presented
ACCSC with new and shifting management structures. By December
2011, in response to the second Probation Order, the school
listed its management team as Juliet Mee, Owner/School Director,
Jeremiah Mee, Director of Finance, Jeremy Beatty, Compliance
Administrator, and Linda Mayhugh, Curriculum Administrator. Id.
at 2187, 2378-79.
28
ACCSC expressed concern in its written explanation of the
denial that Jeremiah Mee, the brother of Juliet Mee, who started
as Director of Finance in August 2011, had made clear that he
was buying his own firm and intended to “guide and direct the
hiring of a new on-site Director of Finance,” implying he too
would soon be leaving. Id. at 2378. In addition, the Commission
found that PMTC “failed to demonstrate” that Jeremy Beatty and
Linda Mayhugh met either the school’s qualifications for their
administrative positions or that either was “qualified to meet
the Commission’s expectations to serve in this capacity.” Id. at
2379. Thus, even after multiple opportunities to remedy the
deficiency, the final management structure submitted in response
to the 2011 Probation Order still presented problems. See id. at
2379; see also id. at 1896, 2099, 2163, 2179-81, 2205-2224,
2228.
The District Court took issue with this conclusion, and
stated that ultimately, Juliet Mee’s role as the “primary
manager of PMTC since she founded the school in 1994” should
have satisfied ACCSC’s management standards. Prof’l Massage
Training Ctr., 2014 WL 201879 at *6-*8. While it may be true
that “the Standards of Accreditation do not require multiple
staff members [to constitute adequate management],” id. at *6,
the record abounds with evidence of repeated and ongoing
turnover. Given the turmoil in administrative and management
29
staff at PMTC, it would stretch the imagination, to say the
least, to credit PMTC’s contention that ACCSC lacked substantial
evidence to support its decision. There is more than a “mere
scintilla” of evidence that PMTC’s management and administration
was in shambles. Almy, 679 F.3d at 301.
We note also that in reviewing for substantial evidence, it
is not within the purview of this court to measure whether
Juliet Mee as an individual manager was sufficient to comply
with Chapter 2, Section I(A)(1)(a)-(d) or to what degree her
presence might provide for “continuity of management and
administrative capacity” in light of the significant staff
turnover. J.A. 4799 (ACCSC Standards Ch. 2 § I(A)(4)). Nor do we
profess any expertise as to what extent an educational
institution can ignore its own stated job qualifications when
hiring underqualified management without running afoul of the
Standards for management personnel.
In sum, the well-documented disorder, constant turnover and
questionable qualifications of PMTC’s management staff provided
substantial evidence that the school was out of compliance with
accreditation Standards. The record also provides substantial
evidence to support the Commission’s additional findings of
deficiencies regarding both the learning resource system and the
faculty qualification verification processes. See id. at 2380-
83.
30
In the Team Summary Report following the 2010 on-site
evaluation, ACCSC explained that a significant number of
students surveyed during the evaluation reported
“dissatisfaction with the school’s learning resource system.”
Id. at 1464. Students said that the “library [was] not adequate
for their educational needs,” and “they [did] not have access to
the library resources at Missouri State University (MSU) as
advertised by the school.” Id.; see also id. at 1788-89. While
the 2011 Probation Order found that PMTC had made satisfactory
progress on the materials available, PMTC still did not
demonstrate that “the school’s learning resource system [was]
managed by qualified school personnel” or that “use of the
learning resource system materials [was] integrated into the
school’s curriculum and program requirements.” Id. at 2162. PMTC
hired a part-time administrator to manage the learning resource
system prior to its response to the 2011 Probation Order, but
stated that it did not “feel that [it would] need a full time
person who dedicate[d] themselves 100% to the Learning Resource
System until [it was] able to increase the resources within the
on-site facility.” Id. at 2264. The Commission took this
admission as acknowledgment that the learning resource system
“continued to be out of compliance with accrediting standards.”
Id. at 2381.
31
In addition, the 2010 Team Summary Report also noted that
“[t]he school did not demonstrate that the prior work experience
of faculty members [was] verified or that the school
maintain[ed] documentation of academic credentials of all
faculty members” in violation of Chapter 2, Section III(A)(4).
Id. at 1464. In the 2010 Probation Order, ACCSC explained that
PMTC had submitted some examples of instructor files to
demonstrate faculty qualifications, but had failed to provide
documentation that such credentials were verified for all
faculty members. Id. at 1789-90. In response, PMTC provided only
blank verification forms and an explanation of how the process
should be completed. See id. at 1872, 2303, 2382.
The 2011 on-site evaluation team found that these forms
were not consistently completed and that April Durnell was
marking faculty qualifications as verified when she had
“conducted the verification process, even if she had not been
successful in verifying the information provided by the
instructor.” Id. at 1892. The results of the team’s review
indicated that some faculty members’ qualifications had been
verified in June of 2011, but many faculty members’ backgrounds
remained unverified. Id. at 1892-93, 1897-98. The record
supports ACCSC’s conclusion that PMTC “failed to properly
address” the concern that the school did not verify faculty
qualifications nor maintain adequate documentation in violation
32
of the Standards Chapter 2, Section III(A)(4). Id. at 2383. It
is not surprising that an accreditation agency would find
recurring questions about something so elementary as faculty
qualifications to be problematic. It is basic to the functioning
of an educational institution that the qualifications of its
teachers and instructors be both accurate and available.
C.
PMTC contends, and the district court agreed, that bias
against the school on the part of the ACCSC staff members
justified a less deferential inquiry into the agency’s
decisionmaking and resulted in a denial of due process owed to
the school. See Appellee’s Br. 45-48; Prof’l Massage Training
Ctr., 2014 WL 201879, at *7 (“Deeply negative staff bias against
Ms. Mee completely infected the record that the commission
reviewed and as a result denied PMTC due process.”).
This court has made clear that an “impartial decisionmaker
is an essential element of due process.” Morris v. City of
Danville, 744 F.2d 1041, 1044 (4th Cir. 1984) (quoting Bowens v.
N.C. Dept. of Human Res., 710 F.2d 1015, 1020 (4th Cir. 1983)).
That ACCSC is a private entity (albeit one with significant
public responsibilities) does not alter this imperative. And
although we are considering a common law due process claim
rather than a constitutional one, a “fair trial in a fair
tribunal” remains a basic requirement of due process. Withrow v.
33
Larkin, 421 U.S. 35, 46-47 (1975) (internal quotations and
citations omitted) (applying the due process requirement of an
unbiased tribunal to administrative agencies). A federal court
may be justified in conducting a more searching inquiry into the
motivations of administrative decisionmakers in the case of “a
strong showing of bad faith or improper behavior.” Citizens to
Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 420 (1971),
abrogated on other grounds by Califano v. Sanders, 430 U.S. 99
(1977). However, the evidence presented here does not rise to
that level.
An administrative decisionmaker “[is] entitled to a
‘presumption of honesty and integrity.’” Morris, 744 F.2d at
1044 (quoting Withrow, 421 U.S. at 47). However, personal bias
may disqualify an adjudicator if it “stem[s] from a source other
than knowledge . . . acquire[d] from participating in a case.”
Bowens, 710 F.2d at 1020. As the Supreme Court has explained,
“various situations have been identified in which experience
teaches that the probability of actual bias on the part of the
[agency] is too high” to allow the adjudicator to consider the
case. Withrow, 421 U.S. at 47. For instance, the potential for
bias is impermissibly high in “those [cases] in which the
adjudicator has a pecuniary interest in the outcome and in which
he has been the target of [prior] personal abuse or criticism
from the party before him.” Id. (internal citations omitted).
34
Neither of those situations is present here. There was no
pecuniary interest at stake for members of the Commission, nor
were any members of the Commission targeted for abuse by Juliet
Mee or PMTC prior to the proceeding. In fact, there is no
allegation that the individual members of the Commission
themselves were biased or had an identifiable conflict of
interest.
Rather, PMTC alleges that frustration and dislike of Juliet
Mee by the staff at ACCSC influenced the creation of the record
on which the Commission relied when casting its vote for
revocation of PMTC’s accreditation. See Appellee’s Br. at 53-54.
PMTC cites to a number of instances in which ACCSC staff members
expressed frustration with Mee or a negative opinion of PMTC’s
application. However, the “expressions of impatience,
dissatisfaction, annoyance, and even anger, that are within the
bounds of what imperfect men and women . . . sometimes display”
are not sufficient to “establish[] bias or partiality.” Liteky
v. United States, 510 U.S. 540, 555-56 (1994); see also
Consolidation Coal Co. v. Williams, 453 F.3d 609, 620 (4th Cir.
2006) (“[T]he tone and tenor of frustration expressed in the
ALJ’s comments do not, in and of themselves, establish bias.”).
An unfavorable impression of an applicant on the part of the
accreditation agency is likewise not bias. To find otherwise
35
would render every denial of accreditation subject to a
searching inquiry for lack of impartiality.
As evidence of bias, PMTC primarily points to emails and
testimony where ACCSC staff members, primarily Lisa Miles,
Christopher Lambert, and Sean Forman, 1 expressed an alleged
“disdain for PMTC and for Juliet Mee.” Appellee’s Br. at 53. In
addition, the school contends that Miles failed to present to
the Commission two binders of documents that were provided to
her during the 2011 on-site visit and that she instead took them
to her home and destroyed them. See id.; see also J.A. 2819. The
district court found there was evidence sufficient to support
the claim that ACCSC staff “intentionally drafted the report in
a negative light to cause the commissioners to vote to withdraw
PMTC’s accreditation.” Prof’l Massage Training Ctr., 2014 WL
201879, at *7.
1
Lisa Miles was a Manager of Accreditation at ACCSC and
served as part of the on-site evaluation teams in both 2010 and
2011. She was responsible for editing and drafting,
respectively, the Team Summary Reports following the each visit.
See J.A. 243, 1455, 1874, 3022. Christopher Lambert served as
ACCSC’s Director of External Affairs and here supervised the
process of drafting the Compliance Summary presented to the
Commission prior to its vote and the written explanation for the
revocation sent to Mee. Id. at 3020; see also id. at 2826-76
(correspondence between Forman and Lambert and partial drafts of
revocation letter and Compliance Summary). Sean Forman was a
Senior Analyst for Institutional Review and Development and here
participated in the drafting of the Compliance Summary and of
the 2012 revocation letter under Lambert’s supervision. See id.
at 2826-76.
36
We think this is not a balanced characterization of the
record. Emails between staff members revealed that Mee was upset
by the possibility that PMTC might lose accreditation and was
often difficult to deal with or even hostile. See, e.g., J.A.
2821-23, 2866. However, staff frustration with Mee, justified or
not, is not dispositive evidence of bias. Furthermore, the
record does not demonstrate that ACCSC was impermissibly
building a case against PMTC. The emails between Lambert and
Forman paint a picture of a subordinate and supervisor
discussing and revising the drafts of the Compliance Summary
(which is presented to the Commission prior to the vote) and the
revocation letter. See, e.g., id. at 2826-39, 2866-74, 2886.
Discussions of this sort are inevitable if the staff is to do
its job.
Due process requires that the basis for revocation of
accreditation be provided in writing and supported by the
evidence. We see nothing sinister in Forman’s raising with his
supervisor areas where he had questions about which evidence to
include in the written document or with Lambert asking his
subordinate to strengthen his explanation for certain findings. 2
2
PMTC argues that the email correspondence between Forman
and Lambert demonstrates that ACCSC was building a case against
them by purposefully including statements Forman knew to be
false in the record put before the Commission. This assertion is
simply not supported by the record. When he was drafting the
(Continued)
37
There is no evidence that information was improperly included or
omitted. Again, this type of back and forth is commonplace in
the drafting of any statement of reasons in the administrative
process. Furthermore, as we have noted, the evidence, including
submissions PMTC itself made to the Commission, supported
ACCSC’s findings, especially with regard to fundamental
revocation letter, Forman wrote to Lambert raising a number of
questions about the draft. He did express concern that the tie
between “the [learning resource system] supervision” and the
“difficulties verifying faculty work experience” and the ongoing
administrative and management failures at PMTC was “fairly weak
in the grand scheme of things.” J.A. 2870. He also noted when
drafting the Compliance Summary that given Jeremy Beatty’s
experience, it might be “a stretch to state that Mr. Beatty may
not have 3 years experience.” Id. at 2854. Appellant has given
us no reason to take these comments to be anything other than
instances of a subordinate asking a supervisor for advice on a
tough call. In the course of this correspondence, Forman had
explained that PMTC had provided some evidence of compliance but
noted the school “also fell short in many areas.” Id. at 2860.
Lambert gave Forman guidance in response to his questions,
directing him to “strengthen [the] finding on faculty
verification” prior to finalization of the letter. Id. at 2867.
He also noted places where Forman needed additional evidence to
support his assertions. Id. Lambert explained to Forman that
“management [had] been a long standing issue at the school, one
that the Commission [had] afforded multiple opportunities” for
PMTC to rectify, id. at 2887, and that the revocation rationale
was to focus on “the management issue that [the Commission] was
building around,” id. at 2872. Lastly, Lambert, when sharing the
final draft of the letter with his colleagues, wrote that it was
“compelling.” Id. at 2866-67. Again, we are given no reason to
read comments commending Forman’s work as anything more than
routine praise from a supervisor to a subordinate upon
completion of an assigned task. Id. at 2837 (“Nice, Sean”). The
emails simply fail to present the kind of case of improper
motivation or bad faith on the part of the Commission or its
staff members necessary to demonstrate bias.
38
management issues. Compare id. at 2378 (explanation of
management staff turnover in the revocation letter) with id. at
2225 (evidence of management staff turnover submitted by PMTC).
PMTC also makes much of the fact that Lisa Miles took home
two binders of information given to her by Juliet Mee during the
school’s second on-site visit instead of presenting them to the
Commission. However, the record suggests Miles did in fact rely
on the binders when drafting the 2011 Team Summary Report which
was included in the record before the Commission. See id. at
2819. In addition, the Commission only considers official
submissions, which must be filed with the Commission
electronically. See id. at 4745 (Standards Ch. 1 § I(E)(1)(b));
see also, e.g., id. at 1453 (response to Team Summary Report due
electronically). There is no suggestion that it would consider
every document handed to an on-site evaluation team member. In
both the 2010 and 2011 Team Reports, as well as the 2010 and
2011 Probation Orders, PMTC was notified that it must “submit
its response in an electronic format,” id. at 1453 (2010 Team
Summary Report); see also id. at 1791 (2010 Probation Order),
1875 (2011 Team Summary Report), 2167 (2011 Probation Order),
and it did formally submit portions of the binders to ACCSC, id.
at 758, 1829-49 (PMTC response to 2010 Probation Order).
In conclusion, there was not sufficient evidence that ACCSC
was motivated by bias to justify departure from the deferential
39
standard ordinarily due to the accreditation agency under a
common law due process claim. Because we find that ACCSC did not
act arbitrarily or capriciously and grounded its revocation on
substantial evidence, we conclude that the accreditation agency
did not deprive PMTC of its right to due process of law.
IV.
Last, PMTC cross-appeals the district court’s holding that
it was not entitled to relief on any of its state law claims for
breach of contract, negligence, and tortious interference with a
contract and with a prospective business or economic advantage.
See Prof’l Massage Training Ctr., 2014 WL 201879, at *8. We
agree with the district court that these claims fail as a matter
of law, and we affirm its holding in this regard. 3
Virginia’s choice-of-law rules determine what law to apply.
See Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496
3
ACCSC contends that state law claims are not cognizable
grounds to challenge an accreditation decision. See Appellant’s
Response-Reply Br. at 47-48. ACCSC would have us follow the
example set by the Seventh Circuit, which found that because
federal courts have exclusive jurisdiction to hear challenges to
accreditation decisions under 20 U.S.C. § 1099b(f), it is not
possible for such courts to “apply state law to the actions of
accrediting agencies when state courts have been silenced.” Chi.
Sch., 44 F.3d at 449. We agree that a serious question of
cognizability exists with respect to PMTC’s state law claims.
However, we need not decide today the broader question as to
whether Congress intended to preempt state law causes of action
through the grant of exclusive federal jurisdiction in
§ 1099b(f), because the state law claims here are meritless on
their own accord.
40
(1941). The parties agree that Virginia law applies to the
breach of contract claim inasmuch as the contract was made in
Virginia, see Lexie v. State Farm Mut. Auto. Ins. Co., 469
S.E.2d 61, 63 (Va. 1996), but that Missouri law governs the tort
claims as that was the place where the alleged tort was
committed, see Jones v. R.S. Jones & Assocs., Inc., 431 S.E.2d
33, 34 (Va. 1993).
The district court did not err in finding that PMTC’s
contract claim fails as a matter of law. The Standards of
Accreditation do not constitute a binding contract between the
agency and the accredited educational institutions because the
Commission can alter the alleged “contract” at will and, thus,
is not bound by its terms. See J.A. 4790 (ACCSC Standards, Ch. 1
§ IX(A)(1)). Under Virginia law, “[b]oth parties must be bound
or neither is bound.” Town of Vinton v. City of Roanoke, 80
S.E.2d 608, 617 (Va. 1954) (quoting Am. Agric. Chem. Co. v.
Kennedy & Crawford, 48 S.E. 868, 870 (Va. 1904)). And, even
assuming arguendo that a valid contractual relationship exists
between an educational institution and an accrediting agency,
PMTC has still failed to point to any specific term or condition
that ACCSC impermissibly breached. ACCSC had an unquestionable
right to revoke PMTC’s accreditation if compliance with the
Standards was not demonstrated. See J.A. 4783 (ACCSC Standards
Ch. 1 § VII(P)(1)(b)). Exercising one’s lawful rights is not a
41
breach of contract. In addition, for the reasons set forth
above, in Section III.C, PMTC has not demonstrated that ACCSC
exercised any contractual discretion in bad faith, even in the
highly dubious event that a “contract” between the parties
existed.
PMTC’s state law tort claims suffer a similar fate to that
of its breach of contract claims. PMTC’s negligence claim fails
as a matter of law because, as the district court found, it is
foreclosed by the economic loss doctrine. See R.W. Murray Co. v.
Shatterproof Glass Corp., 697 F.2d 818, 829 (8th Cir. 1983)
(concluding that the economic loss doctrine “precludes the
appellants from pursuing a negligence cause of action seeking
recovery for only economic loss”). PMTC’s three additional state
law claims allege tortious interference with a contract and with
a prospective business or economic advantage.
Under Missouri law, tortious interference “requires proof
of: (1) a contract or valid business expectancy; (2) defendant’s
knowledge of the contract or relationship; (3) a breach induced
or caused by defendant’s intentional interference; (4) absence
of justification; and (5) damages.” Nazeri v. Mo. Valley Coll.,
860 S.W.2d 303, 316 (Mo. 1993) (en banc). The district court
properly found that PMTC cannot show a lack of justification.
The record is replete with evidence of continued failure by the
school to meet the Standards of Accreditation, which gave ACCSC
42
“an unqualified legal right” to revoke PMTC’s accreditation. Id.
at 317; see also J.A. 4783 (ACCSC Standards Ch. 1 § VII(P)(1)(b)
(grounds for revocation)).
Under Missouri law, a plaintiff can “establish a lack of
justification” where “the defendant employed improper means in
seeking to further only his own interests.” Nazeri, 860 S.W.2d
at 316-17; see also Stehno v. Sprint Spectrum, L.P., 186 S.W.3d
247, 252 (2006) (en banc). PMTC contends on appeal that the
school is entitled to relief because staff bias at ACCSC led to
a “misrepresentation of facts” in the record relied on by the
Commission. Appellee’s Reply Br. at 10; see also Nazeri 860
S.W.2d at 317 (“[I]mproper means are those that are
independently wrongful, such as threats, violence, trespass,
defamation, misrepresentation of fact . . . .“). However, as we
explained above, there is insufficient evidence of any
impermissible bias in this case. Because PMTC cannot demonstrate
that improper means were employed, it has not met its burden of
proof with regard to the tortious interference claims. As such,
we affirm the district court’s finding that PMTC was not
entitled to relief on its state law tort claims as a matter of
law.
V.
For the foregoing reasons, we believe that ACCSC acted
lawfully in revoking PMTC’s accreditation. The district court’s
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ruling to the contrary is reversed, and we remand to that court
with directions to enter judgment in ACCSC’s favor on PMTC’s due
process claim and to dismiss the case.
AFFIRMED IN PART, REVERSED IN PART,
AND REMANDED WITH INSTRUCTIONS
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