Inside Higher Ed: Protection for For-Profit Colleges
Arbitration clauses in contracts are designed to give parties a clear-cut and less expensive route to resolving potential disputes. But provisions that require parties to go through arbitration and relinquish their right to pursue other legal avenues have been controversial, particularly when one of the parties is viewed as being at a disadvantage to the other, as in the case of nursing homes and their clients.
Those issues took center stage in a decision issued Tuesday by the U.S. Court of Appeals for the Eighth Circuit, which reversed a lower court’s ruling last year forcing a for-profit college to defend itself in court against 38 students’ charges of fraudulent misrepresentation and negligence. In its ruling, a three-judge panel of the Eighth Circuit said that the arbitration clause contained in the enrollment agreement that students signed before entering High-Tech Institute, a vocational institution in Missouri, compels the student plaintiffs to enter arbitration before they can rightfully pursue their claims in state or federal court.
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