Diahann Grasty v. Colorado Technical University
Filing
Filed Nonprecedential Disposition PER CURIAM. AFFIRMED. Frank H. Easterbrook, Circuit Judge; Ann Claire Williams, Circuit Judge and David F. Hamilton, Circuit Judge. [6653969-1] [6653969] [14-2880]
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NONPRECEDENTIAL DISPOSITION
To be cited only in accordance with Fed. R. App. P. 32.1
United States Court of Appeals
For the Seventh Circuit
Chicago, Illinois 60604
Submitted April 7, 2015 *
Decided April 8, 2015
Before
FRANK H. EASTERBROOK, Circuit Judge
ANN CLAIRE WILLIAMS, Circuit Judge
DAVID F. HAMILTON, Circuit Judge
No. 14-2880
DIAHANN GRASTY,
Plaintiff-Appellant,
Appeal from the United States District
Court for the Northern District of Illinois,
Eastern Division.
v.
No. 13 C 3221
COLORADO TECHNICAL
UNIVERSITY,
Defendant-Appellee.
Sharon Johnson Coleman,
Judge.
ORDER
Diahann Grasty, an Illinois resident and former student of Colorado Technical
University, appeals the district court’s order compelling arbitration and dismissing her
race-discrimination suit against the school. Because we agree with the district court that
an arbitration agreement between Grasty and the university precludes Grasty from
litigating her claim in federal court, we affirm the judgment.
After examining the briefs and the record, we have concluded that oral
argument is unnecessary. Thus the appeal is submitted on the briefs and the record.
See Fed. R. App. P. 34(a)(2)(C).
*
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We review de novo the district court’s order compelling arbitration. See Druco
Rests. v. Steak n Shake Enters., 765 F.3d 776, 779–80 (7th Cir. 2014). Grasty registered to
study computer science at Colorado Technical University by executing an enrollment
agreement that includes an arbitration clause. As we understand her complaint, Grasty
initially registered for two courses—one worth three credits and the other five
credits—that were scheduled to begin in January 2013. An administrator informed
Grasty that she would be eligible for financial aid even if she dropped the five-credit
course, which she did. An academic advisor then told Grasty, however, that with only
three credits she no longer was eligible for financial aid. When Grasty questioned this
turnabout, she says, the advisor called her a “black bitch.” A vice provost later
apologized for the mix-up and offered Grasty the options of taking the three-credit
course for free, dropping it without academic penalty, replacing it with a five-credit
course, or adding another course to be eligible for aid once again. None of these options
satisfied Grasty; she explains that she wanted financial assistance from Colorado
Technical University, not to pay for coursework there, but to pay off a $1,260 debt to a
different college.
Grasty then brought this suit under Title VI of the Civil Rights Act of 1964, see 42
U.S.C. §§ 2000d to 2000d–7, claiming that the university had refused to give her financial
aid because she is black. She seeks $3 million in damages. The university, citing Federal
Rule of Civil Procedure 12(b)(1), moved to compel arbitration and dismiss the suit on the
ground that the enrollment agreement’s arbitration clause divests the district court of
subject-matter jurisdiction. The arbitration clause, which the university appended to its
motion, provides in relevant part:
Any disputes, claims, or controversies between the parties to this
Enrollment Agreement arising out of or relating to (i) this Enrollment
Agreement; (ii) the Student’s recruitment, enrollment, attendance, or
education; (iii) financial aid or career service assistance by CTU; (iv) any
claim, no matter how described, pleaded or styled, relating, in any manner,
to any act or omission regarding the Student’s relationship with CTU, its
employees, or with externship sites or their employees; or (v) any objection
to arbitrability or the existence, scope, validity, construction, or
enforceability of this Arbitration Agreement shall be resolved pursuant to
this paragraph (the “Arbitration Agreement”).
Moreover, the university added, the enrollment agreement did not include a promise or
guarantee of financial aid. Grasty countered that the arbitration clause is not binding
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because, she said, the parties did not enter a valid contract under Illinois law (which,
both sides agreed, applies). According to Grasty, her arrangement with the university
lacked consideration because she had offered to enroll on the understanding that she
could take a three-credit course and receive financial aid, which the university failed to
provide. Alternatively, Grasty argued, the university had anticipatorily breached any
contract by notifying her of its intent not to provide financial aid.
In granting the university’s motion, the district court first concluded that the
enrollment agreement—which Grasty did not dispute executing—is a valid contract. The
enrollment agreement is supported by consideration, the court reasoned, because the
university had promised educational services to Grasty in exchange for payment. The
district court then concluded that Grasty’s discrimination claim falls within the scope of
the agreement’s broad arbitration clause. On that basis the court ruled that it lacked
subject-matter jurisdiction.
As a preliminary matter, an agreement to arbitrate does not affect a district court’s
subject-matter jurisdiction. An arbitration clause is a type of forum-selection clause.
Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 628 (1985); Sherwood
v. Marquette Transp. Co., 587 F.3d 841, 844 (7th Cir. 2009). Motions to compel arbitration
thus concern venue and are brought properly under Federal Rule of Civil Procedure
12(b)(3), not Rule 12(b)(1). Jackson v. Payday Fin., LLC, 764 F.3d 765, 773 (7th Cir. 2014).
But this misunderstanding did not affect the outcome, since under Rule 12(b)(3) the
district court still was free to consider the materials submitted with the university’s
motion, including the arbitration clause. See Faulkenberg v. CB Tax Franchise Sys., LP,
637 F.3d 801, 809–10 (7th Cir. 2011); Bailey v. ERG Enters., LP, 705 F.3d 1311, 1314 n.1
(11th Cir. 2013); Aggarao v. MOL Ship Mgmt. Co., 675 F.3d 355, 365–66 (4th Cir. 2012).
On the merits, Grasty makes in this court a number of new factual assertions and
legal arguments, including that she never executed the enrollment agreement and that
her discrimination claim falls outside the scope of the arbitration clause. But Grasty
conceded, both in her complaint and in her response to the university’s motion to
dismiss, that she had executed the agreement, and she is bound by that concession.
See Amgen Inc. v. Conn. Ret. Plans & Trust Funds, 133 S. Ct. 1184, 1197 n.6 (2012);
Consolidation Coal Co. v. Dir., Office of Workers’ Comp. Programs, 732 F.3d 723, 730 (7th Cir.
2013). Furthermore, we must enforce the parties’ agreement to arbitrate “gateway”
questions about arbitrability of claims and the scope of the arbitration agreement.
See Rent-A-Center, West, Inc. v. Jackson, 130 S. Ct. 2772, 2777 (2010). And there is no
prohibition on arbitrating federal discrimination claims. See Circuit City Stores, Inc. v.
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Adams, 532 U.S. 105, 123 (2001). In any case, Grasty has waived contentions that she did
not make in the district court. See O’Gorman v. City of Chicago, 777 F.3d 885, 890 (7th Cir.
2015); Auto. Mechs. Local 701 Welfare & Pension Funds v. Vanguard Car Rental USA, Inc., 502
F.3d 740, 747 (7th Cir. 2007).
Grasty also maintains that the enrollment agreement lacked consideration
because she never received financial aid. But Grasty misunderstands the parties’
agreement. The university promised to provide educational services in exchange for her
promise of payment, and such an agreement is supported by valid consideration.
See Steinberg v. Chi. Med. Sch., 371 N.E.2d 634, 639 (Ill. 1977) (“Any act or promise which
is of benefit to one party or disadvantage to the other is a sufficient consideration to
support a contract.”); see also Boomer v. AT & T Corp., 309 F.3d 404, 416 (7th Cir. 2002)
(valid consideration where company promised to continue telephone services in
exchange for customer’s promise to arbitrate disagreements); Carter v. SSC Odin
Operating Co., 976 N.E.2d 344, 352–53 (Ill. 2012) (valid consideration where one party
promises to arbitrate disagreements in exchange for other party’s promise to pay
arbitrators’ and attorneys’ fees); Johnson v. Lincoln Christian Coll., 501 N.E.2d 1380, 1384
(Ill. App. 1986) (explaining that contract is implied when student pays tuition and
completes coursework in exchange for university’s facilities, instruction, and diploma).
We have considered Grasty’s remaining contentions, and none has merit.
AFFIRMED.
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