United States of America ex rel. et al v. American Intercontinental University, Inc., a Georgia Corporation et al

Filing 20

MEMORANDUM Opinion and Order. Signed by the Honorable Geraldine Soat Brown on 12/10/2013. (psm, )

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
UNITED STATES OF AMERICA ex
rel. MELISSA SIMMS POWELL, et al.,
Plaintiffs,
v.
AMERICAN INTERCONTINENTAL
UNIVERSITY, INC., et al.,
Defendants.

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Case No. 13 C 7825
District Judge Edmond E. Chang
Magistrate Judge Geraldine Soat Brown

MEMORANDUM OPINION AND ORDER
Geraldine Soat Brown, United States Magistrate Judge
Before the court is plaintiffs’ motion to compel a non-party, the Higher Learning
Commission (“HLC”), to re-produce a corporate representative to testify further pursuant to a
deposition subpoena. (Pls.’ Mot.) [Dkt 1.] The motion arises from litigation in the Northern
District of Georgia and is presented in the Northern District of Illinois because the deposition at issue
was taken in Chicago, Illinois. Fed. R. Civ. P. 37(b)(1). The District Judge referred the motion to
this court pursuant to Local Rule 72.1. [Dkt 6.] HLC opposes plaintiffs’ motion and has filed a
cross-motion for a protective order. (HLC’s Mot.) [Dkt 12.]1 For the reasons below, plaintiffs’
motion to compel and HLC’s motion for a protective order are both denied.

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Defendants American InterContinental University, Inc., et al., have not taken a position on
the motions nor submitted any materials to this court.
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Background
In 2008, plaintiffs initiated a qui tam action under the False Claims Act, 31 U.S.C. § 3730(b),
against American InterContinental University, Inc. (“AIU”), Career Education Corporation, and
other unknown persons (collectively, “defendants”) in the Northern District of Georgia. See United
States ex rel. Powell v. Am. InterContl. Univ., Inc., No. 1:08-CV-2277-RWS, 2012 WL 2885356 at
*1 (N.D. Ga. July 12, 2012) (the “Georgia lawsuit”). Plaintiffs alleged that defendants obtained
federal funds by falsely representing that AIU complied with federal law prohibiting incentive-based
compensation for enrollment counselors and with the accreditation standards of the Southern
Association of Colleges and Schools (“SACS”). Id. In 2012, the district court dismissed all but the
accreditation claim. Id. at *6-9, 11.
In an opinion earlier this year, the magistrate judge supervising discovery in the Georgia
lawsuit revised the scope of discovery to conform to the remaining claim in the case. (HLC’s Mot.,
Ex. A, Order, Feb. 22, 2013, at 17.) [Georgia lawsuit dkt 201.] As described in that opinion, SACS
had put AIU on probation but restored it from probationary status in December 2007. (Id. at 17.)
In their remaining claim, plaintiffs allege that defendants made false representations to SACS in
order to be removed from probation and to be accredited. (Id. at 7.) SACS was, however, no longer
the accreditation organization for AIU after November 6, 2008. (Id. at 18.) Based on that fact and
on the order dismissing all but the accreditation claim, the magistrate judge granted the defendants’
request to prohibit discovery of documents created after November 6, 2008. (Id. at 17-19.) Fact
discovery in the Georgia lawsuit was ordered closed on October 24, 2013. (Order, Oct. 9, 2013.)
[Georgia lawsuit dkt 305.]

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In September 2013, plaintiffs served a subpoena to depose HLC in Chicago, Illinois, pursuant
to Fed. R. Civ. P. 30(b)(6), and listed 20 different topics for the deposition. (HLC’s Mot., Ex. B.)2
HLC objected to the scope of the deposition, arguing that, because the lawsuit related to alleged
problems arising during SACS’s accreditation of AIU, there was no need for discovery about HLC’s
general accreditation standards, its investigation into AIU, or anything occurring after November 6,
2008. (HLC’s Mot., Ex. C.) In response to these objections, plaintiff sent a revised subpoena
limiting the deposition to the following three categories of information:
1. Communications between HLC and SACS referencing AIU, which transpired
between January 1, 2005, and November 6, 2008.
2. HLC’s policies and procedures effective during all periods of time between
January 1, 2005, and November 6, 2008, relating to its accreditation of
institutions that are accredited by another regional accrediting body, institutions
that are on probation or suspended by, or whose accreditation has been revoked
by another regional accrediting body.
3. Communications between AIU and HLC regarding AIU’s satisfaction of SACS’
standards, specifically statements made by AIU regarding its practices and
procedures for admitting students and for ensuring the qualification of its faculty
members between January 1, 2005, and November 6, 2008.

(Pls.’ Mem., Ex. D.) [Dkt 4.] HLC agreed to the deposition with these limitations. (HLC’s Mot.
at 7.)
The deposition of HLC’s Rule 30(b)(6) witness, Dr. Andrew Lootens-White, took place in
Chicago on October 17, 2013, a week before the scheduled conclusion of fact discovery.3 (Pls.’

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HLC had previously produced documents to plaintiffs pursuant to a document subpoena
served in 2011. (Pls.’ Mem. at 3 n. 4.) [Dkt 4.]
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Plaintiffs’ motion included redacted excerpts from Dr. Lootens-White’s deposition. The
court requested and the parties provided, a complete copy of the deposition for the court’s use.
Plaintiffs are ordered to file the complete unredacted transcript on the docket of the Northern District
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Mem. at 1.) Throughout the deposition, which lasted more than two and a half hours, HLC’s counsel
instructed Dr. Lootens-White not to answer certain questions posed by plaintiffs’ counsel, asserting
that the questions were outside the scope of the subpoena. (Id. at 4-6.) For example, the witness was
instructed not to answer these questions:
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HLC has an accrediting role, correct? (Id., Ex. A, HLC Dep. at 27.)

•

How would you describe what HLC is and what it does? (Id. at 26-27.)

•

How many schools does HLC accredit? (Id. at 29.)

•

Were you aware that a number of the documents submitted to HLC as part of
the accreditation package from AIU had also been submitted to SACS in
response to SACS probation?

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Was HLC ever informed of anyone from AIU intentionally misleading a
SACS visiting team? (Id. at 83.)

•

If AIU had informed you that they intentionally misled a SACS visiting team
is that something that HLC would have been interested in its accrediting
decision? (Id. at 85.)

HLC says that it objected to many of the questions because they “were related to HLC’s
accreditation of AIU, which occurred in mid-2009, well after the temporal limits established by the
Court’s Order.” (HLC’s Mot. at 11.) Further, at the deposition HLC’s counsel argued that the
questions about HLC’s “role” and “what it does” were improper because they were not directly
related to the limited inquiry about HLC’s policies and procedures as described in subpoena topic
#2. (HLC Dep. at 27-29.)

of Illinois under seal in light of the protective order entered in the Georgia lawsuit [Georgia lawsuit
dkt 217].
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Plaintiffs now ask this court for an order directing HLC to re-produce its witness and
requiring counsel to abstain from directing the witness not to answer questions. (Pls.’ Mem. at 9.)
Plaintiffs also ask for sanctions against HLC in the amount of their “fees and costs incurred in
bringing this motion and in attending a reset deposition in Chicago.” (Id.) HLC asks the court to
deny plaintiffs’ request and to issue a protective order under Fed. R. Civ. P. 30(d). (HLC’s Mot. at
12.)

Legal Standard
During a deposition, objections “must be noted on the record, but the examination still
proceeds; the testimony is taken subject to any objection.” Fed. R. Civ. P. 30(c)(2). “A person may
instruct a deponent not to answer only when necessary to preserve a privilege, to enforce a limitation
ordered by the court, or to present a motion under Rule 30(d)(3).” Id. If a nonparty deponent fails
to answer a question, the questioning party may move to compel an answer. Fed. R. Civ. P.
37(a)(3)(B)(i).

Discussion
As an initial matter, plaintiffs argue that HLC’s motion for a protective order is untimely
because it was filed nearly a month after the deposition was taken. (Pls.’ Reply at 5.) [Dkt 17.] As
this court observed at the initial hearing on November 8, 2013, Rule 30(d) provides only for the
filing of motions to terminate or limit “[a]t any time during a deposition.” Fed. R. Civ. P.
30(d)(3)(A). To use this rule, an attorney should suspend the deposition, state the problems on the
record, and apply for court protection immediately. See NDK Crystal, Inc. v. Nipponkoa Ins. Co.,
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No. 10 C 1824, 2011 WL 43093 at *4 (N.D. Ill. Jan. 4, 2011). Although the immediacy requirement
may be overlooked when the movant is pro se, Burnett v. City of Herrin, No. 10-cv-0533-JPG-SCW,
2011 WL 4007377 at *1 (S.D. Ill. Sept. 8, 2011), that is not the situation here. Furthermore, as
plaintiffs note, HLC does not provide any justification for the delay in requesting an order limiting
the deposition. Thus, HLC’s motion for a protective order is denied as untimely.
For their motion to compel, plaintiffs argue that it was improper for HLC’s attorney to
instruct Dr. Lootens-White not to answer without asserting a claim of privilege. (Pl.’s Mem. at 8.)
This view, however, is overly restrictive. Rule 30(c)(2) allows attorneys to instruct a witness not to
answer not only to protect privilege but also “to enforce a limitation ordered by the court.” Here,
the court in Georgia ordered in February 2013 that “discovery should not be permitted for documents
created subsequent to November 6, 2008, because . . . SACS no longer was the accreditation
organization for AIU.” (Order, Feb. 22, 2013, at 18.) HLC contends that order provides support
for its attorney’s instructions not to answer questions “related to HLC’s accreditation of AIU, which
occurred in mid-2009.” (Defs.’ Mot. at 11.)
Plaintiffs maintain that the February order is not controlling. First, plaintiffs argue that the
order applies only to discovery of documents, not deposition testimony, and only to discovery from
defendants, not third parties. (Pls.’ Reply at 8-9.) The February order, however, applies to all
discovery. The heading for the section of the order addressing this issue states, “Discovery on the
SACS Fraud Claim Should not Extend Beyond November 2008.” (Order, Feb. 22, 2013, at 17.)
The court also explained, without limitation, that “the temporal scope of discovery must be
curtailed.” (Id. at 18.) Moreover, plaintiffs’ counsel was notified of HLC’s interpretation of the
discovery order when HLC objected to the initial subpoena. At that point, plaintiffs’ counsel could
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have asked the court in Georgia to clarify the scope of discovery but instead agreed to include the
cut-off date as a limitation in the subpoena. Plaintiffs’ agreement to those limitations underscores
counsel’s understanding that the February order limited discovery from non-parties as well as
defendants, and applied to deposition testimony as well as document production. This court cannot
create an exception to the Georgia court’s discovery order.
Plaintiffs also decry what they characterize as HLC’s “bad faith” behavior, arguing that HLC
knew the November 6, 2008 date was “erroneous” and negotiated its inclusion in the subpoena as
a trap for plaintiffs’ counsel. (Pls.’ Reply at 9-10.) The record does not support plaintiffs’
protestations. First, plaintiffs say that it “became apparent during HLC’s truncated deposition . . .
that HLC did not begin accrediting AIU in November 2008, but rather in May 2009.” (Pls.’ Reply
at 9.) The deposition was not, however, the first time plaintiffs became aware of the May 2009 date.
As early as March 2011, more than two years before the deposition, plaintiffs acknowledged in the
proceedings in Georgia that “HLC granted AIU accreditation in May 2009.” (Pls.’ Opp’n Defs.’
Mot. Quash Subpoena at 8.) [Georgia lawsuit dkt 99.] Because the plaintiffs knew about the 2009
accreditation date and agreed to the 2008 limitation when they negotiated the scope of the subpoena,
their effort to portray HLC as setting a trap is unpersuasive.
Second, there is no evidence before this court that the magistrate judge’s statement that
SACS stopped accrediting AIU on November 6, 2008 is, in fact, “erroneous” as plaintiffs claim. The
fact that HLC granted accreditation to AIU in May 2009 does not, standing alone, prove anything
about when SACS stopped accrediting AIU. Significantly, Plaintiffs knew at the time the February
2013 order was entered that there was a gap between the November 6, 2008 date stated in the

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magistrate judge’s order and May 2009 date when HLC accredited AIU. There is no evidence in the
record before this court that plaintiffs ever raised this with the court in the Georgia lawsuit.
Plaintiffs argue, however, that some of the questions that Dr. Lootens-White was instructed
not to answer relate to conduct occurring before November 2008. (Pls.’ Reply at 3-4, 7.) Plaintiffs
list three types of questions that fell into this category: questions about (1) whether HLC has an
accrediting role, (2) how many schools HLC accredits, and (3) HLC’s policies in regard to decisions
by certain types of other accreditors. (See id. at 7; HLC Dep. at 27-29, 68.) On their face, these
questions do not seek information outside the temporal scope of the February 2013 discovery order.
HLC nonetheless asserts that plaintiffs’ motion should be denied because the questions at issue
amount to “undefined, unfocused fishing expeditions,” and plaintiffs fail to explain what they hope
to gain from a second deposition. (HLC’s Mot. at 10.)
This court may deny a motion to compel a deposition if it would not aid “‘the exploration
of a material issue.’” CSC Holdings, Inc. v. Redisi, 309 F.3d 988, 993 (7th Cir. 2002) (quoting Isr.
Travel Advisory Serv., Inc. v. Isr. Identity Tours, Inc., 61 F.3d 1250, 1254 (7th Cir. 1995)); see Loc.
744, Intl. Bhd. of Teamsters v. Hinckley & Schmitt, Inc., 76 F.3d 162, 165 (7th Cir. 1996) (affirming
denial of motion to compel when movant had not shown the “relevance of the information sought”).
HLC points to the recent decision in Last Atlantis Capital, LLC v. AGS Specialist Partners, Nos. 04
C 0397, 05 C 5600, 05 C 5671, 2013 WL 4759581 at *3 (N.D. Ill. Sept. 4, 2013), which denied a
similar request for further discovery when counsel’s instructions not to answer during a deposition
ran afoul of the federal rules. No additional discovery was warranted, the court explained, because
the party seeking it had “not explained what additional testimony they require or why the testimony
they got was inadequate.” Id.
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Having reviewed the deposition transcript, this court declines to order HLC to produce a
witness for a continued deposition. As in Last Atlantis Capital, the plaintiffs here have not shown
that compelling answers to the questions addressing pre-November 2008 conduct will produce any
additional material evidence. To start, in a number of instances in which HLC’s counsel initially
instructed the witness not to answer, the question was eventually answered after plaintiffs’ counsel
rephrased the question. For example, HLC’s counsel eventually allowed the witness to answer
whether “HLC accredits higher education institutions,” thereby providing the answer to plaintiffs’
counsel’s question about HLC’s accrediting role. (HLC Dep. at 29.) Likewise, it is not correct, as
plaintiffs claim, that HLC’s counsel directed the witness not to answer “‘[a]ny questions’ on the
subject of whether HLC was aware that AIU had been on probation with SACS.” (Pls.’ Mem. at 5.)
That question was asked and answered, and further deposition questions on that topic were also
answered. (HLC Dep. at 56, 58-59.)
Furthermore, a number of the topics which HLC refused to answer had been removed from
the deposition topics during the pre-deposition negotiations between HLC’s counsel and plaintiffs’
counsel. For example, plaintiffs’ counsel asked questions about HLC’s communications with the
Department of Education regarding AIU. (HLC Dep. at 64.) That topic appeared on the initial
deposition subpoena (HLC’s Mot., Ex. B, at 6), but was not among the three deposition topics in the
final subpoena. Likewise, plaintiffs’ counsel asked whether HLC accredits more proprietary schools
than SACS. (HLC Dep. at 70.) That topic was also initially listed (HLC’s Mot., Ex. B, at 8), but
deleted from the final subpoena.
Finally, it is important to remember that plaintiffs’ remaining claim in the case is that
defendants made false statements to SACS with regard to AIU’s purported compliance with SACS’s
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accreditations standards. (Order, Feb. 22, 2013, at 6-9.) HLC is a non-party to the lawsuit whose
deposition is being taken at the tail-end of discovery. Its accreditation practices are not at issue.
Plaintiffs offer no reason why the answers to questions about how many schools HLC accredits and
how HLC responds to the actions of certain outside accreditors might have any bearing on AIU’s
alleged misrepresentations to SACS. Thus, plaintiffs have not justified the need to redepose HLC’s
representative and their motion to compel is denied.

Conclusion
For the reasons set forth in this order, plaintiffs’ motion to compel and HLC’s motion for a
protective order are denied.

________________________________
Geraldine Soat Brown
United States Magistrate Judge

DATE: December 10, 2013

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