DENVER (Legal Newsline) - Colorado’s highest court reversed an appeals court’s order requiring a new trial over state claims a career college defrauded students out of more than $200 million, but said an appeals court must reconsider whether the college’s actions had “significant public impact.”
The Colorado attorney general’s office sued CollegeAmerica in 2014, claiming it violated state consumer protection laws by telling students they would earn more money in better jobs if they obtained a CollegeAmerica degree. The state sought injunctions and $232 million in tuition and fees students had paid the school since 2006.
The case went to a bench trial over CollegeAmerica’s objection it had a right to a jury trial because of the size of the civil penalties the state was seeking. The judge ultimately ordered CollegeAmerica to pay $3 million, rejecting the state’s claim that the schools EduPlan loan program had unconscionable terms that led to excessive student default rates.
An appeals court upheld the trial judge’s decision denying a jury trial but ordered a retrial on the question of whether the trial court had improperly applied a version of the state consumer protection statute the Colorado General Assembly amended in 2019, long after the state sued. That amendment made it clear that the state needn’t prove a deceptive trade practice had a “significant public impact.”
The Colorado Supreme Court said the appeals court went too far in ordering a new trial. In a May 15 decision, the high court said the appeals court should first reconsider whether CollegeAmerica had adequate opportunity to litigate the question of whether the amended law should be applied in its case.
The court otherwise upheld the appeals court decision, ruling that the state couldn’t rely upon statistical evidence alone of a high default rate to prove the EduPlan program was unconscionable to all borrowers. The court also held that CollegeAmerica wasn’t entitled to a jury trial, despite the state’s large disgorgement demands, because state regulatory actions are equitable in nature and different than ordinary civil fraud cases seeking damages.