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United States ex rel. Powell v. American Intercontinental University, Inc.

United States District Court, Seventh Circuit

December 10, 2013

UNITED STATES OF AMERICA ex rel. MELISSA SIMMS POWELL, et al., Plaintiffs,
v.
AMERICAN INTERCONTINENTAL UNIVERSITY, INC., et al., Defendants.

MEMORANDUM OPINION AND ORDER

GERALDINE SOAT BROWN, 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.

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.]

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.' 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:

• HLC has an accrediting role, correct? ( Id., Ex. A, HLC Dep. at 27.)
• How would you describe what HLC is and what it does? ( ...

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