SanFIam?sco CountySuperior Court JAN 1 6205 LE OF AIHE COURT BY: (??09pr Clair?" SUPERIOR COURT OF CALIFORNIA COUNTY OF SAN FRANCISCO PEOPLE OF THE STATE OF CALIFORNIA Case No. ex rel. DENNIS HERRERA, SAN FRANCISCO CITY ATTORNEY, Plaintiff, . TENTATIVE DECISION AND vs. PROPOSED STATEMENT OF DECISION ACCREDITING COMMISSION FOR . COMMUNITY AND JUNIOR COLLEGES, and DOES 1?50, inclusive, Defendant. I. INTRODUCTION In this case the San Francisco City Attorney, on behalf of the People of California, asks this court to vacate the decision of the defendant accrediting commission (ACCJ C) in terminating the accreditation of the City College of San Francisco. City College is not a party. The action is brought under this state?s unfair competition law CU CL). This use of the law appears unprecedented, and the case presents a series of novel legal issues. A plain English summary of my rulings appears at (Summary), below at page 16. i The sole issues before the court are whether and to what extent the People have proven a violation of the UCL, and if they have, what relief is commensurate with the speci?c material violations proven. Unlike the situation presented by a motion for preliminary injunction, I do not now Case No. (300- 13-533 693 balance hardships of issuing or not issuing injunction, and I do not weigh those hardships against a forecast of the strength of the parties? positons on the merits. The merits are now established and the sole function of injunctive relief is to address the defendant?s proven derelictions. This is my tentative decision and proposed statement of decision under CRC 3.1590 Parties objecting under CRC 3.1590 must be familiar with the authorities that describe the very limited purposes of objections.2 In addition to their objections, I solicit the parties? View on two other issues as well, described in the Conclusion of this proposed statement. ?After I have considered the parties? views, I will issue a ?nal statement of decision and, if appropriate, an accompanying injunction. II. BACKGROUND The ACCJC and City College The Accrediting Commission for Community and Junior Colleges accredits community colleges and other 2-year institutions in California, Hawaii, and the Paci?c Islands. ACCJ Trial Brief, 6. ACCT is a non-pro?t organization with over 100 member institutions. Id.; See also Peeple?s Post-Trial Brief, 51. As an accreditor, ACCJ collaborates with member institutions to develop and promulgate a set of accreditation requirements and standards applicable to member institutions. Deposition of Barbara Beno, 22:25-23:20. Member institutions agree that they will periodically undergo a comprehensive review aSsessing their compliance with accreditation requirements. Id. role, as described by its President, Barbara Beno, is to provide quality assurance to the public and to provide the impetus and support for institutional excellence over time. 1 As I noted during closing argument on December 9, 2014, and as the result of the recent ?ling of voluminous exhibits and transcripts as well as the multiplicity of issues, I have extended the time (to today) for the ?lling of this proposed statement of decision, and hereby do so in writing. CRC 3.1590 . 2 Golden Eagle Ins. Co. v. Foremost Ins. Co., 20 Cal.App.4th 1372, 1380 Yield Dynamics, Inc. v. TEA Sys. Corp, 154 Cal.App.4th 547, 560 (2007); Heaps v. Heaps, 124 Cal.App.4th 286, 292 (2004) (?The main purpose of an objection to a proposed statement of decision is not to reargue the merits, but to bring to the court's attention inconsistencies between the court?s ruling and the document that is supposed to embody and explain that ruling?) 2 Case No. Id. at 21:11~l4, 22:18-24. At the time of trial, ACCJ had a?nine?person paid staff, consisting of seven full-time members and two-part time members. Trial Transcript, 5726-8.3 When ACCJ evaluates a school, it dispatches an evaluation team made up of unpaid volunteers to visit the school. Id. at 572:20-22. Then ACCJ C?s Commission, also composed of unpaid volunteers, makes an accreditation decision. Id. at 572:23~573:1. City College of San Francisco is a public community college accredited by ACCJC. I have previously discussed City College?s signal importance. See Jan. 2, 2014 Order, 41-42. B. City College?s Recent Accreditation History 1. 2006 Evaluation and Followup Reports An ACCJ evaluation team visited City College in March 2006. Ex. 2 at 3. ?The visiting team validated that the college meets the eligibility reduirements for accreditation and complies with the standards of accreditation, as required by Id at 4. Nevertheless, the team developed eight recommendations ?to guide the college in accomplishing certain goals and assuring the high quality of its programs and services.? Id. at 4-5. The team elaborated, ?Recommendations and #4 are presented as overarching concerns that should receive the college?s focused attention and emphasis. The other recommendations are also important for the college to address in conjunction with its ongoing planning and Operational activities.? Id. at 5.4 Recommendation 2 concerned planning and assessment. Id. Recommendation 3 concerned student learning outcomes. Id. Recommendation 4 concerned ?nancial planning and stability. Id. In Recommendation 4, the team recommended ?that the college develop a ?nancial strategy that will: match ongoing expenditures with ongoing revenue; maintain the minimum prudent reserve level; reduce the percentage of its 3 In 2012, ACCIC spent almost $800,000 to compensate four of its full-time sta? members. See Dec. 2, 2014 Stipulation 1i 1. ACCIC also paid other full time staff in 2012. Id. at 2. ACCJC continues to pay salaries to full?time staff and executives. Id. at it 3. 4 Together, the eight recommendations implicated Standards I.A.3, I.A.4., LB, ILA. II.A.2, II.A.6, and Ex. 2 at 5-6. 3 Case No. CGC-13-533693 annual budget that is utilized for salaries and bene?ts; and address funding for retiree health bene?t costs.? Id. I In June 2006, the Commission took action to reaf?rm City College?s accreditation with the requirement that City College complete a Progress Report and a Focused Midterm Report. Ex. 3 at 1. The Commission instructed City College to. focus on its resolution of Recommendation 4 in the Progress Report, which City College was required to submit in March 2007. Id.5 The Commission instructed City College to address all in the Focused Midterm Report, with special emphasis on Recommendations 2 and 3. Id. at 1-2. City College submitted the required Progress Report. Ex. 6 at i. In addition, an evaluation team visited City College in March 2007. Id. The evaluation team concluded that City College had made signi?cant progress in responding to Recommendation 4, but that City College should continue to address the issue of the percentage of personnel costs of its overall budget and should develop a plan for funding the long?term liability of retiree health bene?ts. Ex. 5 at 7. After reviewing the reports submitted by City College and the 2007 evaluation team, the Commission took action to accept the report with a requirement that City College complete a Focused Midterm Report. Ex. 6 at 1. The Commission directed City College to address all recommendations noted by the 2006 evaluation team, with a special emphasis on Recommendation 4. Id. In January 2008, between the Commission?s action on the Progress Report and City College?s submission of the mid-term evaluation, ACCJC sent a letter to Chief Executive Of?cers and Accreditation Liaison Of?cers of all the institutions it accredits. Ex. 9 at 1. In the letter, the Commission reported that the Department of Education found that ACCJ did not fully comply with i the two~year rule, which, according to the letter, requires accreditors to provide no more than two years for an institution to correct de?ciencies and come into compliance with accreditation standards 5 The letter reporting the Commission?s action was sent by ACCJC President Barbara Beno on behalf of the Commission. In the letter, Beno referred to Standards LB, II.A.2, II.A.3, II.A.6, and Ex. 3 at 1-2. 4 Case No. (EGG-13633693 unless the Commission identi?es. good cause to extend the period and withhold termination. Id. The Commission reported that it would (1) strengthen the language referring to the two-year rule in letters sent to institutions with de?ciencies, (2) set deadlines, within a two-year time limit, by which institutions must address de?ciencies, (3) not extend the accreditation of an institution beyond a maximum of two years where that institution is de?cient in accreditation standards that signi?cantly affect educational quality or institutional integrity, and (4) create a small list of reasons that the Commission would consider potential reasonable bases for a ?good cause? extension. 1d. The Commission stated that it would retain sole discretion to determine whether a ?good cause? extension is warranted. Id. City College submitted the required Focused Midterm Report in advance of the Commission?s June 2009 meeting. Ex. 19 at l. The Commission took action to accept the Focused Midterm Report with the requirement that College submit a Follow-Up Report by March 2010. Id. The Commission directed City College to ?demonstrate status toward resolution of Recommendation 3 and resolution of Recommendation Id. The letter also provided: ?[I}nstitutions out of compliance with standards or on sanction are expected to correct de?ciencies within a two-year period or the Commission must take action to terminate accreditation. City College of San Francisco must correct the de?ciencies noted by June 2010.? Id. But nothing else in the Commission?s communications with City College up to and including the Commission?s acceptance of the Focused Midterm Report indicates that City College was de?cient in meeting the accreditation standards. To be sure, the Commission had identi?ed concerns and required City College to take action to address those concerns. But it had not identi?ed de?ciencies? City College submitted the required Focused Midterm Report, which the Commission to accepted at its June 2010 meeting. Ex. 24 at 1. But the Commission expressed concern that City College was not making its Annual Required Contribution (ARC) to meet its Other Post Employment 6 The de?nition of ?de?ciencies? is discussed below at 5 Case No. (EGG-13633693 Bene?ts (OPEB). Id. The Commission explained it was concerned about whether City College?s ?nancial resources were suf?cient to support student learning outcomes and to improve institutional effectiveness. Id. The Commission stated that unless the OPEB liability was funded, the college?s ?nancial condition would deteriorate to a level that it would make it dif?cult to meet Standard HID. Id. at 2. The Commission required City. College to provide information about how City College would handle ARC in its upcoming self-study, due in spring 2012 in conjunction with the City College?s evaluation for re-accreditation. Id. The Commission also desired City College to meet standards related to student learning outcomes and planning. Id.7 The Commission did not mention the two- year rule. 2. 2012 Evaluation a. Policy on Commission Actions on Institutions ACCJC's July 2011 Policy on Commission Actions on Institutions provides: ?In the case that a previously accredited institution cannot demonstrate that it meets the Eligibility Requirements, Accreditation Standards, and Commission Policies, the Commission will impose a sanction as de?ned below. If the institution cannot document that it has come into compliance within a maximum of two years after receiving the initial sanction, the Commission will take adverse action.? Ex. 36 at 38.8 Adverse action, for an accredited institution, means termination of accreditation. Id. The policy sets forth eight possible actions that may be taken on institutions that apply for reaf?rmation of accreditation. Id. at 40-42. First, the Commission may reaf?rm accreditation. Id. at 40. This is proper where the institution substantially meets or exceeds accreditation requirements and recommendations are directed towards strengthening the institution, not correcting failures to meet accreditation requirements. Id. If the Commission reaf?rms accreditation, the institution is required to submit a midterm report in the third year of the six-year accreditation cycle. Id. 7 The Commission listed a set of standards: 1.3.1, 11.3.4, and no.2. 3 The policy was subsequently edited in August 2012 and revised in June 2013. Ex. 119 at l. The provisions for termination in the June 2013 version of the policy are not materially different from those discussed below. Id. at 5. 6 Case No. CGC-13-533693 Second, the Commission may reaf?rm accreditation and request a follow-up report. Id. Third, the Commission may reaf?rm accreditation- and request a followup report with a visit. Id. at 40-41. These actions are appropriate where the institution substantially meets or exceeds the accreditation requirements, but faces recommendations on a small number of issues of some urgency that, if not immediately addressed, may threaten the institution?s ability to meet the accreditation requirements. Id. at 4. In both cases, the recommendations are expected to be resolved within a one? to two-year period. Id. Fourth, the Commission may defer a decision on rea?tirmation to allow an institution six months or less to correct de?ciencies or provide additional information. Id. at 41. During the deferral period, the institution remains accredited. Id. The ?fth through seventh options are increasing levels of sanctions: warning, probation, and show cause. Id. at 41 -42. In all cases, an institution that?is out of compliance with accreditation standards must come into compliance within a two-year period or be terminated, absent good cause for an extension of time. Id. at 41. The Commission will issue a warning, the lowest level of sanction, when an institution has ?pursued a course deviating from? the accreditation requirements. Id. The Commission will set the time for the institution to resolve its de?ciencies. Id. During the warning period, the institution is subject to reports and visits at the Commission?s discretion. Id. The Commission will impose probation when an institution ?deviates signi?cantly from? the accreditation requirements, ?but not to such an extent to warrant a Show Cause order or the termination of accreditation, or fails to respond to conditions imposed upon it by the Comr'nission, including a Id. As with a warning, the Commission will set the time for the institution to resolve its de?ciencies and, during the probation period, the institution is subject to reports and visits at the Commission?s discretion. Id. The Commission will require the institution to show cause why its accreditation should not be Case No. CGC-13-533693 withdrawn when an institution is ?in substantial noncompliance wi the accreditation requirements, ?or when the institution has not responded to the conditions imposed by the Commission.? Id. at 41 42. An institution on show cause status must demonstrate that it has corrected the de?ciencies noted by the Commission and is in compliance with accreditation standards. Id. at 42. The burden of proof is on the institution. Id. The Commission will set the time by which the institution must resolve de?ciencies and the institution will be subject to reports and visits at the Commission?s discretion. Id. Finally, the Commission will terminate accreditation where an institution ?has not satisfactorily explained or corrected matters of which it has been given notice, or has taken an action that has placed it signi?cantly out of compliance with the? accreditation requirements. Id. Termination is subject to internal review and appeal. Id. b. Policy on Commission Good Practice in Relations with Member Institutions In July 2011 Policy on Commission Good Practice in Relations with Member Institutions, the ?Commission makes the commitment to follow good practices in its relations with the institutions it accredits.? Ex. 36 at 43. Speci?cally, the Commission stated that it ?will?: ?Provide institutions with due process concerning accrediting decisions made by the Commission: Institutions are provided an opportunity to respond in writing to draft team reports in order to correct errors of fact; to respond in writing (no less than 15 days in advance of the Commission meeting) to ?nal team reports on issues of substance and to any Accreditation Standard de?ciencies noted in the report; and i to appear before the Commission when reports are considered.? Id. at 44. Importantly, the Commission stated, among other things, that the Commission?s action lists any de?ciency, which was not noted in the Team Report, before making any decision that includes a sanction, denying or terminating accreditation, or candidacy, the Commission, through its President, will afford the institution additional time to respond in writing to the perceived de?ciency before ?nalizing its action at the next Commission meeting.? Id. at 45. Case No. CGC-13-533693 c. The 2012 Team?s Report The 2012 Evaluation Team revievved City College?s progress in meeting the eight recommendations made by the 2006 Evaluation Team and adopted by the Commission. See Ex. 61 at 11?15. The team found that City College had partially addressed Recommendations 1-3, 7-8. Id. at 12-13, 15. The team found that City College had not addressed Recommendations4-6. Id. at 13-14. With respect to Recommendation 4, the team found that the projections for 2011-12 showed expenditures exceeding revenues, a reserve that met the minimum requirement under California law but that was well below prudent levels, salaries and bene?ts above 92% of the unrestricted general fund expenditures, and growing unfunded liabilities such as OPEB. Id. at 14. The team found that City College did not have a plan to address payment of its un?mded liabilities. Id. The 2012 Evaluation Team made fourteen recommendations. Id. at 5-8. The recommendations fell into three groups: (1) ?to improve implying that the accreditation requirements are met but that there is room for improvement; (2) ?to fully meet? accreditation requirements; and (3) ?to meet? accreditation requirements. Id. The ?rst group consisted of Recommendations 1 and 3. Id. at 5-6.9 The second group consisted of Recommendations 2, 4-9, 12-14. Id. at 5--8.to The third group consisted of 10?11. Id. at 7-8.11 The 2012 team?s Recommendations 10-11, like the 2006 team?s Recommendation 4, related to City College?s ?nancial situation. Id. at 55-58. The 2012 team recommended the Commission impose probation through March 2014, with a followup report and a visit in one year. Ex. 68 at ACCJC 004012. The team reasoned that City College deviated signi?cantly from the accreditation standards, had not addressed four of the eight recommendations from the 2006 team, had partially addressed four of the eight recommendations from 9 The 2012 Evaluation Team cited Standards 1.11.3 and 1.3.5. - - The Evaluation Team cited Standards I.A.3, 1.3, 1.3.1, 1.3.2, 1.3.4, 1.3.6, f, g-i, 11.1613, II.A.6, iI.A.6.a, 11.3.1, 11.3.3, c, r, 11.3.4, no.2, 111.A.1.c, 11111.2, 1113.5, 1113.1, 111.02, 111111.34; g, 11113.3, IV.A, 1v.A.1 was, IV.A.5, 1v.s.1, e-h, and The Evaluation Team cited Standards 1111). .c~d and Ill.D.2.c, g. 9 Case No. the 2006 team, and did not meet four eligibility requirements: administrative capacity, ?nancial resources, ?nancial accountability, and relations with the accrediting commission. Id. at 004014; see also Ex. 69 (letter from Serrano expressing concerns relating to ?overarching challenges? facing City College, including with respect to mission and institutional effectiveness, student learning and assessment, leadership, governance, and decision-making, and resources and institutional integrity). d. The Commission?s Action In a July 2, 2012 letter, Beno announced that in June 2012 the Commission acted to order Show Cause, requiring City College to submit a Show Cause Report by March 15, 2013. Ex. 77 at 1. The report was to be followed by a visit. Id. The Commission stated that City College would be required to demonstrate that it had corrected the de?cienciesnoted by the Commission and brought itself into compliance with the accreditation requirements at the time of the Commission?s June 2013 meeting. Id. The Commission emphasized that City College would bear the burden of proof of demonstrating that it should be allowed to retain accredited status. Id. The Commission based its decision on its conclusion that City College failed to demonstrate compliance with a signi?cant number of accreditation requirements and failed to implement the eight recommendations of the 2006 team, partially addressing ?ve and failing to implement three. Id. at 2. The Commission incorporated the 2012 Evaluation Team Report by reference insofar as it listed speci?c accreditation requirements that City College failed to meet, fully or partially. Id. at 2 (incorporating the report), 4 (urging City College to use the report as a basis for developing strategies to come into compliance). The Commission also cepied the text of the 2012 Evaluation Team?s ?ndings on Eligibility Requirements and recommendations, noting which recommendations repeated recommendations expressed by the 2006 Evaluation Team and speci?c standards implicated by the recommendations. Id. at 4-7. 10 Case No. CGC-13-533693 3. 2013 Show Cause Evaluation City College submitted its Show Cause Report, as required. Thereafter, a new team, again chaired by Sandra Serrano, visited City College. The 2013 Evaluation Team was impressed by City College?s response to theCommission?s show cause directive. BX. 112 at 9.12 Nevertheless, the team found that City College did not meet many standards.13 The team found that City College did not meet Eligibility Requirements 63-66. The team found that City College had addressed Recommendations 3-4, 6, and 9, and had partially addressed Recommendations 1-2, 5, 7-8, and 1044, made by the 2012 Evaluation Team. Id. at 66-77. ACCJ provided City College a my of the 2013 Evaluation Team Report, invited City College to send a letter to Beno citing recommended corrections responsive to any perceived inaccuracies, and invited City College?s Chief Executive Of?cer to request an appearance to discuss the report. Ex. 114 at 1. ACCJC stated that the CEO was the expected presenter, and noted that City College should consult with ACCJC sta?? if it wished to invite other representatives to join the CEO. Id. at 2. Robert Agrella made a presentation on behalf of City College at the Commission?s June 2013 meeting. Trial Transcript, 790:12?18, 885:3-8, 90422-90526, 920:18-922:18. Interim-Chancellor Thelma-Scott Skillman and Accreditation Liaison Of?cer Gohar Mornjian also provided testimony on behalf of City College at the meeting. BX. 130 at 1; Trial Transcript, 634:8-12, 790:12u18, 885:3-8, 904:22-905:6, 920:18-922:18. Members 'of City College?s board of trustees did not attend. Trial Transcript, 790:25-791:12; 885:9?20. Their absence was noted by several Commissioners. Id. At the June 2013 meeting, the Commission voted 15-1, with one Commissioner abstaining, to terminate City '2 The reference to a July 2013 letter is a typographical error in the report, which was prepared before July 2013. ?3 Speci?cally, Standards 1.3.4, H.A.1, II.A.2, 11.3.1, 11.3.3, ILC, 1113.2, 31.3.2343, c, 11132.8, [11.113 .11, IV.A.2, IV.A.3, IV.A.4, IV.A.5, IV .13. I, and IV.B.2. BX. 112 at 17, 22, 24, 28, 31, 35, 38, 4243, 45, 48-55, 57-59, 61-62. 1 1 Case No. College?s accreditationJuly 2013 letter, the Commission announced its decision to terminate City College?s accreditation effective July 31, 2014. BX. 130 at 1. The Commission cited noncompliance with numerous accreditation standards,14L noncompliance with Eligibility Requirements 5, 17, 18, and 21, and the failure to fully address twelve15 of fourteen recommendations made by the 2012 Evaluation Team. Id. at 2-3. The Commission expressly referred to de?ciencies in City College?s leadership and ?nancial management. Id. at 3-5. 4. Proceedings Following the Commission?s Termination Decision In the July 2013 letter, the Commission advised City College of its right to a review and to appeal. Ex. 130 at 1. Pending review and appeal, the Commission?s decision was not ?nal. Id. The rights to review and appeal are described in the July 2013 edition of accreditation handbook. BX. 127 at 10205, 153-57.Mhistitutions whose accreditation is terminated have a right to request a review by the Commission. Id. at 102. A review must be requested prior to any appeal. Id. The institution may specify any of four bases to request review: there were errors or omissions in carrying out prescribed procedures on the part of the evaluation team and/or the Commission which materially affected the Commission?s decision; (2) there was demonstrable bias or prejudice on the part of one or more members of the evaluation team or Commission which materially affected the Commission?s decision; (3) the evidence before the Commission prior to and on the date when it made the decision which is being appealed was materially in error; or (4) the decision of the Commission was not supported by substantial evidence.? Id. at 102-03. Institutions may then appeal on the same bases. Id. at 156. A?er a notice of appeal is ?led, ACCJC appoints a hearing panel that is not constituted of Commission members and that did not 1? Speci?cally, Standards I.A.3, I.B.1, 13.2, I.B.3, 1.3.4, 11.A.l, 11.3.3, II.B.4, 11.0.1, II.C.2, 111.A.2, 111.8.1, 111.32, IH.C.1, 111.62, 111.13.], IV.A.1, IV.A.2, 1V.A.4, IV.A.5, IV.B.1, and IV.B.2. '5 The Commission concluded that Recommendations 6 and 9 had been fully addressed, and Recommendation 3 had nearly been fully addressed. 12 Case No. CGC-13-S33693 participate in the decision being appealed. Id. at 153-54. The institution may challenge hearing panel members. Id. at 154. The hearing panel may af?rm, amend, reverse, or remand the Commission?s decision. Id. at 156-57. City College sought review of the Commission?s termination decision. By letter of February 7, 2014, the Commission announced its action to re-affirm the termination decision. BX. 161. City College appealed.16 The Commission interpreted the ruling of the appellate heating panel to require a remand of the termination decision to consider City College?s state of compliance as of May 21, 2014. BX. 173 at 1. By letter of July 21, 2014, the Commission announced, upon a review consistent with its interpretation of the hearing panel?s decision, that a reconsideration of the termination decision was - not warranted. Id. The Commission reasoned that City College had not demonstrated compliance with Standards LB, ILA, ILB, II.C, 111.0, 111.1), and NB as of May 21, 2014. Id. at 1-2. Further, the Commission stated that because City College was on show cause status, substantial compliance was insuf?cient: City College was required to show full compliance with the standards. Id. at 2. In any event, the Commission concluded that City College had not even shown substantial compliance because so many standards were implicated. Id. Moreover, the Commission found that City College?s evidence indicated that it would take more than a year to achieve compliance with respect to student and learning support services, data analysis capability, internal control systems, and ?nances. Id. Thus, the Commission?s termination decision became ?nal. Id. Nevertheless, the Commission encouraged City College to apply for ?restoration status.? Id. The Commission added ?restoration status? to its policies in June 2014. Ex. 174 at 5. Under the policy, an institution that has not been granted a good cause extension to come into compliance with any standard prior to the termination decision may apply for restoration status after a termination decision. Id. To obtain restoration status, an institution must demonstrate its compliance with all accreditation requirements or its ability to come into compliance within a two-year restoration status ?5 The parties have not noted where in the record of this case the bases for that appeal are reflected. 13 Case No. 06013-533693 period. Id. at 6. The request for restoration status must be accompanied by an eligibility report. Id. at 5. The application process includes a comprehensive self-evaluation and a site visit. Id. If an institution obtains restoration status, its o?icial status remains accredited, pending termination. Id. While on restoration status, an institution will be subject to such follow-up or special reports as may be warranted, and will, at the end of the period, be subject to a comprehensive evaluation. Id. at 6. If the institution is in ?compliance? at the end of the restoration status period, its accredited status will be re-a?irmed. Id. Otherwise, termination will be immediately implemented with no ?uther opportunity for internal appeal. Id. City College applied for restoration status, with express reservations. BX. 247 at 1-3.17 0 C. Procedural History The People ?led their Complaint in this action on August 22, 2013. ACCJC removed this action to federal court. People ex rel. Herrera v. Accrediting Comm ?n for Community and Junior Colleges, 2013 WL 5945789, at *3 (N .D. Cal. Nov. 4, 2013). On the People?s motion, United States District Court Judge Illston remanded this action to this court. Id. at 1. Thereafter, the Peeple sought a preliminary injunction, while ACCJ moved to have this court abstain from hearing the case or to stay the proceedings. In a January 2, 2014 Order, I granted the People?s request for a preliminary injunction and denied ACCJ C?s motion to abstain or stay. On January 30, 2014, I issued a preliminary injunction blocking the Commission from implementing the termination of City College?s accreditation. In the summer of 2014, ?lrther attempt to stay the proceedings was rejected. In September 2014, I heard argument on cross-motions for summary adjudication pursuant to GOP. 437c(s). Summary adjudication was refused on all but-one issue. Sept. 19, 2014 Order, 1-2. On the remaining issue, 1 found that the Commission?s failure to have more than one academic on the 2013 Show Cause Team violated federal regulations. Id. at 2. Shortly thereafter, the court denied ?7 While news reports suggest the Commission has granted restoration status, its action on restoration (one way or the other) has no effect on the issues decided here. 14 Case No. CGC-13-533693 motion for judgment on the pleadings. Oct. 8, 2014 Order. This trial followed including about a week of testimony and the submission of voluminous exhibits and depositions. At closing argument, the People moved to add two new theories to the Complaint. I permitted the People leave to plead a theory based on use of improper standards, but not one citing denial of peer review based on rights derived from federal law and policies and procedures. Dec. 15, 2014 Order, 1-2. D. Central Issues The ultimate question posed by this case is whether the People are entitled to an order vacating the Commission?s 2012 decision to put City College on show cause and/or the Commission?s 2013 decision to terminate City College?s accreditation; or to some other relief. The People seek such an order to compel the Commission to review City College for re?af?rmation of accreditation based on a ?clean slate.? This in turn requires resolution of these issues: (1) Whether the UCL applies, that is, whether the challenged accreditation activities are ?business acts or practices? subject to the UCL. (2) Whether a doctrine preclude this suit, such as whether the UCL is preempted by federal law. ACCJC also presses arguments under the Near-Pennington doctrine, the Parker doctrine, quasi- judicial immunity, and litigation privilege. (3) Whether ACCJC engaged in any ?unlawful? conduct under the UCL, failure to maintain adequate controls against con?icts of interest, or the appearance thereof, with respect to team members or Commissioners; failure to include suf?cient academics on evaluation teams; failure to comply with federal regulations governing due process; violation of common law fair procedure; basing decisions on factors other than stated accreditation standards. (4) Whether ACCJ engaged in any ?unfair? conduct under the UCL, 15 Case No. CGC-13-533693 whether the allegedly tmlaw?rl conduct is unfair conduct under the acting unfairly by evaluating City College for reaf?nnation of accreditation while embroiled in a public political ?ght with City College. (5) What relief is justi?ed based on the unlawful or Unfair conduct actually proven at trial. SUMMARY All the interested parties?City College, the People, and ACCJC?agree that when City College had its accreditation terminated in 2013 it was not in full compliance with accreditation standards; and this after years of serious ?nancial and other problems. City College has not yet challenged that termination ?nding in court, but the San Francisco City Attorney has, on behalf of the affected People of California. The People?s case rests on a single statute, the Unfair Competition Law (U CL), which allows courts to issue injunctions after ?ndings of ?unfair? or ?unlawful? business practices. Practices that violate other laws, or state or federal regulations, might be termed ?unlawful,? and the People?s complaint contains a list of such assertedly unfair and unlaw?il practices. It appears the UCL has never previously been used to challenge an accreditation decision. The parties presented their evidence at trial, through ?ve days of testimony and many documents. The evidence does not support a ?nding of any unfair practices. The evidence does show that ACCJC violated certain federal regulations and a law known as the ?common law fair procedure? doctrine. That doctrine requires basic due process, that is, the fundamental opportunity to be able to respond to accusations of de?ciencies before a ?nal termination ?nding is made. These are this court?s ?ndings on liability. On my way to those ?ndings, I have had to evaluate a series of defenses that ACCJ claims bar this suit altogether. I have generally rejected those defenses. The People seek a judgment and injunction which would in effect erase the actions of ACCJC since 2012 and restore City College to a ?clean slate? of a fully accredited status. But in deciding what sort of injunction to issue, a court must ?rst decide which of the liability ?ndings are suf?ciently 16 Case No. material, or signi?cant, to warrant any relief. I have found that not all the liability bases deserve relief. Some of the liability ?ndings, speci?cally those relating to City College?s ability to respond in 2013 to the bases for termination, do warrant relief. The scope of the injunction I issue must be commensurate, or proportionate, to that speci?c liability. Therefore the injunction I plan to issue requires ACCJ to give City College that chance to respond; and allows ACCJC to then take any action consistent with law, including rescinding or reaf?nning the 2013 termination. This relief directly accounts for the signi?cant unlawful practices I have found, it pays attention to the extensive federal regulations which surround the accreditation process, and it respects, as it must and as all parties agree, the fact that under federal law it is ACCJ C, and not this court, which exercises its discretion with respect to accreditation decisions. iv. DISCUSSION A. Accreditation Activities are Subject to the UCL 1. Business Acts or Practices The broad language of the substantive provisions extends to ?anything that can properly be called a business practice and that at the same time is forbidden by law.? Loe??ler v. Target Corp, 58 Cal.4th 1081, 1125 (2014) (quotations omitted). The purpose is to protect both consumers and competitors by promoting fair competition in commercial markets for goods and services. Id. The statute allows courts to enjoin wrongful business conduct in whatever context such activity might occur, no matter the variations of possible schemes. Id. The initial question is whether ACCJ C?s challenged accreditation activities ?can properly be called a business practice.? For example, the UCL ?is not a roving warrant for a prosecutor to use injunctions and civil penalties to enforce criminal laws. Its application to conduct which violates the penal law is limited to circumstances where such conduct is also a business practice.? People v. 17 Case No. CGC-13-533693 E. WAR Inc, 106 Ca1.App.3d 315, 321 (1980). Whether a-particular act is business-relatedis a question of fact. People ex rel. City of Santa Monica, 12. Gabriel, 186 Cal.App.4th 882, 888 (2010). ACCJ argues that its accreditation activities are not business acts or practices because ACCJ is a nonprofit organization that does not compete'in a commercial market for accreditation services. ACCJC Trial Brief, 16.18 The People counter that ACCJ C?s accreditation activities are business acts or practices because (1) ACCJ charges member institutions for accreditation and accreditation services; and (2) several people make their livelihood from the activities performed by the ACCJ C. People?s Post?Trial Brief, 51; Ex. 59 (including annual membership fee invoice and schedule of fees for eligibility review charges); Dec. 2, 2014 Stipulation if 1. ACCJC moved for summary judgment on this issue, but I denied the motion because the Commission had not shown an absence of any businesslike attributes. Sept. 19, 2014 Order, 18. As on summary judgment, primary California authority is That v. Alders Maintenance Ass ?72, 206 Ca1.App.4th 1419 (2012). In That, the plaintiff homeowner was part of a group that attempted to recall the sitting board of directors from a homeowners association of which the plainti?? was a member. That, 206 Cal.App.4th at 1422. The recall effort failed, after which the plaintiff sued under the UCL challenging the underlying process. The trial court sustained the demurrer to the UCL cause of action, and the Court of Appeal af?rmed. Id. at 1424, 1427. The plaintiff argued that a homeowners association is a business under the UCL, noting that such associations have been held to be businesses under the Unruh Civil Rights Act. Id. at 1426-27. The That Court rejected the analogy, reasoning that the Unruh Act requires a broad de?nition of ?business establishment? to ful?ll its purpose of protecting civil rights, but the UCL does not require an equally broad de?nition of ?business? to ful?ll its purpose of protecting consumers and competitors ?8 ACCJ also argues that its accreditation activities are not business acts or practices because such activities are protected by quasi-judicial immunity and litigation privilege. ACCJC Trial Brief, 17-18. These are separate issues, addressed below. No authority suggests these issues pertain to whether ACCJC's actions are business acts or practices under the UCL. 18 Case No. CGC-13-533693 by promoting fair competition in commercial markets ior goods and services. Id. The That Court held that the dispute before it was not related to any activity that might be deemed in the ?least bit commercial,? but was solely related to the conduct of association elections. Id. at 1427.19 The Court explained that ?applying the UCL to an election dispute would simply make no sense. An association, operating under its governing documents to maintain its premises and conduct required proceedings, possesses none of the relevant features the UCL was intended to address. Applying the UCL in this context would both misconstrue the intent of that statute and undermine the speci?c procedures set forth in the Davis-Stirling Ac Id. 0n summary judgment, I distinguished That because the Commission charges a fee for accreditation services, which ?might be deemed in the least bit commercial.? Sept. 19, 2014 Order, 18. That remains factually distinguishable for the same reason. Ex. 59.20 In Pines v. Tomson, 160 Cal.App.3d 370 (1984), the publisher of a business telephone directory, a nonpro?t religious corporation, was sued under both the Unruh Act and the UCL. Pines, 160 Cal.App.3d at 375-78. The publisher accepted advertisements for publication only upon af?rmation that the person placing the advertisement was a born-again Christian. Id. at 375. The publisher argued that it was neither a ?business establishment? within the meaning of the Unruh Act, nor engaged in ?business practices? within the meaning of the UCL. Id. at 383. The argument was based on the publisher?s professed status as a nonpro?t religious corporation. Id. The publisher reasoned that it was not a business establishment, and therefore could not be engaged in business practices. Id. The Court noted that the publisher had ?businesslike attributes,? and concluded that the publisher was a business establishment within the meaning of the Unruh Act because it ?t both the commercial and noncommercial aspects of the meaning of a business establishment. Id. at 386. The ?9 That did not foreclose the possibility that the UCL might apply to a homeowners association that decided to sell products or services that are voluntary purchases for members or nonmembers. That, 206 Cal.App.4th at 1427. 2? ACCJC renews its argument, made on summary judgment, that accreditation by a non-pro?t accreditor is beyond the scope of the UCL. Trial Brief, 16; Sept. 19, 2014 Order, 17-18. But the out-of-state authority on which ACCJ relies is inapplicable to the California UCL, as described in the order. Sept. 19, 2014 Order, 16-18. 19 Case No. CGC-13-533693 Court held that the publisher?s activitieswere business practices under the UCL. Id. Relevant inquires in Pines may have included an analysis of the publisher?s businesslike attributes and whether the publisher was open to the public for commercial and noncommercial activity.21 As other courts have explained, the word ?business? embraces everything about which one can be employed, and is o?en synonymous with calling, occupation, or trade, engaged in for the purpose of obtaining a livelihood or gain. Burks v. Poppy Const. Ca, 57 Cal.2d 463, 468 (1962) (Unruh Act case). Businesslike attributes in Pines included solicitation and sale of commercial advertisements, substantial mandatory monetary fee for advertisements, collection of royalties and derivation of income from the sale of advertising space, and admissions respecting commercial and economic purposes. Pines, 160 Cal.App.3d at 386 n.10. While pro?t-seeking is one businesslike attribute, other attributes include employment of peeple, care for a physical plant, and charging a fee for use of facilities. O?Connor Village Green Owners Ass 22 Cal.3d 790, 796 (1983) (Unruh Act case). The issue is a close one here. On one hand, ACCJ collects a fee to provide accreditation services by which it funds, in part, its operations. ACCJC also maintains a paid staff that supports its accreditation work. Indeed, all of the work performed by ACCJ relates to its evaluations of institutions for accreditation; and the members pay for these services. Trial Transcript at 417; Ex. 59. On the other hand, ACCJC is a non-pro?t corporation; at closing argument, ACCJC urged this as a decisive :tiact.22 Aside from the receipt of a fee for the provision of services, there is no indication that ACCJ competes in any market to provide accreditation services. The fact that ACCJC provides accreditation services through a regulated federal system overseen by the Department of Educationzz? is vaguely reminiscent of That ?s invocation of regulation by the Davis~Sterling Act as a factor suggesting 2? As noted in my summary judgment order, precedent is in con?ict with respect to whether cases construing only the Unruh Act are good precedent for de?nitions under the UCL. Sept. 19, 2014 Order, 18 n.51. 22 Closing Argument Transcript at 66. As my earlier order noted (Sept. 19, 2014 Order, 1516), i have rejected the notion that this is decisive. 23 This is discussed in more detail below, (preemption). 2 Case No. the inapplicability of the UCL. If the lone rationale for the application of the UCL were to protect business competition, the analysis would favor position. But the UCL also protects consumers such as those the City Attorney represents now, and provides a broad scope of protection. Loe?ler, 58 Ca1.4th at 1125. Because ACCJ receives compensation to provide accreditation reviews, including the one at issue here, and maintains a paid full?time support staff to facilitate the provision of accreditation services, the conduct at issue in this case can properly be described as a ?business? practice. The UCL applies. 2. Safe Harbor As it did on summary judgment, ACCJ argues that it is expressly authorized to conduct accreditation activities under federal and state law, so it cannot be subject to UCL liability. ACCJC Trial Brief, 18?20; September 19, 2014 Order, 19. Of course, a UCL action cannot succeed if the challenged conduct is actually legal. September 19, 2014 Order, 19 (citing cases). But whether or not ACCJ is expressly authorized to conduct accreditation activities, the People are not alleging that ACCJ violated the law simply by conducting accreditation activities, but rather that ACCJ violated the law by conducting accreditation activities in a manner that violates the law and is not expressly authorized. 9 B. The City Attorney is Not Barred from Bringing this Lawsuit 1. Preemption I [F]ederal legislation prevails over state law pursuant to the supremacy clause of the United States Constitution, article VI, section 2. Where federal law and state law do not directly con?ict, however, courts will determine that federal law preempts state law where preemption is the ?clear and manifest purpose of Congress.? Yarick v. PacifiCare of California, 179 Ca1.App.4th 1158, 1165 (2009), quoting Rice v. Santa Fe Elevator Corp, 331 US. 218, 230 (1947). 21 Case No. a. Types of Federal Preemption There are four species of federal preemption: express, con?ict, obstacle,24 and ?eld. Viva! Intern. Voice for Animals v. Adidas Promotional Retail Operations, Inc, 41 Cal.4th 929, 935 (2007); see also People ex rel. Harris v. Poe Anchor Tramp, Inc, 59 Cal.4th 772, 777 (2014). Courts are reluctant to infer preemption, and it is the burden of the party claiming that Congress intended to preempt state law to prove it. Vivaf, 41 Cal.4th at 936.325 ACCJ C?s invokes obstacle and ?eld preemption. ACCJ Trial Brief, 27-31 (discussing obstacle preemption under header for con?ict preemption).26 Obstacle preemption arises when state law blocks the full purposes and objectives of Congress. Viva!, 41 Cal.4th at 93 6. Field preemption applies where the scheme of federal regulation is so comprehensive that the court must infer that Congress meant to ?occupy the field? and so intended to prohibit state regulation. Id. The United States Supreme Court has identi?ed two cornerstones of the federal preemption analysis. Pac Anchor, 59 Ca1.4th at 778. First, the question of preemption is fundamentally a question of congressional intent. Id; CTS Corp. v. 134 S. Ct. 2175, 2185 (2014). if a statute contains an express pre-emption clause, the task of statutory instruction must in the ?rst instance focus on the plain wording of the 2? In Arizona v. U.S., 132 2492, 2505-07 (2012), the Supreme Court invalidated state statutory provisions as an obstacle to the regulatory system Congress chose under the ?welhsettied? proposition that state law is preempted where it stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress. Justice Thomas, in a separate opinion concurring in part and dissenting in part, expressed his view that ?the ?purposes and objectives? theory of implied preemption is inconsistent with the Constitution because it invites courts to engage in ?'eewheeling speculation about congressional purpose that roams well beyond statutory text.? Id. at 2524 (Thomas, J., concurring in part and dissenting in part). But obstacle preemption remains good law. See Arizona Dream Act Coalition v. Brewer, 757 F.3d 1053, 1061 (9th Cir. 2014). 25 Recent decisions con?rm the rule that disfavors a ?nding of preemption. Nat'l Credit Union Admin. 13d. v. Nomura Home Equity Loan, Inc, 764 F.3d 1199, I217 n.19 (10th Cir. 2014), cert. denied, No. 14-379, 2015 WL 132974 (11.8. Jan. 12, 2015), construing multiple opinions in C73 Corp. v. Waldburger, 134 S. Ct. 2175 (2014). 2? Cases sometimes treat obstacle prevention as a type of con?ict preemption, rather than a distinct form of preemption. See Salas v. Sierra Chemical Co., 59 Cal.4th 407, 42} (2014); Pa: v. AG Adriano Inc, 2014 WL 5561024, at *2 (SD. Cal. Oct. 27, 2014) (citing Crosby v. Nat?! Foreign Trade Council, 530 US. 363, 372 (2000)); Montemayor v. GC Services LP, F.R.D. 2014 WL 508822], at *5 (SD. Cal. Sept. 29, 2014). ACCJC does so here. This Statement uses the four categories set forth in Vival. Applying that framework, ACCJ has not actually raised con?ict preemption because ACCJ has not argued that it would be impossible to comply with both federal and state law. Compare, Vival, 41 Cal.4th at 936 (con?ict preemption arises when simultaneous compliance with both state and federal directives is impossible). Rather, ACCJ argues obstacle preemption. Defendants? Trial Brief at 29, lines 12 er seq. 22 Case No. CGC-13-533693 clause, which necessarily contains the best evidence of Congress? pre-emptive intent. Pac Anchor, 59 Cal.4th at 778. The structure and purpose of?the statute as a whole is relevant. Id. Second, in all preemption cases, and particularly in those in which Congress has legislated in a ?eld traditionally occupied by the states, courts assume that the historic police powers of the states are not superseded by the federal act unless that is the clear and manifest purpose of Congress. Id. b. The Higher Education Act 20 U.S.C. 1099b is at the heart of preemption argument. Section 1099b is part of the Higher Education Act. See, Accrediting Comm ?nfor Community and Junior Colleges, 2013 WL 5945789 at *4 (Illston, 1.). Accreditation by an accreditation agency recognized by the Secretary of Education is generally a requirement to be treated as an institution of higher education under the Higher Education Act. See 20 U.S.C. 1001-1002, Accreditation by a recognized accreditation agency enables an institution to participate in various federal programs and receive federal funds under the Higher Education Act.28 Section 1099b is found in a part of a subchapter concerning the integrity of student assistance programs.? This section governs, among other things, recognition of accrediting agencies. For example, pursuant to 1099b(a), accrediting agency or association may be determined by the 27 Receipt of ?preaccreditation status? will also suf?ce if such status is bestowed by an agency or association that has been recognized by the Secretary for the granting of preaccreditation status and the Secretary has determined that there is satisfactory assurance that the institution will meet accreditation standards of the same agency or association within a reasonable time. 20 U.S.C. 1001(a)(5). 28 See 20 U.S.C. 1070, 1085, 1091(a)(l), 1094, 1099mm); Chicago School of Automatic Transmissions, Inc. v. Accreditation Alliance of Career Schools and Coileges, 44 F.3d 447, 449 (7th Cir. 1994) (the school applied for accreditation because it ?wanted a key that would unlock the federal Treasury. An accreditation agency is a proxy for the federal department whose spigot it opens and closes?); Massachusetts School of Law at Andover, Inc. v. American Bar Ass ?12, 142 F.3d 26, 33 (let Cir. 1998) (Massachusetts School of Law II) (?Accreditation serves an important national function because once an institution of higher education becomes accredited by the DOB or its designated accrediting agency, the institution becomes eligible for federal student loan monies. [Citation] The Higher Education Act and the implementing regulations spin a sophisticated regulatory web that governs the relationship between accrediting agencies and accreditation applicants?). 2 1099b is found in part of subchapter 4 of chapter 28 of Title 20 of the United States Code. Part is entitled ?Program Integrity.? . 23 Case No. 06013-533693 Secretary[ of Educationg?o] to be a reliable authority as to the quality of education or training offered for the purposes of this chapter or for other Federal purposes, unless the agency or association meets criteria established by the Secretary pursuant to this section.? See also 20 U.S.C. 1099b(c) (operating procedures required for recognition). The Secretary enforces an accrediting agency?s compliance iwith the requirements of 1099b and the Secretary?s underlying regulations. See 20 U.S.C. Under the Higher Education Act recognized accreditors are required to provide an institution an opportunity to appeal any adverse action. 20 U.S.C. 1099b(a)(6)(C). The Secretary must not recognize the accreditation of any institution of higher education unless that institution agrees to submit any dispute involving the ?nal denial, withdrawal, or termination of accreditation to initial arbitration prior to any other legal action. 20 U.S.C. lO99b(e). Section 1099b(f) provides: ?Notwithstanding any other provision of law, any civil action brought by an institution of higher education seeking accreditation from, or accredited by, an accrediting agency or association recognized by the Secretary for the purpose of this subchapter and part of subchapter I of chapter 34 of Title 42 and involving the denial, withdrawal, or termination of accreditation of the institution of higher education, shall he brought in the appropriate United States district court.? Thus, 1099b(t) creates exclusive federal jurisdiction where an institution of higher education sues its accreditor to challenge the withholding of accreditation on the basis of alleged harms within the accreditation process. Massachusetts School of Law II, 142 F.3d at 33. In sum, an educational institution bene?ts from accreditation by an accrediting agency recognized by the Secretary because such accreditation is a prerequisite to eligibility for certain federal funds. See Chicago School, 44 F.3d at 449. If an educational institution?s accreditation is terminated by the accrediting agency, and the institution wishes to bring a civil action ?involving? the ?termination of accreditation,? the institution must bring the challenge in federal court. 20 U.S.C. 3? 20 U.S.C. 100307). 24 Case No. 06013-633693 1099b(f). To bring such an action, the institution must exhaust required- processes. See 20 U.S.C. 1099b(a)(6)(C), c. The Higher Education Act and the Underlying Regulatory Scheme Do Not Preempt This Suit In federal court, ACCJ opposed remand by arguing that 20 U.S.C. 1099b created federal question jurisdiction. Accrediting Comm 2013 WL 5945789 at The federal Court noted that a state law claim arises under federal law, and therefore creates a federal question, if 1) the federal law completely preempts state law, (2) the state claim is necessarily federal in character, or (3) the right to relief requires resolution of a substantial, disputed, federal question. Id. at Judge noted that ACCJ did not explicitly argue that the Higher Education Act preempts the People?s claims in this case, but did argue that the Higher Education Act created a comprehensive regulatory ?arnework that does not authorize the state to have input on an adverse accreditation decision. Ids-at The Court held that the Higher Education Act does not completely preempt state law claims. Id. at As a result, the Court ruled that federal preemption is nothing more than a defense, and remanded the case to state court. Id. at Now, ACCJ raises preemption as a defense.31 i. Field Preemption 20 U.S.C. 1099b(f) does not refer to civil actions brought by any party other than the institution whose accreditation is terminated. Thus, while the statute explicitly gives City College the right to challenge the termination of accreditation in federal court and precludes City College ?'orn initiating that suit in state court, it is silent on the right of other parties (such as the People) to bring a suit challenging the termination of City College?s accreditation in either state or federal court. The statute does not expressly preempt a state court action brought by the People under state law seeking to vacate an accreditor?s termination decision, or otherwise ?involving? the termination of accreditation. 3' trial brief contains the sole ACCJC argument on preemption in this court. post-trial brief did not mention it. Preemption implicates subject matter jurisdiction and is not waived by failure to assert it in the answer. DeTomaso v. Pan American World Airways, Inc, 43 Cal.3d 517, 520 11.1 (1987) (defendant raised preemption for the ?rst time in the trial brief, without pleading preemption as an a?irrnative defense in the answer). 25 Case No. CGC-13-533693 In Keams v. Tempe Technical InStitnte, Inc, 39 F.3d 222, 224-25 (9th Cir. 1994), plaintiff students pled a cause of action for common law negligence against an accreditor on the theory that the accreditor tailed to monitor the school the istudents? attended, causing the students damages. The Ninth Circuit noted that the Higher Education Act does not expressly preempt state common law tort claims against accreditors, even though it does expressly preempt state law in several areas. Id. at 225.32 Moreover, as Judge Illston noted in her remand decision, the Ninth Circuit refused to ?nd ?eld preemption, concluding that the narrow and precise express preemption clauses were irreconcilable with the implication that Congress intended to occupy the entire ?eld in which it was regulating. Id. at 225-26. The Ninth Circuit held that the accreditors were not entitled to dismissal on the basis of preemption because they had not demonstrated that preemption of the negligence claims at issue was the clear and manifest purpose of Congress. Id. at 227.33 ACCJ hopes to avoid Keams by de?ning the ??eld? more narrowly. In Keams, the Ninth Circuit looked to the entire ?eld in which Congress was legislating pursuant to the Higher Education Act. Now ACCJ argues only that ?Congress intended to occupy the ?eld of accreditation decision[s] affecting eligibility for federal funds.? ACCJ Trial Brief, 28. ACCJC appears to suggest that Congress provided the procedure for obtaining a reversal of accreditation decision, and intended the procedure it provided to be the sole procedure available. See id. at 28?29. This argument devolves to obstacle preemption argument, addressed next. ACCJC Trial Brief, 30. Here, it is enough to note that under Keams Congress did not in enacting the Higher Education Act preempt the ?eld in which it legislated. As discussed in more detail below, Congress did not preempt all state law claims ?involving? the termination of accreditation. 3?2 Speci?cally, the Keams Court found express preemption in the following provisions: 20 U.S.C. 1699 (loans not subject to state disclosure requirements); 20 U.S.C. 1078(d) (state usury laws inapplicable); 20 U.S.C. 1091a(a) (state statutes ofiimitations inapplicable); and 20 U.S.C. 1091303) (state infancy defenses unavaiiable). Keams, 39 F.3d at 225. 33 As discussed below, the accreditors also raised obstacle preemption in Keams. 26 Case No. ii. Obstacle Preemption Preemption analysis looks to the practical impact of state law on federal laws and the policies they manifest. Arizona Dream Act Coalition v. Brewer, 757 F.3d 1053, 1062-63 (9th Cir. 2014)}4 Obstacle preemption has unique features. First, the issue is whether in a ?particular case? state law is an obstacle to the execution of the federal purpose. Parks v. MBNA Am. Bank NA, 54 Cal.4th 376, 383 (2012), quoting Viva], 41 Cal.4th at 935. Second, the degree of incompatibility between the state and federal regimes must be very high: Under obstacle preemption, whether a state law presents ?a suf?cient obstacle is a matter of judgment, to be informed by examining the federal statute as a whole and identifying its purpose and intended effects: [11] ?For when the question is whether a Federal act overrides a state law, the entire scheme of the statute must of course be considered and that which needs must be implied is of no less force than that which is expressed. If the purpose of the act cannot otherwise be accomplished?if its operation within its chosen ?eld else must be ?'ustrated and its provisions be refused their natural effect-?-the state law must yield to the regulation of Congress within the sphere of its delegated power.? Cnty. of San Diego v. San Diego NORMI, 165 Cal.App.4th 798, 821-22 (2008), quoting Crosby v. National Foreign Trade Council, 530 as. 363, 373 (2000)(emphasis supplied)? Thus the issue is whether the prosecution of this particular case will bar the success of the federal goals. Of course, this requires ascertainment of the federal goals. ACCJC tells us those goals are to keep the process of accreditation and the connected issues of federal ?mding within the federal A system, including the federal courts. ACCJ A Trial Brief, 30, lines 1-5. This sounds like tautologyw state claims are barred because only federal claims are allowed?wbut this conceivably could be the 'case. However, there is no useful evidence that ACCJC is right. ACCJC points to the fact of the federal scheme, and of course that does exist, evidenced by the federal regulations. But there is a federal scheme in every preemption analysis?that is the start of the analysis, and cannot necessarily 3? In Arizona Dream, the Ninth Circuit wrote, ?If the practical result of the application of Defendants? policy is that DACA recipients in Arizona are generally obstructed from working despite the Executive?s determination, backed by a delegation of Congressional authority, that DACA recipients throughout the United States may work then Defendants? policy is preempted.? Arizona Dream, 757 F.3d at 1063. 5 Crosby is the case ACCJ relies on, Trial Brief at 29, and my emphasis here is the same as made by Qualified Patients Ass 'n v. City of Anaheim, 187 Cal.App.4th 734, 760 (2010). . 27 Case No. CGC-13-533693 establish preemption. ACCJC asserts that Congress must have intended the scheme in question here to be a comprehensive dispute resolution process concerning adverse accreditation decisions. ACCJC Trial Brief, 29, citing 2O U.S.C. 1099b(a)(6)(C), Congress did preclude institutions from seeking relief from adverse accreditation decisions outside of the dispute resolution process Congress created. ?20 U.S.C. 1099b(t). But Congress did not address suits by third parties. argument, then, relies on the inference that Congress intended to preclude a suit brought by third parties. But ACCJ provides no evidence or other support for this inference; only the fact of the federal regime itself. ACCJ has not satis?ed its burden to identify the putatively protected federal goal or purpose which would be frustrated by the prosecution of this case. I turn to cases which look at preemption in cases attacking the actions of accreditors such as ACCJC. In Keams, the Ninth Circuit found no obstacle preemption. The negligence claim for damages pressed by the Keams plaintiffs plausibly threatened the objectives of the Higher Education Act by subjecting accreditors to diverse standards, discouraging accreditors from participating in the federal program. Keams, 39 F.3d at 226. But the Court concluded that diversity of standards could, just as plausibly,-be a boon to the federal program because diverse standards would help adapt the federal program to local conditions. Id. Further, the Ninth Circuit reasoned that the interest in honest and effective accreditation may best be protectedby allowing the students to bring suit in a state court forum. Id. at 227. The Court concluded that a private tort for negligent accreditation could bene?t the federal system by aiding the Secretary of Education in overseeing accreditation agencies. Id. Thus, the Keams Court held that the accreditors failed to demonstrate that preemption of the claims brought by the plainti??s was the clear and manifest purpose of Congress. Id. argument suggests this lawsuit has a greater potential to disrupt the federal scheme 28 Case No. (EGG-13633693 than did the action brought by the students in Keams. As ACCJ phrases it, allowing this suit to proceed is an ?end-run around 1099b(? and accord[s] state courts the ability to effectively direct federal ?mds to non?complaint institutions.? Defendant?s Trial Brief at 3 I. ACCJ has not demonstrated that it would be contrary to Congressional objectives for a state court too to hear challenges to termination decisions. Although a state court might thereby render decisions that have the indirect consequence that federal continue to be disbursed, such state court proceedings might as well be thought of as a mechanism to ensure an unfairly terminated institution continues to enjoy the bene?ts of accreditation, ?zrtherz'ng the federal interest in disbursement of funds to quali?ed institutions. The diversity of standards as between a state UCL proceeding and the federal action might, as in Keams, help adapt the federal program to local conditions. And the interestaof all participants in an honest and eifective accreditation process may be protected by allowing a suit such as this one. Now, conceivably a state proceeding might inject standards antithetical to a federal process or analysis. For example, state law might block termination for accreditation unless the accrediting agency ?nds overtly illegal conduct on the part of the institution, or otherwise tries to modify the standards used by the accrediting agency. Nothing like that has been suggested here. But without the risk of that departure from the federal standards, there is little risk of in effect directing federal funds to a nonncompliant institution. Indeed the point of and outcome of this case is to hold ACCJC to the very standards that govern it. ACCJ C?s ?end-run? argument alludes to procedures for reversal of termination decisions. The federal scheme provides a remedy for adverse accreditation decisions, but not a remedy for negligently awarding an institution accredited status. This case differs from Keams in that this case involves a termination decision, from which an institution may seek relief under the federal scheme, whereas Keams involved a decision to accredit an institution, for which no federal relief was available. 29 Case No. COG-13633693 argument assumes a Congressional intent to limit challenges to termination decisions to those brought by institutions. But ACCJC provides no evidence that Congress intended such a result. Too, position assumes that any problem in the accreditation process of necessity will be called out by the reviewed institution and be the subject the federal review process (including proceedings in federal court). This presumes the interests other parties, such as students and faculty, will always be congruent with those of the institution. This may not always be true, perhaps depending, in some cases, on how well the institution is governed, and responsive to its constituents. 20 U.S.C. 1099b(t) serves both as a grant and a limitation of jurisdiction. Congress authorized federal courts to hear cases involving the termination of accreditation, but restricted such suits to federal court. See Massachusetts School of Law II, 142 F.3d at 33. Congress neither authorized federal courts to hear cases brought lay-third parties, nor restricted the jurisdiction of such cases to federal court. Congress did not address the possibility of a third party suit seeking to vacate a termination decision, so this action does not interfere with express Congressional objectives. While Congress implemented a procedure by which institutions would resolve disputes involving the termination of accreditation without recourse to litigation, after which litigation initiated by the institution could be brought only in federal court, allowing third parties to sue for similar relief does not prevent the federal process from being carried out; indeed, that process has continued throughout the duration of this case. One might reasonably infer that had Congress intended to preclude actions brought by third parties in state court asserting state law claims, it would have said so. See Keams, 39 F.3d at 225 (applying the expressio unius est exclusio alterius canon of construction36 in discussing ?eld preemption). The parties have not provided useful evidence of Congressional intent beyond the language of the statute itself.37 3? The expression of some things in a statute necessarily means the exclusion of other things not expressed. Gikas v. Zolin, 6 Cal.4th 841, 852 (1993). 37 ACCJ argues that the jurisdictional provision, which was enacted as part of Public Law 102-325, was intended to address concerns that federal funds were being allocated to institutions without suf?cient assurances that those institutions 30 . Case No. (EGG-13633693 It is ACCJ C?s burden to demonstrate that Congress intended to preempt the Peeple?s suit, Vival, 41 Cal.4th at 936, in the words of Crosby, 530 US. at 373, that federal goals simply cannot be accomplished if this suit is prosecuted. While we know Congress limited the reviewed institutions? options to federal court, ACCJ has not sustained its burden of demonstrating that Congress meant only the reviewed institutions could challenge a termination decision. Keams suggests otherwise. And an express preemption clause is the best evidence of Congress? pro-eruptive intent. Pac Anchor, 59 Cal.4th at 778. The Higher Education Act contains various preemption clauses, none of which relates to claims challenging preemption provisions. See Keams, 39 F.3d at 225. Congress could have, but did not, preempt this lawsuit.38 2. Near-Pennington Doctrine ?Under the Noerr-Pennz?ngton doctrine established by Eastern Railroad Presidents Conference v. Noerr Motor Freight, Inc, 365 US. 127, (1961), and United Mine Workers v. Pennington, 381 US. 657, (1965) - defendants are immune from antitrust liability for engaging in conduct (including litigation) aimed at in?uencing decisionmaldng by the government.? Octane Fitness, LLC v. ICON Health Fitness, Inc, 134 1749, 1757 (2014); see also Hernandez v. Amcord, Inc, 215 Cal.App.4th 659, 679 (2013) (Noererennington has been applied in cases involving civil liability for causes of action beyond the violation of the Sherman Act). The United States Supreme Court ?crafted the Noerr~Pennington doctrine .. . to avoid chilling the exercise of the First Amendment right to petition the govetmnent for the redress of grievances.? Id. - Under the Near-Pennington doctrine, private action cannot form the basis for antitrust liability if it is ?incidental? to a valid effort to in?uence government action. Sosa v. DIRECTV, Inc, 437 F.3d 923, 934 (9th Cir. 2006). To exercise petitioning rights meaningfully, a party may not be subjected to were meritorious. Trial Brief, 27-28. ACCJC relies on hearing records Earn the i013: Congress to support its arguinent, without explaining why records of hearings before the mist Congress should in?uence this Court?s understanding of the intent of the ll)an Congress. Id. 33 While I have not found preemption, the federal interests do have a role as prudential factors evaluated in connection with the relief to be afforded through this lawsuit. See below, V. 31 Case No. CGC-13-533693 liability for conduct intimately related to petitioning activities. Id. For example, the doctrine protects not just direct communications with legislators, but may protect public relations campaigns that are designed to in?uence the passage of favorable legislation. 151.; see also Tichz'm?n v. City of Morgan Hill, 177 Ca1.App.4th 1049, 1068 (2009) (conduct incidental or reasonably related to petition is protected). Here, ACCJC ?rst argues that its communication of its accreditation decisions to the government is protected petitioning activity under Massachusetts School of Law atAndover, Inc. v. American Bar Ass ?71, 107 F.3d 1026 (3d Cir. 1997) (Massachusetts School of Law 1) and Zavaletta v. ABA, 721 F.Supp. 96, 98 (ED. Va. 1989). ACCJC Trial Brief, 32. As a result, ACCJC argues that its accreditation decisions are themselves petitioning activity. Id. at 33. I have previously interpreted Massachusetts School of Law I and Zavaletta, rejecting argument. October 8, 2014 Order, 3-5. ACCJC does not provide a basis to revisit that reasoning. Second, ACCJ argues that any liability theory stemming from ACCJ C?s petitioning activity with respect to the Student Success Task Force is barred. ACCJC Trial Brief, 33. The People assert that ACCJC acted unfairly by evaluating City College at a time when ACCJ and City College were on Opposite ends of a public debate concerning the Student Success Task Force. People?s Trial Brief, 14; People?s Post-Trial Brief, 46-51. The People argue that this conduct was unfair because it created an appearance of bias on the part of ACCJ C, it could have in?uenced some Commissioner?s decisions, and Bone may have known and responded to City College?s position. People?s Post-Trial Brief, 49? 51.39 If the People mean to ascribe liability simply as function of taking a position on the debate, this is likely barred by the doctrine. But there may be a perfectly reasonable basis to challenge accreditation actions based on a con?ict of interest, the evidence of which includes position on a matter of public debate. In the abstract, that is, the claims survive an attack based on the 39 The People do not contend that the dispute influenced the Commission?s decisions or Beno?s conduct, only that it could have. 32 Case No. Noon-Pennington doctrine. But as discussed below in this case the claims are without merit. 3. Parker Doctrine Parker v. Brown, 317 U.S. 341 352 (1943) immunizes private action that would otherwise violate the Sherman Act when it is, in effect, state action. It does so because, as a matter of statutory construction, the Sherman Act does not reach governmental action. See United Nat. Maintenance, Inc. v. San Diego Convention Center, Inc, 766 F.3d 1002, 1009 (2014). Although Parker has not been applied to a California UCL claim, the UCL may be similar to the Sherman Act in that the UCL does not regulate state conduct. See PeOple for the Ethical Treatment of Animals, Inc. v. California Milk Prods. Advisory Bat, 125 Cal.App.4th 871, 878-79 (2005); Bus. Prof. Code 17201, 17203. ACCIC has not identi?ed authority applying Parker beyond the antitrust context.40 In Massachusetts School of Law I, the Third Circuit applied the Parker doctrine to some, but not all, of the antitrust claims before it. States decide whom to allow to sit for bar exams,-and in Massachusetts School of Law I the state decided to rely on accreditation decisions. The Court rejected a Sherman Act claim brought by a law school against an accreditor to the extent that the asserted antitrust injury students may not take the bar exam) ?owed from the law school?s lack of accreditation. Massachusetts School of Law I, 107 F.3d at 1031, 1035-36. But Parker did not bar theories of injury arising ?om stigma or ?owing directly from the enforcement of the accreditor?s standards. Id. at 1037, 1041. The Court stated that the ?state action relates to the use of the results of the accreditation process, not the process itself. The process is entirely private conduct which has not been approved or supervised explicitly by any state. [Citation] Thus, the enforcement of an anticompetitive standard which injures MSL would not be immune from possible antitrust liability.? Id. at 1039. 4? See ACCJC Trial Brief, 35, citing Fed. Trade Comm v. Ticor Title Ins. Co., 504 U.S. 621, 625, 627 (1992) (assertion of Parker immunity from antitrust prosecution as a defense to a charge of price ?xing under the Federal Trade Commission Act); People ex rel. Freitas v. City and County of San Francisco, 92 Cal.App.3d 913, 920 (1979) (Cartwright Act). 33 Case No. CGC-13-533693 ACCJC argues that whatever claims the People may have here are against the state because any harm ?owing from the loss of accreditation is a result of state action following the loss of accreditation. ACCJ Trial Brief, 36-3 7. But, as I have already observed in denying judgment on the pleadings, the People do not claim injury derived from credence the state gives to accreditation decisions, but rather that ACCJ failed to properly conduct its accreditation evaluation. October 8, 2014 Order, 5. This is not an antitrust case, the People do not need to prove antitrust injury. The fact that some of the harm suffered by City College if its accreditation is terminated will ?ow from an intervening act by the government does not transform the People?s claim that ACCJC failed to follow proper accreditation procedures into a claim against the state. The Parker doctrine does not preclude the People?s claim. 4. Quasi?Judicial Immunity California courts have granted quasi-judicial immunity to nonjudicial persons who perform quasi-judicial functions. Bergeron v. Boyd, 223 Cal.App.4th 877, 887 (2014). The doctrine affords certain individuals absolute immunity for damages claims arising from their performance of duties in connection with the judicial process. Id. The purpose of the doctrine is to encourage individuals to accept such roles and to prevent the threat of civil liability from affecting the manner in which individuals perform those roles. Id. The doctrine extends to portions performing acts that are judicial in nature. Id. at 884?85. The doctrine has, for example, been applied to private arbitrators to promote principled and fearless decision-making and to prevent intimidation. Id. at 887; see also v. West, 219 Cal.App.4th 540, 550 (2013) (federal decisions have extended the doctrine to trust of?cers, conservators, receivers, guardians ad litem, and attorneys for children in child abuse cases). ACCJ argues that its conduct is immune from UCL liability because it is a quasi-judicial body. ACCJC Trial Brief, 17-18.. Neither party has identi?ed any California law discussing whether 34 Case No. CGC-13-533693 an accreditor is a quasi?judicial body. Id.; People?s Post-Trial Brief, 54. ACCJ emphasizes that, in rendering accreditation decisions, accreditors hold hearings and ?nd facts to make decisions about the institutions they accredit. ACCJ Trial Brief, 17, citing Illinois College of Optometry v. Labombarda, 910 F.Supp. 431, 433 can. 111. 1996).? i To be sure, in making accreditation decision the Commission accepts evidence, holds a hearing, and renders an accreditation decision based on that evidence. But this is only a small part of the operations. conduct at issue in this case involves: composing teams to be sent to City College to collect facts for consideration by the Commission, including composing related policies; (2) composing a Commission, including composing related policies; (3) providing notice of de?ciencies and an opportunity to respond to perceived de?ciencies; (4) promulgating accreditation standards; and (5) engaging in political advocacy. None of this conduct is judicial in nature. Moreover, this suit was brought against ACCJC, not any of its Commissioners. In addition, ACCJC has not provided any authority to support the use of quasi-judicial immunity to bar a suit for injunctive relief, as opposed to damages.42 Quasi-judicial immunity does not bar this suit. 5. Litigation Privilege ACCJ contends that its accreditation activities are performed by participants in a quasi- judicial proceeding to achieve the object of the proceeding, and are therefore privileged communications. ACCJ Trial Brief, 18. I have already rejected this argument. Sept. 19, 2014 Order, 21. The litigation privilege applies to communications made in judicial or quasi?judicial proceedings, by litigants or other participants authorized by law, to achieve the objects of the litigation. Silberg v. Anderson, 50 Ca1.3d 205, 212 (1990). This affords litigants and witnesses the freedom to access the The Illinois College Court held that because an accreditor was a quasi-judicial body under a six factor test used in Illinois, a complaint ?led with the accreditor was protected by Illinois law privileging statements made during quasi- judicial proceedings. Illinois College did not involve the claim of quasi-judicial immunity by an accreditor. Nor did it involve California law. ACCJC relies on Bergeron. ACCI fails to note language making it clear that Bergeron is discussing immunity ?om damage claims. Defendant?s Trial Brief, 17-18; Bergeron, 223 Cal.App.4th at 882, 887; see also Greene v. Zanlc, 358 Cal.App.3d 497, 507 11.10 (1984) (?Judicial immunity, however, does not absolutely insulate judicial of?cers from declaratory or injunctive relief when acting in their judicial capacities?). 35 Case No. 06013-533693 courts without fear of being subsequently harassed by derivative tort actions. People ex rel. Gallegos v. Paci?c Lumber Co., 158 Cal.App.4th 950, 958 (2008). But, as I noted, this suit is not premised on See Sept. 19, 2014 Order, 21. ACCJC never did identify any particular communications that it believes are subject to the privilege. The litigation privilege does not bar this action. C. The Commission Violated the UCL -- Unlawful Prong 1. Lack of Adequate Controls against Con?icts of Interest The Secretary of Education must establish criteria for recognition of an accrediting agency. 20 U.S.C. 1099b(a). The Secretary has done so. 34 C.F.R. 602.10 et seq. In the summary judgment context, I concluded that the Secretary?s criteria for recognition may be borrowed under the UCL. September 19, 2014 Order, 22-24. Pursuant to 34 C.F.R. 602.15: The agency must have the administrative and ?scal capacity (to carry out its accreditation activities in light of its requested scope of recognition. The agency meets this requirement if the agency demonstrates that?- The agency has-- (1) . . and (6) Clear and effective controls against con?icts of interest, or the appearance of con?icts of interest, by the agency?s- - Board members; (ii) Commissioners; Evaluation team members; (iv) Consultants; Administrative staff; and (vi) Other agency representatives. . .. The People contend that ACCJC violated the unlawful prong of the UCL by failing to maintain clear and effective controls against con?icts of interest, or the appearance of con?icts of interest. People?s Trial Brief, 7-8. Speci?cally, the People contend that (1) the inclusion of Peter Ctabtree on the 2012 Evaluation Team created the appearance of a con?ict of interest; and (2) a signi?cant percentage of Commissioners who served on the Commission in June 2012 and June 2013 were appointed pursuant to a selection process that did not provide clear and effective controls against con?icts of interest. Id. 36 Case No. CGC-13-533693 a. Crabtree Between 2006 and January 2012, con?icts of interest policy provided that the ?Commission will not knowingly invite or assign participation in the evaluation of an institution anyone who has a con?ict of interest or the appearance thereof.? Ex. 12 at 145. The policy stressed the importance of self-reporting con?icts. Id. The policy further provided that any person with one of the following connections with an institutionIdist?ct/system in the last ?ve years will not participate in the evaluation of an institution: (1) employment at the institution/district being evaluated; (2) candidacy for employment at the inStitution/district being evaluated; (3) current or prior service as a paid consultant or other business relationship with the institution/district! system being evaluated; (4) any written agreement with an institution/district/system that may create the appearance of a con?ict . of interest with the institution/district/system; (5) personal or ?nancial interest in the ownership or operation of the institution/district/system; (6) close personal or familial relationships with a member of the instinition/distiict; (7) other personal or professional connections that would create either a con?ict or the appearance of a con?ict of interest; and (8) receipt of remnneration, honoraria, honorary degrees, honors, or other awards ?orn the institution/.district/system. Id. at 145-46. The policy was revised in January 2012. Once again, the Commission stated that it would not knowingly invite evaluators with con?icts of interest to serve on evaluation teams. Ex. 43 at 2. The new policy added a requirement that team members con?rm in writing that they reviewed the policy. Id. The policy also instructed institutions being evaluated to check for con?icts of interest. Id. The revision added a de?nition of a ?con?ict? ?any circumstance in which an individual?s capacity to make an impartial and unbiased decision may be affected because of a prior, current, or anticipated institutional/district/system af?liation or other signi?cant relationship(s) with an accredited instimtion/district/system or with an institution seeking initial accreditation, candidacy, or reaccreditation.? Id. at 1. Again, the Commission stressed the importance of self-reporting. Id. The 37 Case No. (36013-533693 January 2012 policy included the same eight-item list of con?icts. Id. at 2. Peter Crabtree was married to ACCJ President Barbara Beno. Deposition of Peter Crabtree, Crabtree was employed as a Dean at Laney College in the Peralta Community College District. Id. at 47:3-25. Crabtree was invited to serve on the 2012 Evaluation Team by Garman ?Jack? Pond. Deposition of German J. Pond, 9328-13; Ex. 40. Crabtree accepted the invitation in the fall of 2011. Ex. 40. In selecting teams, Pond does not invite current or former employees of the institution being evaluated because those individuals create a con?ict of interest or the appearance of it. Pond Deposition, 100: 17-101 :17. Pond said applicants for jobs at an institution create con?icts, but noted that he would be unaware of application history. Id. at 101 :18-102:5. Finally, Pond reSponded to an inquiry regarding ?[a]ny other obvious con?icts? by stating that tr[ies] not to put individuals on a team if they if their districts actually butt up against one another? because ?[t]hey could share students.? Id. at 102:6-12. City College was provided a list of team members, which included Crabtree?s name and af?liation. The College made no objection. Ex. 45; Ex. 56; see also Pond Deposition, 104:2-19 (reviewing roster that was apparently sent to City College by Tom Lane).43 The People do not argue that Crabtree?s appointment presented a con?ict under any of the written policies described above. Instead, the People in effect devise a policy and argue that Crabtree was con?icted, or at least the appearance of con?ict existed, because Crabtree works at Laney College, which is in the district abutting City College. People?s Post-Trial Brief, 4. Laney College is relatively near City College and BART accessible, leading two City College teachers to believe that 43 The People object to Exhibit 45 as hearsay. Exhibit 45 consists of an email dated January 4, 2012 from Tom Lane of ACCJC and a reply email dated January 6, 2012 from Don Grif?n of City College. Lane announces that the roster of evaluators is attached. Griffin responds that ?we? are ?very happy? with the team. The roster is not itself included in Exhibit 45. Without considering Exhibit 45 for the truth of the matter asserted, Exhibit 45 indicates that City College had an opportunity to review the team roster and did not raise an objection and it is admissible at least for that purpose. Further, Exhibit 56 is a February 27, 2012 email ?om Lane to Grif?n announcing that the roster has been revised. Exhibit 56 does include the attached roster, which lists Crabtree as a Dean at Laney College. There is no indication that City College objected to Crabtree?s membership based on his af?liation with Laney College or for any other reason. 38 Case No. Laney College might bene?t ?'orn increased enrollment as a result of City College?s accreditation struggles. Trial Transcript, 67:10-68:23; Deposition of Karen Saginor, 165:13-166:1 1.44 Pond might have thought that inclusion of an evaluation team member created a conflict of interest or the appearance of a con?ict of interest. Pond Deposition, '1 But there is no evidence that Crabtree stood to personally bene?t in any way from Laney College?s enrollment, or that Laney College was seeking to increase enrollment, whether at the expense of City College or otherwise. The People argue that Laney College might bene?t; thus its employees were con?icted. See Trial Transcript, 273:20-25. How might this be? Perhaps if City College lost accreditation and closed (or was threatened with closure), some students might enroll at Laney which might then possibly do better ?nancially (or not), which might then possibly improve the employment security of its faculty (such as Crabtree) or perhaps increase faculty income. That is certainly not an actual con?ict. And the series of speculative inferencesmfor which no substantial evidence was presented at trial?will not support even the more slender reed of an appearance of a con?ict. Although such appearance might exist where there is a potential for the personal interests of an individual to clash with ?duciary duties,46 nothing suggests such a potential here.47 We should 4? It became clearer at closing argument that the People?s view is not precisely that the districts were next to each other, but more generally that the same conflicts issues exist whenever the reviewed institution and the reviewer?s institution were linked by mass transit, because that in turn suggested students could make an easy transfer from one institution to another. Closing Argument Transcript at 9. Whether linked by BART, bus, or a combination, many intuitions could be presumably be seen as competing for students and so, under the People?s very broad view, bar reviewers from their peer review work. The People have failed to articulate a test which distinguishes reasonable perceptions of a con?ict of interest, and have failed to explain why the testimony of a few people is pertinent. These two problems are discussed at somewhat greater length at note 51 below in connection with the public perception of Beno?s role. . ?5 The People incorporate the question, including the words ?obvious con?icts,? into Pond?s response. But Pond did not directly answer the question. Pond?s statement is only that he dies not to invite members from abutting districts. Pond?s other testimony makes it clear that Pond does not invite members in other con?ict situations. Pond Deposition, 100:23-25, 101 16-17. ?5 BX. 139 at 2-3. The parties dispute whether I should consider this Exhibit. As the text makes clear, it doesn?t matter. ACCJ contends that Exhibit 139 is a draft of staff ?ndings, which does not amount to the opinion of the Department of Education and is not a ?nal determination, but is subject to written response, appearance at a hearing, and appellate process. Trial Brief, 22-25; Post-Trial Brief, 18-19. The People argue that I can rely on the reasoning in Exhibit 139 regardless of its ?nality. People?s Post?Trial Brief, 5-6 11.3. Exhibit-1139 does not contain ?nal ?ndings of fact, so the factual ?ndings should not be adopted. See 34 C.F.R. 60233-60237; BX. 139 at 5 (?The that ACCJ does not meet the requirements of the sections identi?ed in the body of the letter, advising ACCJ to take immediate action to correct non-compliance, and inviting ACCJC to submit its response to speci?c sections in the letter in conjunction with its response to the draft sta?? analysis of petition for 39 Case No. 06013-533693 recall that ACCJ is a voluntary association. of peers-of competitors, to some extent?who continuously review each other and thus presumably have the power to undermine each other?s stability. Something more than speculation is needed to suggest that team members might be reasonably perceived as biased in favor of destroying one of their peer academies. Second, the People argue that because Crabtree was married to Beno, President, his presence on the evaluation team created the appearance of con?ict of interest because either (I) the public could believe that Commission would favor the position taken by the spouse of President, as a team member, over that of the institution being evaluated; or (2) the public could believe that Crabtree would do Beno?s bidding. The former position, but not the latter, was adopted in an August 2013 letter from the Department of Education. BX. 139 at 2-3. The Peeple also presented testimony from three members of the City College community and their expert that, in their opinions, inclusion of Beno?s Spouse on the evaluation team created an apparent con?ict. See People?s Post- Trial Brief, 6-8. At issue is the objective ?appearance to the public.?48 I will not adopt the Cepartrnent?s factual ?nding that the public would believe that the Commission may favor the opinion of an evaluation team over an institution if the president?s Spouse in on the evaluation team. The Department of recognition). Whether the interpretation of the regulations conveyed in Exhibit 139 is the proper subject of deference is a different question. The degree to which judicial deference to an agency?s interpretation is appropriate depends on the context, including the extent to which the agency?s expertise provides a comparative interpretive advantage over that of the courts and the degree to which it appears that the agency has carefully considered the issue. Holland v. Assessment Appeals Bd. No. I, 58 Cal.4th 482, 494 (2034). A 'court may defer to, for example, an informal advice letter. 1d. at I am not con?dent the Department has given the letter its full consideration. I have attended to its understanding of federal regulations with interest but I do not consider it binding. As to the scope of Exhibit 139?s interpretation of federal regulations, I extract these constructions: it speci?es to whom there must be an appearance of con?ict; (ii) requires policies to account for the appearance of a con?ict of interest as well as a con?ict; and notes that an appearance may include the perception that an individual?s ?personal interests? may con?ict with his or her ??duciary duties? presumably referring to duties on behalf of ACCJC. I am happy to accept those interpretations, but none helps the People?s position regarding Crabtree?s role. . ?7 The People rely on the fact that state funding is given based on enrollment to demonstrate that Laney College has an interest in enrolling students displaced from City College. People?s Post-Trial Brief, 4. But enrolling additional students is not without costs. The People do not discuss these costs. Nor have the People noted evidence that Laney College was not already enrolled at capacity. See Ex. 152 at ACCJC-002215 (although Laney College agreed to take on City College students in the event of closure, Laney College did not promise seats to City College students but consideration of priority admission within the existing local studies priority policy structure). The record does not support the conclusion that Laney College stood to bene?t from an adverse accreditation action against City CollegeCase No. 3-5 33 693 Education has no Special expertise with respect to public opinion; The factual ?nding was not reviewed, for the Commission revised its policy in October 2013 rather than pursue the issue41. Other than the Department?s factual ?nding, the only other evidence supporting the notion that the public would perceive an apparent con?ict consists of (1) the suggestion that Beno desired the demise of the College and (2) the subjective responses of a handful of witnesses. While there was evidence that Beno?s position on the Student Success Task Force was opposed to that associated with at least some elements at City College,49 there is no evidence that as a consequence she meant to injure City College or that she knew of the College?s position,50 nor, importantly, that her husband would be perceived as desirous of carrying out a nefarious intent which might be speculativer ascribed to Beno. And nothing suggests it is reasonable for me to extrapolate from the handful of witnesses to the public as a whole.51 The People have not proven that the inclusion of Crabtree on the 2012 Evaluation Team created the appearance of a con?ict of interest just because he was married to Beno. ?9 Many associated with City College opposed the reconunendations of the Student Success Task Force. See, e. Trial Transcript, 60:25-63:21 21124-2135. Beno publicly supported the recommendations personally and on behalf of ACCJC. Sec, 2.3., Trial Transcript 46124-46334. 5? Beno credibly testi?ed that she did not become aware of City College?s opposition to the Student Success Task Force recommendations until April or May of 2013, long after Crabtree?s involvement in the 2012 evaluation. Trial Transcript, 3571l3-19. The People do not point me to contrary evidence. Rather, the People urge that because Beno acknowledged that individual colleges were more sensitive to the recommendations and, according to other testimony, only two colleges opposed the recommendations, Beno must have known that City College opposed the People?s Post- Trial Brief, 50-51. But Beno explained that in November 201 I she attended an open session held by the Community College League of California at which people raised their hands and spoke to the task force about their thoughts about different recommendations. Trial Transcript, 35720?358: I4. Beno had no idea whether or not City College was at the November 2011 meeting. Id. The evidence on which the People rely does not contradict Beno?s testimony that she was unaware of City College?s position. And Beno speci?cally testi?ed that that her support for the Student Success Task Force recommendations did not have any effect on, impact on, or relationship with any of the decisions that were made with respect to City College. Trial Transcript, 462: 1~14. Nor have the People pointed to any other reason why Beno might have been biased. 5? The People do not articulate a test by which a court might determine the existence of a potential conflict of interest. It surely cannot be enough to just present witnesses who say they have such a perception. Anecdotal evidence frequently fails in court. Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541, 2556 (201 1). In other contexts, it is plain that unilateral perceptions of an appearance of bias are not grounds for disquali?cation. Gal v. City of Selma, 68 Cal.App.4th 213, 220 (1998). Judges, for example, are subject to exacting standards, but are disquali?ed only if one ?aware of the facts might reasonably entertain a doubt that the judge would be able to be impartial.? Id. at 229; Linney v. Turpen, 42 Cal.App.4th 763, 776 (1996). See also Haworth v. Superior Court, 50 Cal;4th 372, 389 (2010) (state and federal tests) (test based on a ?reasonable person? who is ?not someone who is ?hypersensitive or unduly suspicious,? but rather is a ?well- informed, thoughtful observer?); Mt. Holyoke Homes, LP. v. Je?er Mongols Butler Mitchell, LLP, 219 Cal.App.4th 1299, 1311 (2013) (arbitrators). The point is that matters are measured ?om the point of View of someone who actually knows the pertinent facts, generating an objective test. The People present no substantial evidence that tracks any such test. 41 Case No. But all this is prologue. We must recallthe issue: it is whether controls were adequate. The People submit that the controls were inadequate because Crabtree was allowed to be on the team. People?s Post?Trial Brief, 8-9. But the fact (even were it true) that a con?ict or an appearance of a con?ict arose does not logically imply controls were inadequate: controls need not be perfect, or adhered to in every case, for controls to be adequate. rule may be plain, clear and adequate and yet transgressed. More to the point, a controlling policy need not be so precise as to expressly determine the outcome in every possible determination of a con?ict (or appearance of con?ict). Indeed, that would be impossible. A policy may be-uindeed, will be?general in its terms, not by its express terms describe every prohibited con?ict, and yet be adequate. For example, state law requires a judge to recuse considerations apply,52 but one cannot tell from just those words whether a given situation is covered. Those policies are not inadequate because sometimes a judge fails to recuse when she ought to. So too here: even if the People were right that Crabtree ought not to have been on the team (and I have rejected that assumption) his presence on the team would not be suf?cient to show the controls were inadequate. b. Commissioners Pursuant to the October 2007 version of bylaws, the Commission consists of nineteen members all of _whom are appointed by a seven-member Commissioner Selection Committee. Ex. 20 at 136-38. Commissioners serve staggered three-year terms. Id. at 137. The seven members of the Commissioner Selection Committee included three appointed by the Chair of the Commission, one appointed by the Paci?c Postsecondary Education Council, and three appointed by the Academic Senate for the California Community Colleges, the California Chief Executive Of?cers, the California Community College Trustees, and the Hawaii Community College Academic Senate Chairs. Id. at 138. There must be at least two administrators, two faculty members, and two public representatives ?le, if The judge believes his or her recusal would ?n'ther the interests of justice. (ii) The judge believes there is a substantial doubt as to his or her capacity to be impartial. A person aware of the facts might reasonably entertain a doubt that the judge would be able to be impartial.? C.C.P. 170.1 42 Case No. CGC-13-533693 on the committee. Id. The ACCJ President serves as the nonvoting Secretary to the committee. Id. In an August 2010, the Department of Education sent ACCJ a letter announcing its conclusions, after reviewing various complaints, that the bylaws did not provide the transparency necessary to provide clear and effective controls against con?icts of interest (or the appearance of those) in the Commissioner selection processbecause the bylaws (1) lacked a formal documented process for soliciting appoints to the Commissioner Selection Committee, (2) did not address the maximum number of times an individual may serve on the Commissioner Selection Committee, and (3) did not address public notice of the membership of the Commissioner Selection Committee. Ex. 242 at 1, 3-4. By October 2010, ACCJ had amended its bylaws to address the Department of Education?s concerns. Exs. 28-29. Exhibit 242 demonstrates the Department?s understanding of 34 CPR. Applying that understanding to the bylaws in the present record, I reach the same result. Between at least October 2007 and October 2010, ACCT C?s Commissioner selection process did not provide adequate controls against con?icts of interest, or the appearance of con?icts of interest. This was unlaw?il under the UCL. Twelve of the nineteen Commissioners who served in June 2012 and nine of the nineteen Commissioners who served in June 2013 were appointed under the inadequate policy. Trial Transcript 873:5-87419. No evidence, however, establishes that any of the Commissioners had a con?ict of interest, or that there was an appearance of a con?ict of interest.53 2. Failure to Include Suf?cient Academics on Evaluation Teams Item of 34 C.F.R. 602.15 is: ?Academic and administrative personnel on its evaluation, policy, and decision~making bodies, if the agency accredits I have already ?3 The Department of Education suggested, as ACCJC acknowledges, that the old policies contributed to a lack of ?transparency.? Defendants? Post-Trial Brief, 20. But this not the same as potential or appearance of a con?ict of interest which, as my discussion above in connection with Crabtree suggests, should be tethered to a some sort of speci?c identi?able [potential or appearance of] con?ict. That is, a ?potentiai con?ict of interest' has no content or meaning without specifying what kind of con?ict is possible. 43 Case No. CGC-13-533693 ruled that ACCJ failed to include suf?cient academics on its 2013 Show Cause Team. September 19, 2014 Order, 39. The People contend that ACCJC also failed to include suf?cient academics on the 2012 Evaluation Team. People?s Trial Brief, 8. The People concede that three members of the sixteen-member 2012 Evaluation Team were academics. People?s Post-Trial Brief, 17.54 ACCJ argues that between seven and nine were academics. Post-Trial Brief, 17 (at least seven, nine if ACCJ prevails in an appeal with the Department of Education concerning de?nition of ?academic?); People?s Post~Trial Brief, 13 (nine); Trial Transcript, 5953-5969.? The People have not provided authority that three academics are too few. The People?s expert testi?ed only that a team reviewing a teaching~oriented institution should have more academics than a team evaluating a research-oriented institution. Trial Transcript, 283 :3-284zl. He described the proper number as highly variable, and did not discuss the impact administrative issues may have on the appropriate balance. See id. The People also point to Pond?s testimony, the ACCJC of?cer charged with assembling the team. Pond testi?ed that he originally sought four faculty members and, upon losing two, felt that the remaining two faculty members were probably too few for a big school. Con?dential Deposition of German J. Pond, 68: 12-6924. But it is undiSputed that there were three academics on the ?nal team and there is no evidence that the inclusion of three academics is insuf?cient. The People have not shown that ACCJC included insuf?cient academics on the 2012 Evaluation Team. 5? Pat Flood, Alicia Munoz, and Jeannette Redding. 5? The focus of the dispute between the parties is whether academics include only individuals with recent direct instructional experience, or can extend to deans and others who lack direct instructional experience but have primary responsibility for instructional support. See Ex. 149; Trial Transcript, 598:5-603: 19; Ex. 58; People?s Post-Trial Brief, 16- 17. 44 Case No. 06043-533693 3. Due Process Regulations and Common Law Fair Procedure The People argue that ACCJ violated a federal regulation requiring ACCJ to provide ?sufficient? opportunity for a written response by an institution or program regarding any de?ciencies identi?ed by the agency, to be considered by the agency within a timeframe determined by the agency, and before any adverse action is taken,? and the common law fair procedure doctrine. See 34 CPR. EI-Atrar v. Hollywood Presbyterian Med. Cir, 56 Cal.4th 976, 987 (2013).56 The Commission took adverse action when, and only when, it terminated City College?s accreditation. See 34 C.F.R. 602.3. Constitutional due process compels the government to a?ord persons due process before depriving them of any property interest. Today?s Fresh Start, Inc. v. Los Angeles O??ice of Educ, 57 Cal.4th 197, 212 (2013). The essence of due process is the requirement that a person in jeopardy of serious loss be given notice of the case against him and an opportunity to meet it. Id. The dictates of due process are ?exible and vary according to context. Id. Because ACCJC is a private actor, the People rely on the common law fair procedure doctrine rather than Constitutional due process. Sound Appraisal v. Wells Fargo Bank NA, 717 F.Supp.2d 940, 945 (ND. Cal. 2010) 451 F. App'x 648 (9th Cir. 2011). a. Due Process Regulations 20 U.S.C. 1099b(a) includes a list of requirements to be imposed on accrediting associations such as ACCJ C. This list includes: such an agency or association shall establish and apply review procedures throughout the accrediting process, including evaluation and withdrawal proceedings, which comply with due process procedures These review procedures must provide for adequate written speci?cation of identi?ed de?ciencies at the institution or program examined and for suf?cient Opportunity for a written response, by an institution or a program, regarding any de?ciencies identi?ed by the agency or association to be considered by the agency or association prior to ?nal action in the evaluation and withdrawal proceedings. See 20 U.S.C. 1099b(a)(6)(A)(ii), .55 The People also argue that ACCJC violated 34 can. 45 Case No. CGC-13-533693 In 34 CPR. 602.18, the Secretary set forth the criteria for ensuring consistency in decision- making. An accrediting agency meets the requirement in 34 C.F.R. 602.18 if it meets ?ve conditions, including if the accrediting agency: Provides the institution or program with a detailed written report that clearly identi?es any de?ciencies in the institution?s or program?s compliance with the agency?s standards.? In 34 CPR. 602.25, the Secretary set forth the criteria for ensuring that accrediting agencies provide due process. An accrediting agency meets therequirement in 34 C.F.R. 602.25 if it meets seven conditions, including if the agency: Provides suf?cient opportunity for a written response by an institution or program regarding any de?ciencies identi?ed by the agency, to be considered by the agency within a timeframe determined by the agency, and before any adverse action is taken.? ?Adverse action? means ?the denial, withdrawal, suspension, revocation, or termination of accreditation or preaccreditation, or any comparable accrediting action an agency may take against an institution or program.? 34 C.F.R. 602.3. b. Common Law Fair Procedure Common law fair procedure provides for deferential review.57 The doctrine protects against arbitrary decisions by private organizations under certain circumstances. Porvz'n v. Metropolitan Life Ins. Co. 22 Cal.4th 1060, 1066 (2000). California courts have applied the doctrine where a union arbitrarily denied full membership privileges to African-American workers and in medical privileges cases. Id. at 1066-70. The private organization subject to the common law right to fair procedure in that case was a private entity affecting the public interest. Id. at 1070. See Applebaum v. Bd. of Directors of Barton Mem ?1 Hosp, 104 Cal.App.3d 648, 657 (1980). Although neither party has identi?ed a case applying the common law fair procedure doctrine to an accreditor, the applicability of the doctrine is not disputed here. As discussed in the preemption analysis above, accreditation decisions play a gatekeeper role in limiting access to funding. 5" Jan. 2, 2014 Order, 27?34; Sept. 19, 2014 Order, 27-30. 46 Case No. CGC-13-533693 As in the medical privileges context, accreditation by ACCJC impacts City College?s ability to operate. Sound Appraisal, 717 F.Supp.2d at 946. The common law fair procedure doctrine applies to a decision by ACCJ to terminate accreditation. An association subject to the common law fair procedure doctrine retains discretion in fonnalizing procedures that provide notice and an opportunity to respond. El-Arrar v. Hollywood Presbyterian Med Ctr, 56 Cal.4th 976, 987 (2013). The judicial inquiry extends ?to the questions whether the resPondent has proceeded without, or in excess of, jurisdiction; whether there was a fair trial; and whether there was any prejudicial abuse of discretion. Abuse of discretion is established if the Respondent has not proceeded in the manner required by law, the order or decision is not supported by the ?ndings, or the ?ndings are not supported by evidence.? Id. at 987-88. Although abuse of discretion is established where the respondent has not proceeded in the manner required by law, such a deviation from the mandated procedures is not prejudicial, and therefore does not warrant relief, unless the deviation is material. Id. at 991. Similarly, a violation of a hospital?s own bylaws may deprive fair procedure if, and only if, it is prejudicial. Id. at 990-91. Prejudice or materiality is shown where the violation resulted in unfairness, such as depriving an individual of adequate notice or an opportunity to be heard before impartial judges. Id. To establish liability, plaintiffs need not show that the outcome of the review would have been different. c. The Procedures were Insuf?cient The People contend that ACCJC violated each of the regulations governing due process when it terminated City College?s accreditation in 2013 because ACCJ acted on de?ciencies without providing City College notice of the same deficiencies. People?s Trial Brief, 9-10; People?s Post-Trial Brief, 18-29. Similarly, the People contend that ACCJ violated the common law fair procedure doctrine because ACCJ did not give City College adequate notice of the charges against it and an opportunity to respond. People?s Trial Brief, 11. The People argue that the common law fair 47 Case No. procedure theory is supported by (1) the same facts that show a violation of 34 C.F.R. 602.18(e) and and (2) ACCJ C?s failure to follow its own Policy on Commission Good Practices. Id. The central question under both theories is whether ACCJC afforded City College notice and an opportunity to respond before terminating City College?s accreditation. See El-Artar, 56 Cal.4th at 990-91 (even if ACCIC failed to follow its own policies, there is no violation of common law fair procedure unless the violation in some way deprived City College of notice and an opportunity to be heard by impartial judges). Beginning in 2006 the Commission raised various concerns regarding City College?s future ability to comply with accreditation standards. But the Commission did not at that time, or at any time between 2006 and 2012, ?nd that City College failed to meet any accreditation requirement. In 2012, the Commission found that City College failed to meet numerous accreditation requirements and placed City College on show cause status. At that point, City College was given notice of the de?ciencies identi?ed by the Commission in issuing its show cause decision. Pursuant to the show cause evaluation, City College submitted a written self-evaluation that spanned over 200 pages and separately addressed each Accreditation Standard and Eligibility Requirement. See BX. 103. Thereafter, City College was reviewed by a new visiting team. City College had an opportunity to review and comment on the team?s report before the report was ?nalized and sent to the Commission. See Trial Transcript, 454:4-22, 528: 12-14, 534:23~25. The team found that City College had made progress, but still failed to meet numerous accreditation standards. The Commission then terminated City College?s accreditation. In doing so, the Commission concluded that some accreditation requirements the team believed were met were not, in fact, met. Before the Commission?s action became final, City College had an internal right to appeal. City College did appeal. The appellate panel remanded the termination decision to the Commission to consider City College?s compliance as of May 21, 2014. Concluding that several standards were not 48 Case No. CGC-13-533693 met as of that date, the Commission did not reconsider its decision, at which point the termination decision became ?nal. There are discrepancies between the Standards that the 2013 Evaluation Team concluded were not met and the Standards that the Commission concluded were not met.58 Three analyses are required in order to determine if the process provided by ACCJC was suf?cient. First, we must decide the relevant time period for notice purposes. Second, we must decide which ?de?ciencies? City College should have been afforded notice of. Third, we should consider whether the internal appellate process ACCJC afforded City College affects the adequacy of the procedures. 1. Time Period There areat least two ways of analyzing the time period for which notice of de?ciencies is effective for the purposes of ascertaining whether City College was afforded notice of de?ciencies and an opportunity to respond in writing. See 34 can. EI?Attar, 56 Cal.4th at 990-91?9 One, suggested by A0010, is to determine whether City College was at any time prior to termination 53 In 2012, the Evaluation Team found de?ciencies with respect to Standards 1.A.3, LB, 1.3.2, 1.13.4, I.B.6, 11.A.1, f, g-i, II.A.3, 11.A.6, II.B.1, 11.3.3, 11.B.3.a, c, f, 11.3.4, 11.0.2, 111.A.1.c, 111.A.2, 111.A.6, 111.13.], 111.0. l.a-d, 111.0.2, 111.D.1.aud, 111.D.2.a-c, g, 111.113, 1V.A, 1V.A.1 IV .A.3, 1V.A.5, IV.B.1, e-h, and Ex. 61 at 5-8. The Commission adopted the 2012 Evaluation Team?s ?ndings. Ex. 77 at 2. In 2013, the Evaluation Team found de?ciencies with respect to Standards 1.8.4, II.A.1, 11.A.2, 11.8.1, 11.3.3, 11.0, 1113.2, 111.D.1.a-c, 111.D.2.e, 111.D.3.c, 111.D.3.f, 111,133.11, 111.114, IV.A.2, 1V.A.3, IV.A.4, IV.A.5, IV.B.1, and 111.32. Ex. 112 at 17, 22, 24, 28, 31, 35, 38, 42-43, 45, 48-55, 57-59, 61-62. The Commission thereafter found de?ciencies with respect to Standards 1.A.3, 1.8.1, 1.3.2, I.B.3, 11.A.6, 11.3.1, 11.8.3, 11.8.4, 11.0.1, 11.0.2, 111.A.2, 111.B.2, 111.0.1, 111.0.2, 111.D.1, 111.112, 111.113, 111.D.4, IV .A.1, 1V.A.2, 1V.A.3, 1V.A.4, 1V.A.5, 1V.B.1, and 1V.B.2. Ex. 130 at 2-3. Comparing the two lists, the Commission found de?ciencies that were not found by the Evaluation Team with respect to Standards 1.A.3, 1.13.1, 1.3.2, I.B.3, 11.A.6, 11.B.4, 111.B.1, 111.01, 111.02, and IV.A.1. The Commission had found de?ciencies with respect to each of these standards except Standard 1.8.3 in 2012. However, after appeal the Commission determined that even with supplemental information submitted City College had not demonstrated compliance with Standards LB, 11.A., 11.13, 11.0, 111.13, 111.C, 11.1.D, and NB. Ex. 173 at 1-2. Thus, the Commission did not base its decision on appeal on deficiencies with respect to Standards 1.A.3 or 1V.A. 1. It is not clear whether the Commission relied on de?ciencies with respect to 1.13.1, 1.13.2, I.B.3, 11.A.6, 1113.4, and 111.13. 1. This is because other de?ciencies found by the Evaluation Team and the Commission could also support a ?nding of de?ciencies with respect to LB, ILA, 11.8, and 111B. The Commission continued to rely on de?ciencies with respect to only 111.0 that were not found by the 2013 Evaluation Team. . in Stun, the Commission?s ?nal termination decision cited violations with respect to 111.0 that were not'found by the 2013 Evaluation Team but were noticed in issuing show cause in 2012. The Commission may have incorporated de?ciencies with respect to LBJ, 1.13.2, 11.A.6, 113.4, and that were not found by the 2013 Evaluation Team but were noticed in issuing show cause in 2012. The Commission may have incorporated de?ciencies with respect to 1.13.3 that were neither found by the 2013 Evaluation Team nor noticed in issuing show cause in 2012. 59 Whether City College received notice and an opportunity to respond is critical to 34 CPR. 602.2502!) and the common law fair procedure doctrine, but is not relevant to 34 0.F.R. 49 Case No. 06013-533693 made aware of de?ciencies identi?ed by the Commission, and given an opportunity to respond in writing and/or come into compliance?;0 Under this rubric, City College received notice of all of the de?ciencies? that supported the Commission?s ?nal termination decision in the Commission?s 2012 letter announcing the decision to put City College on show cause status, with the possible exception of I.B.3.62 In the same letter, the Commission announced a date by which City College would need to be compliant with all accreditation requirements. Thereafter, City College was permitted to submit a written report demonstrating its compliance in the form of a self~evaluation, which spanned over 200 pages and addressed every accreditation standard. An evaluation team then visited City College, City College had input on the report, and, after a hearing, the Commission issued its decision. On this reading, City College had an opportunity to respond in writing to the deficiencies identi?ed by the Commission before adverse action was taken. Another approach, implied by the PeOple, is to analyze whether City College was afforded notice of de?ciencies and an opportunity to respond within the evaluation cycle at which the termination decision was reached. Under that rubric, City College should have had notice of all de?ciencies found by the Commission at the time of a given evaluation, and an opportunity to respond in writing, before those de?ciencies are made the basis for termination of accreditation. That did not happen in this case. The People?s approach finds strong support in Policy on Commission Good Practice and Relations with Member Institutions. Ex. 36 at 43 -45. There, the ?Commission makes the commitment to follow good practices in its relations with institutions it accreditsmaking this argument, ACCJ views ?de?ciencies? as problems that need to he addressed rather than ?ndings relating to speci?c accreditation requirements. The appropriate understanding of the term ?de?ciencies? is addressed in the following subsection. 5' Using ?de?ciencies? to mean failures to meet speci?c accreditation requirements. ?2 See Ex. 61 at 5?8 (fourteen recommendations with associated unmet or partially met standards); Ex. 77 (Commission action letter announcing decision to place City College on show cause, incorporating the team?s ?ndings with respect to unmet or partially met standards, and advising City College that it would bear the burden of demonstrating compliance with all standards prior to the June 2013 Commission meeting); Deposition of Painila Fisher, 210:5-19 (explaining that she created accreditation response teams organized around the 14 recommendations). 50 Case No. Commission states that it ?will ful?ll its commitment by adhering to? a list of practices. Id. One such practice is providing due process, including providing institutions an opportunity to respond in writing to draft team reports in order to correct errors of fact; to respond in writing (no less than 15 days inadvance of the Commission meeting) to ?nal team reports on issues of substance and to any Accreditation Standard de?ciencies noted in the report; and to appear before the Commission when reports are considered. If the Commission?s action lists any de?ciency, which was not noted in the Team Report, before making any decision that includes a sanction, denying or terminating accreditation, or candidacy, the Commission, through its President, will afford the institution additional time to respond in writing to the perceived de?ciency before ?nalizing its action at the next Commission meeting. Id. at 44-45. The Commission did not comply with its policy? Rather, the Commission concluded that ten standards were unmet, where the 20l3 Evaluation Team had concluded those standards were met. The People?s interpretation of 34 C.F.R. 602.25(d) is also supported by 34 C.F.R. 34 C.F.R. 602.1863) requires the Commission to provide institutions a ?detailed written report? that ?clearly identi?es any de?ciencies in the institution?s or program?s compliance with the agency?s standards.? Thus, in each evaluation cycle ACCJ must identify all de?ciencies. Read together with 34 C.F.R. this indicates, consistent with policy,64 an institution is entitled to reSpond in writing to any de?ciencies identi?ed in a given evaluation cycle before those de?ciencies are acted upon. ii. De?ciencies ACCJC must (1) issue a detailed report that clearly identi?ed any de?ciencies in City College?s compliance with standards (34 C.F.R. and (2) provide City College with notice and an opportunity to reSpond to de?ciencies identi?ed by ACCJ before adverse action, such as termination, is taken. 34 C.F.R. 56 Cal.4th at 990-91. The meaning of the term ?de?ciency? is critical. ACCJC asserts that the word ?de?ciency? 53 Again, using ?de?ciencies? to mean faiinres to meet speci?c accreditation requirements. 6" 34 C.F.R. 602.25(d) aiiows the accreditor discretion to determine the time?-ame for consideration of an institution?s written response to de?ciencies identi?ed by the accreditor, lending additional weight to policy. 5 1 Case No. CGC-13-533693 refers to conduct that results in noncompliance, not noncompliance itself. Therefore, ACCJ contends, the Commission may conclude that an institution failed to meet an accreditation standard at the pertinent time for the purposes of terminating accreditation even if the failure to meet that standard at the pertinent time has not been previously raised by ACCJ so long as the Commission?s decision is based on facts found by the evaluation team. The People argue that de?ciency means the failure to meet a standard. I adopt the meaning urged by the People. Whether a factual ?nding amounts to a ?de?ciency? is a conclusion arising from the application of accreditation standards to factual ?ndings. A de?ciency is not noted or identi?ed until the underlying conduct is evaluated in connection with an accreditation standard, and an insuf?ciency is found. If the same factual ?nding is made, but there is no conclusion that the accreditation standard is unmet, no de?ciency has been identi?ed.65 That is, a de?ciency is not listed or identi?ed with respect to a speci?c standard unless and until the underlying behavior is directly tied to a failure to meet the standard.?5 This interpretation means that the Commission violated 34 CPR. If the Commission adopts the team?s ?ndings, as was the case in 2012, the team report clearly identi?es any de?ciencies in compliance by tying factual ?ndings to standards. If, in 2013, the Commission was not relying on the evaluation report, then there is no such detailed report that serves that purpose. The termination decision, as ACCJ argues (ACCJC Post-Trial Brief, 37), does not make factual ?ndings. Nor does it tie factual ?ndings to speci?c standards, although of course it lists several standards. If ACCJ is relying on the team report, then the team report does not identify de?ciencies in compliance with the standards that the team report concluded were met, but the Commission concluded were not 6? ACCJC argues that this interpretation of its policy will lead to the absurd result that the Commission can never ?nalize a termination decision because the institution will continuously reargue the merits. ACCIC Post-Trial Brief, 41. Not so. As discussed in the body, this interpretation of the policy allows institutions one opportunity to contest, in writing and'before the Commission reaches its decision, the conclusion that a factual ?nding amounts to a de?ciency. ?6 Beno testi?ed that de?ciencies are behaviors that lead to a failure to meet the standard. Trial Transcript, 4109-12, 433: 12-15. Her views do not change the interpretation of federal regulations or policy; It is signi?cant that at least two Commissioners apparently believed that a de?ciency is a failure to comply with accreditation standards. Deposition of Chris Constantin, 145:18-146:13; Trial Transcript 935:14-23. Mornjian, City College?s Accreditation Liaison Officer, understood de?ciency to mean noncompliance with the standard. Deposition of Gohar Momjian, 334: 15- 20. 52 Case No. 3-533693 met. Either way, ACCJ violated 34 602.18(c) with respect to the 2013 evaluation. As to 34 C.F.R. City College was not given notice that de?ciencies with respect to standards LBJ, I.B.2, I.B.3, II.A.6, llI.B. and IH.C persisted in 2013 before the Commission acted to terminate based in part on the conclusion that those de?ciencies did persist in 2013. The record does not disclose what weight the Commission gave to those de?ciencies. Indeed, the only de?ciencies, of the above, necessarily referenced in the Commission?s ?nal decision a?er appeal were with respect to IH.C. Nevertheless, this violates 34 CPR I turn to the common law fair procedure doctrine. For the reasons outline above, violation of its own policy was material with respect to the additional de?ciencies identi?ed as such by the Commission but not in the 2013 report. The policy, as I interpret it based on the evidence before me, ensures an institution the opportunity to dispute, in writing and in advance of the Commission meeting at which a decision is reached, the conclusion that a factual ?nding amounts to a de?ciency. This can happen at one of two times: (1) if the team concludes that a standard in unmet, the institution can dispute that conclusion after the team?s report is ?nalized but at least 15 days before the Commission meets; (2) if the team does not conclude that a standard is unmet, but the Commission does and intends to list that de?ciency in its action letter, the Commission will allow the institution to respond in writing to the perceived de?ciency before taking the matter up again at the next Commission meeting. Ex. 36 at 44-45. City College was deprived of that opportunity to the extent that the Commission identi?ed new de?ciencies not identi?ed as such in the team report because City College was never given notice that de?ciencies with respect to those speci?c standards persisted in 2013. Such a deprivation of notice can render the process unfair. Appeal The termination decision was not the end of the process. ACCJ seems to suggest that the review and appeal procedures afforded to City College cured any unfairness in the process. 53 Case No. Post-Trial Brief, 41 n.21. As noted above, City College was permitted to seek review and appeal on the basis that ?there were errors or. omissions in carrying out prescribed procedures on the part of the evaluation team and/or the Commission which materially affected the Commission?s decision.? BX. 102 at 102?03. Neither party has discussed the impact this may have on the fairness of the procedure a?'orded by the Commission. The appeal does not cure the violation of 34 CPR. 602.18(e) because the appeal did not result in a report meeting the requirements of that section. Similarly, appellate process does not cure a violation of 34 CPR. because an accrediting agency is required to separately provide notice and an opportunity to respond and an opportunity to appeal. The situation conceivably might be different with respect to the violation of common law fair procedures. The record re?ects the decisions on review and appeal, but not the bases on which City College sought review and appeal. Exs. 161, 173. Appellate proceedings do not necessarily cure defects in the underlying procedure.67 It does not appear that appellate processes cured the 1 de?ciencies I have noted, speci?cally, that City College did not have an opportunity to contest the speci?c de?ciencies identi?ed by the Commission but not by the 2013 Evaluation Team. The record re?ects the decisions on review and appeal, but not the bases on which City College sought review and appeal. Exs. 161, 173. It does not appear that in?rmities in the procedures before the Commission were either cured or waived (assuming waiver applies) by City College?s conduct of the appeal, and accordingly I conclude here that there is a "violation of the common law fair procedure doctrine. As noted in the Conclusion below, the parties are invited to brief the potential impact of internal appellate procedures on prejudice or materiality for the purpose of the common law fair 5? See Mileikowsky v. West Hills Hosp. and Medical Center, 45 Cal .4th 1259, 1272 (2009) (hearing of?cer improperly and without authority prevented the reviewing panel from ful?lling its statutory duty to review the peer review committee?s recommendation to deny a doctor?s applications, and the error was not cured by the doctor?sappeal to the governing board and the board?s af?rmance of the hearing of?cer?s order because the board gave no weight to the actions of any peer review body, but instead af?rmed the hearing of?cer?s order); EI-Attar, 56 Cal.4th at 994 (appeai in Mileikowsky was insu?icient because it did not afford the doctor the procedure to which he was statutorily entitled - a determination by a review panel that the decision to deny his application was justi?ed). 54 Case No. 3-533693 procedure doctrine, including whether City College waived certain rights on appeal (ii) what impact that might have hero, the burden of proof here where the issue apparently regards cure. 4. Basing Accreditation Decisions on Improper Factors 34 C.F.R. 602.18 requires accrediting agencies to ?consistently apply and enforce standards that respect the stated mission of the institution, and that ensure that the education or training o??ered by an institution is of suf?cient quality to achieve its stated objective for the duration of any accreditation or preaccreditation period granted by the agency.? The regulation sets forth ?ve conditions that, if met, satisfy the requirement. One of those conditions is met where the agency ?[b]ases its decisions regarding accreditation and preaccreditation on the agency?s published 34 C.F.R. First, the People argue that the Commission acted improperly by considering the fact that City College spent more than 80% of its revenues on salaries or bene?ts, although no 80% cut-c?? is contained in the accreditation standards. People?s Post-Trial Brief, 34-36. The testimony on which the People rely does not indicate the application of a cut-off but rather an analysis of the amount of revenues City College was spending on salaries or bene?ts.68 The People have not contested that ?nancial well-being is, and is properly, evaluated under accreditation standards. The People seem to suggest that the Commission cannot consider the amount of revenues exhausted by salaries and bene?ts unless ACCJ provides an explicit cut~off in its accreditation standards. Nothing requires ?8 Commissioner Marie B. Smith testi?ed that she voted to place City College on show cause and to terminate City College?s in part because City College was unable to balance its budget and was spending more of its budget on salaries and bene?ts than most colleges. Trial Transcript, 795:1-23. Smith did not invoke any percentage. Commissioner Sharon Whitehurst~Paync testi?ed that she was appalled by the ?nancial situation because 93% of City College?s revenue was going towards salary and compensation even though a college has to do more than pay for salaries and compensation. Id. at 882: 16-23, 897 :9?898:l. Whitehurst-Payne did not indicate any potential cutoff. Commissioner Tim Brown testi?ed that there was concern over the amount of the general fund committed to faculty salaries and whether City College was solvent enough to meet liabilities for retirement and bene?ts. Id. at 918:10?18. Brown did not invoke any percentage. Commissioner Steven Kinsella testi?ed that the normal average amount of money spent on salary and bene?ts is 80% whereas the amount spent at City College was 92%. Id. at 9512365219. Kinsella elaborated that City College should have taken some action to address this percentage?and that the actions City College did take were insuf?cient because they did not bring City College in line with the 80% average. Id. at 95210-95324. While Kinsella did suggest that City College should have come in line with the 80%average, even he did not state that he decided matters based on a the basis of precise cut-off point. Presumably if 80% is an average, there are schools that devote more than 80% of their revenues to salaries and compensation. 55 Case No. such an in?exible approach. To the extent the Commissioners considered the implications of the fact that salaries and bene?ts at City College consumed at greater percentage of their revenues than salaries and bene?ts do at the average college, that decision was based on standards.69 The percentage is indicative of the allocation of funds for various uses, a topic expressly part of the accreditation standards.70 Second, the People argue that two Commissioners indicated that their votes were in?uenced by the fact that no members of City College?s Board of Trustees attended the Commission?s June 2013 meeting. Post-Trial Brief, 36; Ex. 114 at 2 (institutional CEO is not required to attend the Commission meeting). But this overstates the testimony. The two Commissioners in question did express their disappointment with the fact that the Board of Trustees did not attend.71 The Commissioners did not say whether or not the absence in?uenced their votes.? More importantly, the Commission set forth the bases for its decision in the letter announcing its termination decision. Nothing in the letter indicates that the decision was based on the fact that the Board of Trustees did not attend the June 2013 meeting. The People have not proven that the Commission based its decision on the fact that no members of the Board of Trustees attended the June 2013 meeting. ?9 ?Financial Resources? is an accreditation standard. See, 2.3., Ex. 36 at 22-23. ?Financial Resources? includes several requirements. For example, the level of ?nancial resources must provide a reasonable expectation of both short-term and long-term ?nancial solvency. 1d. at 22. The distribution of resources must support the development, maintenance, and enhancement of programs or services. 1d. Financial documents, including the budget, must re?ect appropriate allocation and use of ?nancial resources to support learning outcomes and services22-23. 7? Commissioner Smith testi?ed that she was disappointed and frustrated that City College?s Board of Trustees did not attend the June 2013 meeting. Trial Transcript, 790:25-79lzl2. Commissioner Whitehorst?Payne testi?ed that she was surprised City College did not send its Board of Trustees to the Commission meeting and that what stood out to her ?om the presentation was that City College did not bring a lot of people, City College did not have a lotto say, and City College had not made good progress. Id. at 885:9~20, 887:9-l6. 72 Commissioner Smith testi?ed to her reasons for voting to terminate City College?s accreditation. Trial Transcript, 789: l8-790:l 1. Commissioner Smith didnot identify the failure of the City College?s Board of Trustees to appear at the June 2013 Commission meeting as a basis for her decision. See id. (termination vote based on lack of progress). Commissioner Whitehm'st-Payne similarly testi?ed to her reasons for voting to place City College on show cause and voting to terminate City College?s accreditation. Id. at 882:13-883:4, 88435-15. Commissioner Whiteharst~Payne did not identify the failure of City College?s Board of Tmstees to appear at the June 2013 Commission meeting as a basis for her decisions. Id. (?rst decision based on ?nance and governance issues, second decisions based on failure to move forward). 56 Case No. 06013-533693 D. The Commission Did Not Violate the UCL Unfair Prong The People argue that the Commission committed various unfair practices under Smith v. State Farm Automobile Ins. Co, 93 Cal.App.4th 700 (2001). Under Smith, ?[t]he test of whether a business practice is unfair ?involves an examination of [that practice?s] impact on its alleged victim, balanced against the reasons, justi?cations and motives of the alleged wrongdoer. In brief, the court must weigh the utility of the defendant?s conduct against the gravity of the harm to the alleged victim [Citations.]? [Citation] In [Casa Blanca}, the court concluded that an ?unfair? business practice occurs when that practice ?o??ends an established public policy or when the practice is immoral, unethical, oppressive, unscrupulous or substantially injurious to consumers.? [Citation.}? Smith, 93 Cal.App.4th at 718-19. The People agree that Smith creates a ?balancing test.? People?s Post-Trial Brief, 37. Thus, there must be harm to the victim. See In re Firearm Cases, 126 Ca1.App.4th 959, 981 (2005) (?The UCL provisions are not so elastic as to stretch the imposition of liability to conduct that is not connected to the harm by causative evidence?). ACCJC has urged me instead to apply Gregory v. Albertson Inc, 104 Ca1.App.4th 845, 854 (2002) which held that ?where a claim of an unfair act or practice is predicated on public policy, we read Cal?Tech to require that the public policy which is a predicate to the action must be ?tethered? to speci?c constitutional, statutory or regulatory provisions.? There are important differences between these two approaches.73 Neither party has expressly discussed what one commentator says is the current trend, the test.? William L. Stern, BUSINESS PROFESSIONS Coos 17200 PRACTICE 1; 3.121 .1. (Rutter 2014) (Stem), citing Davis v. Ford Motor Credit Co, 179 Ca1.App.4th 581 (2009). The signi?cance 73 See generally, Eric P. Enson, ?Davis v. Ford Motor Credit Company: More Confusion Regarding the De?nition of "Unfair" or an Indication of Growing Consensus?? 19 J. ANTI. UNFAIR SEC. S1113. CAL. 24, 25- 26 (2010) (comparing the two approaches); Roxana Mehrfar, ?Rede?ning Commonality for Consumer Class Actions Under California Business and Professions Code Sections 17200 and 17500,? 44 LOY. LA. L. REV. 353, 372 (2010) (noting split of authority and commenting on Hardin v. Corp, 136 Cal.App.4th 1255, 1260 (2006) (to the same effect?; Jolley v. Chase Home Fin, LLC, 213 Cal.App.4th 872, 907 (2013) (same). 57 Case No. (36013-533693 of the FTC test here is that it makes it plain that ?substantial harm? must be proven:74 The key factor under the new FTC standard is consumer injury, and that injury, in turn, must be substantial. Trivial or speculative harm is insuf?cient, and must arise to real monetary harm or unwarranted health and safety risks. Likewise, emotional harm will not render a practice Stem 3.126.75 There are a few elements to this FTC test as quoted, and I have not seen authoritative state sources that speci?cally mandate ?monetary harm or unwarranted health and safety risks? to the exclusion of all other harms. Nevertheless, the emphasis on substantial harm is common to a series of appellate opinions, and that is what I mean when I cite the FTC test below. I also note that same panel that decided the People?s favored case, Smith, authored Davis, which adopted the FTC test. See also Camacho v. Auto. Club of S. California, 142 Cal.App.4th 1394, 1405 (2006). ACCJC invokes Gregory because it contends the People cannot show the complained-of practices are ?tethered? to a constitutional, statutory or regulatory provision. But ACCJ has not carefully analyzed the various practices under the Gregory test nor demonstrated this failure. A common problem with many of the practices alleged to be unfair are not so much that they are un- tethered in the Gregory sense (actually, many are), but that they have not resulted in substantial harmm?which is a problem not only under the FTC test-and Davis, but also under the balancing test of Smith pressed by the People. My ?ndings below on lack of harm re?ect the fact that under the FTC test no substantial harm has been shown, as well as (ii) the result of my balancing under Smith of the harm against the utility of the conduct, which, because the harm is so insubstantial, and because there is so little evidence (if any) of ?impact on [the] alleged victim,? Smith, 93 Ca1.App.4th at 718, favors a ?nding on no liability. My notations below of a lack of ?substantial? harm re?ect this analysis. 7? This is quite aside from standing requirements that private plaintiffs?~but not the People in this case?must demonstrate. 7? See generally, Drum v. San Fernando Valley Bar Ass'n, 182 Cal.App.4th 247 (2010) (noting endorsement of FTC test in Davis and Camacho v. Automobile Club of Southern California, 142 Cal.App.4th 1394, 1403 (2006). See also, In re Firearm Cases, 126 Cal.App.4th 959, 981 (2005) (Supreme Court in Cal-Tech impliedly required evidence of causation and harm, i.e. that ?defendants' business practices caused or were likely to cause substantial injury?) (emphasis supplied). 58 a Case No. 1. Denial of Peer Review The Peeple argue that ACCJ failed to allow City College to be reviewed by its peers because Beno served as a staff reader during the 2013 evaluation, in that capacity edited the 2013 report, and encouraged Serrano, who was responsible for compiling the report as the team chair, to ?[p]lease try to make the suggested changes.? BX. 111; People?s Post-Trial Brief, 37-42. The People contend that because of Beno?s editing, the report cast City College in a more negative light than it otherwise might have. People?s Post-Trial Brief, 41. First, this theory is beyond the scope of the case because this court denied the People?s post- trial request to add this theory to the complaint. Dec. 15, 2014 Order, 2. Second, the theory is not supported by the evidence. ACCJC supplies staff readers to review the team report for clarity, consistency, and accuracy, but not for content. Deposition of Susan Cli?'ord, 23 :18-24; Trial Transcript, 44025-4433 (staff readers review report for completeness, citations, clarity, and consistency), 446:1 5-447: 13 (team chair can accept or reject staff reader?s suggestions, and then should send the report to the evaluation team to ensure the content still re?ects the team?s ?ndings), 534:15-22, 53721-5385, 564:20-565:9. The People do not challenge the use of a staff reader for clarity and consistency. See People?s Post-Trial Brief, 42. The People cite four comments in support their suggestion that Beno went beyond permissible involvement. People?s Post-Trial Brief, 40-41; Ex. 111 at SS 003823, SS 003850, SS 003878, SS 003882.76 In the ?rst, Beno highlighted a sentence that read: ?The College demonstrated a high level of dedication, passion, and enthusiasm to address the issues and provided evidence of compelling action to address previous ?ndings.? BX. 111 at SS 003 823. Beno commented that the sentence spoke of the efforts of the college but read like a conclusion, expressing concern that the sentence could be misread to state that the institution took ?compelling action"7_and addressed ?previous ?ndings.? Id. 7? Beno?s comments appear at pages ss 003816, 53 003823, 33 003826, 33 003829-31, ss 003847, 38 003850, 83 003853-54, 53 003857, 33 003870, 33 003875, 53 003878, 83 003881-86 ofExhihit 1 1. 59 Case No. 3-533693 Beno explained that the words were loose, such that the sentence could be read to mean that City College had addressed all of its problems, compelling a favorable response from ACCJ C. Id. Beno thought such a conclusion would be inconsistent with the factual content in the report. Id. Nevertheless, Beno advised Serrano to retain the highlighted sentence if it was in fact her conclusion, but to move it to the end of the report where the team listed its conclusions. Id.? Serrano removed the sentence from the report. See BX. 108 at ACCI 001917. This comment did not go beyond Beno?s role as a staff reader to ensure that the report was consistent throughout. Beno did not suggest any change to the factual ?ndings, but highlighted what she perceived to be an inconsistency between the factual ?ndings and the team?s conclusion for review by the team chair. In the second suggestion highlighted by the People, Beno questioned how the team could conclude that City College met a speci?c standard given the foregoing narrative in the report. BX. 111 at SS 003850-61. In the third comment, Beno asked whether Serrano was sure City College met a standard, or had taken action that could meet the standard in the future. Id. at 003878. In the narrative, the team?s ?nding was that City College had revised its governance structure and implementation of the revised structure remained in progress. Id. In the fourth comment, Beno again questioned whether a standard was in fact met given the factual ?ndings in the report. Id. at SS 003882. These instances are further examples of Beno questioning Serrano to ensure that the team?s conclusions were consistent with the factual ?ndings in the report. Once again, Beno did not suggest any change to the factual ?ndings made by the team. Serrano implemented the changes. BX. 108 at ACCJC 001943, ACCJC 001967, ACCJC 001970. Serrano, who the People do not dispute is a peer to City College, exercised her independent discretion to changelthe report as a result of comments from Beno (see Trial Transcript, Perhaps Serrano failed to send the report to other team members after revisions; she could not recall 77 Contrary to the People?s assertion, Beno did not instruct Serrano to remove the sentence. See People?s Post-Trial Brief, 40. 60 Case No. whether she in fact sent the report to other team members after making changes pursuant to Beno?s edits and before ?nalizing the report. Trial Transcript, 564:20-565z9. In any event, her failure would not eviscerate peer review. Serrano, a peer and the team?s chair, made edits to the report that she believed were. appropriate. Third, the People have not identi?ed substantial harm caused by the challenged conduct. The People suggest two approaches. On one theory, the denial of peer review is intrinsically hann?il to the City College and the People. People?s Post-Trial Brief, 42. But, as noted above, this harm must be substantial. It is not. The People also say Beno?s comments caused the report to be less favorable to City College. People?s Post-Trial Brief, 42. This may be so,?but Serrauo?s responses to Beno?s suggestions do not appear to have been improper and, in any event, the People do not argue that this had any impact on any decisions based on the report. There is no showing that any asserted de?ciencies in the review process, independently or together, impacted the conclusion or otherwise affected any asserted victim. 2. Inclusion of Academics on Evaluation Teams The People argue that, in addition to being unlawful, the failure to include sufficient academics on evaluation teams is unfair. People?s Post-Trial Brief, 43 -44. The facts pertaining to this theory are discussed above. The unfairness theory is no broader than the unlawful theory representation of academics was either suf?cient or insufficient. As to harm, the People reference only the intangible harm of depriving City College and the People the right to have City College reviewed by a balanced evaluation team. M. This is not substantial harm. The People do not attempt to prove, for example, that any changes to the review process, even taken together, would have affected the outcome. 3. Basing Decisions on Improper Factors The People argue that, in addition to being unlawful, it is unfair to base accreditation decisions on improper factors. People?s Post-Trial Brief, 44-45. The factual merits of this theory are discussed 61 Case No. above. Once again, the harm alleged is insubstantial. No impact was shown. 4. Including Crabtree on the 2012 Evaluation Team The People contend that it is unethical and contrary to public policy to allow con?icted individuals, such as Crabtree, to serve on fact-?nding bodies. People?s Post-Trial Brief, 45. As discussed above, the People have not proven that Crabtree had a con?ict of interest, whether personal or ?nancial, nor have they proved Crabtree?s inclusion on the 2012 Evaluation Team undermined the perceived fairness of the process in the eyes of the general public or the hypothetical reasonable person I discussed in that context. Even had I concluded otherwise, the insubstantial harm is not cognizable under the UCL: the People only suggest that Crabtree?s inclusion may have affected the outcome, but concede that Crabtree?s impact cannot be proven. Id. at 45 11.35. 5. Evaluating City College While Embroiled in a Political Fight with It The People argue that ACCJ acted unfairly by evaluating City College for rea?irmation of accreditation while embroiled in a public political ?ght with City College over the proper role of Community Colleges. People?s Post-Trial Brief, 46-51. The Peeple?s theory is that the debate created an appearance of a con?ict of interest. Id. at 49. This purportedly caused harm by eroding the public?s con?dence in accreditation decisions. Id. at 50. The People do not argue, or present evidence, that any individual at ACCJ or its Commission acted imprOperly as a result of the political dispute. Nor is there substantial evidence that the alleged harm oCcurred. The People?s argument is simply that an accreditor cannot take a public political position adverse to the position of any institutions it accredits. This theory is either barred by the Noerr- Penningron doctrine or fails because there is no substantial evidence that the Commission had a con?ict of interest as a result of the fact that its position on the Student Success Task Force differed from that espoused by elements at City College.78 7? The People cite no evidence showing that personnel?s views regarding the Student Success Task Force had any effect on any actions regarding City College. See People?s Post?Trial Brief, 50-51. 62 Case No. CGC-13-533693 Finally, the purported erosion of the public?s faith in ACCJ is not a substantial harm under the UCL. E. Remedy 1. Background Under the UCL, the court may make such orders or judgments, including the appointment of a receiver, as may be necessary to prevent the use or employment by any person of any practice which constitutes unfair competition, as de?ned in this chapter, or as may be necessary to restore any person in interest any money or property, real or personal, which may have been acquired by means of such unfair competition. Bus. Prof. Code 17203. Only two remedies are available to redress violations of the UCL: injunctive relief and restitution. Feitelberg v. Credit Suisse First Boston, LLC, 134 Cal.App.4th 997, 1012 (2005), citing Korea Supply Co. v. Lockheed Martin Corp, 29 Ca1.4th 1134, 1147 (2003). Feitelberg held: The ?rst sentence of section 17203 provides that those engaging in unfair competition ?may be enjoined in any court of competent jurisdiction.? The second sentence of section 17203 recognizes the court?s power ?to prevent? acts of unfair competition and ?to restore? money or property ?acquired by means of such unfair competition.? The remedies and penalties available under the UCL ?are cumulative to each other and to the remedies or penalties available under all other laws of this state.? 17205). Id. Feitelberg also stated that the ?injunctive remedy should not be exercised in the absence of any evidence that the acts are likely to be repeated in the future.? Id. (internal quotations omitted); see also Stender, 212 cal.App.4th at 631. In Consumers Union of the US, Inc. v. Alta-Dena Certified Dairy, 4 Cal.App.4th 963 (1992), the trial court issued an order under the UCL and the False Advertising Law (PAL) requiring the defendant to put a warning label on its consumer products. Consumers Union, 4 Cal.App.4th at 971 The Court recognized that both the UCL and PAL authorize courts to make orders or judgments ?as 63 1 Case No. may be necessary to prevent the use or employment? of unfair competition. Id. at 972. The defendant?s advertising had created a perception that its raw certi?ed milk was safe and nutritionally superior to pasteurized milk. The Court found the warning statement imposed by the trial court was necessary to correct any misperception. Id. at 972-73. The Court wrote that while an injunction against future violations might have some deterrent effect, it is only a partial remedy since it does not correct the consequences of past conduct. An ?order which commands [a party] only to go and sin no more simply allows every violator a ?ea bite at the apple.? The warning statement mandated by the trial court is necessary to deter [the defendant] from conducting similar misleading advertising campaigns in the future. Id. (Emphasis supplied.) 1 also note that an important focus of authorized injunctive relief under the UCL is the threat of ?continuing harm.? See William L. Stern, BUSINESS PROFESSIONS Coos 17200 PRACTICE 8:34 (Rutter 2014). HI am right on the merits, the harm caused by unlawful acts continue to this day (absent the contemplated injunction). In crafting relief under the UCL, judicial abstention may be implicated. See an. 2, 2014 Order, 11-12. ?[B]ecause the remedies available under the UCL, namely injunctions and restitution, are equitable in nature, courts have discretion to abstain from employing them.? Desert Healthcare Dist. v. PacifiCare FHP, Inc, 94 Cal.App.4th 781, 795 (2001). For example, judicial abstention may be appropriate in cases where granting the relief would require a trial court to assume the functions of an administrative agency, would interfere with the ?mctions of an administrative agency, or would be unnecessarily burdensome for the trial court to monitor and enforce given the availability of more effective means of redress. Klein v. Chevron, U.S.A., Inc. 202 Cal.App.4th 1342, 1362 (2012). Closely connected to this are prudential concerns generated by the scheme of federal regulations which normally govern accreditation determinations. While I have not found this state court action preempted, I do take the federal policies as cautionary, an alert that as I exercise my 64 Case No. discretion"9 any order of this court only do so much as is plainly necessary to account for the speci?c liability I have found and avoid to the extent possible interference with federal policies and procedures. Finally, I note that the task now does not resemble that facing me when I decided the preliminary injunction motion. That preliminary injunction will of course be dissolved when judgment is entered here, and now I do not consider for example the balance of equities, or the probability of success, as I did in the earlier context. DVD Copy Control Ass?n, Inc. v. Kaleidescope, Inc, 176 Cal.App.4th 697, 721 (2009); Bcnasra v. Mitchell Silberberg Knapp, 96 Cal.App.4th 96, 110 (2002); compare CALIFORNIA Pastor?th GUIDE: CIVIL PROCEDURE BEFORE TRIAL Ch. 900 (Rutter 2014) (factors considered for preliminary injunctions). 2. Appropriate Scope of the Order MAS the People acknowledge, it is inappropriate for me to decide if the Commission?s decisions in 2012 and 2013 were correct. People?s Post-Trial Brief, 68; see Pinsker v. Pacific Coast Society of Orthodontists, 12 Cal.3d 541, 556-57 (1974) (trial on the merits before state court did not cure violation of common law fair procedure because doctor was entitled to a ruling from the defendant association, not a trial judge who possessed neither the professional experience nor the discretionary latitude of defendant association). The court lacks the expertise and authority to determine what sanction, if any, was appropriate given the conditions at City College. We do know that ACCJ had discretion under to the two-year rule to allow City College two years after ACCJC identi?ed de?ciencies to come into compliance, plus additional time if ACCJC found good cause to do so. 34 CPR. Ex. 9; Ex. 36 at 41-42; Ex. 76 at 40-41. ACCJC is permitted by federal regulation to terminate accreditation if an institution is non-compliant with any standard without allowing an institution time to care. 34 CPR. 602.3, ACCJC 79 Horsford v. Ba'. Of Trustees Of California State Univ., 132 Cal.App.4th 359, 390 (2005) (injunction issues in discretion of the trial judge). 65 Case No. CGC-13-533693 retained discretion to place an institution en show cause status for ?substantial non-compliance? with accreditation requirements and to set the time period within which an institution must come into compliance. Ex. 36 at 41-42; Ex. 76 at 40-41. The court does not have the expertise or authority to independently review the facts and determine whether ACCJC should have exercised its discretion to allow City College the full two years, or two years plus a good cause extension, to come into compliance with accreditation standards. Thus the People?s extensive argument that the problems at City College did not justify termination, including in light of treatment of purportedly similarly situated schools, is beyond this court?s purview.30 See Post-Trial Brief, 68?85. 3. Proven UCL Violations The People have shown that ACCJC violated the unlawful prong of the UCL in the following ways: (1) failing to maintain adequate controls against the appearance of con?icts of interest in the Commissioner selection process between October 2007 and October 2010, during which time twelve of the nineteen Commissioners who served in June 2012 and nine of the nineteen Commissioners who served in June 2013 were selected in violation of 34 C.F.R. 602.15; (2) failing to include suf?cient academics on the 2013 Evaluation Team in violation of 34 C.F.R. 602.15; (3) failing to provide a detailed written report that clearly identi?es deficiencies in the institution?s compliance with accreditation standards in 2013, in violation of 34 CPR. 602.18; and (4) failing to provide suf?cient opportunity for a written response to de?ciencies identi?ed by the Commission in 2013 but not by the 2013 Evaluation team, in violation of 34 C.F.R. 602.25 and common law fair procedure. 4. Relief Requested The People ask the court to vacate the Commission?s 2012 decision to place City College on .show cause status and the Commission?s 2013 decision to terminate City College?s accreditation. 8" A court lacks the expertise to determine whether City College was similarly situated with other colleges accredited by ACCJC. Even if the court had suf?cient expertise, a perusal of action letters (or other evidence in the record) is insufficient to make such a determination. See Exs. 7, 10-11, 1546, 18, 21~22, 34, 229-36. . 66 Case No. CGC- 3-?533 693 Peeple?s Post?Trial Brief, 60. Further, the People ask the court to order ACCJC to re-evaluate City College, presumably on the basis of its current compliance with accreditation standards. Id. The Peeple then apparently expect that, if City College is de?cient, those de?ciencies will result in some sanction that is less severe than termination and City College will be given some amount of time to come into compliance before termination can be ordered. Indeed, part of the reason the People seek the relief they request is to erase any record that City College was de?cient in 2012' or 2013. Id. at 62. The People contend that this broad relief is appropriate, even if the decisions would have been the same regardless of the above violations, because the decisions are ?tainted? and procedural violations could have impacted the outcome. Id. at 63 -64. 5. The 2012 Show Cause Decision The only UCL violations proven by the People concerning the 2012 show cause decision relate to policies protecting against the appearance of con?icts of interest in the selection of Commissioners. There is no evidence there vvas an actual con?ict and there is no evidence that the lack of correct procedures had any impact on City College. The Department of Education, which made a parallel ?nding, expressed no interest in reversing the decisions made by the Commission by those improperly selected Commissioners. Nor did the Department of Education require ACCJ to replace the Commissioners selected under the old policy. Trial Transcript, 675:4?25. There was no showing that failures of the procedures used to select Commissioners rendered those procedures unfair under the common law fair procedure doctrine. The People suggest comparisons to other cases, none decided under the UCL, involving the appearance of judicial partiality, discriminatory jury selection, an improperly constituted union disciplinary committee, an improperly constituted medical disciplinary board, and a two-judge panel in an appellate court. People?s Post-Trial Brief, 64-65. In these cases, there was at least an appearance of bias, indeed, facts suggesting that bias was probably inevitable. Applebaum v. Bd. 67 Case No. CGC-13-533693 of Directors, 104 Cal.App.3d 648, 660 (1980). In another case cited by the People, the challenged decision was made by a court improperly constituted under statutory law and implicating a Constitutional right to the correct number of appellate judges. Johnson v. Appellate Div. of Superior Court, 230 Cal.App.4th 825, 832 (2014). The People draw from these and the other cited cases the rule that the participation of those with a con?ict of interest ?either actual or apparent? in effect voids all decisions made by the pertinent body. People?s Post-Trial Brief at 65. The People?s logic would void all the decisions of the Commission for a multi?year period, perhaps back to 1963.81 This logic also has implications for decisions continuing institutions? accredited status; for example, the People?s logic implies no institution would be validly recognized by ACCJ as an accredited institution. Adopting the People?s logic and on that basis granting the relief requested would severely undermine the federal accreditation process. Even if the People are right thatall decisions of bodies which include these with an actual or potential con?ict ought to be vacated, that is not what we have in this case. The People have not actually argued, and I have certainly not found, that any of the Commissioners had any such con?ict; only that the procedures used'to select them contravened federal law. It would not be equitable to vacate a ?nding that City College was de?cient with respect to speci?c standards in 2012 when it was afforded, on the whole, a fair procedure. Moreover, no other equitable relief is appropriate because the Department of Education has addressed, and will continue to supervise, compliance with regulations governing Commissioner selection going forward. 6. 2013 Termination Decision With respect to the 2013 termination decision, the People have proven that the evaluation team had too few academics; (2) numerous Commissioners were selected pursuant to a, policy that inadequately guarded against the appearance of con?icts of interest; (3) ACCJ did not provide a detailed written report that clearly identi?ed all de?ciencies in City College?s compliance with 8? See Trial Transcript, 67 5:4-9. 68 Case No. accreditation standards; and (4) ACCJ did not provide suf?cient opportunity for a written response to de?ciencies identi?ed by the CommissiOn in 2013 but not by the 2013 Evaluation team. For reasons stated above, I will not grant relief with respect to the Commissioner selection policy. Nor will I do so with respect to the makeup of the evaluation team.82 However, the reporting and notice violations do undermine the fairness of the process within the meaning of the common law fair procedure doctrine. City College was deprived of an opportunity to respond in writing to ?ndings of de?ciencies in 2013, and to prepare for a hearing on those same de?ciencies. These de?ciencies may have been insigni?cant, because other de?ciencies were found and the Commission was entitled to terminate City College?s accreditation based on any de?ciency after the show cause period had expired. But they may not have been insigni?cant. We do not know if the Commissioners would have exercised their discretion differently had City College been given an opportunity to address the additional ?ndings in Given this uncertainty relief should be granted, but the termination decision should not now be vacated. Having in mind that there was no violation of common law fair procedure as to numerous de?ciencies, my discretion is best exercised if I do not wholly undermine the federal accreditation process by vacating a decision that the accreditor had discretion to make. But I can address the consequences of past conduct and its continuing impact today, Consumers Union of the US, Inc, 4 Cal.App.4th at 972-73, by providing City College the chance it never had to respond to the ?ndings of de?ciencies. As I note, we do not know whether, if City College had had its rights observed in 2013, it would have made any difference;83 but we can ?nd outwfrom the Commission. The court?s injunction 82 34 C.F.R. 602.15 requires an accreditor to demonstrate its administrative and ?scal capacity to carry out accreditation activities by including academic and administrative personnel on its evaluation bodies. it does not make the inclusion of only one academic a basis for reversing an accreditation decision. The de?ciencies identi?ed in 2012 went to ?nancing and administrative oversight, not the quality of instruction. Thus this is not a situation where administrators reviewed teachers and found that the teachers were not teaching properly. There is no showing the make-up of the team had any impact, or indeed created any unfairness, in the team?s review of City College. ?3 The People agree. Closing Argument Transcript at 39. . 69 Case No. no, ?ier ~39 should permit84 City College to address the additional de?ciencies in writing and if City College so opts, mandate the Commission to reconsider its termination decision based on those responses. This would ensure that City College has the notice and opportunity to in?uence the exercise of the Commission?s discretion to which the People have demonstrated City College was entitled. At the same time, this relief would not be unduly burdensome on the Commission and would not unduly interfere with the federal accreditation process. If the Commission detemiines that it would have made the same termination decision, the Commission would proceed free of further restraint from this court; otherwise the Commission should vacate its termination decision. This is the relief which is commensurate with the material violations 1 have found. It will be observed that such a resolution leaves in the hands of the defendant the key to further restraint by the court. This is so, and it is unusual. But this is just another way of noting that the Commission is entrusted, and has always been entrusted, to decide accreditation in its own discretion. City College opted for that regime when it joined ACCJC. The relief sought by the People does not differ from that directed here in the sense that the People, too, agree that the Commission must have the last word on City College?s accreditation, the People too urge an injunction requiring the Commission to review the termination decision, as well as an opportunity for City College to respond to the alleged de?ciencies. But the speci?c order pressed by the People would wipe out years of work done by ACCJ C, likely interfere with the two-year rule,? and might in effect compel the Commission to maintain accreditation contrary to federal criteria. V. CONCLUSION ACCJC is liable for violations of the Unfair Competition Law, speci?cally, the law?s ban on unlawful business practices. ACCJ C?s material violations made it impossible for City College to have 8? Because City College is not a party, I cannot order it to do anything. Hence the contemplated injunction must allow City College the option to trigger the new review. 8? See 70 Case No. CGC-13-533693 a fair hearing prior to the 2013 termination decision. The material violations can only be remedied with an injunction allowing City College to have the due process to which it was entitled in 2013. The Commission must specify in writing its bases for ?nding de?ciencies in its 2013 termination decision that were not identi?ed in the 2013 Evaluation Team Report, consider any written responses to those newly identi?ed de?ciencies provided by City College, and reconsider its termination decision, then taking such action as it in its lawful discretion may decide.35 The preliminary injunction, will be dissolved on entry of judgment. The People should new draft a proposed judgment and injunction consistent with this proposed statement of decision 03801)) for review by ACCJC and to be provided to me, together with comments, on the date when objections under CRC 3.1590 are due. By that due date, either party may also draft, present to the other party for review, and provide to me, any other proposed judgment and injunction which is either consistent with this PSOD or which assumes I will agree with objections made to the PSOD. In the latter case, the draft must indicate that it assumes aISpeci?ed modi?cation of the PSOD. Aside from objections, the parties are invited to comment on (1) the scope of the injunction proposed in this PSOD assuming the bases for liability remain unchanged, and (2) the potential impact of internal appellate procedures on prejudice or materiality for the purpose of the common law fair procedure doctrine, including whether City College waived certain rights on appeal (ii) what impact that might have here, the burden of proof here where the issue apparently regards cure. Under CRC 3.1590 objections are due 15 days from this date; including 2 court days for electronic service, CRC 2.251 that is, by February 3, 2015. All other submissions invited in this Conclusion are due at the same time and may be combined into one document per party. 36 The contemplated injunction would (1) allow City College to opt into a reconsideration process, and if it does (2) have - ACCJ create a report which states as to each Standard the evidence as of June 2013 which supports a ?nding of de?ciency, (3) allow City College to make a written response, and (4) allow ACCJC to change or reaf?rm the termination decision; ACCIC cannot ?nalize the termination decision until the process is complete. The une 2013 date is based on Ex. 77 (City College required to show it was in compliance as of lune 2013 Commission meeting). 71 Case No. ACCJC should alert me if it desires a. brief stay of any injunction in order to seek relief [including a stay pending appeal] from the Court of Dated:Januaryl6,2015 a Chrtis EA. Kamow Judge Of The Superior Court 87 ACCJC will not be permitted by this trial court to ?nalize the termination decision during the period of any such brief stay entered by this court. 72 Case No. CGC-13-533693 CERTIFICATE OF ELECTRONIC SERVICE (CCP 1010.6(6) CRC I, Ericka Lamauti, a Deputy Clerk of the Superior Court of the County of San Francisco, certify that I am not a party to the Within action. On January 16, 2015, I electronically served TENTATIVE DECISION AND PROPOSED STATEMENT OF DECISION via File ServeXpress on the recipients designated on the Transaction Receipt located on the File Servexpress website. Dated: January 16, 2015 T. Michael Yuen, Clerk By: Ericka LarnE?ti, Deputy?Clerk