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State ex rel. Balderas v. Itt Educational Services, Inc.

Court of Appeals of New Mexico

April 24, 2018

STATE OF NEW MEXICO ex rel. HECTOR BALDERAS, Attorney General, Plaintiff-Appellee,
v.
ITT EDUCATIONAL SERVICES, INC., Defendant-Appellant.

          APPEAL FROM THE DISTRICT COURT OF BERNALILLO COUNTY Valerie A. Huling, District Judge

          Hector H. Balderas, Attorney General Joseph Yar, Assistant Attorney General Nicholas M. Sydow, Assistant Attorney General P. Cholla Khoury, Assistant Attorney General Santa Fe, NM for Appellee

          Sutin, Thayer & Browne, A.P.C. Stevan Douglas Looney Albuquerque, NM Bardacke Allison LLP Paul G. Bardacke Santa Fe, NM Thompson Coburn LLP William R. Bay Jeffrey R. Fink St. Louis, MO for Appellant Richard John Rubin, Assistant Attorney General Santa Fe, NM for Amici Curiae

          OPINION

          JULIE J. VARGAS, Judge

         {¶1} In this consolidated appeal, ITT Educational Services, Inc., d/b/a ITT Technical Institute (ITT) appeals the district court's order denying its motion to compel arbitration, as well as its order compelling compliance with subpoenas served on counsel for ITT students by the Attorney General. On appeal, ITT claims that the Attorney General is bound by provisions in student enrollment agreements requiring that any dispute related to a student's enrollment be arbitrated and further requiring that any information related to the arbitration remain confidential. We conclude that under the specific circumstances of this case, enforcement of the agreement to arbitrate and accompanying confidentiality clause against the Attorney General is contrary to public policy and we affirm.

         BACKGROUND

         {¶2} The State of New Mexico, through its Attorney General (State) filed suit against ITT, claiming violations of the New Mexico Unfair Practices Act (UPA) arising out of alleged misrepresentations to students about ITT's nursing program and its financial aid process. ITT filed a motion to compel arbitration, asking the district court to order the State to arbitrate individually for each student, "all claims seeking restitution or other relief on behalf of any ITT students in accordance with the arbitration provision in the students' enrollment agreements with ITT[.]" ITT's enrollment agreement requires that "any dispute arising out of or in any way related" to the agreement, "including without limitation, any statutory, tort, contract or equity claim" be resolved by binding arbitration. ITT argued that, notwithstanding that the State was not a party to the enrollment agreement, it was required to arbitrate because its claims were derivative of student claims or alternatively, were brought in a representative capacity on behalf of students. Following a hearing, the district court denied ITT's motion to compel arbitration. ITT appealed the district court's denial pursuant to the New Mexico Uniform Arbitration Act, allowing for an appeal from an order denying a motion to compel arbitration. NMSA 1978, § 44-7A-29(a)(1) (2001).

         {¶3} During discovery, the State served subpoenas duces tecum on two private attorneys (attorneys) who had each represented ITT students in prior arbitration proceedings against ITT conducted in accordance with the requirements of the enrollment agreements. The subpoenas served on the attorneys required that, for any proceeding against ITT in which they were counsel for an ITT student, they produce the following material:

1. All pleadings, decisions, or verdicts, filed, entered or issued in any arbitration proceeding involving [ITT] and ITT students in New Mexico;
2. All written discovery, including but not limited to, answers to interrogatories, and admissions and accompanying requests for admissions, produced or provided by [ITT] during arbitration between ITT and ITT students;
3. All testamentary evidence gathered or produced during arbitration proceedings between [ITT] and [ITT] students . . . including but not limited to, transcripts of depositions, transcripts of hearings or the contact information of any court reporter transcribing any hearings if the transcripts were not delivered or provided to you, affidavits, and written statements;
4. All documents produced or provided by [ITT];
5. All documents produced or provided by your clients[.]

         ITT objected to the subpoenas pursuant to Rule 1-045(C) NMRA, asserting that disclosure of the requested materials would violate the confidentiality clauses of the enrollment agreements, requiring that "[a]ll aspects of the arbitration proceeding, and any ruling, decision or award by the arbitrator, will be strictly confidential." ITT instructed the ...


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