School’s accreditation loss did not violate due process rights

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Where a decision to revoke a school’s accreditation after the school failed to meet graduation rate requirements relied on a recommendation made by a team that included the president of a competing school, the level of competition between the schools was not sufficiently direct for the president’s presence on the team to create a due process violation.

Background

The National Accrediting Commission of Career Arts and Sciences, or NACCAS, is a private company, authorized the United States Department of Education to grant and review accreditation for institutions such as Wards Corner Beauty Academy, or WCBA, a cosmetology and barbering institution in Virginia. WCBA was first accredited in 1977 by NACCAS’s predecessor, the Cosmetology Accrediting Commission, and its accreditation was continuously renewed until 2014.

In November 2014, WCBA reported a 2013 graduation rate below the 50 percent benchmark rate required for schools to maintain their accreditation and was given 12 months to bring its graduation rate into compliance. In the fall of 2015, NACCAS determined that WCBA had failed to demonstrate a compliant graduation rate in its 2014 annual report. WCBA was permitted to submit supplemental information to demonstrate compliance, which it did in January 2016.

In February 2016, NACCAS held a week-long commission meeting to vote on numerous school actions, including WCBA’s accreditation. A day or two before any vote is taken by the commission, file review teams, comprised of three commissioners, independently investigate the school action in question and make a recommendation to the full commission. The teams do not know what school actions they will be responsible for until they meet on their designated day.

The chairman of the commission, Michael Bouman, presided over the February 2016 meeting. Although chairmen are not typically assigned to file review teams, Bouman was assigned to WCBA’s file as a substitute for a missing member. Bouman is the president, chief operating officer and part owner of Empire Education Group Inc., or EEG, which operates a cosmetology school near WCBA.

Bouman’s team recommended that WCBA’s accreditation be withdrawn and the full commission unanimously voted to do so. An appellate review panel affirmed the decision in October 2016. WCBA then sued in federal district court, asserting that the proceedings violated its it was denied its common law right to due process and requesting injunctive and declaratory relief. The district court denied WCBA’s requests for relief after a multi-day bench trial. This appeal followed.

Analysis

The district court did not err by finding that Bouman’s participation in the NACCAS proceedings violated WCBA’s due process rights. While there was some degree of competition between WCBA and EEG, it did not meet the level of direct competition necessary to form the basis of a common law due process claim. Notably, while WCBA taught both cosmetology and barbering, EEG taught only cosmetology. Moreover, competitive significance of any one school was diluted by the presence of three other schools in the area. In addition, the degree of direct competition was limited by differences in teaching methods and curricula that made transfer difficult and a lack of access to transportation that would enable WCBA students to attend EEG instead.

Indeed, at most, only three students actually transferred from WCBA to EEG, and only one of them did so after WCBA’s loss of accreditation became public knowledge. Even for that transfer, there was no evidence it was motivated by NACCAS’s accreditation decision.

WCBA has also failed to show that the transfer resulted in a direct and substantial financial benefit to Bouman sufficient to give rise to a due process violation. There is no evidence to suggest that Bouman received any remuneration from EEG as a result of NACCAS’s accreditation decision and any indirect, trickle down financial benefit he might receive in the future is purely speculative. Such a slight pecuniary interest is not disqualifying for the purposes of a common law due process claim.

Notably, Bouman’s role in the ultimate accreditation decision was limited. He did not participate in the final debate before the dispositive vote was cast, nor did he formally vote to withdraw accreditation.

We are likewise unpersuaded that NACCAS’s rules impose a higher standard than the general common law duty to provide an impartial decision-maker such that a violation of those rules led to a due process violation in this case. Notably, as the rules fail to define what constitutes an improper personal or pecuniary interest, there is no basis upon which to infer that they are more stringent than the common law.

Affirmed.

Wards Corner Beauty Academy v. National Accrediting Commission of Career Arts & Sciences, Case No. 18-1290, April 30, 2019. 4th Cir. (Duncan), Appeal from EDVA at Norfolk (Davis). William A. Lascara for Appellant; Julia Kim Whitelock for Appellee. VLW 019-2-137. 18 pp.