GRAND CANYON UNIVERSITY V. MIGUEL CARDONA, ET AL, No. 21-17113 (9th Cir. 2022)

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NOT FOR PUBLICATION UNITED STATES COURT OF APPEALS FILED DEC 28 2022 MOLLY C. DWYER, CLERK FOR THE NINTH CIRCUIT GRAND CANYON UNIVERSITY, Plaintiff-Appellant, v. No. U.S. COURT OF APPEALS 21-17113 D.C. No. 2:21-cv-00566-DLR MEMORANDUM* MIGUEL A. CARDONA, in his official capacity as Secretary of the United States Department of Education; U.S. DEPARTMENT OF EDUCATION, Defendants-Appellees. Appeal from the United States District Court for the District of Arizona Douglas L. Rayes, District Judge, Presiding Submitted December 5, 2022** Phoenix, Arizona Before: WARDLAW and BUMATAY, Circuit Judges, and SCHREIER,*** District Judge. * This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. ** The panel unanimously concludes this case is suitable for decision without oral argument. See Fed. R. App. P. 34(a)(2). *** The Honorable Karen E. Schreier, United States District Judge for the District of South Dakota, sitting by designation. Grand Canyon University (GCU) appeals the dismissal of its complaint against the Department of Education (the “Department”), which sought to obtain COVID-19 emergency relief funds established for nonprofit institutions of higher education (IHEs). We review de novo the grant of a motion to dismiss. See Faulkner v. ADT Sec. Servs., Inc., 706 F.3d 1017, 1019 (9th Cir. 2013). Dismissal is proper “if the complaint fails to plead enough facts to state a claim to relief that is plausible on its face.” Koessler v. CVS Health Corp., 977 F.3d 803, 807 (9th Cir. 2020) (simplified). We have jurisdiction under 28 U.S.C. § 1291, and we affirm. GCU is a private, Christian university located in Phoenix. In 2004, after 55 years as a nonprofit institution, GCU’s Board of Trustees approved its sale to a forprofit corporation to raise money to keep the University operating. The Department now classifies GCU as a for-profit “proprietary institution of higher education” under § 102(b) of the Higher Education Act (HEA), see 20 U.S.C. § 1002(b), as opposed to a § 101 “nonprofit” IHE, see 20 U.S.C. § 1001(a)(4). Through the Higher Education Emergency Relief Funds (HEERF) II and III, Congress allocated the vast majority of relief funds for “institutions of higher education as defined in [HEA] section 101” and a smaller amount to “institutions of higher education as defined in section 102(b) of the HEA.” See Coronavirus Response and Relief Appropriations Act (CRRSAA), Pub. L. No. 116-260, § 314(a)(1), (a)(4), 134 Stat. 1909, 1932–33 (2020); accord American Rescue Plan Act (ARPA), Pub. L. No. 2 117-2, § 2003(1), (4), 135 Stat. 4, 23–24 (2021).1 GCU argues that it qualifies for § 101 nonprofit relief funds under HEERF II and III. The university relies heavily on the fact that, in 2018, it was purchased by a company that the Internal Revenue Service (IRS) recognized as a 501(c)(3) nonprofit. But HEA § 101 nonprofit status requires more than the IRS’s recognition of 501(c)(3) status under 26 U.S.C. § 501(c)(3). See 34 C.F.R. § 600.2 (defining a HEA § 101 nonprofit); see also HEA § 103(13), 20 U.S.C. § 1003(13) (same). In 2019, and again in 2021, the Department determined that GCU failed to satisfy the definition of a “nonprofit” IHE under the HEA. That determination is not challenged in this action.2 Because GCU is not a recognized HEA § 101 nonprofit, it is not entitled to funds reserved for such IHEs under HEERF II and III. Despite the Department’s rejection of GCU's § 101 nonprofit status, GCU contends that it is still entitled to nonprofit HEERF relief funds under Department regulations. GCU specifically relies on a Department regulation that allows an applicant to prove it is a “nonprofit organization” for “some programs” based on 501(c)(3) status. See 34 C.F.R. § 75.51(b)(1). But these regulations apply only “to 1 Congress also allocated funds to IHEs under HEA § 102(c)—a classification not relevant here. CRRSAA § 314(a)(1); ARPA § 2003. 2 GCU challenged that determination in a separate lawsuit against the Department and lost. See Grand Canyon Univ. v. Rosenfelt, No. 2:21-cv-177 (D. Ariz.). The district court granted the Department’s Cross-Motion for Summary Judgment on December 1, 2022. 3 the extent [they are] consistent with the authorizing statute.” Id. § 75.1(b). Here, the authorizing statutes expressly allocate the nonprofit funds to “institution[s] of higher education as defined in [HEA] section 101.” See CRRSAA § 314(a)(1); accord ARPA § 2003. Consequently, we agree with the district court that Department regulations, which do not purport to determine a school’s HEA status, are inapplicable here. AFFIRMED. 4

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