Case 2:16-mc-00002-SRB Document 2 Filed 01/12/16 Page 1 of 8

JONATHAN E. NUECHTERLEIN 

General Counsel 

LESLIE RICE MELMAN 

Assistant General Counsel for Litigation 

BURKE KAPPLER

Attorney 

FEDERAL TRADE COMMISSION

600 Pennsylvania Ave., N.W., Mail Drop H-585 

Washington, DC 20580 

Telephone: (202) 326-2043 (Kappler) 

Facsimile: (202) 326-2477 

E-mail: bkappler@ftc.gov

Attorneys for the Federal Trade Commission

IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF ARIZONA 

 ) 

FEDERAL TRADE COMMISSION, ) 

) 

Petitioner, ) 

) 

v. ) 

) 

APOLLO EDUCATION GROUP, INC., ) 

) 

and ) 

) 

THE UNIVERSITY OF PHOENIX, INC., ) 

) 

Respondents. ) 

) 

Case No.

MEMORANDUM IN SUPPORT OF 

UNOPPOSED PETITION FOR AN 

ORDER GOVERNING 

COMPLIANCE WITH CIVIL 

INVESTIGATIVE DEMANDS 

ISSUED IN FURTHERANCE OF A 

LAW ENFORCEMENT 

INVESTIGATION
1 

I. INTRODUCTION

The Federal Trade Commission has commenced an investigation to determine whether 

Respondents, Apollo Education Group, Inc. and the University of Phoenix, Inc. (collectively, the

Companies), “have engaged or are engaged in deceptive or unfair acts or practices in or affecting

commerce in the advertising, marketing, or sale of secondary or postsecondary educational 

products or services, or educational accreditation products or services, in violation of Section 5 

of the Federal Trade Commission Act, 15 U.S.C. § 45.” 

It petitions this Court under Section 20 of the Federal Trade Commission Act (FTC Act), 

15 U.S.C. § 57b-1, and Section 1232g of the Family Educational Rights and Privacy Act 

(FERPA), 20 U.S.C. § 1232g(b)(1)(J)(ii) and 1232g(b)(2)(B), for an order requiring the

Companies to produce education records sought by civil investigative demands (CIDs) without 

disclosing the contents of the CIDs, or the information provided in response, as permitted by 

FERPA. This information is relevant to the Commission’s investigation. 

The Companies have made several productions of documents but they have not yet 

produced FERPA-protected “education records.” They note that FERPA requires them to notify 

students and parents prior to the disclosure of such records and restricts their ability to produce 

them in an efficient and timely manner and assert that giving such notice will be costly and 

burdensome, and the parties have been engaged in discussions as to how best to address the 

production of FERPA-protected education records. The restrictions of FERPA and the 

corresponding non-production of education records called for by the CIDs have impeded the

Commission’s investigation, prevented it from determining whether there have been any 

violations of the FTC Act, and hindered its ability to identify those potentially harmed by any 

such acts or practices. To effectively carry out its investigation, the Commission therefore asks 

the Court to enter an order requiring the Companies to produce education records responsive to 

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the CIDs without disclosing the contents of the CIDs, or any information provided in response 

thereto, as permitted by FERPA, 20 U.S.C. §§ 1232g(b)(1)(J)(ii) and 1232g(b)(2)(B). The

Companies do not oppose this request.

II. JURISDICTION

Section 20 of the FTC Act authorizes the Commission to issue CIDs to require the 

production of documentary material relating to any matter under investigation. 15 U.S.C. § 57b1(c). If a CID recipient fails to comply, the Commission may petition a district court for an order 

directing the recipient to comply. 15 U.S.C. § 57b-1(e), (h). The statute confers jurisdiction and 

venue on the district court of the United States in the district where the CID recipient “resides, is

found, or transacts business . . . .” 15 U.S.C. § 57b-1(e). Apollo Education Group and the 

University of Phoenix reside, are found, or transact business in this district. Pet. Exh. 1, ¶¶ 3-4. 

Under Section 20, the Commission issued the CIDs to Apollo Education Group and the 

University of Phoenix on July 23, 2015. Pet. Exh. 1, ¶ 6. Because the Companies have not fully 

complied with the CIDs, the Commission seeks judicial enforcement under 15 U.S.C. §§ 57b1(e), (h). Further, FERPA authorizes this Court to enter an order requiring Respondents to

produce FERPA-protected education records to the FTC without notification to the relevant

students and without seeking written consent for the disclosure. 20 U.S.C. §§ 1232g(b)(1)(J)(ii), 

1232g(b)(2)(B). The Court has federal question jurisdiction to enter orders pursuant to FERPA 

under 28 U.S.C. § 1331, and, as in the FTC Act, venue is proper where respondents reside. 

28 U.S.C. § 1391(b)(1). 

III. STATEMENT OF FACTS 

A. The Parties

The Commission is an administrative agency of the United States, organized and existing 

pursuant to the FTC Act, 15 U.S.C. § 41, et seq. The Commission is authorized and directed by 

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Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), to prevent “unfair methods of competition” and 

“unfair or deceptive acts or practices in or affecting commerce.” 

Respondent Apollo Education Group, Inc. is a private education provider, incorporated 

in Arizona, with its principal place of business in Phoenix, AZ. Pet. Exh. 1, ¶ 3. The University 

of Phoenix offers educational programs and services throughout the United States and is a

wholly-owned subsidiary of Apollo Education Group, incorporated in Arizona, with its 

principal place of business in Phoenix, AZ. Pet. Exh. 1, ¶ 4. The University of Phoenix 

offers undergraduate and graduate degrees in nine schools and operates through a nationwide 

system of campuses and centers. Collectively, the University of Phoenix has approximately 

200,000 current students and 900,000 graduates. Pet. Exh. 1, ¶ 4. 

B. The Commission’s Investigation and CIDs

On November 14, 2013, the Commission issued a Resolution Directing Use of 

Compulsory Process in a Nonpublic Investigation of Secondary or Postsecondary Educational 

Products or Services or Educational Accreditation Products or Services (P138402). Pet. Exh 1, 

¶ 5; Pet. Exh. 2. This resolution authorized the Commission to use all available compulsory 

process

[t]o determine whether unnamed persons, partnerships, corporations, or others 

have engaged or are engaged in deceptive or unfair acts or practices in or affecting

commerce in the advertising, marketing, or sale of secondary or postsecondary 

educational products or services, or educational accreditation products or 

services, in violation of Section 5 of the Federal Trade Commission Act, 

15 U.S.C. § 45, as amended. 

Pet. Exh. 2. 

Under the authority of this resolution, on July 23, 2015, the FTC issued CIDs to Apollo 

and the University of Phoenix to investigate their advertising, marketing, and sale of their

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educational products or services for possible violations of the FTC Act. Pet. Exh. 1, ¶ 6. The 

FTC further modified the return dates on the CIDs by letter dated January 11, 2016. Id.

IV. LEGAL ANALYSIS

A. The Commission is Entitled to An Order Enforcing its CIDs.

The court’s role in a proceeding to enforce an administrative subpoena is “strictly 

limited,” FTC v. Casey, 578 F.2d 793, 799 (9th Cir. 1978), and such proceedings are adjudicated 

in a summary manner. See SEC v. McCarthy, 322 F.3d 650, 657 (9th Cir. 2003). A court must 

enforce an agency’s compulsory process if (1) Congress has granted the authority to investigate1; 

(2) procedural requirements have been followed2; and (3) the information is relevant and material 

to the investigation. FDIC v. Garner, 126 F.3d 1138, 1143 (9th Cir. 1997); EEOC v. Children’s 

Hosp. Med. Ctr. of N. Cal., 719 F.2d 1426, 1428 (9th Cir.1983) (en banc), overruled on other 

grounds as recognized in Prudential Ins. Co. of Am. v. Lai, 42 F.3d 1299 (9th Cir. 1994). An 

affidavit from a government official is sufficient to establish a prima facie showing that these 

requirements have been met. Garner, 126 F.3d at 1143 (citing U.S. v. Stuart, 489 U.S. 353, 360 

(1989)). As shown by the Declaration from Thomas J. Widor, the Commission’s CIDs satisfy 

these standards. 

The education records sought by the CIDs – including call recordings, student 

complaints, and materials related to the Companies’ investigation and resolution of those 

complaints – are clearly relevant to investigation. Pet. Exh. 1, ¶ 6. For example, call recordings 

with prospective, current, or former students may help the FTC determine whether the Companies 

 

1

 The CIDs are within the statutory authority of the agency. They were issued as part of an 

investigation into Section 5 of the FTC Act and were authorized by the Commission under an 

investigatory resolution. Pet. Exh. 1, ¶¶ 5-6; Pet. Exh. 2. 

2

 The agency followed all required processes in issuing these CIDs; notably, they were 

signed by a Commissioner, as required by the FTC Act and the FTC’s Rules of Practice. 15 

U.S.C. § 57b-1(i); 16 C.F.R. § 2.7(a); see also Pet. Exh. 1, ¶ 6. 

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or any of their employees may have engaged in deceptive acts or practices when advertising, 

marketing, or selling the Companies’ educational products or services. Consumer complaints 

provide extrinsic information about the nature and prevalence of any potentially deceptive or 

unfair acts or practices, and material related to the Companies’ investigation and resolution of

these complaints show how and whether the Companies are addressing potentially deceptive or 

unfair acts or practices. Id.

Because the CIDs here meet each of the Garner requirements, the CIDs are enforceable. 

The Companies do not oppose providing materials responsive to the CIDs. 

B. Good Cause Exists for the Court to Issue an Order Pursuant to FERPA to 

Enable Timely Compliance with the CIDs.

FERPA restricts how educational agencies and institutions may disclose students’ 

“education records,” a statutory term that includes a broad range of information “directly related 

to a student.” 20 U.S.C. § 1232g(a)(4)(A). Specifically, FERPA penalizes the disclosure of 

education records without written consent from the affected parents and students with the 

potential loss of federal funds. 20 U.S.C. § 1232g(b)(1). However, FERPA also provides 

several exceptions to this limitation. Most pertinent here, an educational institution may disclose 

records without obtaining consent in response to a “subpoena issued for a law enforcement 

purpose.” 20 U.S.C. § 1232g(b)(1)(J)(ii); 34 C.F.R. § 99.31(a)(9). 

FERPA generally requires educational institutions to notify affected students and their 

parents before making such a disclosure. 20 U.S.C. 1232g(b)(2)(B); 34 C.F.R. § 99.31(a)(9)(ii). 

For good cause, however, a court or the issuing agency may relieve an educational institution of 

the obligation to provide such notice by ordering the institution not to “disclose to any person the 

existence or contents of the subpoena or any information furnished in response to the subpoena.” 

20 U.S.C. §§ 1232g(b)(1)(J(ii), 1232g(b)(2)(B); 34 C.F.R. § 99.31(a)(9)(ii)(B).

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Thus, where an educational institution receives a subpoena issued for a law enforcement 

purpose that calls for education records, the institution may produce these records without 

seeking written consent – and also without notification to those whose education records are 

being produced – so long as a court or the issuing agency has issued an order, upon good cause 

shown, directing nondisclosure.

3

 The Commission and the Companies seek such a

nondisclosure order.

The Companies have not objected to the CIDs. However, to date, they have not produced 

education records called for by the CIDs because meeting FERPA’s notice requirement would be

costly, complex, and time-consuming, and would likely preclude prompt and timely compliance 

with the CIDs. Pet. Exh. 1, ¶¶ 7-8. This delay is due to the nature of the responsive material, the 

numbers of potentially affected students and graduates, and the difficulty in locating and 

notifying those individuals or their families. Id.

The non-production of education records called for by the CIDs has deprived the 

Commission of valuable information in its ongoing investigation. Moreover, the delay likely to 

result if the Companies were required to provide notice would significantly prolong and impede

the Commission’s ability to gather the information it needs to complete its investigation. Pet. 

Exh. 1, ¶ 9. Finally, the Commission, which is entrusted with protecting consumers, has robust 

statutory and regulatory confidentiality protections for material received in response to 

compulsory process. 15 U.S.C. § 57b-2; 16 C.F.R. § 4.10. Under these authorities, material 

received pursuant to process is deemed non- public and confidential and is exempt from public 

 

3

 The CIDs at issue qualify as administrative “subpoenas issued for a law enforcement 

purpose.” See FTC v. Invention Submission Corp., 965 F.2d 1086, 1087 (D.C. Cir. 1992); see 

also General Fin. Corp. v. FTC, 700 F.2d 366, 367 (7th Cir. 1983) (CID is “a type of 

subpoena”); U.S. v. Markwood, 48 F.3d 969, 976 (6th Cir. 1995) (CID is “a subpoena issued by 

an administrative agency”). 

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disclosure except in limited circumstances. 15 U.S.C. § 57b-2(b), (f). Thus, the confidentiality 

of students’ education records remains protected with an order permitting the Companies to 

comply with the CIDs without providing notice. These factors thus constitute good cause for 

entry of an order pursuant to 20 U.S.C. §§ 1232g(b)(1)(J)(ii) and 1232g(b)(2)(B) requiring the 

Companies to produce responsive education records without disclosing the contents of the CIDs 

or any information furnished in response. 

V. CONCLUSION

For these reasons, the Court should enter the FTC’s proposed order requiring the 

Companies to produce education records responsive to the CIDs without disclosing the contents 

of the CIDs or any information furnished in response. 

Respectfully submitted, 

JONATHAN E. NUECHTERLEIN 

General Counsel

LESLIE RICE MELMAN 

Assistant General Counsel for Litigation

 /s/ Burke Kappler 

BURKE KAPPLER

Attorney, Office of General Counsel

FEDERAL TRADE COMMISSION

600 Pennsylvania Ave., NW 

Washington, DC 20580 

Telephone: (202) 326-2043 

Fax: (202) 326-2477 

E-mail: bkappler@ftc.gov 

Attorneys for the Federal Trade

Commission

Dated: January 12, 2016 

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