Capital Elementary School is a certified nonpublic school in California. This means that the School is a for-profit, nonsectarian school that contracts with public school districts to provide specialized services for students whose needs cannot be met in traditional public school settings. In 2019, C.R., a student diagnosed with autism and fetal alcohol syndrome, was enrolled at the School pursuant to an Individualized Education Program (IEP) developed by her home school district, the Elk Grove Unified School District.
C.R., through her guardian ad litem, alleged that while she was a student at the School, she was repeatedly sexually assaulted by classmates. Her grandmother claimed she notified School staff and administrators about the abuse, and that she also contacted a District specialist overseeing nonpublic school placements. The abuse allegedly continued until the student was withdrawn from the School.
C.R. filed suit asserting six claims against the School, the District, and individual defendants, including violations of the Americans with Disabilities Act (ADA), Section 504 of the Rehabilitation Act, Title IX, California’s Unruh Act, and various statutory negligence provisions. At issue in the decision were motions by the School and its executive director, seeking to dismiss or obtain summary judgment on three of those claims—specifically the claims under Section 504 and the Unruh Act.
The Unruh Act provides (among other things) that all persons in California, no matter their disability, are entitled to the full and equal accommodations in all business establishments. There has been debate as to whether the Unruh Act applies to schools. The School argued that it was not a “business establishment” within the meaning of the statute. While the School is a for-profit entity and generates substantial annual revenue—approximately $2 million—it does not charge tuition or fees to families. Instead, the School receives payments directly from school districts like Elk Grove Unified School District pursuant to master contracts mandated by California Education Code section 56366. These contracts prohibit the School from charging parents for services required under the IEP.
The Court agreed with the School, holding that it was not functioning as a business establishment in its relationship with C.R. The Court emphasized that under the California Supreme Court’s recent decision in Brennon B. v. Superior Court, a key factor in Unruh Act applicability is whether the entity is engaged in commercial transactions with the person alleging discrimination. Because the School’s relationship with C.R. was not transactional—she and her family paid nothing for her education—the Court concluded that the School was operating in a public education capacity and not as a commercial enterprise. The Court acknowledged that the School is legally structured as a business and listed itself as “retail” on a Paycheck Protection Program application, but found those facts insufficient to convert the School into a business establishment under the Unruh Act.
The Court also emphasized that in the Brennon B case, the California Supreme Court noted that the legislative history reveals a narrowing and then elimination of references to schools altogether, reflecting a disinclination to have schools subject to Unruh liability.
The Court denied the School’s motion for summary judgment on the claim regarding Section 504 of the Rehabilitation Act. The School had argued that it was not subject to Section 504 because it did not receive direct federal funding. However, the Court found there was a genuine dispute of material fact as to whether the School indirectly received federal financial assistance through its contractual relationship with the District, which received and disbursed federal IDEA funds.
Under the IDEA, Congress disburses funds to states to subsidize the costs of special education, and California has passed legislation for the disbursement of such funds to private schools. Here, the Court noted that federal funding need not be direct to trigger Section 504. The School had voluntarily signed a master contract that incorporated federal compliance obligations, including adherence to IDEA regulations. The School also agreed to oversight by the District, and its participation in the special education funding scheme created binding obligations consistent with accepting federal assistance. These facts, the Court concluded, were sufficient to permit a reasonable factfinder to determine that the School knowingly accepted federal funds under the conditions set by law and regulation.
C.R. v. Elk Grove Unified Sch. Dist. (E.D. Cal. May 14, 2025) 2025 U.S. Dist. LEXIS 93293.
Note: This case provides useful guidance around the applicability of Unruh to private schools. While this case involved a school receiving public district funding, the Court confirmed that recent California case law has disfavored applying the Act to schools. Additionally, it is worth noting that when accepting publicly referred students under contracts tied to federal education mandates, private schools may be deemed recipients of federal funds and therefore subject to federal disability laws, including Section 504.