Alsbrook v. Concorde Career Colls., Inc.

• Decision Date: 25 June 2020
• Docket Number: No. 2:19-cv-02583,2:19-cv-02583
• Parties: Michele ALSBROOK, Latanya Brownlee, Buffy Cleven (Bell), Barbara Collins, Edward Evans, Wendy Holley, Kendra Lloyd, Caleb Martin, Mercedes Treadway, Kendra Warren, and Darren Williams, Plaintiffs, v. CONCORDE CAREER COLLEGES, INC., Defendant.
• Court: U.S. District Court — Western District of Tennessee

469 F.Supp.3d 805

Michele ALSBROOK, Latanya Brownlee, Buffy Cleven (Bell), Barbara Collins, Edward Evans, Wendy Holley, Kendra Lloyd, Caleb Martin, Mercedes Treadway, Kendra Warren, and Darren Williams, Plaintiffs,

v.CONCORDE CAREER COLLEGES, INC., Defendant.

No. 2:19-cv-02583

United States District Court, W.D. Tennessee, Western Division.

Signed June 25, 2020

Amy Worrell Sterling, Charles S. Mitchell, Christopher Michael Williams, Brice Moffatt Timmons, William E. Cochran, Jr., Black McLaren Jones Ryland & Griffee, P.C., Memphis, TN, for Plaintiffs.

Douglas F. Halijan, William David Irvine, Burch Porter & Johnson, PLLC, Memphis, TN, Therese King Nohos, Pro Hac Vice, Brian J. Murray, Pro Hac Vice, Timothy D. Elliott, Rathje Woodward LLC, Wheaton, IL, for Defendant.

ORDER

SAMUEL H. MAYS, JR., UNITED STATES DISTRICT JUDGE

Before the Court is Defendant Concorde Career Colleges, Inc.’s ("Concorde") January 9, 2020 Motion to Dismiss for Failure to State a Claim (the "Motion to Dismiss"). (ECF No. 30.) On March 20, 2020, Plaintiffs responded. (ECF No. 41.) On April 10, 2020, Concorde replied. (ECF No. 45.)

For the following reasons, the Motion to Dismiss is GRANTED IN PART and DENIED IN PART.

I. Background

For purposes of the Motion to Dismiss, the facts are taken from the Amended Complaint.

Concorde is a career college that offers healthcare-related programs and degrees. (ECF No. 23 ¶ 17.) Concorde offers a Health Information Management ("HIM") program of study through which students can obtain an associate's degree in HIM. (Id. ¶ 20.) Plaintiffs are former students in the HIM program. (Id. ¶ 22.) Each Plaintiff graduated from the HIM program with an associate's degree. (Id. ¶¶ 60, 64.)

Plaintiffs were enrolled in, and graduated from, the HIM program at different times between 2013 and 2016. They fall into four groups:

Plaintiff Group	Enrollment Date	Graduation Date
Group 1 (Plaintiffs Collins, Evans, Warren, and Treadway)	March 1, 2013	June 17, 2014
Group 2 (Plaintiffs Bell, Brownlee, and Williams)	October 1, 2013	February 18, 2015
Group 3 (Plaintiffs Alsbrook and Martin)	June 1, 2014	October 31, 2015
Group 4 (Plaintiffs Holley and Lloyd)	May 1, 2015	August 23, 2016

(Id. ¶¶ 34, 39, 46, 51.)¹

Plaintiffs allege that, before, while, and after they were Concorde students, Concorde repeatedly misrepresented the present or future accreditation status of the HIM program with the Commission on Accreditation for Health Informatics and Information Management Education ("CAHIIM").² (See id. ¶¶ 23-77.) For an HIM degree to be of practical use, the holder of the degree must be able to sit for, and pass, the Registered Health Information Technician ("RHIT") exam administered by the American Health Information Management Association. (Id. ¶¶ 23, 28.) To sit for the RHIT exam, a candidate must have a degree from an accredited HIM program. (Id. ¶ 29.) Individuals who pass the RHIT exam receive an RHIT certification. (Id. ¶ 23.)

Concorde's HIM program was not accredited when Plaintiffs enrolled. (Id. ¶ 27.) It was not accredited when Plaintiffs graduated. (Id. ¶ 60.) Plaintiffs allege that Concorde made many misrepresentations about the accreditation status of the HIM program. They allege that, both before and during their enrollment, Concorde repeatedly represented that the HIM program was currently accredited or would be by the time Plaintiffs graduated, and that Plaintiffs would graduate with the ability to sit for the RHIT exam. (See id. ¶¶ 23, 26, 31, 33, 35-36, 38, 41, 43-45, 47, 49, 52, 56-57.) They allege that, after they graduated, Concorde represented that the HIM program would be accredited "soon." (See id. ¶¶ 61, 68.)

Plaintiffs also allege that Concorde made misrepresentations about two topics related to, but distinct from, accreditation status. First, they allege that, after graduation, Concorde represented that, once the HIM program became accredited, Concorde would offer remedial training, at no charge, to prepare Plaintiffs to successfully sit for the RHIT exam. (See id. ¶¶ 64, 66.) Second, they allege that, after graduation, Concorde represented that, "should the [HIM] program not obtain accreditation by September 1, 2018," Concorde would issue Plaintiffs "a full refund of tuition and other fees, and any applicable grants." (Id. ¶ 64.)

Concorde's HIM program did not become accredited by September 1, 2018. (Id. ¶ 69.) After September 1, 2018, Plaintiffs asked that Concorde refund their tuition. (Id. ¶ 70.) Concorde refused to refund tuition to any of the Plaintiffs. (Id. )

The HIM program became accredited on or around December 31, 2018. (Id. ¶ 74.) Before December 31, 2018, Plaintiffs were not eligible to sit for the RHIT exam or to obtain an RHIT certification. (Id. ¶¶ 64, 74.) After December 31, 2018, Concorde offered Plaintiffs a remedial training program designed to prepare them to sit for the RHIT exam. (Id. ¶ 77.) However, the remedial program offered was insufficient to prepare Plaintiffs to sit successfully for the RHIT exam and conflicted with some Plaintiffs’ employment or educational schedules. (Id. ¶¶ 77-78.)

On August 29, 2019, Plaintiffs filed the Complaint. (ECF No. 1.) On November 25, 2019, Plaintiffs filed the Amended Complaint. (ECF No. 23.) In the Amended Complaint, Plaintiffs assert seven claims against Concorde: (1) fraud and fraudulent inducement to contract (the "fraud claim"); (2) unfair and deceptive acts or practices in violation of the Tennessee Consumer Protection Act ("TCPA"), Tenn. Code Ann. §§ 47-18-101 et seq. (the "TCPA claim"); (3) negligent misrepresentation; (4) promissory estoppel; (5) breach of contract; (6) negligence; and (7) quasi-contract and/or unjust enrichment (the "unjust enrichment claim"). (See id. ¶¶ 91-126.) Plaintiffs seek compensatory damages for: (1) the cost of their tuition and expenses; (2) the interest they incurred on their student loans; (3) the value of the time they spent participating in the HIM program; (4) the value of lost employment opportunities; and (5) the value of lost earnings. (See id. ¶ 128(a)-(e).) Plaintiffs also seek treble damages for the TCPA claim; punitive damages; and attorney's fees and suit expenses. (Id. ¶ 128(f)-(h).)

On January 9, 2019, Concorde filed the Motion to Dismiss under Federal Rule of Civil Procedure 12(b)(6), asserting that Plaintiffs have failed to state a claim upon which relief can be granted. (ECF No. 30.)

II. Jurisdiction and Choice of Law

The Court has diversity jurisdiction under 28 U.S.C. § 1332. Plaintiffs Alsbrook, Brownlee, Collins, Evans, Holley, Lloyd, Treadway, Warren, and Williams are resident citizens of Tennessee. (ECF No. 23 ¶¶ 1-2, 4-7, 9-11.) Plaintiffs Bell and Martin are resident citizens of Mississippi. (Id. ¶¶ 3, 8.) Concorde is a Delaware corporation with its principal place of business in Mission, Kansas. (Id. ¶ 12.) The parties are completely diverse.

The amount-in-controversy requirement is satisfied. Plaintiffs allege that the amount in controversy exceeds $75,000. (Id. ¶ 13.) "[T]he sum claimed by the plaintiff controls if the claim is apparently made in good faith." St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 288, 58 S.Ct. 586, 82 L.Ed. 845 (1938).

State substantive law applies to state law claims in federal court. See Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78-80, 58 S.Ct. 817, 82 L.Ed. 1188 (1938). When there is no dispute that a certain state's substantive law applies, the court need not conduct a choice-of-law analysis sua sponte. See GBJ Corp. v. E. Ohio Paving Co., 139 F.3d 1080, 1085 (6th Cir. 1998). The parties assume that Tennessee substantive law applies to Plaintiffs’ claims. (See ECF No. 30-1 at 6-19; ECF No. 41 at 8-28.) The Court will apply Tennessee substantive law.

III. Standard of Review

Rule 12(b)(6) allows dismissal of a complaint that "fail[s] to state a claim upon which relief can be granted." A Rule 12(b)(6) motion permits the "defendant to test whether, as a matter of law, the plaintiff is entitled to legal relief even if everything alleged in the complaint is true." Mayer v. Mylod, 988 F.2d 635, 638 (6th Cir. 1993) (citing Nishiyama v. Dickson Cty., 814 F.2d 277, 279 (6th Cir. 1987) ). A motion to dismiss tests only whether the plaintiff has pled a cognizable claim and allows the court to dismiss meritless cases that would waste judicial resources and result in unnecessary discovery. See Brown v. City of Memphis, 440 F. Supp. 2d 868, 872 (W.D. Tenn. 2006).

When evaluating a motion to dismiss for failure to state a claim, the Court must determine whether the complaint alleges "sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ " Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). The "[f]actual allegations must be enough to raise a right to relief above [a] speculative level." Ass'n of Cleveland Fire Fighters v. City of Cleveland, 502 F.3d 545, 548 (6th Cir. 2007) (quoting Twombly, 550 U.S. at 555, 127 S.Ct. 1955 ).

A claim is plausible on its face if "the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 556 U.S. at 678, 129 S.Ct. 1937 (citing Twombly, 550 U.S. at 556, 127 S.Ct. 1955 ). A complaint need not contain detailed factual allegations. However, a plaintiff's "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Id.

"When reviewing a motion to dismiss, the district court may not consider matters beyond the complaint." Hensley Mfg. v. ProPride, Inc., 579 F.3d 603, 613 (6th Cir. 2009). "If the district court does consider evidence outside the complaint, it effectively converts the motion to dismiss to a motion for summary judgment." Id. (quotation marks and citation omitted). The Sixth Circuit generally takes "a liberal view of what...