Brown v. Adtalem Global Educ., Inc.

• Decision Date: 09 October 2019
• Docket Number: Case No. 19-00250-CV-W-ODS
• Citation: 421 F.Supp.3d 825
• Parties: Robby BROWN, Individually and o/b/o all others similarly situated, Plaintiff, v. ADTALEM GLOBAL EDUCATION, INC., a Delaware Corporation, et al., Defendants.
• Court: U.S. District Court — Western District of Missouri

421 F.Supp.3d 825

Robby BROWN, Individually and o/b/o all others similarly situated, Plaintiff,

v.ADTALEM GLOBAL EDUCATION, INC., a Delaware Corporation, et al., Defendants.

Case No. 19-00250-CV-W-ODS

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

Signed October 9, 2019

Benjamin H. Richman, Pro Hac Vice, Sydney Janzen, Pro Hac Vice, Michael Ovca, Pro Hac Vice, Edelson, Chicago, IL, Ronald A. Marron, Pro Hac Vice, Michael T. Houchin, Pro Hac Vice, Law Offices of Ronald A. Marron, Lilach Halperin, Pro Hac Vice, San Diego, CA, Robert L. Teel, Pro Hac Vice, Seattle, WA, William Charles Kenney, Bill Kenney Law Firm, LLC, Kansas City, MO, for Plaintiff.

Amy D. Fitts, Polsinelli PC, Kansas City, MO, Patricia B. Palacios, Pro Hac Vice, Steptoe & Johnson LLP, Washington, DC, William R. Andrichik, Pro Hac Vice, Chicago, IL, for Defendant.

ORDER AND OPINION GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION TO DISMISS

ORTRIE D. SMITH, SENIOR JUDGE

Pending is Defendants' motion to dismiss for failure to state a claim. Doc. #13. For the following reasons, Defendants' motion is granted in part and denied in part.

I. BACKGROUND

Plaintiff is a former student of Defendant DeVry University ("DeVry"), a for-profit university. At all times relevant to this matter, DeVry was owned and operated by Defendant Adtalem Global Education, Inc. ("Adtalem"). Plaintiff states he enrolled at DeVry because of Defendants' marketing campaigns, which allegedly were false and misleading, and included misrepresentations. He identifies two marketing campaigns.

First, Defendants claimed 90% of their students actively seeking employment had careers in their fields of study within six months of graduation ("90% Placement Claim"). Plaintiff contends the 90% Placement Claim included graduates who continued employment with jobs they had prior to attending DeVry, included graduates who were not employed in their chosen fields, and excluded graduates who were unsuccessful in obtaining jobs after graduation. Second, Defendants represented DeVry graduates obtained jobs with significantly higher incomes than graduates of other colleges or universities ("Higher Income Claim").

Plaintiff alleges he saw or heard Defendants' 90% Placement Claim and Higher Income Claim (collectively, "the Claims") in television and radio advertisements, in telephone calls with DeVry representatives, on DeVry's website, in brochures, and during in-person meetings in 2010. Based on the Claims made to him, Plaintiff enrolled at DeVry and began taking classes in June 2010 in Kansas City, Missouri.

In January 2016, the Federal Trade Commission ("FTC") filed a lawsuit against DeVry alleging the Claims were false, deceptive, unfair, misleading, unsubstantiated, and illegal. Doc. #1, at 8 n.6. At the same time, "DeVry received a Notice of Intent to Limit from the Department of Education ("DOE") Office of Federal Student Aid..., informing DeVry of the DOE's intention to impose certain limitations on DeVry because of its statements regarding the post-graduation employment outcomes of DVU students." Id. According to Plaintiff the DOE concluded "DeVry could not provide evidence to substantiate th[e] [90% Placement] claim." Id. In March 2016, the Department of Veterans Affairs ("VA"), in light of the FTC's lawsuit, suspended DeVry from participating in a program wherein it was identified as a school "doing a good job of serving former troops." Id. State attorneys general also launched investigations into DeVry. Id. Although DeVry denied the allegations against it, it stipulated to the entry of an order for permanent injunction and monetary judgment. Fed. Trade Comm'n. v. DeVry Educ. Grp. Inc. , No. 16-CV-579 (C.D. Cal. Dec. 15, 2016) (Doc. #97). Among other things, DeVry agreed to pay $49,400,000.00 to the FTC, $30,351,019.00 "in forgiveness of unpaid private student loans that DeVry issued directly to current or past students," and $20,248.981.00 "in forgiveness of debts from accounts receivable, relating to debts of" DeVry students. Id. at 10-13.

After learning of the FTC's allegations against DeVry, Plaintiff and three others filed a complaint against Defendants in the United States District Court for the Northern District of Illinois alleging claims under unfair competition, consumer fraud, and false advertising statutes, and asserting claims based on contract and tort theories of relief. Robinson v. DeVry Educ. Grp., Inc. , No. 16 CV 7447, 2018 WL 828050, at *1 (N.D. Ill. Feb. 12, 2018). The Northern District found Plaintiff, who resides in Missouri and took DeVry classes in Missouri, could not bring a claim under the Illinois statutes. Id. at *2, 4. Because his claims did "not fall within the scope of the statute[s]," the Northern District dismissed Plaintiff's claims. Id. The Northern District did not evaluate the merits of Plaintiff's fraud-based claims. Id.

Robinson is one of three cases asserting similar claims against Defendants in which the Northern District has considered motions to dismiss. See also Polly v. Adtalem Global Educ., Inc. , No. 16 CV 9754, 2019 WL 587409 (N.D. Ill. Feb. 13, 2019) ; Petrizzo v. DeVry Educ. Grp. Inc. , No. 16 CV 9754, 2018 WL 827995 (N.D. Ill. Feb. 12, 2018). Petrizzo met the same demise as Robinson in that the Northern District found the plaintiffs failed to "allege facts sufficient to show that [they] suffered actual, measurable, non-speculative damages." 2018 WL 827995, at *5-6. In Polly , the Northern District concluded the plaintiffs sufficiently pleaded a cognizable theory of damages but dismissed the complaint because the plaintiffs failed to specifically plead their fraud claims. 2019 WL 587409, at *2-5.

On March 29, 2019, Plaintiff, individually and on behalf of others similarly situated, filed a lawsuit against Defendants in this Court alleging fraudulent misrepresentation, fraudulent concealment, violations of the Missouri Merchandising Practices Act ("MMPA"), negligence, breach of fiduciary duty, conversion, and unjust enrichment.

Doc. #1.¹ Defendants move to dismiss Plaintiff's claims, arguing he fails to state a claim upon which relief may be granted. Doc. #13.

II. STANDARD

The liberal pleading standard created by the Federal Rules of Civil Procedure requires "a short and plain statement of the claim showing that the pleader is entitled to relief." Erickson v. Pardus , 551 U.S. 89, 93, 127 S.Ct. 2197, 167 L.Ed.2d 1081 (2007) (per curiam) (quoting Fed. R. Civ. P. 8(a)(2) ). "Specific facts are not necessary; the statement need only ‘give the defendant fair notice of what the...claim is and the grounds upon which it rests.’ " Id. (citing Bell Atl. Corp. v. Twombly , 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). The Court must accept the plaintiff's factual allegations as true "and view them in the light most favorable to the Plaintiff[ ]." Stodghill v. Wellston Sch. Dist. , 512 F.3d 472, 476 (8th Cir. 2008).

To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face. A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. The plausibility standard is not akin to a probability requirement, but it asks for more than a sheer possibility that a defendant has acted unlawfully. Where a complaint pleads facts that are merely consistent with a defendant's liability, it stops short of the line between possibility and plausibility of entitlement to relief.

Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009).

When considering a motion to dismiss, the court "can choose to begin by identifying pleadings that, because they are no more than conclusions, are not entitled to the assumption of truth." Id. at 679, 129 S.Ct. 1937. "[L]egal conclusions can provide the framework" for a claim, but the legal conclusions "must be supported by factual allegations." Id. When faced with "well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief." Id.

III. DISCUSSION

A. Damages

The parties agree Plaintiff's "damages cannot rest upon guesswork, conjecture, or speculation beyond inferences that can reasonably decide the case." McLean v. Ponder , 418 S.W.3d 482, 496 (Mo. Ct. App. 2013) (citation and internal quotations omitted); Doc. #14, at 15-17; Doc. #20, at 15-18. Defendants argue Plaintiff does not adequately allege a cognizable theory of damages because his damages are too speculative to support a claim.

Plaintiff maintains his alleged damages are not speculative and he has sufficiently alleged a cognizable theory of damages. In his Complaint, Plaintiff contends he paid DeVry more than $16,000 in tuition, plus interest, and paid for related educational products, including books, supplies, and instruction on DeVry's website. Doc. #1, ¶ 63. He alleges the "prices for [Defendants'] products and services were significantly higher than what he would have paid for other similar post-secondary educational programs, but he believed they were worth it based on the 90% Placement Claim and Higher Income Claim." Id. "Had he known these claims were in fact false, he would have paid less for these products and services or would not have enrolled at all." Id. Plaintiff "suffered injury," including "monetary loss in connection with borrowing funds to enroll," "incurring student loan debt," and "paying education related costs" he would not have otherwise purchased "absent DeVry's false representations. Id. ¶¶ 83, 116; see also ¶¶ 89-91, 122, 135. Plaintiff claims he is "entitled to actual damages, including but not limited to the difference in value between the DeVry products and services as represented versus as delivered...." Id. ¶ 104. Finally, Plaintiff contends Defendants were "enjoined from making the 90%...