Carroll v. Walden Univ.
| Decision Date | 28 November 2022 |
| Docket Number | CIVIL 1:22-cv-00051-JRR |
| Parties | ALJANAL CARROLL, et al., Plaintiffs, v. WALDEN UNIVERSITY, LLC, et al., Defendants. |
| Court | U.S. District Court — District of Maryland |
This matter comes before the court on Defendants Walden University, LLC, and Walden e-Learning's Motion to Dismiss. (ECF No. 35; the “Motion.”) The court has reviewed all submissions on the Motion. No hearing is necessary. Local Rule 105.6 (D. Md. 2021).
BACKGROUND[1]
Defendant Walden University, LLC, is a Florida company with its principal place of business in Baltimore, Maryland. (ECF No 1 ¶ 38; “the Complaint.”) Defendant Walden eLearning, LLC, is a Delaware company with its principal place of business in Baltimore, Maryland. Id. ¶ 39. Walden University and Walden e-Learning jointly own and operate Walden University, a for-profit university with its academic headquarters in Minneapolis, Minnesota. Id. ¶¶ 35, 41
Walden University offers online degrees for various doctoral programs. Id. ¶ 51. In 2008, Walden University offered its Doctor of Business Administration (“DBA”) program as an inaugural professional doctorate program. (ECF No. 1 ¶ 56.) Walden University advertised that its DBA program requires sixty credits and costs about $43,000 to $63,000 depending on the year. Id. ¶ 58. This case arises from an alleged multi-part discriminatory and fraudulent scheme perpetrated by Walden University. Id. ¶ 2.
Plaintiff Aljanal Carroll is a resident of North Carolina and was a student in the DBA program at Walden University from September 2017 until her graduation in October 2020. (Complaint, ECF No. 1, ¶ 35.) Plaintiff Claudia Provost Charles is a resident of Louisiana and was a student in the DBA program from July 2017 until her graduation in May 2021. Id. ¶ 36. Plaintiff Tiffany Fair is a resident of Virginia and was a student in the DBA program from June 2016 to January 2021. Id. ¶ 37.
The DBA program at Walden University involves two phases: the coursework phase and the capstone phase. Id. ¶ 60. Plaintiffs allege that the capstone credit requirement is the primary subject of Defendants' misrepresentations. Id. ¶ 68. Plaintiffs allege that Defendants beginning no later than fall semester of 2008, and continuing through at least January 2018, in order to entice students to enroll Defendants fraudulently misrepresented the requirements of the DBA program, including the required credits, the length of time required to complete the program and the cost of the degree. (ECF No. 1 ¶ 9.) Additionally, Plaintiffs allege that beginning no later than fall semester of 2008 and continuing through the present Defendants purposefully prolonged the capstone requirement, in order to compel or persuade students to pay for the additional credits to earn a degree. Id. ¶ 10. As a result, Plaintiffs allege that Defendants' capstone process was, and is, designed to extract additional tuition revenue from students by prolonging the process without any legitimate academic purpose. Id. ¶ 24. Through this predatory scheme, Plaintiffs allege that Defendants overcharged members of the proposed classes more than $28.5 million. Id. ¶ 3.
Plaintiffs allege that Defendants lured students into this program by advertising a doctoral degree that could be earned at a reasonable cost and within a reasonable timeframe; however, Defendants knew and intended that the degree would cost much more. Id. ¶ 12. Plaintiffs assert that Defendants used its websites and enrollment advisors to advertise the DBA program to prospective students and the public at large. (ECF No. 1 ¶ 15.) Plaintiffs further allege that Defendants represented the sixty credit program to be about forty coursework credit hours and about twenty capstone credit hours. Id. ¶ 20. However, between 2008 and 2017, Defendants did not allow students to receive a DBA degree until completing fifty-four capstone credit hours, which is three times the advertised requirement. Id. ¶ 21. Plaintiffs allege that Defendants specifically targeted the predatory scheme at Black and female students. Id. ¶ 26.
On January 7, 2022, Plaintiffs filed a class action lawsuit. (ECF No. 1.) Plaintiffs Carroll, Charles, and Fair bring this action for damages, injunctive relief, and declaratory relief on behalf of themselves and all other similarly situated individuals against Defendants Walden University, LLC and Walden E-Learning, LLC. Id. ¶ 1. Plaintiffs Carroll and Charles seek redress for violation of Title VI of the Civil Rights Act of 1964 (“Title VI”). Plaintiffs Charles and Fair seek redress for violation of the Equal Credit Opportunity Act (“ECOA”). Plaintiffs Carroll, Charles, and Fair also bring this action individually for violation of the Minnesota Prevention of Consumer Fraud Act, the Minnesota Uniform Deceptive Trade Practices Act, and Minnesota Statute prohibiting false statements in advertising, and for common law fraudulent misrepresentation under Minnesota law. Id.
The Complaint sets forth six counts: (I) Title VI of the Civil Rights Act of 1964, 42 U.S.C. § 2000d et seq.; (II) Equal Credit Opportunity Act, 15 U.S.C. § 1691 et seq.; (III) Minnesota Prevention of Consumer Fraud Act, MINN. STAT. § 325F.68 et seq.; (IV) Minnesota Uniform Deceptive Trade Practices Act, MINN. STAT. § 325D.43 et seq.; (V) MINN. STAT. § 325F.67, prohibiting false statements in advertising; and (VI) fraudulent misrepresentation. (ECF No. 1 ¶ 1.) The prayer for relief seeks (I) declaratory judgment; (II) an injunction directing Defendants and their directors, officers, agents, and employees to take all steps necessary to remedy the effects of the conduct complained of and to prevent additional instances of conduct or similar conduct from occurring in the future; (III) compensatory damages; (IV) punitive damages; (V) an award of Plaintiffs' reasonable attorneys' fees and costs pursuant to 15 U.S.C. § 1691e(d), 42 U.S.C. § 1988(b), MINN. STAT. § 325D.45 subdiv. 2, and MINN. STAT. § 8.31, subdiv. 3a; (VI) award prejudgment interest; and (VII) any other relief the court deems just and equitable. Id. at pp. 6465.
Defendants move to dismiss the Complaint pursuant to Federal Rules of Civil Procedure 12(b)(1), 12(b)(6), and 9(b). (ECF No. 35-1, p. 11-12.) Defendants argue that Plaintiffs federal claims-Counts I and II-fail to state plausible claims and, as a result, the court does not have subject matter jurisdiction over the state law claims-Counts III through VI. Id. Defendants also argue that Plaintiffs' fraud claims-Counts III through VI-fail to satisfy the heightened pleading standard of Federal Rule of Civil Procedure 9(b). Id. at 12-13.
Federal Rule of Civil Procedure 12(b)(6)
Defendants assert that Counts I and II of the Complaint fail to state a claim upon which relief can be granted. (ECF No. 35-1, p 14.) A Rule 12(b)(6) motion Presley v. City of Charlottesville, 464 F.3d 480, 483 (4th Cir. 2006) (quoting Edwards v. City of Goldsboro, 178 F.3d 231, 243 (4th Cir. 1999)). Accordingly, a “[r]ule 12(b)(6) motion should only be granted if, after accepting all well-pleaded allegations in the plaintiff's complaint as true and drawing all reasonable factual inferences from those facts in the plaintiff's favor, it appears certain that the plaintiff cannot prove any set of facts in support of his claim entitling him to relief.” Edwards, 178 F.3d at 244 (citing Republican Party v. Martin, 980 F.2d 943, 952 (4th Cir. 1992)).
“While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations.” Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009). “Factual allegations must be enough to raise a right to relief above the speculative level on the assumption that all the allegations in the complaint are true (even if doubtful in fact).” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (citations omitted). “A complaint that provides no more than ‘labels and conclusions,' or ‘formulaic recitation of the elements of a cause of action,' is insufficient.” Bourgeois v. Live Nation Ent., Inc., 3 F.Supp.3d 423, 434 (D. Md. 2014) (quoting Twombly, 550 U.S. at 555). “The [c]ourt must be able to deduce ‘more than the mere possibility of misconduct'; the facts of the complaint, accepted as true, must demonstrate that the plaintiff is entitled to relief.” Evans v. 7520 Surratts Rd. Operations, LLC, No. 21-cv-1637, 2021 U.S. Dist. LEXIS 221041, at *4 (D. Md. Nov. 16, 2021) (quoting Ruffin v. Lockheed Martin Corp., 126 F.Supp.3d 521, 526 (D. Md. 2015)).
Federal Rule of Civil Procedure 12(b)(1)
Defendants assert that the Complaint fails to state a plausible federal claim in Counts I and II and, therefore, the court lacks subject matter jurisdiction over Plaintiffs' individual claims- Counts III through VI. (ECF No. 35-1, p. 22.) “Rule 12(b)(1) of the Federal Rules of Civil Procedure authorizes dismissal for lack of subject matter jurisdiction.” Barnett v. United States, 193 F.Supp.3d 515, 518 (D. Md. 2016). Subject matter jurisdiction involves a court's power to hear a case; it may not be forfeited or waived. Arbaugh v. Y & H Corp., 546 U.S. 500, 514 (2006) (citing United States v. Cotton, 535 U.S. 625, 630 (2002)). “[W]hen a court grants a motion to dismiss for failure to state a federal claim, the court generally retains discretion to exercise supplemental jurisdiction, pursuant to 28 U.S.C. § 1367, over pendent state-law claims.” Id. Courts look at various factors to decide whether to exercise supplemental jurisdiction after dismissing the claims over which it had original jurisdiction,...
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