Herrera v. Charlotte School of Law, LLC
| Decision Date | 20 April 2018 |
| Docket Number | 17 CVS 7851,CVS 4265,17 CVS 6749,17 CVS 196517,17 CVS 5870 |
| Court | Superior Court of North Carolina |
| Parties | DANIEL HERRERA; TALECE HUNTER; ARIQUE DROSS, III; STACEY KING; DAWN PATTERSON; WILL HODGE; JOELLE BATTAGLIA; PORTIA DARBY HAWKINS; JAMES HOWE; JULES DOSSOU AZATASSOU; MAURICE RUSSELL; KIMBERLY JOHNSON; JENNIFER POLSKY; and TARAH FRIEDMAN, Plaintiffs, v. CHARLOTTE SCHOOL OF LAW, LLC; INFILAW CORPORATION; INFILAW HOLDING, LLC; JAY CONISON; CHIDI OGENE; DONALD E. LIVELY; and RICK INATOME, Defendants. |
Law Offices of James Scott Farrin, by Gary W. Jackson, Hoyt G Tessener, James S. Farrin, Christopher R. Bagley, Sidney B Fligel, and The Law Offices of Jason E. Taylor, P.C., by Lawrence Serbin, for Plaintiffs.
Womble Bond Dickinson (US) LLP, by Debbie W. Harden, Johnny M Loper, and Sarah M. Stone, and Cooley LLP, by David E. Mills (pro hac vice) and Michael D. Hays (pro hac vice), for Defendants Charlotte School of Law, LLC, InfiLaw Corporation InfiLaw Holding, LLC, Jay Conison, Chidi Ogene, Donald E. Lively, and Rick Inatome.
James L. Gale Chief Business Court Judge.
1. THIS MATTER is before the Court on Charlotte School of Law, LLC ("CSL"), InfiLaw Holding, LLC, InfiLaw Corporation, Jay Conison, Chidi Ogene, Donald E. Lively, and Rick Inatome's (collectively, the "CSL Defendants") Motion to Dismiss for Failure to State A Claim (the "Motion") filed in: Herrera v. Charlotte School of Law, LLC, 17 CVS 1965 (the "Herrera Action"); Robertson v. Charlotte School of Law, LLC, 17 CVS 4265 (the "Robertson Action"); Mosley v. Charlotte School of Law, LLC, 17 CVS 5870 (the "Mosley Action"); Merritt v. Charlotte School of Law, LLC, 17 CVS 6749 (the "Merritt Action"); and Frisby v. Charlotte School of Law, LLC, 17 CVS 7851 (the "Frisby Action"), (collectively the "Actions"). For the reasons discussed below, the Court GRANTS IN PART and DENIES IN PART the Motion.
2. Plaintiffs Daniel Herrera, Talece Hunter, Arique Dross, III, Stacey King, Dawn Patterson, Will Hodge, Joelle Battaglia, Portia Darby Hawkins, James Howe, Jules Dossou Azatassou, Maurice Russell, Kimberly Johnson, Jennifer Polsky, and Tarah Friedman (collectively, "Herrera Plaintiffs") attended CSL at some point during 2015 or 2016. (Third Am. Compl. ¶¶ 30-43, ECF No. 18.)
3. Plaintiffs Brianna Robertson, Asia Brown, Matthew Yoo, Gary Leto, China McGee, Jody Lyles, Derasean Adegbola, Justin Knoll, Russell Martin, and Lauren Yuhas (collectively, "Robertson Plaintiffs") attended CSL at some point during 2015 or 2016. (First Am. Compl. ¶¶ 30-39, ECF No. 2.)
4. Plaintiffs Ephraim Mosley, Yolanda Davis, Ryan Love, Shaun Malone, William Segers, III, Fabba Kijera, Michael Perez, Jasmine Smith, Lauren Tatro, Rachel Bryan, Kabir Buhari, Cierra Blaher, Douglas Walker, Edilia Zuniga, and Courtenay Sellers (collectively, "Mosley Plaintiffs") attended CSL at some point during 2014, 2015, or 2016. (Compl. ¶¶ 30-45, ECF No. 2.) Nichole Burkhart initially was a plaintiff in the Mosley Action, but voluntarily dismissed her claims against all Defendants without prejudice on April 4, 2018. (Notice Voluntary Dismissal Without Prejudice, ECF No. 269.)
5. Plaintiffs Brittaney Merritt, Elle Pappas, Ashley Good, Lacey Webb, Brent Finnell, Sarah Speed, Adriana Urtubey, Tyler Spillman, Jalen Sanders, and Shereka Banks (collectively, "Merritt Plaintiffs") attended CSL at some point during 2014, 2015, or 2016. (Compl. ¶¶ 30-39, ECF No. 2.)
6. Plaintiffs Patience Frisby, Charlie Carpenter, Brandon Potter, Erica Bennerman, Melissa Grisewood, Kathleen Pasquarella, Demetria Braden, Jamal Williams, Annabelle Pardo, Omar Bashi, Jasmin Brooks, Ashlee McGinnas, Rachel Gainey, Ashlin Massey, Steven Burleson, Mary Welch, and Charles Hornack (collectively, "Frisby Plaintiffs") attended CSL at some point during 2014, 2015, or 2016. (Compl. ¶¶ 30-46, ECF No. 2.)
7. The Court has subsequently been assigned multiple related actions brought by other CSL students.
8. Defendants initially included Sterling Capital Partners, L.P., a Delaware limited partnership with its principal place of business in Chicago, Illinois, and Sterling Capital Partners GmbH & Co. KG, a German limited partnership with its principal place of business in Chicago, Illinois (collectively, the "Sterling Defendants"). See Herrera v. Charlotte School of Law, LLC, 2018 NCBC LEXIS 15, at *5 (N.C. Super. Ct. Feb. 14, 2018). All the claims against the Sterling Defendants have been dismissed. See id. at *20. (See also Notice of Voluntary Dismissal Without Prejudice, ECF No. 263; Notice of Voluntary Dismissal Without Prejudice, ECF No. 264.)
9. InfiLaw Holding, LLC ("Holding") is a Delaware limited-liability company with its principal place of business in Florida. (Third Am. Compl. ¶ 348.) Holding owns InfiLaw Corporation ("InfiLaw"). (Third Am. Compl. ¶ 348.)
10. InfiLaw is incorporated in Delaware with its principal place of business in Naples, Florida and is licensed to do business in North Carolina. (Third Am. Compl. ¶ 347.) InfiLaw owns three for-profit law schools, including CSL. (See Third Am. Comp. ¶ 350.)
11. CSL is a Delaware limited-liability company with its principal place of business in Charlotte, North Carolina. (Third Am. Compl. ¶ 344.) CSL was founded in 2006 as a for-profit law school and was accredited by the ABA in 2011. (Third Am. Compl. ¶ 345.) CSL ceased operations in August 2017.
12. Jay Conison ("Dean Conison") is a citizen and resident of Charlotte, North Carolina and was CSL's Dean from 2013 until it closed in August 2017. (Third Am. Compl. ¶ 351.)
13. Chide Ogene ("Ogene") is a citizen and resident of Charlotte, North Carolina and was CSL's President from 2015 until it closed. (Third Am. Compl. ¶ 353.)
14. Don E. Lively ("Lively") is a resident of Phoenix, Arizona and was CSL's President from 2011-2014. (Third Am. Compl. ¶ 354.)
15. Rick Inatome ("Inatome") is the Chief Executive Officer of InfiLaw and Holding. (Third Am. Compl. ¶ 356.)
16. The Herrera Action was initiated on January 31, 2017, with a Second Amended Complaint filed on February 20, 2017.
17. The Robertson Action was initiated on March 10, 2017, with a First Amended Complaint filed on March 28, 2017.
18. The Herrera Action was designated a mandatory complex business case by order of the Chief Justice on March 27, 2017, and assigned to the undersigned on March 29, 2017.
19. The Herrera Plaintiffs filed their Third Amended Complaint on March 28, 2017.
20. The Robertson Action was designated a mandatory complex business case by order of the Chief Justice and assigned to the undersigned on April 18, 2017.
21. The Mosley Action was initiated on March 28, 2017, the Merritt Action was initiated on April 13, 2017, and the Frisby Action was initiated on May 1, 2017.
22. The Mosley Action, Merritt Action, and Frisby Action were designated mandatory complex business cases by order of the Chief Justice on June 12, 2017, and assigned to the undersigned on June 13, 2017.
23. On June 16, 2017, the Sterling Defendants moved to dismiss the Actions pursuant to Rule 12(b)(2) and Rule 12(b)(6) of the North Carolina Rules of Civil Procedure ("Rule(s)"). (ECF No. 29.)
24. On June 16, 2017, the CSL Defendants collectively moved to dismiss the Actions pursuant to Rule 12(b)(6). (ECF No. 35.) Holding, Lively, and Inatome separately moved to dismiss the Actions pursuant to Rule 12(b)(2). (ECF No. 33.)
25. The Court, with consent of the parties, entered the Stipulation and Case Management Order No. 1 on June 21, 2017, which provides, inter alia, that subsequently filed actions arising out of the same or substantially similar events will be treated as mandatory complex business cases, without need for an additional Notice of Designation, assigned to the undersigned, and then referred to as "Related Actions." (Stipulation and Case Management Order No. 1 ¶ 2, ECF. No. 38.) The Court designated the Herrera Action as the Master File and its Third Amended Complaint as the operative complaint. (Stipulation and Case Management Order No. 1 ¶ 4.)
26. At present, there are over ninety actions assigned to the Court, representing claims of 156 former CSL students, with an indication that there are others yet to be filed. Each Plaintiff brings claims individually and there is no putative class action pending before the Court. The five Actions captioned above were the first cases initiated and the only cases pending when the CSL Defendants filed their Motion.
27. There are also four actions in the United States District Court for the Western District of North Carolina, involving similar allegations against some of the CSL Defendants, three of which were brought as putative class actions: (1) Barchiesi v. Charlotte School of Law., LLC, No. 3:16-CV-00861 (purported class action); (2) Levy v. Charlotte School of Law, LLC, No. 3:17-CV-00026-GCM (purported class action); Krebs v. Charlotte School of Law, LLC, No. 3:17-CV-00190-GCM (purported class action); and (4) Ash v. Charlotte School of Law, LLC, No. 3:17-CV-00039-GCM (individual action). Presiding Judge Graham C. Mullen has entered a number of orders narrowing the claims in those federal actions. See, e.g., Levy v. InfiLaw Corp., No. 3:17-CV-00026-GCM, 2017 U.S. Dist. LEXIS 131106, at *16 (W.D. N.C. Aug. 17, 2017); Barchiesi v. Charlotte School of Law, LLC, No. 3:16-CV-00861, 2017 U.S. Dist. LEXIS 131107, at *22 (W.D. N.C. Aug. 17, 2017); Krebs v. Charlotte School of Law, LLC, No. 3:17-CV-00190-GCM, 2017 U.S. Dist. LEXIS 143060, at *34 (W.D. N.C. Sept. 5, 2017).
28. When the Court heard arguments on Defendants' motions on September 12, 2017, Plaintiff...
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