Guzman sued Bridgepoint, Ashford University, and University
of the Rockies on behalf of a putative class of people who enrolled in either
of the two academic institutions operated by Bridgepoint for violations of
California consumer protection statutes and common law. She alleged that Bridgepoint falsely
recruited students and overcharged the government for financial aid, including funding
for veterans. This conduct allegedly
included (a) hiding federally-required disclosures on its website; (b)
“misrepresent[ing] the true cost of attendance by falsely claiming that Ashford
and The Rockies provide ‘some of the lowest cost tuition programs available,’
quoting to prospective students false and misleading tuition rates for degree
programs, and failing to disclose substantial non-tuition costs such as
administrative fees”; (c) misrepresenting the quality of academic instruction;
(d) misrepresenting the status of “The Rockies' accreditation with the American
Psychological Association (‘APA’) and ability to qualify students to obtain
professional psychology licensure”; (e) misrepresenting employability and
earnings potential for graduated students. Guzman alleged that these uniform
misrepresentations were made in written materials, oral scripts for enrollment
advisors, and material omissions.
Defendants allegedly encouraged students to apply for more federal
financial aid than they needed, failed to disclose that Bridgepoint’s default
rate is higher than other institutions’, and failed to disclose that students
have to begin repaying loans immediately upon enrollment.
Guzman alleged that she relied on these misrepresentations
and completed approximately 20 online courses, but Ashford claimed that she
owed over $3600 and refused to issue her diploma and release her transcripts. Before she enrolled, she alleged, a
Bridgeport enrollment advisor used high-pressure sales tactics on her, calling
her several times a week and making the misrepresentations discussed above,
including that federal financial aid would cover all her tuition, books, fees,
and other costs; that Bridgepoint schools are fully accredited, and all credits
awarded by Bridgepoint schools are transferable to other higher education
institutions; and that a high percentage of Bridgepoint graduates found jobs in
their fields of studies immediately following graduation, and earned tens of
thousands of dollars in annual income.
Defendants argued that Guzman lacked constitutional standing
because she didn’t adequately allege injury from allegedly improper enrollment
tactics regarding the military or improper compensation of enrollment
advisors. Guzman responded that she had
identified specific misrepresentations and that she wasted thousands of dollars
from her enrollment. After Proposition
64, a plaintiff has to show injury in fact as a result of the violation of the
California consumer protection statutes.
Here, Guzman alleged specific misrepresentations that induced her to
enroll in Ashford courses, and alleged that she incurred debt as a result. This
was injury in fact, so she had standing to assert claims against Bridgeport and
Ashford.
What about the Rockies?
She didn’t allege that she attended or had any contact with it. Guzman argued (correctly, but to no avail)
that this was a premature challenge to her typicality and adequacy and that she
adequately alleged a common course of misconduct. The court agreed with defendants:
Guzman didn’t allege that she relied on any misrepresentations by the Rockies,
and thus lacked standing to assert claims against it.
Her claims against the remaining defendants, however, were
sufficiently particular to satisfy Rule 9(b).
Defendants argued that a side-by-side comparisons of the allegations in
the initial complaint, which was dismissed, and the amended complaint revealed
that Guzman had just taken the deficient boilerplate from the first and repackaged
them as statements purportedly made directly to her. It was implausible, defendants argued, that
she was suddenly able to remember that she was exposed to all the same
generalized misrepresentations alleged in the current complaint. But the court has to accept the complaint’s
allegations as true on a motion to dismiss.
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