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Scott Rosendahl and Veronica Clark, On v. Bridgepoint Education

October 17, 2011


The opinion of the court was delivered by: Hayes, Judge:


The matters before the Court are the Motion to Dismiss (ECF No. 10) and Motion to Strike (ECF No. 11) filed by Defendants Bridgepoint Education, Inc., Ashford University, and University of the Rockies.

I. Background

On January 11, 2011, Plaintiffs initiated this action by filing the Complaint. (ECF No. 1). On March 15, 2011, Defendants Bridgepoint Education, Inc., Ashford University, and University of the Rockies filed a Motion to Dismiss and a Motion to Strike the Complaint. On April 4, 2011, Plaintiffs Scott Rosendahl and Veronica Clark filed Oppositions to the Motions and a Request for Judicial Notice. On April 11, 2011, Defendants Bridgepoint Education, Inc., Ashford University, and University of the Rockies filed replies as well as an Opposition to Plaintiffs' Request for Judicial Notice.

II. Allegations of the Complaint

Plaintiffs propose a nationwide class action "consisting of all persons who enrolled in and/or attended classes at one of the two academic institutions operated by Bridgepoint Education, Inc. ('Bridgepoint' or the 'Company') -- Ashford University ('Ashford') or University of the Rockies ('The Rockies') -- during the period approximately from March 1, 2005 through the present (the 'Class Period')." (ECF No. 1 at ¶ 1).

Plaintiffs allege that Bridgepoint, the company that owns and operates Ashford and The Rockies, employs deceptive marketing tactics including misleading students regarding the true cost of attendance, misleading students about the quality of academic instruction, misleading students about post-graduate employability, misleading students about the need for federal student loans, and misleading students about their obligation to repay federal student loans. The deceptive marketing practices "are designed solely to sign up as many students as possible and to sign them up for as many federal loans as possible ...." Id. at ¶ 49.

Plaintiffs allege that Bridgepoint improperly hides information from prospective students on its website through a "sophisticated" tactic of directing internet search engine results to a "polished-looking yet basic site that offers vague and misleading praise for the universities and an option to enroll online." Id. at ¶ 51. Plaintiff alleges that "while a more comprehensive website for both schools exists, they cannot be easily accessed by prospective students ...." Id.

Plaintiffs allege that Bridgepoint misrepresents the quality and reputation of its academic programs, its job placement rate, and its student's post-graduate employability; however, "the degrees from Ashford and The Rockies are not as marketable as similar degrees from traditional post-secondary schools," "degrees from Ashford and The Rockies would be of de minimus use to helping graduates seek employment," and "salaries quoted to students as representative of their 'earning potential' ... were earned by less than 5% of all individuals in those professions." Id. at ¶ 72. Plaintiffs allege that Bridgepoint employs deceptive tactics regarding federal tuition assistance by "pressur[ing] prospective students to enroll ... before completing their financial aid applications[ and o]nce enrolled, Bridgepoint completes and submits the financial aid applications on the students' behalf, requesting the maximum allowable amount even if the amount exceeds the cost of attendance...." Id. at ¶ 74. Bridgepoint misleads students about how much of their tuition will be paid by federal financial aid and "misleadingly downplays students' federal loan repayment obligations often telling prospective students not to worry about loan repayment ...." Id. at ¶¶ 75-76.

Plaintiffs allege that Bridgepoint targets veterans because "in order to maintain its Title IV standing, Bridgepoint must derive no less than 10% of its revenue from sources other than Title VI funds ... [and] the money Bridgepoint ... receives from veterans via Post-9/11 GI Bill does not count towards the 90% limit these schools can receive in federal funding." Id. at ¶ 79. "The result of [Bridgepoint's] deception is that veterans ... often apply for loans, and often end up with far more debt than was necessary or than they can pay back." Id. at ¶ 86.

Plaintiffs allege that Bridgepoint uses a prohibited incentive system which encourages enrollment advisors to employ deceptive and harassing marketing tactics. Plaintiffs allege that the Government Accountability Office has exposed widespread for-profit college misfeasance.

Plaintiff Scott Rosendahl, active duty member of the United States Air Force, alleges that he spoke with an online enrollment advisor at Ashford, enrolled in online courses, completed five online courses by 2009, and currently owes Ashford over $4,000. Plaintiff Rosendahl "was induced to enroll ... in large part because his enrollment advisor misleadingly claimed that Ashford offered 'one of the cheapest undergraduate degree programs in the country." Id. at ¶ 58. However, Bridgepoint "charges more tuition per credit hour than all of the public colleges and universities in over half of the states in the entire nation." Id. at ¶ 54.

Plaintiff Veronica Clark alleges that she was advised by an enrolment advisor that the doctor of psychology program at The Rockies "would qualify her for licensure as a clinical psychologist in the U.S. military." Id. at ¶ 23. Plaintiff Clark enrolled in the program and completed nearly one year "before discovering that this was not the case." Id. Plaintiff Clark was "induced to enroll at The Rockies in part because her enrollment advisor claimed that The Rockies offered one of the highest quality PsyD programs available[;]" however, she submitted her transcript to the U.S. Navy and civilian psychologist who told her that "her degree was worthless" and "she would have to begin her degree again at an APA accredited institution." Id. at ¶¶ 68, 71. Plaintiff Clark was told her degree would cost $53,000 but after she enrolled she was told the cost would be $75,000. Plaintiff Clark owes The Rockies over $23,000.

Plaintiffs assert claims for (1) breach of implied contract; (2) breach of the implied covenant of good faith and fair dealing; (3) violation of California Business and Professions Code section 17200 ("Unfair Competition Law"); (4) violation of California Business and Professions Code section 17500 ("False Advertising Act"); (5) violation of the Consumer Legal Remedies Act ("CLRA"); (6) negligent misrepresentation; and (7) fraud.

III. Standard of Review

Federal Rule of Civil Procedure 12(b)(6) permits dismissal for "failure to state a claim upon which relief can be granted." Fed. R. Civ. P. 12(b)(6). Federal Rule of Civil Procedure 8(a) provides: "A pleading that states a claim for relief must contain ... a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). Dismissal under Rule 12(b)(6) is appropriate where the complaint lacks a cognizable legal theory or sufficient facts to support a cognizable legal theory. See Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1990).

To sufficiently state a claim for relief and survive a Rule 12(b)(6) motion, a complaint "does not need detailed factual allegations" but the "[f]actual allegations must be enough to raise a right to relief above the speculative level." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). "[A] plaintiff's obligation to provide the 'grounds' of his 'entitle[ment] to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Id. (quoting Fed. R. Civ. P. 8(a)(2)). When considering a motion to dismiss, a court must accept as true all "well-pleaded factual allegations." Ashcroft v. Iqbal, __ U.S. __, 129 S. Ct. 1937, 1950 (2009). However, a court is not "required to accept as true allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences." Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001). "In sum, for a complaint to survive a motion to dismiss, the non-conclusory factual content, and reasonable inferences from that content, must be plausibly suggestive of a claim entitling the plaintiff to relief." Moss v. U.S. Secret Serv., 572 F.3d 962, 969 (9th Cir. 2009) (quotations omitted).

IV. Discussion

A. California's Unfair Competition Law - Claim Three False Advertising Act - Claim Four Consumer ...

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