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Betty Guzman, On Behalf of Herself and All v. Bridgepoint Education

May 30, 2012

BETTY GUZMAN, ON BEHALF OF HERSELF AND ALL OTHERS SIMILARLY SITUATED
PLAINTIFFS,
v.
BRIDGEPOINT EDUCATION, INC., ASHFORD UNIVERSITY, AND UNIVERSITY OF THE ROCKIES, DEFENDANTS.



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

ORDER

The matter before the Court is the Motion to Dismiss (ECF No. 27) filed by Defendants Bridgepoint Education, Inc., Ashford University, and University of the Rockies.

I. Background

On January 12, 2011, Plaintiff Betty Guzman 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 October 19, 2011, the Court granted the Motion to Dismiss and denied as moot the Motion to Strike. (ECF No. 21).

On November 18, 2011, Plaintiff filed a Motion for Leave to file the First Amended Complaint. (ECF No. 22). On January 3, 2012, the Court granted the Motion for Leave to File First Amended Complaint. (ECF No. 25).

On January 4, 2012, Plaintiff filed the First Amended Complaint ("Complaint"). (ECF No. 26). On January 18, 2012, Defendants filed the Motion to Dismiss the First Amended Complaint. (ECF No. 27).

II. Allegations of the Complaint

Plaintiff proposes a nationwide class action "composed of all persons who enrolled in and/or attended classes at either 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'), for violations of California's consumer protections statutes and common law." (ECF No. 26 at ¶ 1).

Plaintiff generally alleges that Bridgepoint, the company that owns and operates Ashford and The Rockies, "engaged in a pattern of improper and unlawful conduct in order to recruit students and over-charge the federal government for federal financial aid." Id. at ¶ 3. Plaintiff alleges that Defendants use "standardized, misleading recruitment tactics" including: (a) hiding federally-required disclosures on their 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. Id. at ¶ 3. Plaintiff alleges that Defendants "made these uniform material misrepresentations in three ways: (a) through standardized written materials ... (b) through uniform scripted oral misrepresentations made by school's enrollment advisors; and (c) through material omissions of information that Defendants had a duty to disclose ...." Id. at ¶ 4. Plaintiff alleges that she and other class members relied on "these material misrepresentations when deciding to enroll." Id. at ¶ 5.

Plaintiff alleges that Defendants pressured the enrollment advisors to employ illegal recruiting techniques including setting quotas for admissions. Id. at ¶¶ 7-9. Plaintiff alleges that Defendants misleadingly encourage students to apply for more federal financial aid than they need, fail to inform students that the percentage of students who default on their students loans is higher at Bridgepoint schools than other institutions, and fail to inform students that they will be required to begin repaying their loans immediately upon enrollment. Id. at ¶¶ 10-11. Plaintiff alleges that Defendants exploit federal education funding for veterans. Id. at ¶¶ 14-17.

Plaintiff Guzman alleges that she "enrolled in online courses with Ashford in 2006 after speaking with an online enrollment advisor and being exposed to Bridgepoint's false advertisement and statements regarding, among other things, the tuition and costs, federal financial aid, quality of education, accreditation, and post-enrollment employment prospects." Id. at ¶ 21. Plaintiff Guzman alleges that she "succumbed to Bridgepoint's high pressure recruiting tactics, and relied on Bridgepoint's false advertisement and misstatements before deciding to enroll at Ashford." Id. Plaintiff Guzman alleges that she "completed approximately 20 online courses." Id. Plaintiff Guzman alleges that Ashford claims that she owes them "over $3,600, and refuses to issue her diploma and release her transcripts." Id.

Plaintiff alleges that Bridgepoint "recklessly or negligently employs misrepresentative marketing tactics designed to entice prospective students to enroll at its universities and apply for federal loans they do not need and cannot pay back." Id. at ¶ 29. Plaintiff alleges that her "initial contact with Bridgepoint started through the Internet." Id. at ¶ 30. Plaintiff alleges that "[i]n the one-month period before her enrollment at Ashford in 2006, a Bridgepoint enrollment advisor used high-pressure sales tactics on her by calling her several times a week." Id. Plaintiff alleges:

During that period, the Bridgepoint enrollment advisor made numerous misrepresentations to Ms. Guzman, including: Bridgepoint schools offered the most affordable education to students, and the tuition and costs were the "lowest" and could not be found elsewhere;

Federal financial aid would cover all tuition, books, fees, and other costs, including costs for ...


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