United States District Court, S.D. California
BETTY GUZMAN, individually and on behalf of all other similarly situated, Plaintiff,
BRIDGEPOINT EDUCATION, INC., et al., Defendants.
(1) GRANTING DEFENDANTS' MOTION FOR SANCTIONS; AND (2) DENYING PLAINTIFF'S
MOTION FOR CLASS CERTIFICATION [ECF Nos. 86, 78]
CYNTHIA BASHANT, District Judge.
On January 11, 2011, Plaintiff Betty Guzman commenced this class action against Defendants Bridgepoint Education, Inc. ("Bridgepoint"), Ashford University ("Ashford"), and University of the Rockies ("The Rockies"),  alleging that Defendants "engaged in a pattern of improper and unlawful conduct in order to recruit students and over-charge the federal government for federal financial aid... through the use of standardized, misleading recruitment tactics[.]" (Compl. ¶ 6.) Plaintiff amended the complaint twice, the current operative complaint being the Second Amended Complaint ("SAC"). Now pending before the Court are Defendants' motion for sanctions and Plaintiff's motion for class certification. Both motions are opposed.
Having reviewed the papers submitted and oral argument from both parties, the Court GRANTS Defendants' motion for sanctions (ECF No. 86) and DENIES Plaintiff's motion for class certification (ECF No. 78).
Bridgepoint is "one of the largest publicly-traded for-profit college companies in the United States" with more than 5, 800 employees. (SAC ¶¶ 22, 25.) Ashford is an academic entity founded, owned, and operated by Bridgepoint. (SAC ¶¶ 23-25.) It "offer[s] Associate's, Bachelor's, Master's, and Doctoral degree programs, primarily online." (SAC ¶ 25.) Though most of Ashford's students are enrolled in the online program, it nonetheless maintains a physical campus in Clinton, Iowa. (SAC ¶ 23.) Students take only one online class at a time, each course typically being five weeks in length. (Ng Dep. 221:12-23.)
According to the complaint, 67, 744 students have enrolled in Bridgepoint's institutions, "99% of whom were attending classes exclusively online." (SAC ¶ 26.) The total student enrollment at Ashford and The Rockies increased from 19, 509 students at the end of the first quarter in 2008 to 42, 025 students as of March 31, 2009. (SAC ¶ 27.) New student enrollment for the first quarter of 2009 was approximately 16, 800 compared to new enrollments of approximately 8, 800 for the first quarter of 2008. ( Id. ) As of December 31, 2012, over 50, 300 students have graduated from the Bridgepoint institutions with students having enrolled from all 50 states, the District of Columbia, and 60 different countries. (Bridgepoint 10-K (2012) at 5.)
At the heart of this action is Plaintiff's assertion that "Bridgepoint's explosive enrollment growth at its online academic institutions is a direct result of misleading marketing tactics designed to recruit students to attend its schools, and its implementation of federally-prohibited employee incentive programs that were designed to encourage enrollment advisors' to recruit as many students as possible." (SAC ¶ 28.)
A. Advertising and Marketing
Prior to 2012, Ashford's only national marketing was through third-party "aggregator websites, " which are "websites that allow students interested in information regarding post-secondary education to input their information to be sent to a number of universities, " including Ashford. (Mignone Decl. ¶ 4; Mignone Dep. 118:10-23.) Currently, however, marketing efforts include digital, print, and television advertising. (Mignone Dep. 109:7-111:12.) Digital advertising composed of "70 to 80 percent" of all advertising with the remaining "20 to 30 percent" consisting of print and television advertising. ( Id. ) Ashford does not use the same messaging across all advertising forms. ( Id. at 139:8-19.)
Ashford's main website is www.ashford.com. A communications review committee - consisting of "compliance, legal, and other individuals that are part of Ashford University" - vets all content posted on the website. (Mignone Dep. 51:3:-16.) "The marketing content on the current website is... different from what was on the website in 2005 because Ashford University has expanded its programs and regularly changes its marketing message." (Mignone Decl. ¶ 5.)
In addition to the main website, Ashford has also used other website addresses, the quantity depending on considerations such as the current "campaign" and site testing. (Mignone Dep. 113:7-23.) Currently, Ashford has three additional websites. ( Id. at 113:16-114:25.) One of these websites is degrees.ashford.edu, which is a "landing environment for paid search." ( Id. ) In other words, it is a site where prospective students "simply submit information if they would like to request more information." ( Id. ) The other two websites are here.ashford.edu and belong.ashford.edu, which are also landing environments associated with current or former advertising campaigns. ( Id. ) Students cannot enroll at these landing environments. ( Id. )
Ashford also sends representatives to military bases and military conferences to recruit potential students. (Mignone Dep. 142:22-144:12.) It sends representatives to community colleges and conferences to recruit and speak about corporate partnerships, among other things, as well. ( Id. at 144:13-25.) Furthermore, "[o]ftentimes, people may refer friends or family members or people that they work with to attend Ashford University, and that's an important group of inquiries[.]" ( Id. at 103:14-24; see also Grady Decl. ¶ 10.)
B. Enrollment Advisors
After Ashford received contact information from aggregator websites, it would have its enrollment advisors follow up. (Mignone Dep. 120:1-9.) Enrollment advisors "provid[e] whatever is necessary to what the student is asking[.]" (Ng Dep. 66:12-19.) Questions typically received from prospective students range "from the specific education they are looking for all the way to normal questions that students ask when they are looking for what is the right college for them[, ]" including questions related to costs and programs. ( Id. at 67:6-21.)
Enrollment advisors are trained to give "accurate and truthful information" to prospective students. (Ng Dep. 54:8-55:24.) As a part of this training, advisors are given written materials including "the content piece for student services" and "conversation guides." ( Id. ) The purpose of the written materials is so that a newly hired enrollment advisor can first learn "what the content is" and then have "conversation guides to ensure that they are giving students... information that's pertinent to that specific student." ( Id. ) Though all newly hired enrollment advisors receive training materials, different training materials are given depending on the relevant department. ( Id. ) Defendants insist that enrollment advisors are not given scripts. ( Id. )
One document provided in the training materials is titled "Ethics of Admissions, which provides nine ethical guidelines for enrollment advisors, including "[a]here[nce] to state and federal Do Not Call regulations, " and "[m]aintaining truth and accuracy of all areas of advertisement." (Young Decl. Ex. 16; see also Young Decl. Ex. 17 (document titled "Enrollment Compliance Acknowledgment").) Elaborating on the latter, the guidelines explicitly state that "[i]t is unacceptable to misrepresent or advise students incorrectly in any area, (i.e. length of time for completion, program content, attendance requirements, certification, technology requirement, PLA, all charges associated with degree program)" and that "[i]t is not permissible to discuss a definitive amount of funds a student may receive in student loans/grants, a definitive amount of transfer credits prior to an unofficial pre-evaluation or employability upon graduation[.]" (Young Decl. Ex. 16.)
In a document titled "Incorporating Quality Control, " presumably from the training materials, Ashford instructed enrollment advisors that "ALL outbound calls must include this verbiage": "Great! This call may be monitored for quality assurance. So tell me, [prospective student's name], why is getting your degree so important to you (Motivation Question)?" (Bottini Decl. Ex. 22.) That document makes clear that "[the verbiage] must happen immediately in the call and within a very short time period. No later than 60 seconds." ( Id. ) The purpose of the verbiage is to prevent the conversation from "get[ting] away from us[, ]" which is why enrollment advisors should not ask "How are you, today?" in their introductions. ( Id. ) Enrollment advisors are further instructed that their first role is to increase enrollment and achieving that goal may be done if they "Create Urgency" in a "polite, helpful way!" (Bottini Decl. Ex. 11.)
Ashford also provided guides to its enrollment advisors addressing follow-ups and leaving effective messages. (Bottini Decl. Ex. 12.) In these guides, fields are left open for enrollment advisors to presumably fill out to develop a consistent approach in their own words. ( Id. ) For example, in the document titled "Leaving Effective Messages - The Rules, " enrollment advisors are told to "[w]rite down 6 [reasons to call you back] and circle 2-3 you might use" to complete the sentence "When you call me back, we will discuss...." ( Id. ) Example language is also provided throughout this document along with occasional instructions to the enrollment advisor. ( Id. ) Some instructions provided state, for example: "Be Persistent!"; "It's important to mix things up a little with your message to avoid sounding like a broken record"; "Spend your time wisely and focus on meeting the students [sic] needs"; and "Slow down and listen to your students." ( Id. ) Other documents are similar in form including instructions given with example language. ( See, e.g., Bottini Decl. Ex. 23.)
Despite the instructions in these guides, a former enrollment advisor at Ashford from August 2009 to January 2011 - Ryan Ferguson - states in a declaration that "Ashford pressured enrollment advisors to employ a series of tactics, including making misrepresentations and concealing material information, to induce students to begin enrollment and to remain enrolled." (Ferguson Decl. ¶ 7.) He continues, "Although Bridgepoint's training materials required truth and accuracy in all areas of advisement, ' enrollment advisors were pressured to say anything necessary to enroll students." ( Id. ) To achieve enrollment goals, enrollment advisors purportedly used "uniform scripted oral misrepresentations[.]" ( Id. ¶ 9.) However, the declaration only provides generalized contents of the purported "uniform scripts, " such as "describ[ing] Bridgepoint schools as great school with amazing professors who offer individualized attention to students" and "claiming that a degree from Bridgepoint schools would provide students and prospective students a competitive advantage over graduates from other postsecondary schools." ( See id. )
C. Student Complaints
Plaintiff is "one of the tens of thousands of students who [allegedly] fell victim to Bridgepoint's systematic false advertisements, material omissions, dissemination of misstatements, and boiler-room pressure recruiting tactics." (SAC ¶ 30.) Her initial contact with Bridgepoint started through the Internet, and in the time period leading up to enrollment at Ashford in 2006, "a Bridgepoint enrollment advisor used high-pressure sales tactics on her by calling her several times a week." ( Id. ) According to Plaintiff, the enrollment advisor made numerous misrepresentations, 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 purchasing computers and software";
"The need to enroll as soon as possible and to apply for maximum financial aid was urgent";
"Bridgepoint schools are fully accredited, and all credits awarded by Bridgepoint schools are transferable to other higher education institutions"; and
"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."
( Id. ) Plaintiff alleges that all of these statements are lies. (SAC ¶ 31.) And though inaccurate, "these statements are part of the uniform script designed by Bridgepoint, and used by all Bridgepoint enrollment advisors during their communications with prospective students." ( Id. )
Other students had similar experiences. For example, one student, a veteran, was repeatedly told by recruiters that his post-9/11 GI Bill benefits would cover the entire cost of his degree, only to find out after he was enrolled that he would owe approximately $11, 000 to Ashford that his benefits did not cover. (Bottini Decl. Ex. 3.) According to that student, he "was extremely disappointed, confused and angry[, ]" and felt that he "ha[d] been misled, deceived or even outright lied to in an effort to gain [his] contractual agreement." (Bottini Decl. Ex. 3, Document 1.) That said, the student did note that except for incident involving tuition, he "thoroughly enjoyed [his] affiliation with Ashford University and [has] effectively referred several people to this University" because he "completely believe[s] in the concepts that Ashford subscribes to and [has] been a strong advocate of this University." ( Id. )
In another example, a student was told that he would be able to receive his teaching license from Ashford. (Bottini Decl. Ex. 3, Document 2.) But a year later, right before his scheduled graduation, he found out that Ashford was not allowed by the state of Iowa to award teaching licenses, so he would have to attend a "cooperating school" in Arizona for a year. ( Id. ) The student "was really blown away to find out that [he] had spent so much time and money at a College that [he] was not going to be able to obtain [his] Teacher's license from." ( Id. )
Another student entered Ashford intending to become a licensed dental assistant. (Bottini Decl. Ex. 3, Document 3.) Recruiters told him that he could achieve this goal at Ashford. ( Id. ) After becoming suspicious about the lack of dental classes one year in, he raised his suspicion with his academic advisor who told him Ashford would not lead to a dental assistant license and that "she didn't really have anything to say." ( Id. ) The student told the school that he felt that he was "completely and utterly lied to, " only to be left with $9, 000 in loans and $3, 000 owed to the school. ( Id. )
In addition to experiences where students felt lied to by recruiters, student complaints included a broad range grievances: (1) students who could not get a response to their requests for help once enrolled; (2) students who found out after leaving or graduating that they owed money; (3) mishandling of student financial aid; (4) students who were not informed of a technology fee; (5) lack of accommodation for students who need extra help; (6) problems with transfer credits; (7) students who felt worse off after attending Ashford; and (8) complaints directed at specific teaching programs, such as the use of an outdated curriculum. (Bottini Decl. Ex. 3.) Plaintiff supports her motion with student complaints that touch upon each and every one of the general categories listed above.
D. Procedural History
There are two related actions filed in this district: (1) Rosendahl v. Bridgepoint Education, Inc., No. 11-cv-61-BAS(WVG) (S.D. Cal. Jan 11, 2011); and (2) Ferguson v. Bridgepoint Education, Inc., No. 11-cv-493-BTM(DHB) (S.D. Cal. Mar. 10, 2011). Both actions name the same defendants - Bridgepoint, Ashford, and The Rockies - and the same plaintiffs' counsel - Francis A. Bottini - as this action.
Rosendahl was strikingly similar to this action, alleging similar facts and asserting nearly identical claims, including claims for violations of the California Business & Professions Code §§ 17200 and 17500, violation of the California Consumer Legal Remedies Act ("CLRA"), and negligent misrepresentation. The plaintiffs in Rosendahl also proposed a near-verbatim class definition as the one proposed in this action, down to the proposed class period, with the only difference being the inclusion of University of the Rockies:
All persons in the United States, who during the period from approximately March 1, 2005 through the present..., enrolled in and/or attended classes offered by Bridgepoint Education through either of its two academic institutions, Ashford University or University of the Rockies. Excluded from the Class are defendants, their immediate families, subsidiaries, affiliates, successors-in-interest, representatives, trustees, executors, administrators, heirs, assigns or transferees, any person acting on behalf of defendants, all governmental entities, and co-conspirators.
Ultimately, on February 28, 2012, the Rosendahl action was administratively closed after the court granted the defendants' motion to compel arbitration.
Ferguson was a qui tam action brought under the False Claims Act, based on allegations that prospective students were induced to enroll at Bridgepoint schools by making misrepresentations and concealing material information. The United States chose to decline to intervene, and on June 13, 2013, the case was eventually dismissed without prejudice at the joint request of the parties.
This action commenced on January 12, 2011, around the same time as Rosendahl and Ferguson. Plaintiff amended the complaint twice, the current operative complaint being the SAC. Plaintiff asserts five claims under California law in her SAC: (1) Violation of Business & Professions Code § 17200 (Unfair Trade Practices Act, also known as Unfair Competition Law or "UCL"); (2) Violation of Business & Professions Code § 17500 (False Advertising Act or "FAL"); (3) Violation of the CLRA; (4) Violation of Civil Code § 1710(3); and (5) Negligent Misrepresentation.
Now pending before the Court are Defendants' motion for sanctions and Plaintiff's motion for class certification. Both motions are opposed. The Court will address both motions below in turn, beginning with Defendants' motion for sanctions, which presents a preliminary issue that needs to be resolved before reaching Plaintiff's motion for class certification.
II. DEFENDANTS' MOTION FOR SANCTIONS
On May 9, 2013, Plaintiff served Defendants initial disclosures pursuant to Federal Rule of Civil Procedure 26(a)(1). (Bottini Decl ¶ 10; Young Decl. ¶ 2; Pl.'s Initial Disclosures 2:19-23.) Subsequently, on June 7, 2013, Plaintiff served Defendants her First Amended Initial Disclosures. (Bottini Decl. ¶ 10; Pl.'s First Am. Initial Disclosures 185:1-186:19.) In both disclosures, Plaintiff did not list Ryan Ferguson as a potential witness in this litigation. (Bottini Decl. ¶ 10; Young Decl. ¶ 2; Pl.'s Initial Disclosures 2:24-3:9; Pl.'s First Am. Initial Disclosures 185:1-186:19.)
As previously mentioned, Mr. Ferguson is a former employee of Defendants who had filed a qui tam action against them in March 2011. See Ferguson, No. 11-cv-493. Plaintiff's current counsel, Mr. Bottini, along with two other attorneys represented Mr. Ferguson and his co-plaintiff in the qui tam action. Similar to Plaintiff's SAC and Mr. Ferguson's declaration in support of Plaintiff's class-certification motion, Mr. Ferguson alleged Defendants incentivized their employees to use uniform written and scripted oral misrepresentations in an effort to meet enrollment quotas. The matter was dismissed on June 13, 2013. ( See Bottini Decl. ¶ 3.)
On August 6, 2013, Defendants served Plaintiff with interrogatories. (Young Decl. ¶ 3; Defs.' Interrog. 7:15-12:25.) The interrogatories sought facts, documents, and witnesses supporting specific allegations in Plaintiff's SAC. ( See Defs.' Interrog. 7:15-12:25.) Defendants' sixteenth interrogatory, particularly relevant here, requested Plaintiff to "[s]tate all facts that support [her] allegation in paragraph 52 of the SAC that [Defendants] make uniform written and scripted oral misrepresentations'... including but not limited to... any [persons] who provided these statements." (Defs.' Interrog. 10:17-23.) Plaintiff served responses to Defendants' interrogatories on October 9, 2013. (Bottini Decl. ¶ 12; Pl.'s Resp. Defs.' Interrog. 27:1-28:22.) But she again failed to identify Mr. Ferguson, or any other witness, as requested by Defendants' ...