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Rangel v. Adtalem Global Education, Inc
United States District Court, W.D. Texas, San Antonio Division
December 13, 2019
MR. LUIS RANGEL, SETH ADOMAKO, CHRISTINA CABELLO, ELISABETH NGUYEN, JOSE SANCHEZ, CHRISTAL TURNER, MELISSA WILSON, MARTIN OLOYEDE, NATHALIE YEKA, TRISTEN WILSON, TERRELL WHITE, DAVID W. JESSOP, DENAIRIUS ROBINSONII, EMRAN ALHYASAT, TERESA ANAYA, TIFFANY BROWN, MED CULLINS, KEVIN D. EARLS, TYHESSIA ELLIS, CRYSTAL HAYDEN, RHONDA JAMES, EMMANUEL MAKARI, CHRISTOPHER MARTIN, CATHERINE MCCARTY, ROSHAWN SAMPSON, VICTOR SEKGANTSO, MARK DAVIS, CANDACE D. SMITH, LATASHA SOLOMON, ALAN TA, GEORGE VAN-LARE, SAUL VEGA, ROSALINDA A VELA ESCOBAR, JUSTIN WIGGINS, PATRICK ACHEAMPONG, JOANNA AGUILERA, SHAWN J. AUSTIN, KINNEY BARCUCH, YOUNGHEE BERMINGHAM, NINA BURNS, CHRISTIAN BURROW, MIKE DEAN, FRANKIE EARLYJR., SHARONDA FORD, JAYSON FOX, COURTNEY FRAZIER, JENNIFER GAILLEY, RYAN GRIZZLE, JEREMY HENGY, LISA HOWARD, NATHANIEL JONES, DERRICK KEITH, PROSPER KISWAGA, NORMA MARTINEZ-CANTU, KASANDRA MCGHEE, GODFREY MOMANYI, MICHELLE ORR, LAWRENCE OWONIKOKO, ANDRES SALAZAR, KIMBERLY SEARCY, LACHANNA SNEED, SCOTT SULLIVAN, JULIO VALENCIA, MIRANDA VAN COLEN, EDWARD WATTS, WAYNE CARL WILLIAMS, SEAN WILLIAMS, GLADYS BERISTAIN, WILLIE GARRET, RICHARD SHAW, TREVOR REED, HEATHER MICHELLE EMMONS, Plaintiffs,
ADTALEM GLOBAL EDUCATION, INC., FORMERLY KNOWN AS DEVRY EDUCATION GROUP, INC.; AND DEVRY UNIVERSITY, INC., Defendants.
REPORT AND RECOMMENDATION OF UNITED STATES MAGISTRATE
ELIZABETH S. ("BETS Y") CHESTNEY UNITED STATES
the Honorable United States District Judge Jason K.
Report and Recommendation concerns Defendants' Motion to
Dismiss Plaintiffs' Second Amended Class Action Complaint
[#64]. The case was referred to the undersigned for a report
and recommendation on Defendants' Motion and the entry of
a new scheduling order [#68]. The undersigned has authority
to enter this recommendation pursuant to 28 U.S.C. §
Court held a status conference on November 20, 2019, at which
all parties appeared through counsel and presented argument
on the Motion to Dismiss. Having considered Plaintiffs'
Second Amended Complaint in light of the arguments raised in
Defendants' Motion, the response and reply thereto [#65,
#66], the supplemental authority provided by Plaintiffs
[#71], Defendants' response [#74], and the arguments of
counsel at the hearing, the undersigned will recommend that
the District Court deny the motion. The Court will enter an
Amended Scheduling Order by separate order.
case was originally filed by over seventy Texas graduates of
DeVry University who allege that Defendants Adtalem Global
Education, Inc. (“Adtalem”) and DeVry University,
Inc. (“DeVry”) misrepresented the benefits of
graduating from DeVry by advertising false employment and
income rates of graduates with the purpose of inducing
potential students to purchase educational products and
services. (Compl. [#1].) Adtalem is the parent company of
DeVry, its subsidiary. Plaintiffs' Original Complaint
asserts claims of fraud and negligent misrepresentation and
violations of the Texas Deceptive Trade Practices Act
(“DTPA”) and seeks restitution for the unjust
enrichment of Defendants. (Id. at ¶¶
91-121.) Defendants moved to dismiss the Complaint pursuant
to Rule 12(b)(6), and Plaintiffs responded with an Amended
Complaint. The Court denied Defendants' motion to dismiss
as moot but without prejudice to filing a new motion with
respect to Plaintiffs' amended pleading, and Defendants
filed a second motion asking the Court for dismissal.
the motion was pending, the District Court consolidated
another cause of action into this case, Lindberg v.
Adtalem Global Education, Inc., et al., 5:18-CV-649-DAE,
and ordered the Lindberg Defendants to refile their
motion to dismiss. After consolidation, a group of additional
Plaintiffs moved for and were granted the right to intervene
in this action and filed their Complaint in Intervention.
There are now over 100 Plaintiffs in this action. Defendants
thereafter stipulated that their pending motions to dismiss
applied to the Intervenors' Complaint as well.
earlier motion to dismiss argued that Plaintiffs' First
Amended Complaint did not meet the particularity requirements
of Rule 9(b) governing allegations of fraud and failed to
sufficiently allege the misconduct of Adtalem, among other
bases for dismissal. The District Court agreed with
Defendants and held the following: (1) Rule 9(b) applies to
all of Plaintiffs' claims (fraud, negligent
misrepresentation, and violations of the DTPA); (2)
Plaintiffs failed to satisfy Rule 9(b); and (3) Plaintiffs
failed to allege that Adtalem was in control of or benefited
from DeVry's advertising practices. (Order [#59].) The
Court, however, gave Plaintiffs another opportunity to plead
their causes of action and ordered Plaintiffs to file an
amended pleading addressing the identified deficiencies
within 45 days of its Order.
timely filed their Second Amended Complaint [#62], which is
now the live pleading before the Court. Plaintiffs'
181-page Second Amended Complaint adds over 100 pages of
additional factual allegations but does not add any new
causes of action. In response to the new Complaint,
Defendants filed the motion to dismiss that is the subject of
this report and recommendation. After Defendants filed their
motion, this case was reassigned to the docket of the
Honorable Jason K. Pulliam, who referred the motion to the
undersigned for a report and recommendation. For the reasons
that follow, the undersigned will recommend the District
Court deny Defendants' motion to dismiss and allow
Plaintiffs to proceed with their claims.
survive a motion to dismiss, a complaint must contain
sufficient factual matter, accepted as true, to ‘state
a claim to relief that is plausible on its face.'”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570
(2007)). “A claim has facial plausibility when the
plaintiff pleads factual content that allows the court to
draw the reasonable inference that the defendant is liable
for the misconduct alleged.” Id.
“Although a complaint “does not need detailed
factual allegations, ” the “allegations must be
enough to raise a right to relief above the speculative
level.” Twombly, 550 U.S. at 555. The
allegations pleaded must show “more than a sheer
possibility that a defendant has acted unlawfully.”
Iqbal, 556 U.S. at 678.
reviewing a motion to dismiss under Federal Rule of Civil
Procedure 12(b)(6), a court “accepts all well-pleaded
facts as true, viewing them in the light most favorable to
the plaintiff.” Martin K. Eby Const. Co. v. Dallas
Area Rapid Transit, 369 F.3d 464, 467 (5th Cir. 2004)
(internal quotation omitted). However, a Court need not
credit conclusory allegations or allegations that merely
restate the legal elements of a claim. Chhim v. Univ. of
Tex. at Austin, 836 F.3d 467, 469 (5th Cir. 2016)
(citing Iqbal, 556 U.S. at 678). In short, a claim
should not be dismissed unless the court determines that it
is beyond doubt that the plaintiff cannot prove a plausible
set of facts that support the claim and would justify relief.
See Twombly, 550 U.S. at 570.
9(b) imposes a heightened pleading standard for claims
sounding in fraud. See Fed. R. Civ. P. 9(b)
(“In alleging fraud or mistake, a party must state with
particularity the circumstances constituting fraud or
mistake.”). The Fifth Circuit has clarified that Rule 9
requires the plaintiff to plead the “who, what, when,
where, and how” of the alleged fraud. Williams v.
WMX Techs., Inc., 112 F.3d 175, 179 (5th Cir. 1997)
(quoting Melder v. Morris, 27 F.3d 1097, 1100 n.5
(5th Cir. 1994)). The District Court has already determined
that Rule 9(b) governs all of the claims asserted in
Plaintiffs' Second Amended Complaint.
District Court should deny Defendants' Motion to Dismiss.
Defendants' motion argues that Plaintiffs' Second
Amended Complaint still fails to satisfy the heightened
pleading standard governing fraud claims; fails to allege
viable theories of causation and damages; fails to allege
consumer status under the DTPA; fails to allege a plausible
claim for unjust enrichment; and fails to allege sufficient
allegations against Adtalem. None of these contentions has
merit in light of the additional factual allegations
contained in Plaintiffs' Second Amended Complaint.
Plaintiffs' Second Amended Complaint satisfies Rule
in this motion, again attack the sufficiency of the
allegations underlying Plaintiffs' claims of fraud,
negligent misrepresentation, and violations of the DTPA. The
elements of fraud include: (1) a misstatement or omission;
(2) of material fact; (3) made with the intent to defraud;
(4) on which the plaintiff relied; and (5) which proximately
caused the plaintiff's injury. Williams, 112
F.3d at 177. Claims of negligent misrepresentation and claims
arising under the DTPA both also require the pleading of
false, misleading, or deceptive acts or representations
causing a plaintiff's injuries. See Miller v.
LandAmerica Lawyers Title of El Paso, 362 S.W.3d 842,