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Alisha Montgomery, et al v. Corinthian Colleges

March 25, 2011

ALISHA MONTGOMERY, ET AL., PLAINTIFFS,
v.
CORINTHIAN COLLEGES, INC. AND CORINTHIAN SCHOOLS, INC., D/B/A EVEREST COLLEGE AND OLYMPIA COLLEGE, DEFENDANTS.



The opinion of the court was delivered by: Hon. Harry D. Leinenweber

MEMORANDUM OPINION AND ORDER

Before the Court is Defendants' Motion to Compel Individual Arbitration and Stay the Proceedings. For the reasons contained herein, the Motion is granted.

I. BACKGROUND

The thirty-three named Plaintiffs are current or former students in the "Medical Assisting" program at the Merrionette Park campus of Everest College. The school is owned and operated by Defendants Corinthian Colleges, Inc. and Corinthian Schools, Inc. (hereinafter, "Corinthian"). Plaintiffs brought the instant putative class action lawsuit accusing Corinthian of a deceptive marketing scheme that they claim has deceived thousands of students into pursuing an education that has little value. Plaintiffs claim that Corinthian deceived them about the program's accreditations, cost, and job placement rates. They allege, inter alia, that Defendants charged them in excess of the contracted amount for tuition, falsified financial aid applications, and failed to offer certain courses listed in the curriculum and placed on their transcripts. Plaintiffs seek relief for breach of contract, violation of the Illinois Consumer Fraud and Deceptive Business Practices Act ("Consumer Fraud Act"), 815 ILCS 505/1, and unjust enrichment.

Defendants seek to compel individual arbitration of these claims based on agreements to arbitrate signed by the Plaintiffs. Twenty-eight Plaintiffs signed a six-page Enrollment Agreement and a five-page document titled "Enrollment Agreement Addendum and Disclosures." Each of the twenty-eight Plaintiffs initialed each paragraph of the addendum, which covered topics including placement, salaries, and financial aid. The addendum begins with this disclaimer:

Please take your time while you read the following information regarding your education program. Please ask us as many questions as you like. Do not sign until you fully understand and agree with each paragraph. Put your initials at the end of each paragraph indicating your understanding of, and agreement with, each item. When you have finished reading the entire form, please sign your name in the space provided.

The arbitration provision appears on the last page of the addendum and provides, in relevant part:

AGREEMENT TO BINDING ARBITRATION AND WAIVER OF JURY TRIAL.

I agree that any dispute arising from my enrollment, no matter how described, pleaded, or styled, shall be resolved by binding arbitration under the Federal Arbitration Act conducted by the American Arbitration Association under its Consumer Rules.

Terms of Arbitration.

1. Both I and the School irrevocably agree that any dispute between us shall be submitted to arbitration.

2. Neither I nor the School shall file or maintain any lawsuit in any court against the other, and agree that any suit filed in violation of this Agreement shall be dismissed by the court in favor of an arbitration conducted pursuant to this Agreement. Both I and the school agree that filing a court action will cause damage to the other party. We agree that an appropriate measure of this damage includes the costs and attorney's fees actually incurred in compelling arbitration. Such damages shall be paid by the party who has filed an action in court within 30 days of the court's order compelling arbitration.

3. The costs of the arbitration filing fee, arbitrator's compensation and facilities fees shall be paid by the School, to the extent that the fees are greater that the applicable Court filing fee. The School shall not be solely responsible for arbitration costs beyond those for an individual student's claim.

4. I agree not to combine or consolidate any Claims with those of other students, such as in a class or mass action. I may opt out of this no-consolidation provision by delivering a written statement to that effect received by the School within 30 days of my first execution ...


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