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Riley J. Wilson, On Behalf of Himself and All Others Similarly v. Career Education Corporation

April 12, 2012

RILEY J. WILSON, ON BEHALF OF HIMSELF AND ALL OTHERS SIMILARLY SITUATED, PLAINTIFF,
v.
CAREER EDUCATION CORPORATION,
DEFENDANT.



The opinion of the court was delivered by: Geraldine Soat Brown United States Magistrate Judge

Magistrate Judge Geraldine Soat Brown

MEMORANDUM OPINION AND ORDER

Before the court is the motion of defendant Career Education Corporation ("CEC") to dismiss plaintiff Riley J. Wilson's ("Wilson") complaint. [Dkt 18.] Oral argument was held on the motion on March 6, 2012, and the court accepted supplemental briefing from the parties thereafter. [Dkt 37, 38, 39.] Wilson alleges that CEC failed to pay bonuses to him and other similarly situated employees under a supplemental compensation plan it instituted. CEC argues that the plain language of the plan permitted CEC unilaterally to terminate or amend it for any reason and in its sole discretion, and that Wilson was not entitled to any compensation after CEC chose to exercise that option. Because the terms of the plan unambiguously provided CEC the right to terminate it at any time, and because Wilson cannot maintain a claim for quasi-contract relief in the alternative, the motion is granted.

BACKGROUND

Wilson brought this putative class action suit alleging that CEC failed to pay him and all other similarly situated employees certain bonuses he alleges they earned. CEC operates about 11 for-profit post-secondary schools variously located in about 25 states. (Compl. ¶ 3.) [Dkt 1.] Wilson worked for CEC from about October 6, 2008 through May 18, 2011 at Le Cordon Bleu culinary arts college, located in Mendota Heights, Minnesota. (Compl. ¶¶ 2, 6, 17.) He began as a high school admissions representative, and sometime in 2010 became an inside sales admissions representative. (Id. ¶¶ 6, 14.) In both positions, his job involved recruiting high school students to attend Le Cordon Bleu. (Id. ¶¶ 6, 7, 12-14.)

As an admissions representative, Wilson participated in the Admissions Representative Supplemental Compensation Plan ("ARSC Plan" or "Plan"). (Id. ¶¶ 7, 9.) The ARSC Plan provided that admissions representatives who exceeded minimum quarterly thresholds (known as "Minimum Performance Goals") of students they enrolled in a CEC school became "eligible" to receive a bonus of $400 for each additional student over the minimum number when those students met certain conditions. (Compl. ¶ 10; Def.'s Mot., Decl. Jackie Barry, Ex. B at 1, 4 ("Plan").)*fn1 Those conditions included (but were not limited to) the following: (1) the student successfully completed either his or her academic program or one academic year of the program, whichever is shorter; (2) the student attained one of these benchmarks within a nine-month "Evaluation Period" (which began six months after the end of the quarter during which the student started attending the school and ended fifteen months after the student started attending the school); and (3) the student attained one of those benchmarks prior to the resignation or termination of the admissions representative. (Compl. ¶ 10; Plan at 1, 2, 4.)

The Plan specifically provided the following language as to when bonuses were "earned": The admissions representative will earn supplemental compensation of $400 for each such student beyond the thresholds specified in the representative's Minimum Performance Goals for number of graduates or number of students who complete one academic year of their program ("MPG Threshold"). The earned supplemental compensation will be paid on a monthly basis, after the end of each month during the evaluation period, unless otherwise required to paid sooner under applicable law.

An employee is considered to have "earned" supplemental compensation under this Plan for the evaluation period during which his/her employment ends if, as of the employee's termination date, the employee has exceeded his/her MPG Threshold for that evaluation period for students who have successfully completed either their academic program or one academic year of their program. The employee will only be entitled to supplemental compensation under this Plan based on those students who have successfully completed their academic program or one academic year of their program, whichever is shorter, as of the employee's termination date, and not for any students who successfully complete their academic program or one academic year of their program after the employee's termination date. (Plan at 1, 2.) Given these requirements, bonuses were not earned until a number of months after the quarter in which the student initially enrolled.

The ARSC Plan also contains the following clause: If CEC determines at any time that this Plan should be modified due to the requirements or standards of the U.S. Department of Education or any state agency or accrediting commission, then CEC may be obligated to modify this Plan. CEC reserves the right to terminate or amend the terms of this Plan at any time, for regulatory compliance purposes or for any other reason that CEC determines, in its sole discretion. Any interpretation of any provision of this Plan or of any regulatory authority may be made by CEC in its sole discretion. (Plan at 3 (emphasis added).)

In a memo to its admissions representatives and advisors dated December 9, 2010, CEC announced it was ending the ARSC Plan pursuant to a federal regulation from the U.S. Department of Education that would become effective in 2011. (Compl. ¶¶ 19, 20; Def.'s Mot., Barry Decl., Ex. C.) CEC announced it would pay bonuses under the Plan as they came due through February 28, 2011, but not thereafter. (Id.) Although not stated in the notice, Wilson asserts the regulation at issue became effective on July 1, 2011. (Compl. ¶ 20.) Wilson does not dispute the validity of the regulation or that it would prohibit CEC from paying bonuses under the ARSC Plan as of July 2011. (Compl. ¶¶ 34-36; Pl.'s Resp. at 4 [dkt 23].) Rather, Wilson's position is that the regulation did not require CEC to terminate bonus payments that were "in the pipeline" before December 9, 2010 but that would have come due sometime between March 1 and June 30, 2011 if the students met all the applicable criteria. Wilson resigned from CEC on May 18, 2011. (Compl. ¶¶ 16, 20, 34.)

Wilson brings a two-count complaint alleging: (1) breach of contract and (2) implied contract and unjust enrichment, individually and on behalf of a class of CEC admissions representatives operating under the same or similar plans. Wilson asserts that he is entitled to a total of approximately $9,200 in unpaid bonuses under the Plan for the time period of March through May 2011. (Compl. ¶¶ 34, 35.) This total represents 23 students that Wilson enrolled while the Plan was in effect but who did not meet the other conditions until March, April, or May 2011. (Id.)*fn2 Wilson estimates similar damages to the proposed class in this time period would total in excess of $5 million. (Id. ¶ 37.)

LEGAL STANDARD

"To 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, 129 S. Ct. 1937, 1949 (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). "When there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief." Iqbal, 129 S. Ct. at 1950. As the Seventh Circuit has stated:

A complaint will withstand a motion to dismiss [under Rule 12(b)(6)] if it provides a short and plain statement of the claim showing that the pleader is entitled to relief that is also sufficient to provide the defendant with fair notice of the claim and its basis. In order to demonstrate that he is entitled to relief, however, the pleader must show through his ...


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