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Petrizzo v. Devry Education Group, Inc.

United States District Court, N.D. Illinois, Eastern Division

February 12, 2018

DEBBIE PETRIZZO, et al., Plaintiffs,
v.
DEVRY EDUCATION GROUP INC., DEVRY UNIVERSITY, INC., and DEVRY/NEW YORK INC., Defendants.

          MEMORANDUM OPINION AND ORDER

          Manish S. Shah United States District Judge

         Defendants ran a for-profit school, and its long-running advertising and marketing campaign focused on the employment rates of its graduates. After learning of the favorable employment outcomes enjoyed by past graduates, plaintiffs enrolled in and eventually graduated from the school. But they later learned that the advertised employment rates had been overstated, and they brought claims under the consumer protection statutes of 17 states and on a theory of unjust enrichment. Defendants move to dismiss for failure to state a claim. For the following reasons, the motion is granted.

         I. Legal Standards

         A complaint must contain factual allegations that plausibly suggest a right to relief. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). The court must accept all factual allegations as true and draw all reasonable inferences in the plaintiff's favor, but need not accept legal conclusions or conclusory allegations. Id. at 678-79. With a 12(b)(6) motion, a court may consider only allegations in the complaint, documents attached to the complaint, and documents that are both referred to in the complaint and central to its claims. Levenstein v. Salafsky, 164 F.3d 345, 347 (7th Cir. 1998).

         II. Background

         Plaintiffs are 39 individuals from across the country who attended and graduated from DeVry University, a for-profit school operated by defendants DeVry Education Group Inc., DeVry University, Inc., and DeVry/New York Inc. [21] ¶¶ 2, 9-50.[1] Plaintiffs enrolled at DeVry after seeing a representation that DeVry had made a cornerstone of its marketing campaign for years. [21] ¶¶ 9-50, 58-59. Specifically, DeVry claimed that 90% of its graduates who were actively seeking employment obtained new jobs in their fields of study within six months of graduation. [21] ¶ 59. DeVry made that representation (or variations of that representation) in its advertisements on television, radio, print, the internet, and social media, as well as in in-person sales pitches. [21] ¶¶ 56, 60-61. DeVry sometimes referred to certain class years when presenting the statistic, and it sometimes made the claim with respect to all graduates since 1975. [21] ¶ 60. Other variations of the representation included explanations and footnotes that provided greater specificity. [21] ¶ 61. And some identified a slightly different percentage, such as 87% or 92%. [21] ¶ 61. After over a decade, DeVry stopped advertising its graduates' employment rates in 2016. [21] ¶ 4.

         The complaint provides examples of the advertisements in different media stating a 90% employment rate. One television commercial that aired in 2013 stated: “In 2012, 90% of DeVry University grads actively seeking employment had careers in their field in six months.” [21] ¶ 64(a). That advertisement instructed viewers to “[j]oin the 90%.” [21] ¶ 64(a). Commercials with similar statements aired between 2010 and 2016. [21] ¶ 64(b).

         The complaint also identifies an example print advertisement that stated: “In 2012, 90% of DeVry University GRADS actively seeking employment HAD CAREERS in their field within six months of graduation.*” [21] ¶ 67. The asterisk led to the following explanation: “Figure based on 2012 graduated self-reporting data to DeVry University Career Services who were employed at graduation or actively seeking employment in their field after graduation. Does not include master's degree graduates or graduates who were not actively seeking employment, as determined by DeVry, or who did not report data on employment status to DeVry.” [21] ¶ 67.

         DeVry made similar statements in its social media accounts. [21] ¶¶ 65, 68. The initial call scripts employed by DeVry representatives between 2013 and 2016 included the sentence, “The DeVry University difference includes outstanding career outcomes - In 2012, 90% of DeVry University grads actively seeking employment had careers in their field within six months of graduation.” [21] ¶ 69.

         This claim of high employment rates suffered from one major flaw-it was inaccurate. DeVry did collect and maintain data on its students and their employment, but it manipulated that data in two ways to arrive at an employment rate at or near 90%. [21] ¶¶ 71-76. Specifically, DeVry inflated the statistic by including among the 90% some graduates who had found jobs outside their fields of study or who had worked the same job after graduation that they did when they enrolled. It also decreased the pool of graduates considered by excluding certain graduates who were actively seeking a job but had not yet found one. [21] ¶¶ 72-73. Plaintiffs believe the actual percentage of job-hunting DeVry graduates who obtained new jobs in their fields of study within six months of graduation is lower than 90%, and that DeVry possesses a report containing conflicting data. [21] ¶¶ 75-76.

         Each plaintiff saw some version of the 90% representation and relied upon it when deciding to enroll in DeVry. [21] ¶¶ 9-47. Plaintiffs later graduated from DeVry and were unable to find a job in their fields of study within six months of graduation. [21] ¶¶ 9-47. Plaintiffs seek to represent a nationwide class and an assortment of subclasses, and they bring 23 claims (some of which are pled in the alternative), based on consumer fraud statutes, unfair competition statutes, and other statutes from 17 states, and on a theory of unjust enrichment. Three counts allege claims on behalf of all plaintiffs: Count One alleges a claim under the Illinois Consumer Fraud and Deceptive Business Practices Act, 815 ILCS 505/1 et seq.; Count Two alleges a claim under the Illinois Private Business and Vocational Schools Act of 2012, 105 ILCS 426/5 et seq.; and Count Twenty-Three alleges a claim for unjust enrichment. The rest of the counts allege claims by subsets of plaintiffs under various state statutes. DeVry moves to dismiss the complaint for failure to state a claim.

         III. Analysis

         A. Compliance with Rule 9(b)

         Under Federal Rule of Civil Procedure 9(b), a party alleging fraud or mistake “must state with particularity the circumstances constituting fraud or mistake.” That means the complaint must describe the “‘who, what, when, where, and how' of the fraud-‘the first paragraph of any newspaper story.'” Pirelli Armstrong Tire Corp. Retiree Med. Benefits Tr. v. Walgreen Co., 631 F.3d 436, 441-42 (7th Cir. 2011) (quoting United States ex rel. Lusby v. Rolls-Royce Corp., 570 F.3d 849, 854 (7th Cir. 2009)). The rule applies to allegations of fraud and is implicated ...


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