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Texas Federal Court Recommends Fraud Suit Against DeVry University by 108 Former Students Should Proceed As Trump Administration Dismantles Oversight of For-Profit Colleges
Austin, TX (December 18, 2019) —On Dec. 13, U.S. Magistrate Judge Elizabeth Chestney of the Western District of Texas issued her Report and Recommendations on a motion to dismiss a lawsuit brought against DeVry University and its parent company, Adtalem Global Education, Inc. The company filed the motion to dismiss earlier this year in an effort to challenge the viability of a mass action filed in San Antonio federal court by 108 graduates of DeVry University.
In her Report to U.S. District Judge Jason K. Pulliam, the judge overseeing the case, Magistrate Judge Chestney recommended that all of the claims asserted by the former students against DeVry and its parent company, Adtalem Global Education, Inc. be allowed to proceed.
The former DeVry students allege that between 2008 and 2016, DeVry engaged in deceptive marketing practices to lure prospective students to enroll and incur significant student loan debt. The for-profit college did so by severely inflating the success rate of job placements and earnings of graduates through an aggressive marketing scheme grounded on deceptive data and flawed methodologies. For instance, DeVry’s deceptive marketing campaign falsely asserted that 90% of DeVry graduates found employment in their field of study within six months of graduation. The case alleges that internal DeVry documents reveal the employment rate of graduates is significantly lower.
In her Report to the Court, issued after hearing oral arguments, Judge Chestney recommended denial of DeVry’s dismissal motion in its entirety, upholding the former students’ claims that DeVry’s marketing practices constituted acts of fraud, negligent misrepresentation, violations of the Texas Deceptive Trade Practices Act, and may give rise to a claim for Restitution for Unjust Enrichment.
The group of DeVry Texas graduates are represented by John Fabry and Luis Muñoz of the Carlson Law Firm, P.C.
Titled the We Major In Careers campaign, the former students allege that DeVry’s deceptive ads were aggressively disseminated to persuade prospective students to enroll at DeVry, through various media outlets, including television commercials, websites, YouTube videos, marketing brochures, print advertisements, radio ads and in person by DeVry recruiters and admissions counselors. The campaign specifically targeted students from low-income and minority communities.
In her Report and Recommendations, Judge Chestney made clear that the former DeVry students have successfully alleged that, “Defendants made material misrepresentations regarding DeVry’s post-graduation employment and income rates with the intent that prospective students and current students would rely on the given statistics, purchase their educational services, and continue with their studies through graduation.”
In fact, the court found that even though “Plaintiffs do not yet have access to the documents in Defendants’ possession that could substantiate their belief that the representations were fraudulent” they have properly relied on the Civil Investigative Demand filed by the Federal Trade Commission in its investigation of DeVry’s deceptive marketing, which uncovered some 2 million documents supporting fraud allegations; statements from confidential witnesses and other documents produced by the Department of Education in connection with its own investigation; and investigations conducted by the attorneys general of New York and Massachusetts, the Higher Learning Commission, Veterans Administration and the U.S. Senate.
Notably, Judge Chestney found that “Plaintiffs’ Second Amended Complaint contains ample allegations connecting Adtalem’s executives to the misrepresentations at issue and alleging that Adtalem controlled, approved, ratified and benefitted from DeVry’s misrepresentations” sufficiently alleging that Adtalem’s “high-level corporate officers and executives knew the 90% Representation was false or acted with reckless disregard for the truth and nonetheless were directly involved in drafting, reviewing, publishing, and disseminating the false and misleading statements at issue in this case.”
This mass action is being litigated in the wake of the Trump Administration’s active dismantling of regulations aimed at providing oversight of for-profit schools such as DeVry.
“Education is supposed to open doors and serve as the great social equalizer in America. Instead of improving their lives by earning a degree from DeVry, these students are now worse off, with massive student loan debts and a degree of little value,” said John Fabry, the lead attorney on the case. “Without any effective regulation of deceptive marketing by for-profit schools, we must turn to the courts for a remedy. We are pleased that the Report and Recommendations in this case reject DeVry’s attempt to have the case thrown out.”
The Texas case against DeVry University is Civil Action No. SA-18-CV-00082-JKP; Luis Rangel, et al. v. Adtalem Global Education, Inc. and DeVry University, Inc.; In the United States District Court, Western District of Texas, San Antonio Division.
A similar case filed by a group of 102 DeVry California graduates has recently also been allowed to proceed in Oakland federal Court. The case makes identical factual allegations underpinning fraud claims against DeVry and Adtalem for their deceptive marketing scheme. The California case is Civil Action No. 19-cv-04079-JSW; Maria Alvarez, et al. v. Adtalem Global Education, Inc. and DeVry University, Inc.; In the United States District Court, Northern District of California, Oakland Division.
About The Carlson Law Firm
The Carlson Law Firm is a Texas-based national law firm committed to providing exceptional legal services in the areas of personal injury, medical malpractice, dangerous drugs and defective products, mass torts, bankruptcy, family law, criminal defense, military criminal defense, nursing home abuse and consumer protection. The Carlson Law Firm has been successfully representing clients nationwide for over 40 years with 12 offices all over Texas. We Care. We Can Help. www.carlsonattorneys.com
ATTORNEYS JOHN FABRY AND LUIS MUÑOZ ARE AVAILABLE FOR COMMENT.
Contact Kazia Conway to schedule an interview at 512-671-7277