Estrada v. Capella University Incorporated et al

MOTION to Dismiss for Failure to State a Claim Capella University's Motion to Dismiss

D. Ariz.March 10, 2017

FENNEMORE CRAIG, P.C. PHOE NI X 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 FENNEMORE CRAIG, P.C. Amy Abdo (No. 016346) Kevin M. Green (No. 025506) 2394 East Camelback Suite 600 Phoenix, AZ 85016-3429 Telephone: (602) 916-5000 Email: amy@fclaw.com Email: kgreen@fclaw.com Attorneys for Defendant Capella University, Inc. UNITED STATES DISTRICT COURT DISTRICT OF ARIZONA James Estrada, Plaintiff, v. Capella University, Inc., a Minnesota company; The Higher Learning Commission, an Illinois corporation; Defendants. Case No.: 2:17-cv-00032-SPL CAPELLA UNIVERSITY’S MOTION TO DISMISS Oral Argument Requested (Assigned to the Honorable Steven P. Logan) Plaintiff, a former doctoral learner at Capella University, alleges that during his dissertation studies, he: (1) experienced faculty mentor changes; (2) once waited ten days for academic feedback; (3) went without a mentor for two weeks; and (4) was subjected to a research non-compliance inquiry. Based on those allegations, Plaintiff seeks relief under a variety of legal theories: intentional misrepresentation, negligent misrepresentation, conspiracy to commit fraud, promissory estoppel, and unjust enrichment. Yet, even having now amended his Complaint, Plaintiff fails to support a viable claim against Capella. In the absence of factual allegations plausibly establishing a claim for relief, Plaintiff’s Amended Complaint is nothing more than a doctoral learner’s expression of Case 2:17-cv-00032-SPL Document 29 Filed 03/10/17 Page 1 of 18 FENNEMORE CRAIG, P.C. PHOE NI X 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 - 2 - dissatisfaction with his academic experience, inviting this Court to second-guess the academic policies and judgments of an accredited University. It is, in short, a claim for educational malpractice, shrouded under other legal theories. Such claims are disallowed as a matter of law. Further, Plaintiff fails to allege actionable misrepresentations or promises and fails to plead sufficient facts to state a claim for conspiracy to commit fraud or unjust enrichment. Accordingly, each of Plaintiff’s claims should be dismissed. This Motion is supported by the following Memorandum of Points and Authorities. CERTIFICATION OF COUNSEL Pursuant to the Court’s January 23, 2017 Preliminary Order (ECF 11), undersigned counsel for Capella University certifies that on March 9, 2017, the parties conferred in good faith to determine whether an amendment could cure the deficiencies in Plaintiff’s First Amended Complaint (the “Amended Complaint” (ECF 25)). The parties have been unable to agree that Plaintiff’s pleading can be cured by a permissible amendment. I. FACTUAL BACKGROUND1 A. PLAINTIFF’S DOCTORAL EXPERIENCE. Plaintiff alleges he enrolled in a Capella doctoral program in 2010. See Am. Comp. ¶¶ 11-12. Plaintiff’s dissatisfaction stems entirely from his dissertation experience in that program, beginning in 2014. Upon his entering the dissertation phase, Capella assigned Plaintiff a faculty mentor to provide academic feedback and guidance. Id. ¶ 13. Over the course of his dissertation studies, Plaintiff alleges he had three separate mentors. Id. ¶ 32. According to Plaintiff, his original mentor provided written feedback within three days of a submission. Id. ¶ 15. In April 2014, Plaintiff’s original mentor allegedly told him he was close to committee approval. Id. ¶ 16. In that same month, Plaintiff had a two-week period without 1 Capella assumes the veracity of Plaintiff’s factual allegations for purposes of this motion, but does not, in so doing, admit their truth. Case 2:17-cv-00032-SPL Document 29 Filed 03/10/17 Page 2 of 18 FENNEMORE CRAIG, P.C. PHOE NI X 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 - 3 - a mentor and then was assigned a new mentor who told him he needed to rewrite work he had completed on his dissertation. Id. ¶¶ 17-18. According to Plaintiff, “[i]n April 2014,” his new mentor took ten days to review Plaintiff’s dissertation draft, consistent with a written Capella policy concerning faculty feedback. Id. ¶¶ 19-20. Plaintiff further alleges the mentor did not, at the time, fully correct or review Plaintiff’s work. Id. A third mentor was assigned in November 2014, and allegedly advised Plaintiff to “immediately submit his survey (research request)” to the Texas Department of Criminal Justice (“TDCJ”) if the opportunity arose. Id. ¶¶ 21-22. Plaintiff had dis-enrolled from Capella at the time, awaiting an answer from TDCJ. Id. ¶ 23. Plaintiff alleges he waited for five months “to get a letter from Capella’s Institutional Review Board (“IRB”) to approve his study proposal,” apparently around the same time. Id. ¶ 24. Plaintiff asserts he received approval, and proceeded with his study. Id. ¶¶ 25-26. The IRB later investigated him for non-compliance, but allegedly exonerated him. Id. ¶¶ 30-31. Plaintiff contends his third mentor failed to return phone calls and e-mails in April 2015 after leaving Capella’s employ. Id. ¶ 28. Plaintiff was last enrolled at Capella in September 2015. Id. ¶ 24. B. PROCEDURAL HISTORY. Plaintiff filed the present action in the Superior Court of Maricopa County on December 6, 2016; the case was thereafter removed to this Court. (See ECF 1 .) Defendant North Central Association of Colleges and Schools was voluntarily dismissed on January 27, 2017. (ECF 16.) Capella and The Higher Learning Commission (“HLC”), moved to dismiss the complaint on January 27 and 30, respectively. (ECF 18, 19.) After responding to those motions, Plaintiff filed his Amended Complaint on February 17, 2017, abandoning a previously asserted breach of contract claim. (ECF 20, 22, 24-25.) II. ARGUMENT A. APPLICABLE PLEADING STANDARDS. To survive this Rule 12(b)(6) motion to dismiss, the Amended Complaint must Case 2:17-cv-00032-SPL Document 29 Filed 03/10/17 Page 3 of 18 FENNEMORE CRAIG, P.C. PHOE NI X 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 - 4 - “contain[] sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.” Landers v. Quality Commc’n, Inc., 771 F.3d 638, 641 (9th Cir. 2014) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)); Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim achieves plausibility only where it contains sufficient factual content to raise the plaintiff’s right to relief “above the speculative level” by giving the court grounds to infer a right to relief. Somers v. Apple, Inc., 729 F.3d 953, 959 (9th Cir. 2013) (quoting Twombly, 550 U.S. at 555-56). Complaints that allege facts establishing a “possibility” of unlawful conduct or conduct “merely consistent with a defendant’s liability” fall short of the pleading standard. Id. (citing Iqbal, 556 U.S. at 678). Likewise, “threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Iqbal, 556 U.S. at 678. Claims sounding in fraud and misrepresentation must also satisfy the particularity requirements of Federal Rule of Civil Procedure 9(b), which requires a plaintiff to “state with particularity the circumstances constituting fraud.” See also, HM Hotel Props. v. Peerless Indem. Ins. Co., 874 F. Supp. 2d 850, 855 (D. Ariz. 2012) (Rule 9(b) “also applies to negligent misrepresentation”). To satisfy this heightened pleading standard, allegations must be “specific enough to give defendants notice of the particular misconduct which is alleged to constitute the fraud charged so that they can defend against the charge and not just deny that they have done anything wrong.” Snyder v. HSBC Bank, USA, N.A., 913 F. Supp. 2d 755, 774 (D. Ariz. 2012) (citations omitted). Specifically, the plaintiff must allege “the who, what, when, where, and how” of the alleged fraud. Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1102 (9th Cir. 2003). The particularity requirement of Rule 9(b) is in addition to—and not a replacement for—the requirement of plausibility under Rule 12. Cafasso, U.S. ex rel. v. Gen. Dynamics C4 Sys., Inc., 637 F.3d 1047, 1055 (9th Cir. 2011). Thus, where a fraud or negligent misrepresentation claim fails to satisfy even the lower Rule 8(a) threshold, the Court may Case 2:17-cv-00032-SPL Document 29 Filed 03/10/17 Page 4 of 18 FENNEMORE CRAIG, P.C. PHOE NI X 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 - 5 - dismiss the claim without reaching a Rule 9(b) analysis. Id. Applying these standards, the Amended Complaint fails to state claims for relief, and Plaintiff’s claims should be dismissed with prejudice. B. THE EDUCATIONAL MALPRACTICE DOCTRINE DEMANDS DISMISSAL FOR FAILURE TO STATE A CLAIM. The Amended Complaint should be dismissed in its entirety because it sounds in educational malpractice—a claim rejected by courts across the country—and therefore fails to state a claim for relief under Rule 12. Plaintiff complains of having to wait for academic feedback, experiencing faculty assignment changes, being asked to rewrite dissertation submissions based on faculty review, and enduring an academic non- compliance investigation. The Amended Complaint, in conclusory fashion, even attempts to erect an arbitrary “industry standard” for the speed with which a university must return written academic feedback. Am. Comp. ¶ 9. Plaintiff, in essence, asks this Court to determine standards for how fast a professor must grade a student’s work. Plaintiff’s attempt to air general grievances to this Court about his educational experience runs afoul of established jurisprudence. The speed and manner in which a university provides academic feedback, how a university assigns faculty, the academic standards a university erects for its students, and the imposition of academic compliance investigations are within the exclusive purview of the institution of higher education. 1. Courts Consistently Reject Educational Malpractice Claims, Even Where Cast as Other Causes of Action. The United States Supreme Court has long recognized that deference should be afforded educational institutions’ policies and academic determinations. See, e.g., Bd. of Curators of Univ. of Mo. v. Horowitz, 435 U.S. 78, 91 (1978) (noting courts should decline “to further enlarge the judicial presence in the academic community”); Regents of Univ. of Michigan v. Ewing, 474 U.S. 214, 225 n.11 (1985) (courts should “show great Case 2:17-cv-00032-SPL Document 29 Filed 03/10/17 Page 5 of 18 FENNEMORE CRAIG, P.C. PHOE NI X 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 - 6 - respect for the faculty’s professional judgment,” allowing “the widest range of discretion in making judgments as to … academic performance” (internal quotation omitted)). Consistent with the Court’s reasoning, when confronting allegations of academic shortcomings similar to those found in Plaintiff’s Amended Complaint, the majority of jurisdictions have adopted a categorical bar to “educational malpractice” suits in which students assert claims second-guessing academic institutions’ academic processes, procedures, theories, decisions, or policies. See Ross v. Creighton Univ., 957 F.2d 410, 414 (7th Cir. 1992) (collecting cases, concluding “overwhelming majority of states” have disallowed educational malpractice claims). In adopting this prohibition, courts have identified many policy concerns weighing against allowing students to challenge academic policies, procedures, or decisions through litigation. These concerns include: (1) lack of a satisfactory standard of care by which to evaluate educators; (2) inherent uncertainties of the cause and nature of damages in light of such factors as a student’s attitude, motivation, temperament, and past; (3) potential for a flood of litigation against schools; and (4) possibility that such claims will cause the courts to oversee the day-to-day operations of schools. See, e.g., Jamieson v. Vatterott Educ. Centers, Inc., 259 F.R.D. 520, 535 (D. Kan. 2009); Creighton Univ., 957 F.2d at 414-15 (collecting cases); Dallas Airmotive, Inc. v. Flightsafety Int’l, Inc., 277 S.W.3d 696, 700 (Mo. Ct. App. 2008); Page v. Klein Tools, Inc., 610 N.W.2d 900, 903 (Mich. 2000); Alsides v. Brown Inst., Ltd., 592 N.W.2d 468, 472 (Minn. Ct. App. 1999). Pursuant to these policy considerations, courts routinely dismiss actions—even when plaintiffs recast such claims as tort, contract, or fraud claims—based on allegations that a school provided inadequate, substandard, or ineffective educational services. See, e.g., Houston v. Mile High Adventist Acad., 872 F. Supp. 829, 834-36 (D. Colo. 1994) (dismissing negligence, fiduciary duty, contract and fraud claims based on allegation that school promised to provide “a foundation of basic knowledge and mental skills” and Case 2:17-cv-00032-SPL Document 29 Filed 03/10/17 Page 6 of 18 FENNEMORE CRAIG, P.C. PHOE NI X 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 - 7 - “strong academic foundation”); Alligood v. County of Erie, 749 N.Y.S.2d 349, 350 (2002) (dismissing contract and fraud claims based on allegation that college failed to provide adequate instruction and did not teach in accord with syllabus); Alsides, 592 N.W.2d at 473 (upholding dismissal of contract, fraud, and misrepresentation claims based on allegation that school did not provide “effective education”); Cavaliere v. Duff’s Bus. Inst., 413 Pa. Super. 357, 368-69 (1992) (upholding dismissal of contract claim based on allegation that school failed to provide quality education). Courts have exercised the doctrine in dismissing claims which, similar to those at bar, would require “delv[ing] into the nuances of the [school’s] processes and theories” to determine if a student has satisfactorily completed degree requirements, Zinter v. University of Minnesota, 799 N.W.2d 243, 246 (Minn. Ct. App. 2011), or necessitate assessing whether a college provided subpar “guidance . . . and supervision” to a degree- seeker, Lawrence v. Lorain Cty. Comty. Coll., 713 N.E.2d 478, 480 (Ohio Ct. App. 1998). In short, the educational malpractice doctrine stands for the principle that “[u]niversities must be allowed the flexibility to manage themselves and correct their own mistakes” and “it is not [a court’s] place to micromanage a university’s daily operations.” Lucero v. Curators of Univ. of Missouri, 400 S.W.3d 1, 8 (Mo. Ct. App. 2013) (internal quotation omitted). 2 2. Plaintiff’s Claims Sound in Educational Malpractice. The Amended Complaint protests a host of Capella’s internal academic standards 2 Arizona courts have not decided a case involving the educational malpractice doctrine. However, “[i]n deciding the merits of a claim that involves a novel question of state law, it is the rule in [the Ninth Circuit] … that [courts] must try to predict how the highest state court would decide the issue.” Kohler v. Inter-Tel Techs., 244 F.3d 1167, 1171 (9th Cir. 2001). In making that determination, this Court may “look to pertinent decisions from other jurisdictions.” Id.; see also Hal Roach Studios, Inc. v. Richard Feiner & Co., Inc., 896 F.2d 1542, 1578 (9th Cir. 1989) (in determining novel questions of state law, courts may turn to “well-reasoned decisions from other jurisdictions”). In light of the numerous well-reasoned opinions from other jurisdictions, it is likely Arizona would adopt the educational malpractice doctrine and apply that doctrine as a bar to Plaintiff’s claims. Case 2:17-cv-00032-SPL Document 29 Filed 03/10/17 Page 7 of 18 FENNEMORE CRAIG, P.C. PHOE NI X 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 - 8 - and administrative procedures, including: (1) procedures for assigning faculty (Am. Comp., ¶¶ 10, 13, 16, 18, 21, 32, 36, 71); (2) standards for the speed of and nature of academic feedback (Id. ¶¶ 10, 14, 20, 36, 39, 50, 71); and (3) policies for investigating concerns of non-compliance with University research standards (Id. ¶¶ 30-31). Plaintiff takes issue with “having to work under three separate mentors,” complains of having had a two week period with no mentor during a faculty transition, and challenges having to wait ten days for a new mentor to review written work in April 2014. Id. ¶¶ 16-8, 32. Apparently undeterred by the wealth of law prohibiting claims of academic negligence, plaintiff alleges a “3 to 4 calendar day” industry standard dictating how quickly a professor must return academic feedback and attempts to erect a claim based on Capella’s practice of providing feedback in 10 business days. Am. Comp. ¶¶ 9, 19-20. Plaintiff’s clear intent is that this Court erect and enforce a standard of care for the timely return of academic feedback. This is precisely the type of academic negligence claim the Supreme Court and other courts have disallowed. It is not the province of a court to establish a standard of care in higher education. See Ross, 957 F.2d at 414. However framed—whether under the shroud of misrepresentation, promissory estoppel, unjust enrichment, or conspiracy—Plaintiff’s claims do nothing more than challenge Capella’s standards for staffing, evaluating student work, and ensuring research integrity. They center on precisely the type of day-to-day decisions that the educational malpractice doctrine protects from second-guessing, would require the Court to evaluate Plaintiff’s dissertation work, and fall well within the ambit of jurisprudence prohibiting judicial interference with academic discretion. Plaintiff improperly asks the Court to step into the shoes of an accredited institution of higher education and evaluate its academic policies, procedures, and decisions. His Amended Complaint should be dismissed. /// /// Case 2:17-cv-00032-SPL Document 29 Filed 03/10/17 Page 8 of 18 FENNEMORE CRAIG, P.C. PHOE NI X 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 - 9 - C. PLAINTIFF FAILS TO STATE A PLAUSIBLE CLAIM FOR RELIEF. Even if Plaintiff’s claims are considered to be something more than a claim for educational malpractice, each claim fails to state a cause of action under established standards specific to those claims. 1. The Amended Complaint Fails to Allege a Plausible Claim for Intentional Misrepresentation. To adequately plead intentional misrepresentation under Arizona law, a plaintiff must make plausible allegations of: (1) a representation; (2) its falsity; (3) its materiality; (4) the speaker’s knowledge of its falsity; (5) the speaker’s intent that it be acted upon by the recipient; (6) the hearer’s ignorance of its falsity; (7) the hearer’s reliance on its truth; (8) the hearer’s right to rely on it; and (9) the hearer’s consequent and proximate injury. Comerica Bank v. Mahmoodi, 224 Ariz. 289, 292-93 ¶ 14 (App. 2010). If the claim is based on an alleged omission, a plaintiff must allege non-conclusory facts demonstrating that the defendant owed a duty of disclosure. See Haisch v. Allstate Ins. Co., 197 Ariz. 606, 610 ¶ 14 (App. 2000). Plaintiff’s intentional misrepresentation claim is based on both “representations and omissions.” Am. Comp. ¶¶ 35-43. i. Plaintiff Fails to Adequately Support His Intentional Misrepresentation Claim Under Rule 12. The representations alleged in the Amended Complaint are few, and none can support a claim for intentional misrepresentation. Plaintiff alleges only that Capella represented: (a) “the number of units it would take to complete the course work for a Ph.D. program,” (b) “the cost per unit,” (c) “that Capella is an accredited and nationally recognized online university,” and (d) “that for his dissertation [Plaintiff] would have a mentor at all times with whom he would work directly and submit drafts and other related Case 2:17-cv-00032-SPL Document 29 Filed 03/10/17 Page 9 of 18 FENNEMORE CRAIG, P.C. PHOE NI X 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 - 10 - materials.” Id. ¶¶ 5, 7-8. Nowhere does Plaintiff allege the falsity of (a), (b) or (c). 3 Plaintiff does not allege the represented number of or cost per units was false. Plaintiff does not allege that Capella is not accredited or nationally recognized—on the contrary, his conspiracy claim is premised on the fact of accreditation. Id. ¶ 56. As to (d), Plaintiff admits that Capella provided him with mentors, to whom he submitted drafts, and who worked with him and provided academic feedback. See, e.g., id. ¶¶ 15, 18-19. The sole remaining misrepresentation alleged is that Plaintiff “would have a mentor at all times.” Id. ¶ 8. The Amended Complaint contends that this statement proved false once when, some four years after it was made during a mentor transition, Plaintiff purportedly “went two weeks with no mentor.” Id. ¶ 17. 4 Plaintiff has not and cannot plausibly allege that Capella knew the alleged representation was false at the time it was made, or that the alleged representation was material, as required to plead a claim for intentional misrepresentation. See Comerica Bank, 224 Ariz. at 292; Timeless Global, LLC v. Olson, No. CA-CV 15-0005, 2016 WL3660238 ¶ 26 (App. July 5, 2016) (Memorandum Decision). Plaintiff’s intentional misrepresentation claim should be dismissed under Rule 12. ii. Plaintiff Fails to Plead Representations Supporting His Intentional Misrepresentation Claim Under Rule 9(b) Even if Plaintiff had satisfied the plausibility standard in asserting intentional 3 Notably, Plaintiff’s factual allegations only address Capella representations about “complet[ing] the course work for a Ph.D. program.” Am. Comp. ¶ 5 (emphasis added). Plaintiff admits that he “completed the course work for his Ph.D. program” in 2013, before “embark[ing] upon his dissertation.” Id. ¶ 12 (emphases added). He cannot base his misrepresentation claim on vague, unsupported assertions of representations “regarding the duration of the dissertation process.” Id. ¶ 38. See Gould v. M & I Marshall &Isley Bank, 860 F.Supp.2d 985, 987 (D. Ariz. 2012) (“Legal conclusions couched as factual allegations are not entitled to the assumption of truth … and are insufficient to defeat a motion to dismiss for failure to state a claim.”) (internal quotation omitted). 4 Plaintiff elsewhere asserts he experienced “2 gaps when he had no mentor,” (see Am. Comp. ¶ 32), but no other “gap” is identified with particularity in his pleading. Case 2:17-cv-00032-SPL Document 29 Filed 03/10/17 Page 10 of 18 FENNEMORE CRAIG, P.C. PHOE NI X 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 - 11 - misrepresentation, he does not satisfy Rule 9(b)’s applicable heightened pleading standard. In particular, Plaintiff fails to allege the “who, what, when, where, and how” of the representation on which he bases his claim. See Vess, 317 F.3d at 1102. The Amended Complaint provides no detail concerning the claimed “mentor at all times” statement. The broad allegation that Capella made the representation “through its general advertisements made online and through other sources” falls short of the necessary specificity. See Am. Comp., ¶¶ 8, 35. Similarly, the nebulous contention that Capella “made representations” about “the ability to undertake and complete a Ph.D. program in a reasonable and timely manner” cannot sustain the claim. Id. ¶ 35. Plaintiff does not, and cannot, allege that the University promised he would complete his degree, let alone by a date-certain. Under Arizona law, Plaintiff’s allegations are insufficiently precise to support a claim for fraud and fall short of Rule 9(b)’s standard. See Staheli v. Kauffman, 122 Ariz. 380, 383 (1979). Moreover, Plaintiff’s formulaic assertions that the representations were material, that Capella knew the representations were false and intended Plaintiff’s reliance, and that Plaintiff was unaware of the falsity and relied on the representations to his detriment are legal conclusions couched as facts. Am. Comp. ¶¶ 38-43. They should not be “entitled to the assumption of truth” and are “insufficient to defeat a motion to dismiss.” Gould, 860 F.Supp.2d at 987. Thus, to the extent it is based on Capella’s alleged representations, Plaintiff’s intentional misrepresentation cause of action should also be dismissed under Federal Rule of Civil Procedure 9(b). iii. Plaintiff Fails to Adequately Plead Omissions to Support His Intentional Misrepresentation Claim. Plaintiff also attempts to base his intentional misrepresentation claim on certain omissions. These include Capella’s alleged failure to inform him that faculty turnover was possible and could result in a brief mentor-less period, that review of written work could take several days, that faculty could require dissertation rewrites, and that faculty could Case 2:17-cv-00032-SPL Document 29 Filed 03/10/17 Page 11 of 18 FENNEMORE CRAIG, P.C. PHOE NI X 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 - 12 - review submissions in part or in full. Am. Comp. ¶ 36. To state a claim for intentional misrepresentation on the basis of an omission, however, Plaintiff must allege facts showing he was owed a duty of disclosure. See Haisch, 197 Ariz. at 610 ¶ 14. Plaintiff has not asserted and cannot assert non-conclusory facts demonstrating that the University owed him a legal duty to make any of the supposed omissions underlying his claim. A university is not required to divine the unexpressed subjective assumptions of prospective learners and warn against every possible circumstance in the academic life of a student. In the absence of a legal duty to disclose, Plaintiff has not adequately stated a claim. Plaintiff’s claim of misrepresentation based upon hindsight should be dismissed. D. Plaintiff Fails to State a Claim for Negligent Misrepresentation. Pleading in the alternative, Plaintiff asserts a claim for negligent misrepresentation based on the same allegations that underlie his intentional misrepresentation claim. See Am. Comp. ¶45-8. The elements of a claim for negligent misrepresentation are: (1) the defendant provided false information in a business transaction; (2) the defendant intended the plaintiff to rely on the information; (3) the defendant failed to exercise reasonable care in communicating the information; (4) the plaintiff justifiably relied on the information; and (5) the plaintiff suffered resulting damages. See Mur–Ray Mgmt. Corp. v. Founders Title Co., 169 Ariz. 417, 422-24 (App. 1991); see also Restatement (Second) of Torts § 552. As a fraud-based claim, negligent misrepresentation must be pleaded with particularity under Rule 9(b). See HM Hotel Props., 874 F. Supp. at 855. Likewise, to plead negligent misrepresentation based on an omission or failure to disclose, a plaintiff must allege non-conclusory facts demonstrating the defendant’s duty of disclosure. See Haisch, 197 Ariz. 626 (App. 2000). Accordingly, the inadequacies that bar Plaintiff’s intentional misrepresentation claim also warrant dismissal of his negligent misrepresentation claim. Moreover, “negligent misrepresentation requires a misrepresentation or omission Case 2:17-cv-00032-SPL Document 29 Filed 03/10/17 Page 12 of 18 FENNEMORE CRAIG, P.C. PHOE NI X 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 - 13 - of a fact.” McAllister v. Citibank, 171 Ariz. 207, 215 (App. 1992). “A promise of future conduct is not a statement of fact capable of supporting a claim of negligent misrepresentation.” Id. Each of the assertions on which Plaintiff bases his negligent misrepresentation claim concerns a future promise, not a fact. See, e.g., Am. Comp. ¶¶ 8 (alleged representation Plaintiff “would have a mentor at all times”), 10 (claimed failure to disclose “there would be multiple changes in the mentor” assigned to Plaintiff), 35 (vague representations and omissions regarding Plaintiff’s “ability to undertake and complete a Ph.D. program in a reasonable and timely manner”). These allegations cannot support a negligent misrepresentation claim as a matter of law, and the count should be dismissed. E. Plaintiff Does Not State a Claim for Conspiracy to Commit Fraud. The Amended Complaint fails to allege a plausible claim for conspiracy to defraud. “For a civil conspiracy to occur two or more people must agree to accomplish an unlawful purpose or to accomplish a lawful object by unlawful means, causing damages.” Baker v. Stewart Title & Trust of Phoenix, 197 Ariz. 535, 545 ¶ 30 (App. 2000) (internal quotation omitted). The claim “requires an underlying tort which the alleged conspirators agreed to commit.” Id. ¶ 42. Claims of conspiracy to defraud are also subject to Rule 9(b)’s heightened pleading standard. See Silvas v. GMAC Mort., LLC, No. CV-09-265-PHX- GMS, 2009 WL 4573234 at *8 (D. Ariz., Dec. 1, 2009). Here, Plaintiff’s conspiracy to defraud claim fails for multiple reasons. First, Plaintiff has not adequately pleaded a tort underlying his conspiracy claim. As discussed above, the Amended Complaint fails to state a claim for intentional or negligent misrepresentation. Having failed to adequately allege the underlying tort upon which his conspiracy claim is premised, Plaintiff’s conspiracy claim should be dismissed for that reason alone. See, e.g., In re Mortgage Elec. Registration Sys. (MERS) Litig., CV-10-215- PHX-JAT, 2011 WL 251453, at *7 (D. Ariz. Jan. 25, 2011) (dismissing conspiracy claim Case 2:17-cv-00032-SPL Document 29 Filed 03/10/17 Page 13 of 18 FENNEMORE CRAIG, P.C. PHOE NI X 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 - 14 - because the plaintiff failed to state a claim for the underlying tort). Plaintiff’s conspiracy claim also fails because the Amended Complaint does not offer specific, plausible allegations of an agreement between Capella and HLC to commit fraud. Plaintiff alleges in conclusory fashion that “HLC knowingly condoned, overlooked, and specifically participated in the fraudulent inducement of students to enroll at Capella” and “knowingly continued its accreditation of … Capella, for the benefit of itself and the detriment of students such as Plaintiff.” Am. Comp.., ¶¶ 65-66. But there are no factual allegations whatsoever supporting these assertions. Such unadorned, conclusory material should be rejected, and the conspiracy claim should be dismissed. F. Plaintiff’s Allegations Cannot Support a Promissory Estoppel Claim. Plaintiff’s promissory estoppel claim fails under Rule 12. Promissory estoppel “is not a theory of contract liability, but instead a replacement for a contract when parties are unable to reach a mutual agreement.” Johnson Int’l, Inc. v. City of Phoenix, 192 Ariz. 466, 474 ¶ 49 (App. 1998). To state a promissory estoppel claim, a plaintiff must allege that a defendant “made a promise and should have reasonably foreseen that [plaintiff] would rely on that promise,” and that plaintiff “actually relied on the promise to his detriment.” Higginbottom v. State, 203 Ariz. 139, 144 ¶ 18 (App. 2002); see also, Contempo Const. Co. v. Mountain States Tel. & Tel. Co., 153 Ariz. 279, 282 (App. 1987). “[P]romissory estoppel rests upon a promise to do something in the future.” Trollope v. Koerner, 106 Ariz. 10, 18 (1970) (emphasis added). Merely expressing an intention to do something is insufficient—the alleged promise must be clear and unambiguous. See, e.g., Hisun Motors Corp., U.S.A. v. Automotive Testing and Dev. Servs., Inc., No. CV 11-1918-PHX-DGC, 2012 WL 682398 at *5, (D. Ariz. Mar. 2, 2012); Johnson, 192 Ariz. at 474 ¶ 51; 1 Samuel Williston & Richard A. Lord, A TREATISE ON THE LAW OF CONTRACTS § 1.1 (4th ed. 2007). Here, Plaintiff’s promissory estoppel claim is founded on the contention that Case 2:17-cv-00032-SPL Document 29 Filed 03/10/17 Page 14 of 18 FENNEMORE CRAIG, P.C. PHOE NI X 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 - 15 - Capella “made certain promises to Plaintiff regarding Capella’s ability to provide to him an opportunity to earn a Ph.D.” Am. Comp., ¶ 50 (emphasis added). But what are those “certain promises”? Plaintiff does not allege facts allowing Capella or this Court to discern them. Without more, Plaintiff’s allegation is just a conclusory statement, checking off by rote components of the cause of action. Moreover, Plaintiff concedes that Capella did, in fact, give him the opportunity to work toward a doctoral degree by providing him with course work, a series of mentors, and a dissertation committee that offered Plaintiff feedback on his work. See, e.g., Am. Comp. ¶¶ 12-13, 15-16, 18, 52. Plaintiff fails to plead a promise in support of his estoppel claim that actually went unfulfilled, and any allegation of detrimental reliance is contradicted by Plaintiff’s admission that the promise of an opportunity to pursue a Ph.D. was kept. Accordingly, Plaintiff fails to allege a plausible promissory estoppel claim, and the count should be dismissed. G. Plaintiff Fails to Allege a Plausible Unjust Enrichment Claim. Finally, Plaintiff fails to plausibly assert unjust enrichment. To state a claim for unjust enrichment, Plaintiff bears the burden of alleging non-conclusory factual allegations supporting each of the following elements: (1) an enrichment; (2) an impoverishment; (3) a connection between the enrichment and impoverishment; (4) the absence of justification for the enrichment and impoverishment; and (5) the absence of a remedy provided by law.” Freeman v. Sorchych, 226 Ariz. 242, 251 ¶ 27 (App. 2011). Plaintiff bases his unjust enrichment claim on the conclusory assertion that it would be unconscionable for Capella to keep the tuition he paid when enrolled as a doctoral learner “because Capella did not provide a meaningful and appropriate mentor relationship for Plaintiff, timely responses to his dissertation submissions, timely and appropriate guidance and approval through the process, or the ability to complete the dissertation and … degree program in a reasonable and timely manner, and at a reasonable cost.” Am. Comp. ¶ 71. This claim should be dismissed for several reasons. Case 2:17-cv-00032-SPL Document 29 Filed 03/10/17 Page 15 of 18 FENNEMORE CRAIG, P.C. PHOE NI X 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 - 16 - First, the claim should be dismissed because the Amended Complaint offers no factual allegations to support the notion that the feedback Plaintiff received was not “meaningful” or “timely.” Plaintiff cannot ask this Court to find fault with Capella University for a purported failure to adhere to undefined, arbitrary standards for the rigor or speed with which dissertation submissions are reviewed by academic faculty. Indeed, as noted above, these are the type of discretionary educational decisions that Courts routinely and rightly decline to evaluate under the educational malpractice doctrine. Moreover, Plaintiff’s allegations reveal that he did, in fact, receive the benefits of completing course work, engaging with faculty on his dissertation, and receiving feedback on his work. See, id. ¶¶ 12-13, 15-16, 18, 21-22. The Amended Complaint recognizes that Plaintiff enrolled in a doctoral program at Capella, paid the required tuition and fees, worked toward a doctoral degree, and received educational services from Capella and its faculty over the course of nearly five years. These allegations belie any suggestion that Capella’s alleged enrichment and Plaintiff’s alleged impoverishment were unjustified. The mere fact that Plaintiff ultimately failed to obtain approval of his dissertation and never earned his doctorate cannot support his claim for unjust enrichment. A “graduate student seeking admission to a university knows a certain level of performance is necessary to obtain a degree.” Maas v. Gonzaga Univ., 618 P.2d 106, 108 (Ct. App. Wash. 1980). Plaintiff himself recognizes that Capella only ever provided him “an opportunity to earn a Ph.D.,” not a guarantee. Am. Comp. ¶ 50 (emphasis added). The “possibility of academic failure is implicit.” Maas, 618 P.2d at 108. The value of academic pursuit cannot and should not be measured by the conferral of a diploma. Plaintiff’s ultimate failure to obtain a doctoral degree does not diminish the education he received nor can it be the basis of an unjust enrichment claim. See Zinter, 799 N.W.2d at 247 (recognizing benefit of educational instruction and rejecting unjust enrichment claim based on non-receipt of degree). The Court should dismiss Plaintiff’s unjust enrichment Case 2:17-cv-00032-SPL Document 29 Filed 03/10/17 Page 16 of 18 FENNEMORE CRAIG, P.C. PHOE NI X 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 - 17 - claim as a matter of law. III. CONCLUSION Plaintiff cannot erect a cause of action merely by setting forth a list of academic grievances and asserting, in hindsight, arbitrary unexpressed standards to which he believes an academic institution should have been held in the timing, substance and nature of its academic review and policy enforcement. Nor may Plaintiff simply pair the fact of Capella University’s accreditation by the HLC with conclusory allegations to fabricate an inflammatory claim of conspiracy to commit fraud. The Federal Rules of Civil Procedure require more. Without factual allegations setting forth an actionable representation, promise, contract or conspiracy allowing for a reasonable inference of liability, Plaintiff’s claims fail as matter of law and should be dismissed. For the foregoing reasons, the Court should dismiss Plaintiff’s Amended Complaint with prejudice and award Capella reasonable attorneys’ fees pursuant to A.R.S. § 12-341.01. DATED March 10, 2017. FENNEMORE CRAIG, P.C. By /s/ Kevin M. Green Amy Abdo Kevin M. Green Attorneys for Defendant Capella University, Inc. Case 2:17-cv-00032-SPL Document 29 Filed 03/10/17 Page 17 of 18 FENNEMORE CRAIG, P.C. PHOE NI X 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 - 18 - CERTIFICATE OF SERVICE I hereby certify that on March 10, 2017, I electronically transmitted the attached document to the Clerk’s Office using the ECF System for filing and transmittal of a Notice of Electronic Filing to the following CM/ECF registrants: Marshall A. Martin LAW OFFICES OF MARSHALL A. MARTIN 8585 E. Hartford Drive Suite 800 Scottsdale, Arizona 85255 Attorneys for Plaintiff Mitchell J. Resnick Sandra Shoupe-Gorga RESNICK & LOUIS, P.C. 8111 E. Indian Bend Rd. Scottsdale, Arizona 85250 Attorneys for Defendant The Higher Learning Commission /s/ Colleen A. Loos An employee of Fennemore Craig, P.C. 12677282 Case 2:17-cv-00032-SPL Document 29 Filed 03/10/17 Page 18 of 18