Brook v. Sistema Universitario Ana G. Mendez, Inc.
Filing
30
ORDER: Defendant's Motion to Dismiss 15 is partially granted as described herein. Plaintiff's Count I is dismissed without prejudice. Plaintiff may amend her Complaint, if she wishes, within fourteen (14) days of this Order. Signed by Judge James S. Moody, Jr. on 5/4/2017. (LN)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
YELANIS BROOK,
Plaintiff,
v.
Case No: 8:17-cv-171-T-30AAS
SISTEMA UNIVERSITARIO ANA G.
MENDEZ, INC.,
Defendant.
ORDER
THIS CAUSE comes before the Court upon Defendant's Motion to Dismiss (Doc.
15), Plaintiff’s Response in Opposition (Doc. 17), and Defendant’s Reply (Doc. 27). Upon
review, the Court partially grants Defendant’s motion. As discussed herein, the Court will
dismiss Count I without prejudice.
BACKGROUND
Sistema Universitario Ana G. Mendez, Inc. (“SUAGM”) is a non-profit that
operates three universities in Puerto Rico. It has expanded to include several campuses in
the U.S., including one in Tampa.
Plaintiff Yelanis Brook completed a Master’s degree in Education (i.e., Guidance
and Counseling) at SUAGM’s Tampa campus. Subsequently, she filed this action. She
alleges that SUAGM intentionally discriminates against Latinos like herself by targeting
them for a fraudulent educational program.
Plaintiff’s fifty-three page Complaint (Doc. 1) details a number of fraudulent
practices allegedly committed by SUAGM. 1 For example, SUAGM’s Tampa campus
represents to students that they will be attending a SUAGM institution when in fact
SUAGM has outsourced the operation of its U.S. educational programs to Agmus
Ventures, Inc., an unlicensed, unaccredited, for-profit entity. The U.S. campuses benefit
from SUAGM’s name recognition in the Latino community but are vastly inferior to the
Puerto Rico universities in fourteen areas: management, faculty, course materials,
preparation of academic content, delivery of academic programs, CACREP accreditation,
internships, entry/exit requirements, facilities, libraries, technology, mission, history, and
intellectual development. The Complaint also describes other fraudulent practices,
including that SUAGM’s Tampa campus knowingly misrepresents that its Master’s
program is a State-Approved Educator Preparation Program, that it is capable of providing
valid internships required to work in public schools in Florida, and that it validates college
credits and degrees from foreign colleges. These misrepresentations induced Plaintiff to
enroll in SUAGM’s program and take out significant debt to pay SUAGM’s tuition, which
she would not have done had she known she would receive a worthless degree.
This action bears similarities to cases filed against for-profit schools but is
somewhat unique in that Plaintiff alleges that SUAGM specifically targets low-income
Latinos, many of whom are recent immigrants to the U.S., for its “sham” program. It both
1
For purposes of evaluating Defendant’s Motion to Dismiss, the Court must assume all of
these factual allegations are true.
2
targets its marketing to the Latino population and enrolls Latino students in numbers highly
disproportionate to their rate in the population. She alleges that “nearly all” of SUAGM’s
“victims” are Latino and the “majority” are immigrants. She believes SUAGM targets this
population because it believes they are unsophisticated, do not understand English, and do
not understand how the educational and legal systems work in the U.S.
Plaintiff’s Complaint asserts five claims. Plaintiff contends that SUAGM violated
the Equal Credit Opportunity Act (Count I), Title VI of the Civil Rights Act of 1964 (Count
II), and Florida’s Deceptive and Unfair Trade Practices Act (Count III), that it breached an
implied-in-fact contract (Count IV), and that it fraudulently induced her to contract (Count
V). SUAGM argues that Plaintiff has failed to state a claim under the Equal Credit
Opportunity Act or Title VI of the Civil Rights Act of 1964, and therefore the Court lacks
subject matter jurisdiction to hear Plaintiff’s state law claims.
LEGAL STANDARD
In reviewing a pro se complaint, the court must hold the pro se pleading to a less
stringent standard and must construe the complaint liberally. Tannenbaum v. United States,
148 F.3d 1262, 1263 (11th Cir. 1998) (per curiam) (citation omitted). Although courts
afford liberal construction to pro se litigants’ pleadings, litigants appearing pro se must still
meet minimal pleading standards. Olsen v. Lane, 832 F. Supp. 1525, 1527 (M.D. Fla.
1993).
Federal Rule of Civil Procedure 12(b)(6) allows a court to dismiss a complaint when
it fails to state a claim upon which relief can be granted. When reviewing a motion to
dismiss, a court must accept all factual allegations contained in the complaint as true.
3
Erickson v. Pardus, 551 U.S. 89, 94 (2007) (internal citation omitted). It must also construe
those factual allegations in the light most favorable to the plaintiff. Hunt v. Aimco
Properties, L.P., 814 F.3d 1213, 1221 (11th Cir. 2016) (internal citation omitted).
To withstand a motion to dismiss, the complaint must include “enough facts to state
a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570
(2007). A claim has facial plausibility “when the plaintiff pleads factual content that allows
the court to draw the reasonable inference that the defendant is liable for the misconduct
alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Pleadings that offer only “labels and
conclusions,” or a “formulaic recitation of the elements of a cause of action,” will not do.
Twombly, 550 U.S. at 555.
DISCUSSION
I.
Equal Credit Opportunity Act
The Equal Credit Opportunity Act (“ECOA”) makes it unlawful “for any creditor
to discriminate against any applicant, with respect to any aspect of a credit transaction . . .
on the basis of race, color, religion, national origin, sex or marital status, or age.” 15 U.S.C.
§ 1691(a)(1). ECOA and its regulations define a “creditor” as anyone who extends credit,
regularly arranges for the extension of credit, or refers prospective applicants to creditors
in the course of his or her business. 15 U.S.C. § 1691a(e); 12 C.F.R. § 202.2(l). A credit
transaction is defined as “every aspect of an applicant’s dealings with a creditor regarding
an application for credit or an existing extension of credit (including, but not limited to,
information requirements; investigation procedures; standards of credit worthiness; terms
of credit; furnishing of credit information; revocation, alteration, or termination of credit;
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and collection procedures).” 12 C.F.R. § 202.2(m). Due to ECOA’s expansive language,
courts have held that creditors can be held liable not only for denying credit to members of
a protected class (i.e., redlining) but also for offering them credit on terms that are predatory
or unfair (i.e., reverse redlining). E.g., U.S. ex rel. Cooper v. Auto Fare, Inc., No. 3:14-CV0008-RJC, 2014 WL 2889993, at *1-3 (W.D.N.C. June 25, 2014); M & T Mortg. Corp. v.
White, 736 F. Supp. 2d 538, 574-76 (E.D.N.Y. 2010); Hargraves v. Capital City Mortg.
Corp., 140 F. Supp. 2d 7, 20-23 (D.D.C. 2000). For example, in one case, a court held that
a plaintiff stated an ECOA claim by alleging that a chain of car dealerships located in
African-American
neighborhoods
offered
installment
sales
contracts
with
disproportionately high sales prices, large down payments, and high interest rates and
repossessed their customers’ cars even when they were not in default. Cooper, 2014 WL
2889993, at *1, *3.
The Complaint alleges facts sufficient to demonstrate that SUAGM is a “creditor”
as defined by ECOA. Although it does not appear that SUGAM itself offered loans, it did
refer prospective loan applicants to creditors. For example, Plaintiff alleges that SUAGM
provided students with marketing materials to incentivize them to apply for federal student
loans and even entered them in a drawing to win a new iPad if they applied for the loans
by a certain date. (Doc. 1, ¶ 152.)
Even so, the Complaint does not state a claim under ECOA. Plaintiff does not
explicitly describe the credit transaction she believes was unlawful, other than to note that
she took out federal student loans in excess of $40,000. (Id. at ¶¶ 142, 146, 152, 179).
Plaintiff does not describe any aspects of the credit transaction (as opposed to SUAGM’s
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fraudulent enrollment tactics) that she believes were discriminatory. Although she refers
to the loans she took out as “predatory” and “unfair” (Id. at ¶¶ 3, 4, 40, 137, 159), she does
not describe any specific loan terms that she believes were predatory or unfair.
Given that the federal government determines students’ eligibility for its graduate
student loans and offers those loans to all eligible students on the same terms, it is unlikely
that Plaintiff can allege facts sufficient to demonstrate that her loan terms were unfair.
Nonetheless, the Court will allow Plaintiff an opportunity to amend her pleading if she
wishes.
II.
Title VI of the Civil Rights Act of 1964
Title VI provides that “[n]o person in the United States shall, on the ground of race,
color, or national origin, be excluded from participation in, be denied the benefits of, or be
subjected to discrimination under any program or activity receiving Federal financial
assistance.” 42 U.S.C. § 2000d. Title VI itself prohibits only instances of intentional
discrimination. 2 Alexander v. Sandoval, 532 U.S. 275, 282 (2001) (internal citation
omitted).
SUAGM argues that Plaintiff’s Title VI claim should be dismissed for two reasons.
First, it argues that Plaintiff has not sufficiently alleged that it intentionally discriminated
against her because she is Latino, in part because she has not alleged that SUAGM treated
2
The regulations implementing Title VI also prohibit programs from utilizing facially
neutral criteria or methods of administration that have a discriminatory effect on members of
protected classes (i.e., from engaging in practices that have a disparate impact on those classes).
28 C.F.R. § 42.104(b)(2). However, the Supreme Court has held that litigants do not have a private
right of action to enforce the disparate impact regulations and only the Department of Justice can
do so. Alexander, 532 U.S. at 293.
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her differently than a non-Latino student in its educational program. Second, it argues that
Plaintiff’s Title VI claim is best characterized as a claim that SUAGM engaged in
discriminatory advertising, and discriminatory advertising alone cannot violate Title VI.
The Court disagrees.
The Complaint alleges that SUAGM intentionally targets Latinos, many of whom
are recent immigrants to the U.S, for a “sham” educational program. It does not allege that
SUAGM employed facially neutral practices that disparately and negatively impacted
Latinos; rather, it alleges that SUAGM deliberately targeted the Latino population for a
fraudulent scheme.
The Complaint makes factual allegations from which the Court can reasonably infer
intentionality. For example, the Complaint alleges that SUAGM’s student population is
disproportionately (i.e., “nearly all”) Latino. (Doc. 1, ¶¶ 4, 145.) It also alleges facts
sufficient to indicate that this disproportionality is due to intentional targeting. The
Complaint notes that SUAGM has made statements that “Latinos” are its target market.
(Id. at ¶ 148.) It strategically placed its U.S. campuses in cities “emerging with Hispanic
market[s].” (Id. at ¶ 145.) In addition, it intentionally recruits Latinos for its educational
programs by focusing its marketing on channels that disproportionately reach a Latino
audience (e.g., by advertising on Univision and Telemundo, Spanish-language radio
stations, Spanish-language newspapers, Spanish-language websites, and outdoor bus
stations), as well as by using social media, telemarketing, and direct mail campaigns to
target prospective Latino students. (Id. at ¶¶ 5, 139-141, 149-150.)
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Plaintiff is not arguing that targeted advertising alone constitutes a violation of Title
VI. Rather, she is arguing that targeting her for a fraudulent scheme because of her ethnicity
or national origin violates Title VI. It is the combination of the targeted advertising and the
allegedly “sham” educational program that allows the Court to infer intentional
discrimination. The discrimination claim arises from the harmful product being peddled;
the targeted advertising simply helps to prove that the discrimination was intentional. 3
The Court sees no reason why Plaintiff cannot pursue her Title VI claim using a
theory akin to reverse redlining. Courts have allowed plaintiffs to advance reverse redlining
theories under other civil rights laws, like ECOA, the Fair Housing Act (“FHA”), and
sections 1981 and 1982. See, e.g., Clark v. Universal Builders, Inc., 501 F.2d 324, 334 (7th
Cir. 1974) (§ 1982); M & T Mortg. Corp. v. White, 736 F. Supp. 2d at 574-76 (ECOA and
FHA); Matthews v. New Century Mortg. Corp., 185 F. Supp. 2d 874, 885-88 (S.D. Ohio
2002) (ECOA and FHA); Hargraves, 140 F. Supp. 2d at 19-20 (FHA, § 1981, § 1982);
3
The Court has not ignored Brown v. Phillip Morris, Inc., which SUAGM cited to argue
that this case involves a discriminatory advertising claim that is not actionable. That said, the Court
is not bound by that case and does not find it persuasive.
In Brown, the African American plaintiffs argued that the defendant tobacco companies
violated section 1981 (prohibiting discrimination in making and enforcing contracts) and 1982
(prohibiting discrimination in owning, leasing, and conveying property) by targeting advertising
of harmful menthol cigarettes to African Americans. Brown v. Phillip Morris, Inc., No. CIV.A.985518, 1999 WL 783712 (E.D. Pa. Sept. 22, 1999). The court held that the plaintiffs had not stated
a claim under either statute. However, the court decided that discriminatory advertising cannot
violate sections 1981 and 1982 based on dicta in a Supreme Court case specifically discussing
those sections, as compared to more comprehensive civil rights statutes. In addition, the facts in
Brown were distinguishable. For example, although African Americans used menthol cigarettes in
numbers disproportionate to their rate in the population, they still constituted the minority of
menthol cigarette smokers.
8
Contract Buyers League v. F & F Inv., 300 F. Supp. 210, 216 (N.D. Ill. 1969) (§ 1982).
The reasons to allow reverse redlining claims under Title VI are similar—construing the
statute differently would mean that Title VI, part of the Civil Rights Act “created to be an
instrument for the abolition of discrimination, allows [this] injustice so long as it is visited
exclusively on [one ethnic group].” Contract Buyers League, 300 F. Supp. at 216.
For the foregoing reasons, it is ORDERED AND ADJUDGED that:
1.
Defendant's Motion to Dismiss (Doc. 15) is partially granted as described
herein.
2.
Plaintiff’s Count I is dismissed without prejudice.
3.
Plaintiff may amend her Complaint, if she wishes, within fourteen (14) days
of this Order.
DONE and ORDERED in Tampa, Florida, on May 4th, 2017.
Copies furnished to:
Counsel/Parties of Record
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