Jude Gillespie et al v. Kaplan University et al
Filing
315
ORDER granting 301 Motion for Leave to Amend. Third Amended Complaint due by 6/1/12. Signed by Judge Patricia A. Seitz on 5/21/12. (tp) Modified by unsealing per Chambers on 5/21/2012 (nc).
UNI
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i
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le tons ha ve en s s e
e r d. a e e e o m nd
s d befeey gi t M oton i gr nt i pa' l i gr nt d a t aloft pr pos
houl
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t
a e
m ndme se e t e t ta lgec i
nt xc pt hos ha le ontnuednon- ompla wih t Re biia i Ac .
c
ince t he ha lt ton t
1 Bac
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kgro
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t
ReaorJ Gil pi ( le pi) af me empl eofDee ntKa anUni riy,
lt ude les e Gils e , or r oye
fnda
pl
vest
al wih t o ot rf m e e pl ye s fl d t i tr tc pl ntunders alon M a c 7,2008
ong t w
he or r m o e , ie he r i s om ai
e
rh
algi camsunde t Fas Cli Ac (
le ng li
r he le ams t FCA) Subs que l t n ndedc ant we e
.
e nty,wo me
ompli s r
fld.TheSe ondAmende Compli ( 1 ,wa tldunde salonJ 24,2009a
ie
c
d
ant DE- 70) s ie
re
une
nd
uns ald,by Cour or r o J y 15,2009.Uli ael t Co tdim is one ofGil pi '
e e
t de , n ul
tm t y, he ur s s ed
les e s
cli s dim is t FCA c am sbr
am , s s ed he
li
oughtb t ot e oy s a s ver d a t rcli
y he her mpl ee , nd e e no he a m,
l a ngonl Gils e sFCA c am spe ng i t sc s Gil pi now s kst ame hi
e vi
y le pi '
li
ndi n hi a e. les e
ee o
nd s
c r ntFCA c a m s
ur e
li .
Dee t Ka a Uni riy( a Ka a Hi rEduc tonCor (
fndans pln vest KU) nd pln ghe
ai
p. KHEC)ar
e
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cc e t d he gherLe r ng Commi son a a er cpint off r lsude fna alad
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s i nd r e i e s ede a t nt i nci i
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undsfom t U . De rme ofEduc ton, s ntt t HEA. KU ope aesnum e ous
r he S. pa t nt
a i pur ua o he
rt
r
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i duc i l nt r ies hr ug ut he t
at .K s
l
ubs di r
KHEC. KHEC i adi sonofDee ntKa a l .( pln) Gil pi wor df r
I
s vii
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De e ntzfom Aprl2004 t ough Aprl2005 a aCour eDe l pe ,De t e tChaima
f nda s r
i
hr
i
s
s ve o r parm n
r n,
a As oc ae Pr e s ofPa algalSt es
nd s i t of s or
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cond Am e ed Co pl ntalege a vi ai oft Pr a Pa tcpai
nd
m ai l s ol ton he ogr m rii ton
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r me PPA) n de o ti e rl t nt i nci i hr
te V he
a e tona i tt i mus c riyt t Unie Stt govenme ( r t t ti wil
n ducai lnsiuton t e tf o he td aes r nt Govemnen) ha t l
c
ompl wih saut y a r gult y pr r quiie esa ihe byt HEA a t De rme of
y t t t or nd e a or e e sts t bls d
he
nd he pa t nt
Educ ton(
ai DOE) Ce ttcai i donet ou t e c i ofaPPA.
. rii ton s
hr gh he xe uton
Gil s e' c am salegeavi a i oft PPA ba e on De e nt a l ed f iur t
le pi s l i
l
olton he
sd
f nda s' leg a l e o
l heSec Ame d Compli ,i t s mepa a a al ge t KU i awholy
r
f
ond
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ant n he a
r gr ph, le s hat
s
l
owne s i a y ofTheW as ngt Pos Compa a t tKU i awholy o d s i a y
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ny nd ha
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l wne ubsdir
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2 Se
The cond Am e d Com pl i doesnoti ca e f w hom G il s e w or
nde
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ked.
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we , he o e
r
nde
ant le ha les e s mpl ed
2
c ywih j504oft Re biiai Ac. ThePPA rfr est tt educ tonal
ompl t
he ha ltton t3
eeenc ha he ai
i tt i wilcompl wih j504oft Re lttonAct 0nAprl1 2005,Gil pi flda
nsiuton l
y t
he habiiai
.
i 4,
les e ie
co ai wih t DOE' OfieofCi lRi s(
mpl nt t he
s fc
vi ght OCR)be aus KU fie t a ommodae
c e
ald o cc
t
Gils e' bi a dior . The 0CR i esi t d t cai ,whi h i de e buti Ocobe
le pi s polr s der
nv tga e he l m
c t ni d, n t r
2005,t OCR f t tKU wasi vi ai ofj5 oft Re lt i Ac a is
he
ound ha
n olton
04 he habiiaton t nd t
i e tngr ul tons4Asar s toft fndi ,OCR a KU e e ed i o aRes u i
mpl men i eg ai .
e ul he i ngs
nd
ntr nt
ol ton
3 ci 5 oft Reha lt i Ac,29U. C.j7 r dsi pe i ntpat
se ton 04 he
biiaton t
S. 94,ea n rtne r:
()Pr mu g to of ue a dr g ai n
a o lain r ls n e ulto s
No o her s q lfe i vi lwih adia lt i t Unie Stt ,a dei d i
t wie uaii d ndi dua t
s biiy n he t d aes s fne n
s cin7 5 2 )o t i t l, h l, oeyb r ao o he o h sd s blt, ee cu e
e to 0 ( 0 f hs i e s als ll y e s n f r r i ia ii b x ld d
t
y
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r m h a t p to n, e e id h e eis fo e u j ce o ic i nain
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he
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he
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pr
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( ( ane iec po ain, rne s p,o ohe prvaeor ni ton, a e ies e
3)A) ntr or r to pat rhi r t r i t ga zai or n ntr ol
pr i or hi opret s p-
()i a ssa i e e dt s c ai pa t rhi prvaeor niai ors e
i f s itnce s xtnde o uch omorton, rnes p, i t ga z ton, ol
pr i t r hi asa whol or
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e;
(i whihi p i cp l e ga e i teb sn s o p o ii ge u ain, at c r ,
i) c s rn ial n g d n h u ie s f r vd n d c to he lh ae
y
housng,s als vies orpa ksa r c eai n;
i oci er c ,
r nd e r to
4F OCR s toutisfndi i a Oct r27,2005 doc
'he
e
t i ngs n n obe
umentwhi h sa e t tKU was
c tt d ha
i vo ai o j5 4f r h f lwigr ao s ( )t eu i ri d e n t v p bl h d
n ilton f 0 o t e ol n e s n : 1 h nvest o s o ha e u i e
o
y
s
pr e esdealnghow adiablde o ec nr ueta ommodai ;( t uni r iy
oc dur tii
s e mplye a eq s cc
tons 2) he ve st
ne ded t pr vi polci a pr dur s t ta es di c i i i n s pa a e y f om
e
o o de i es nd oce e ha ddr s s r m nato e r t l r
haasme ;( t c an pr ed es ul beame edt pr det dealdpr es by
r s nt 3) he omplit oc ur ho d
nd o ovi he tie oc s
whihe oye c ds e i oma andfr lr s utonoft rc ens ( t uni riy
c mpl es oul e k nfr l o ma e ol i
hei onc r ;4) he vest
s dde inaeco itntyt whom i or la fr lc ansma bea ese ( )t
houl sg t nsse l o
nf ma nd o ma omplit y ddr s d; 5 he
polc e a pr e ess d be a nde t pr deadefnii ma
ii s nd oc dur houl
me d o ovi
i tve nnera tm ei whi
nd i n ch
3
A g e m e , c w asf l e c e on O c obe 27,2005.Bas d on t O CR ' fndi ,
r e nt whi h
uly xe ut d
t r
e
he
S i ngs
Gil s ealeg t tDef nt f l ey c rii d t t Go n tt tt y wer i
le pi l es ha
enda s a s l e tfe o he ver men ha he
en
c inc wiht nec s ayprrquiie t obti ngfdealf ng,s iial j504of
ompla e t he e s r ee sts o ani e r undi pecfc ly
t Reha lt ton Act Gils e as a lgest ,e n a tre e i i o t Res uton
he
biiai
. le pi lo le hat ve fe ntrng nt he ol i
Ag e nt Def nda scontnue t be i non- ompla ewih t Re ltton Ac a wih
r eme , e nt
i do n
c
inc t he habiia i
t nd t
t Res uton Agr m e . H owe ,by pr oror r t Cour lm ied G il pi scl i s t t
he
ol i
ee nt
ver
i de , he
ti t
les e' a m o he
tmefa eco i onl up untlt OCR f
i rm
verng y
i he
ound De e nt i c
f nda s n ompla e wih t
i nc t he
Re biia i A c .
ha lt ton ts
I . T he M oton f L e ve t A m e i G r e i Part
I
i or a o
nd s ant d n
Acc di t Gil s e a ba e on ar e oft pr pos d Thid Am e d Compl nt
or ng o le pi nd s d
eviw
he o e
r
nde
ai ,
t M o i f Lea t Am e s e t m a t f l ng a ndme s
he ton or ve o
nd e ks o ke he olowi me
nt:
1.Al pa a a r aed t t a lga i a cli sofRea or Diz a W icox,a
1 r gr phs elt o he le tons nd am
lt s a nd l
s
wela Di z' r t lai w o d ber m ove fom t compl nt
l s a s e ai ton ul
e
d r he
ai ;
2.Al pa a a r l tngt Reat Gil pi sca msa alegai ofg adei l ton
1 r gr phs e ai o l or les e' li nd l tons r
nfa i
by Def nt w oul be r m ove
enda s
d
e
d;
3.Relt sDi za W ic wo d ber m ove fom t syl oft c e;
a or a nd lox ul
e
d r he t e he as
4.l woul becarfe a t whih oft De e nt e oye Gil pi a wha
t
d
l ii d s o c
he f nda s mpl d les e nd
t
De e n Ka a I .i a does
f nda t pl n, nc s nd
;
5.Exitng f t pa ag a woul becarfed a a tona f c ua pa a a wo d
si acual r r phs
d
l ii nd ddii l a t l r gr phs ul
bead d t s
de o uppor Gil pi scai st the a s d a 1oft Def ndant a t De rme
t les e' l m ha
dvie l he e
s nd he pa t nt
i tgai aet bec ee ( t co ai pr dur s dbea nde t rquie
nvesi tons r o ompltd; 6) he mpl nt oce es houl
me d o e r
t uni riyt notf compl na si wrtngoft r ulsofi tgai ;a ( t
he ve st o iy
ai nt n ii
he es t nvesi tons nd 7) he
polc e s d s toutt whe eone c d ap a a i si ton' fndi .
ii s houl e
o
r
oul pe l n nve tga i s i ngs
5ti notcea fom t Se ond Ame d Compl i whe t OCR f
I s
l r r he c
nde
ant n he
ound De e
f ndan si
t n
c pla . How e r i w oul a a fom doc e t fl w ih t Cour t tt O CR m a
om i nce
ve , t
d ppe r r
um n s ied t he
t ha he
de
is fndi o com pla e no l t rt n M a 24, 07.
t i ng f
i nc
a e ha
y 20
ofEduc tont tal Def nt ha t bei compla wih j504oft Re biiai Ac;
ai ha l enda s d o n
ince t
he ha ltton t
a
nd
6.Exitng f ct pa ag a woul be carfe a a to lf t lpa a r phswoul
si a ual r r phs
d
l iid nd ddii na acua r g a
d
bea t s ppo tGils e' cli t Dee nt c i dt bei no c inc wih j
dded o u r le pi s am hat fnda s ontnue o n n-ompla e t
504 a trM a 2007.
fe
y
De e nt a a t o
f nda s ppe r o ppos t M oto f Le t Am e ba e s ey on t ls oft
e he
in or ave o
nd s d ol l
he a t he
p o s da nd n s Be a s Fe e a Ru eo Cii Pr c d r 1 ()2 sae t thet o r
rpo e me me t. c u e d r l l f v l o e u e 5 a( ) tts ha t d u t
c
s ul fe l g v la e(omne d wh nj sies rq ie 'a dDee a t h ven to p e
ho d rey i e e v t
n l e u tc o e u rs' n fnd n s a o p osd
t e a ndme s Gil pi sM oton i gr nt d a t ame e s1 5,above.
hes me
nt, les e'
i s a e so
ndm nt Def nda sdo o
e nt
ppos a a ndme t t c
e ny me
nt o he ompli t woul efe tt al ge tme
a nt hat
d f c he le d i
fn oft faudulnta i t Defnda soppos t a ndmentont g ou ;( )i i a
rme he r e ctviy. e nt
e he me
wo r nds 1 t s n
i ope atmptt s krc i ai ofapro Cou tor ra ( a ndmentwoul be
mpr r te o ee e onsderton
ir r de nd 2) me
d
f ie. Re r es ofwhe he Gil pi i ate ptng t cic
utl
ga dl s
t r les e s tm i o r umve t r l r r ng
nt he ues ega di
r onsde a i t Cour m us de t moton a t t a e
ec i r ton,he
t t ny he i s o he m ndme sr ga di t tm efa e
nt e r ng he i r m
oft a lge y faudulnta tviy be a e a ndm e woul bef ie.
he le dl r
e c i t c us me
nt
d utl
Re e oft pr pos ThidAm e d Compli s
viw
he o ed r
nde
a nt howst tt onl vi a i nsoft
ha he y olto
he
Re a iiainAc t t l si ha pldwi p riuai aetevoainssto tb teOCR
h bl to tha Gil pe s e t atc lrt r h ilto e u y h
t
e
h
/
a rt i 2005 i si ton i o Gils e' compli a avi a i t tGil pi l a nedof
he her
nve tgai nt le pi s
ant nd olton ha les e e r
t o h aFr e ofl or tonAc ( A)rque t TheOCR ltrdeemi t tKU ha
hrug
e dom nf mai t FOl e s.
ae tr ned ha
d
r me e t evi a i f
e did hos oltons ound i t 2005 i si ton.Asar ul,t Cour pr vi l he d
n he
nve tga i
es t he
t e ousy l
t tGil pi sFCA cli se a t poi twhe t OCR f undt tKU wasno l nge i
ha les e'
am nd t he n
n he
o
ha
o rn
6 t sCour ha pr vi l not t El nt Cicui r quie t tc am sm a under
As hi
t s e ousy ed, he eve h r t e r s ha l i
de
t FCA mus mee t pla ngr rme sofFe r Rul ofCi lPr dur 9( .Se DEhe
t t he e di equie nt
deal e
vi oce e b) e
262a n. 1(uotng Unie St e c r f At nsv.Mcnte ,470F. 1 1 (1hCi.
t 1 q i
td ats x e ki
l er
3d 350, 360 1t r
2006).
)
vi ai ofj5O4oft Re biiai Ac.l KU wa nol ri vi ai oft
olton
he ha ltton t f
s onge n olton he
Re lt ton A c , he i w a no l rs itng faudul ntc a m s Fur he ,G il s e i not
habiia i
t t n t s onge ubm ti r
e l i . t r le pi s
t orgi s r e oft i or ton he ob ane t oug FOI The FCA ba scli snot
he i nal ou c ? he nf ma i
t i d hr h
A.
r am
b o g tb s me n whoi no a o i ia s u c . e 31U. C. 37 ()4 ( ( 0 9 .
ru h y o o e
s t n rgn l o r e S e
S. j 30e( )B) 2 0 )
Bec us Gils eha nota lgedi hi pr e Thid Am e d Com pl ntany s cii
a e le pi s
le
n s opos d r
nde
ai
pe fc
al gai nsofnonle to
compla e wih t Re biiai Ac outi oft pa iul r s touti t
inc t he ha lt ton t sde he tc a s e
n he
OCR fndi a t i or ton r c i d fom t FOI r s , spr pos d a e
i ngs nd he nf ma i e e ve r he A eque t hi o e m ndme i
nt s
f ie.
utl
W hieGils ea gue t ta 1oft Def nda sco i d t benonc
l le pi r s ha 1 he e nt ntnue o
ompla wih t
int t he
Re biia i Ac ,Gil s ehasofe e no s ii a l a i t s
ha ltton t le pi
frd
pecfc leg tons o uppor t tsa e t Suc
t ha t t men . h
ge r la l a i ofco i
ne a leg tons
ntnued no c
n- ompla a ei ufi i ntt me tt pl di
ince r ns fc e o e he ea ng
r q rment ofRul 9( .Gil pi alo ag st tt OCR onl deemi t tKU wa no
e uie s
e b) les e s r ue ha he
y tr ned ha
s
l rnonc plan wih t Re biia i Ac a t ,he ei no evi et tt ot
onge
om i t t he ha ltton t nd,hus t r s
denc ha he her
Def nda sc edt rvi ai .Howe r Gils eha notpl wih pa tcul iy a
e nt ur hei ol tons
ve , le pi s
ed t ri art ny
vi a inss cii t e t rKa an,l .orKHEC. Theonl vi a i pl wih s cii t a e
ol to pe tc o ihe pl nc
y oltons ed t pe fciy r
t vi atonsofKU s touti t OCR l tr us Gil pi hasnotpld a addii lor
he ol i
e
n he
ete .Th , les e
e ny
tona
co i ng vi a i by t s t De e nt. Cons que l Gil s e' pr e a e e
ntnui
oltons he e wo f nda s
e nty, le pi s opos d m ndm nt
r a di contnui non- mpla ewih t Re biiai Ac i f ie.
eg r ng
i ng
co i nc t he ha lt ton t s utl
A c or ngl i i
c di y, t s
Q hever i oft FCA e f tve when t saci w a fld defne a So i nals ce'
son he
feci
hi ton s ie
i d n ûrgi our '
a i n i vi whoha die ta i pe
s t ndi dual
a
s r c nd nde nden knowl e oft i or to on whi h t
t
edg
he nf ma i n
c he
al tonsa eba e a ha vol a iy pr ded t i or ton t t Govemm e be or
legai
r s d nd s unt rl ovi he nf ma i o he
nt f e
flnga a tonunde t ss ci whih i bas ont i o ton. 31U. C.j3730( ( (
ii n ci
r hi e ton c s ed he nfnnai '
'
S.
e)4)B)
(
2009)
.
6
ORD ERED t t Rel t ' M oto f r Le vet A m e a Fie Hi Thid Am e d
ha
a or s
in o a o
nd nd l s r
nde
Co an ( 3 ji GRANTED i p r.Reao s al ieaThidAme d dCo li ti
mplit DE- 01 s
n a t lt r h l fl
r
n e mpan,n
ac or ncewih t sor ra no unde s a ,a as pa aedoc ten r byJune 1,2012,
c da
t hi de nd t
r el s e rt
ke ty
DONE a ORDERED i M i , orda t s
nd
n ami Fl i , hi
J I d yo Ma , 2012.
a f y
PATR I A .S TZ
CI
UN I
TED STA TES D I
STRI J D GE
CT U
cc:
A1 c
1 ouns lofr cor
e
e d
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