Brown v. Adtalem Global Education, Inc. et al

Filing 28

ORDER granting in part and denying in part Defendants' Motion to Dismiss, 13 . Signed on 10/9/19 by District Judge Ortrie D. Smith (Matthes Mitra, Renea)

IN THE UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF MISSOURI
WESTERN DIVISION
ROBBY BROWN,
Individually and o/b/o all others similarly
situated,
Plaintiff,
vs.
ADTALEM GLOBAL EDUCATION, INC.,
a Delaware Corporation, et al.,
Defendants.

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Case No. 19-00250-CV-W-ODS

ORDER AND OPINION GRANTING IN PART AND DENYING IN PART
DEFENDANTS’ MOTION TO DISMISS
Pending is Defendants’ motion to dismiss for failure to state a claim. Doc. #13.
For the following reasons, Defendants’ motion is granted in part and denied in part.

I.

BACKGROUND

Plaintiff is a former student of Defendant DeVry University (“DeVry”), a for-profit
university. At all times relevant to this matter, DeVry was owned and operated by
Defendant Adtalem Global Education, Inc. (“Adtalem”). Plaintiff states he enrolled at
DeVry because of Defendants’ marketing campaigns, which allegedly were false and
misleading, and included misrepresentations. He identifies two marketing campaigns.
First, Defendants claimed 90% of their students actively seeking employment
had careers in their fields of study within six months of graduation (“90% Placement
Claim”). Plaintiff contends the 90% Placement Claim included graduates who continued
employment with jobs they had prior to attending DeVry, included graduates who were
not employed in their chosen fields, and excluded graduates who were unsuccessful in
obtaining jobs after graduation. Second, Defendants represented DeVry graduates
obtained jobs with significantly higher incomes than graduates of other colleges or
universities (“Higher Income Claim”).

Plaintiff alleges he saw or heard Defendants’ 90% Placement Claim and Higher
Income Claim (collectively, “the Claims”) in television and radio advertisements, in
telephone calls with DeVry representatives, on DeVry’s website, in brochures, and
during in-person meetings in 2010. Based on the Claims made to him, Plaintiff enrolled
at DeVry and began taking classes in June 2010 in Kansas City, Missouri.
In January 2016, the Federal Trade Commission (“FTC”) filed a lawsuit against
DeVry alleging the Claims were false, deceptive, unfair, misleading, unsubstantiated,
and illegal. Doc. #1, at 8 n.6. At the same time, “DeVry received a Notice of Intent to
Limit from the Department of Education (“DOE”) Office of Federal Student Aid…,
informing DeVry of the DOE’s intention to impose certain limitations on DeVry because
of its statements regarding the post-graduation employment outcomes of DVU
students.” Id. According to Plaintiff the DOE concluded “DeVry could not provide
evidence to substantiate th[e] [90% Placement] claim.” Id. In March 2016, the
Department of Veterans Affairs (“VA”), in light of the FTC’s lawsuit, suspended DeVry
from participating in a program wherein it was identified as a school “doing a good job of
serving former troops.” Id. State attorneys general also launched investigations into
DeVry. Id. Although DeVry denied the allegations against it, it stipulated to the entry of
an order for permanent injunction and monetary judgment. Fed. Trade Comm’n. v.
DeVry Educ. Grp. Inc., No. 16-CV-579 (C.D. Cal. Dec. 15, 2016) (Doc. #97). Among
other things, DeVry agreed to pay $49,400,000.00 to the FTC, $30,351,019.00 “in
forgiveness of unpaid private student loans that DeVry issued directly to current or past
students,” and $20,248.981.00 “in forgiveness of debts from accounts receivable,
relating to debts of” DeVry students. Id. at 10-13.
After learning of the FTC’s allegations against DeVry, Plaintiff and three others
filed a complaint against Defendants in the United States District Court for the Northern
District of Illinois alleging claims under unfair competition, consumer fraud, and false
advertising statutes, and asserting claims based on contract and tort theories of relief.
Robinson v. DeVry Educ. Grp., Inc., No. 16 CV 7447, 2018 WL 828050, at *1 (N.D. Ill.
Feb. 12, 2018). The Northern District found Plaintiff, who resides in Missouri and took
DeVry classes in Missouri, could not bring a claim under the Illinois statutes. Id. at *2,
4. Because his claims did “not fall within the scope of the statute[s],” the Northern

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District dismissed Plaintiff’s claims. Id. The Northern District did not evaluate the merits
of Plaintiff’s fraud-based claims. Id.
Robinson is one of three cases asserting similar claims against Defendants in
which the Northern District has considered motions to dismiss. See also Polly v.
Adtalem Global Educ., Inc., No. 16 CV 9754, 2019 WL 587409 (N.D. Ill. Feb. 13, 2019);
Petrizzo v. DeVry Educ. Grp. Inc., No. 16 CV 9754, 2018 WL 827995 (N.D. Ill. Feb. 12,
2018). Petrizzo met the same demise as Robinson in that the Northern District found
the plaintiffs failed to “allege facts sufficient to show that [they] suffered actual,
measurable, non-speculative damages.” 2018 WL 827995, at *5-6. In Polly, the
Northern District concluded the plaintiffs sufficiently pleaded a cognizable theory of
damages but dismissed the complaint because the plaintiffs failed to specifically plead
their fraud claims. 2019 WL 587409, at *2-5.
On March 29, 2019, Plaintiff, individually and on behalf of others similarly
situated, filed a lawsuit against Defendants in this Court alleging fraudulent
misrepresentation, fraudulent concealment, violations of the Missouri Merchandising
Practices Act (“MMPA”), negligence, breach of fiduciary duty, conversion, and unjust
enrichment. Doc. #1.1 Defendants move to dismiss Plaintiff’s claims, arguing he fails to
state a claim upon which relief may be granted. Doc. #13.

II.

STANDARD

The liberal pleading standard created by the Federal Rules of Civil Procedure
requires Aa short and plain statement of the claim showing that the pleader is entitled to
relief.@ Erickson v. Pardus, 551 U.S. 89, 93 (2007) (per curiam) (quoting Fed. R. Civ. P.
8(a)(2)). ASpecific facts are not necessary; the statement need only >give the defendant
fair notice of what the…claim is and the grounds upon which it rests.=@ Id. (citing Bell
Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). The Court must accept the plaintiff’s
factual allegations as true “and view them in the light most favorable to the Plaintiff[ ].”
Stodghill v. Wellston Sch. Dist., 512 F.3d 472, 476 (8th Cir. 2008).

Count VIII of the Complaint is for “Declaratory Relief.” Doc. #1, at 36-37. Because
Count VIII seeks remedy related to Plaintiff’s claims and does not present a separate
cause of action, it is not discussed in this Order.
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To survive a motion to dismiss, a complaint must contain sufficient
factual matter, accepted as true, to state a claim to relief that is
plausible on its face. 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. The
plausibility standard is not akin to a probability requirement, but it asks
for more than a sheer possibility that a defendant has acted unlawfully.
Where a complaint pleads facts that are merely consistent with a
defendant’s liability, it stops short of the line between possibility and
plausibility of entitlement to relief.
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
When considering a motion to dismiss, the court “can choose to begin by
identifying pleadings that, because they are no more than conclusions, are not entitled
to the assumption of truth.” Id. at 679. “[L]egal conclusions can provide the framework”
for a claim, but the legal conclusions “must be supported by factual allegations.” Id.
When faced with “well-pleaded factual allegations, a court should assume their veracity
and then determine whether they plausibly give rise to an entitlement to relief.” Id.

III.

DISCUSSION
A.

Damages

The parties agree Plaintiff’s “damages cannot rest upon guesswork, conjecture,
or speculation beyond inferences that can reasonably decide the case.” McLean v.
Ponder, 418 S.W.3d 482, 496 (Mo. Ct. App. 2013) (citation and internal quotations
omitted); Doc. #14, at 15-17; Doc. #20, at 15-18. Defendants argue Plaintiff does not
adequately allege a cognizable theory of damages because his damages are too
speculative to support a claim.
Plaintiff maintains his alleged damages are not speculative and he has
sufficiently alleged a cognizable theory of damages. In his Complaint, Plaintiff contends
he paid DeVry more than $16,000 in tuition, plus interest, and paid for related
educational products, including books, supplies, and instruction on DeVry’s website.
Doc. #1, ¶ 63. He alleges the “prices for [Defendants’] products and services were
significantly higher than what he would have paid for other similar post-secondary
educational programs, but he believed they were worth it based on the 90% Placement
Claim and Higher Income Claim.” Id. “Had he known these claims were in fact false, he

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would have paid less for these products and services or would not have enrolled at all.”
Id. Plaintiff “suffered injury,” including “monetary loss in connection with borrowing
funds to enroll,” “incurring student loan debt,” and “paying education related costs” he
would not have otherwise purchased “absent DeVry’s false representations. Id. ¶¶ 83,
116; see also ¶¶ 89-91, 122, 135. Plaintiff claims he is “entitled to actual damages,
including but not limited to the difference in value between the DeVry products and
services as represented versus as delivered….” Id. ¶ 104. Finally, Plaintiff contends
Defendants were “enjoined from making the 90% Placement Claim as part of their
advertising” after the lawsuits filed by the regulatory bodies were resolved, and DeVry
correspondingly lowered tuition by as much as twenty percent for certain undergraduate
programs and began phasing out other programs. Id. ¶ 27.
Both parties discuss Plaintiffs’ alleged damages collectively as fraud-based
claims. For a fraud claim, “[t]he measure of damages…is the ‘benefit of the bargain
rule’ which allows the defrauded party to recover the difference between the property's
actual value and what its value would have been if it had been as represented.” Moore
v. Mo.-Neb. Express, Inc., 892 S.W.2d 696, 705-06 (Mo. Ct. App. 1994) (citation
omitted). But Plaintiff asserts claims other than fraud, and under those claims, his
recoverable damages differ.
For an MMPA claim, a plaintiff must show “he suffered an ascertainable loss of
money or property.” Pleasant v. Noble Fin. Corp., 54 F. Supp. 3d 1071, 1079 (W.D. Mo.
2014) (citing Mo. Rev. Stat. § 427.025.1). Compensatory and consequential damages
are recoverable in MMPA claims, and “where the benefit of the bargain rule is
inadequate, other measures of damages may be used.” Dierkes v. Blue Cross & Blue
Shield of Mo., 991 S.W.2d 662, 669 (Mo. banc 1999); see also Anderson v. Bass Pro
Outdoor World, LLC, 355 F. Supp. 3d 830, 840-41 (W.D. Mo. 2018) (stating “costs
incurred in reliance on the fraud may be recovered.”) (citations omitted). For a
conversion claim, the measure of damages “is the value of the property at the time and
place of conversion.” Commerce Bank, N.A. v. Tifton Aluminum Co., 217 B.R. 798, 801
(W.D. Mo. 1997) (citation omitted). For a negligence claim, a plaintiff has “a right to
recover actual damages” and may also recover “special damages” for the “natural, but
not necessary, result of the wrongful act.” Sharp v. Robberson, 495 S.W.2d 394, 399

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(Mo. banc 1973); Young v. Mercantile Tr. Co. Nat’l Ass’n, 552 S.W.2d 247, 250 (Mo. Ct.
App. 1977).
To support their positions, the parties rely on the Northern District’s prior DeVry
cases. Plaintiff relies on Polly, where the court noted DeVry’s twenty percent tuition
discount showed damages were “plausible.” Polly, 2019 WL 587409, at *4. The
Northern District found it was “reasonable to infer from the tuition decrease that DeVry’s
allegedly inflated employment-rate representations caused tuition price to be higher
than it otherwise would have been, meaning it is plausible that plaintiffs suffered actual
damage in some amount.” Id. Defendants rely on Robinson, where the Northern
District concluded an “allegation that [he] would not have purchased an education from
DeVry but for the misrepresentations contains an implicit and too speculative notion of
educational value based on employment prospects.” 2018 WL 828050 at *1. The
Northern District also found there was “no allegation that the quality of the education
received was measurably deficient, other than by virtue of post-graduation employment
prospects.” Id.
Similar to Polly, Plaintiff’s damages are not based on the “true value” of his
degree or potentially “adverse employment outcomes.” Instead, his damages are
based, at least in part, on the difference in tuition he paid in reliance on the
misrepresentation versus what he would have paid without it. This is a cognizable
damages theory. See Polly, 2019 WL 587409, at *3 (finding, “at this stage, the tuition
decrease lends plausibility to plaintiffs’ individual allegations that they were damaged.”);
see also Kelly v. Cape Cod Potato Chip Co., 81 F. Supp. 3d 754, 758-59 (W.D. Mo.
2015) (finding the plaintiff “need only allege the actual value of the product as
purchased was less than the value of the product as represented to state a claim for an
ascertainable loss.”). Plaintiff also sufficiently pleads facts demonstrating he suffered
an ascertainable loss of property, he did not receive the benefit for which he bargained,
and he incurred costs when relying on the alleged fraud. Whether Plaintiff can present
evidence to establish the amount of his damages is for a later time and is not examined
at the motion to dismiss stage. Based upon Plaintiff’s allegations, which the Court must
view as true and view in the light most favorable to Plaintiff, the Court finds Plaintiff
alleges sufficient facts to state a cognizable theory of damages.

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B.

Fraud-Based Claims
(1)

Particularity

Defendants move to dismiss all fraud-based claims, arguing Plaintiff fails to
satisfy the particularity requirements of Federal Rule of Civil Procedure 9(b). Rule 9(b)
of the Federal Rules of Civil Procedure requires “the circumstances constituting fraud. .
. shall be stated with particularity.” Fed. R. Civ. P. 9(b). One of the “main purposes” of
Rule 9(b) is “to facilitate a defendant’s ability to respond and to prepare a defense to
charges of fraud.” Commercial Prop. Invs., Inc. v. Quality Inns Int’l, Inc., 61 F.3d 639,
644 (8th Cir. 1995) (citation omitted). The Eighth Circuit has held the requirements of
Rule 9(b) must be interpreted “in harmony with the principles of notice pleading.” Abels
v. Farmers Commodities Corp., 259 F.3d 910, 920 (8th Cir. 2001).
The special nature of fraud does not necessitate anything other than
notice of the claim; it simply necessitates a higher degree of notice,
enabling the defendant to respond specifically, at an early stage of the
case, to potentially damaging allegations of immoral and criminal conduct.
Thus, a plaintiff must specifically allege the circumstances constituting
fraud, . . . including such matters as the time, place and contents of false
representations, as well as the identity of the person making the
misrepresentation and what was obtained or given up thereby.
Id. (quotations and citations omitted). “In other words, Rule 9(b) requires plaintiffs to
plead the who, what, when, where, and how: the first paragraph of any newspaper
story.” Summerhill v. Terminix, Inc., 637 F.3d 877, 880 (8th Cir. 2011).
The parties seem to agree Plaintiff’s claims for fraudulent misrepresentation,
fraudulent concealment, and negligence claims must meet Rule 9(b)’s particularity
requirement because they are based on alleged fraud. Streambend Prop. II, LLC v. Ivy
Tower Minneapolis, LLC, 781 F.3d 1003, 1010 (8th Cir. 2015) (citation omitted).2
The parties discussed Plaintiff’s unjust enrichment claim along with the fraud-based
claims and separate therefrom. The Court addresses the unjust enrichment claim
separately. See infra, section III(E). In addition, the Court notes there is some
disagreement among the judges in this Court as to whether Rule 9(b) applies to MMPA
claims. Claxton v. Kum & Go, L.C., No. 6:14-CV-03385-MDH, 2014 WL 6685816, at *7
(W.D. Mo. Nov. 26, 2014) (citations omitted). The Missouri Court of Appeals concluded
“a claim alleging violations of the MMPA does not necessarily need to be stated with the
same particularity as a claim of common law fraud or mistake.” Ullrich v. CADCO, Inc.,
244 S.W.3d 772, 777 (Mo. Ct. App. 2008). The MMPA supplements the definition of
2

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Defendants argue these claims should be dismissed because Plaintiff fails to sufficiently
identify which misrepresentations were made to him. Plaintiff alleges that, in or around
the second quarter of 2010, he spoke on the phone with Dale Masteas and Chris
Dunlap. Doc. #1, ¶ 59. They told him the 90% Placement Claim and the Higher Income
Claim (as defined supra and in the Complaint), and “assured him not to worry about the
higher cost of the DeVry’s education program because – as evidenced by the 90%
Placement and Higher Income Claims – it was superior to an education from Centric
and would be all covered by grants.” Id. Plaintiff asserts that on or about May 21, 2010,
he met with “Admissions Advisor Chris Dunlap” in person. Id. ¶ 60. During their
meeting, Dunlap gave a computer presentation “that reiterated the 90% Placement and
Higher Income Claims.” Id. Plaintiff alleges that between May 2010 and October 2010,
he “met in person with Dale Masteas and other DeVry representatives who repeated the
90% Placement Claim and Higher Income Claims through verbal representations and
written brochures.” Id. Plaintiff further alleges Dunlap and Masteas told him “DeVry
graduates were in demand from large technology employers who hired DeVry’s
graduates and supported DeVry’s student programs.” Id. Plaintiff claims Dunlap told
him “employers hired DeVry graduates before and above graduates from other
schools.” Id. According to Plaintiff, Masteas also told him that “although Defendants’
tuition is considerably higher than other post-secondary institutions…it would be of
greater value and therefore superior to any other education [Plaintiff] might be
considering.” Id. ¶ 61. Plaintiff alleges Masteas informed him that upon completing
DeVry’s two-year Network Systems Administration degree program, Plaintiff “could
make at least $120,000 per year.” Id.
Plaintiff sufficiently alleges the content of the representations he heard, who
made the representations, where and how the representations were made, and the
approximate dates on which the representations were made. Plaintiff’s allegations put
Defendants on notice of the specific misconduct alleged against them. Summerhill, 637
common law fraud, eliminating the need to prove an intent to defraud or reliance.” Id. at
777-78 (citation omitted). But the Court need not decide whether Rule 9(b) applies to
Plaintiff’s MMPA claim because Plaintiff’s Complaint satisfies the heightened pleading
standard.

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F.3d at 880; Abels, 259 F.3d at 920. Accordingly, the Court finds Plaintiff sufficiently
alleges Defendants’ misrepresentations with the requisite particularity.

(2)

Falsity

Defendants move to dismiss all fraud-based claims, arguing Plaintiff has not
sufficiently alleged falsity. Defendants argue Plaintiff’s “conclusory allegations” are
based “entirely on ‘information and belief,’” and are insufficient to meet Rule 9(b)’s
pleading standard. Doc. #14, at 13. Plaintiff argues he sufficiently alleged facts
showing Defendants’ representations were false, particularly in light of the fact that the
data and information establishing the falsity of the representations is exclusively in
Defendants’ control.
Although Defendants argue Plaintiff’s allegation that Defendants’ representations
were false is based entirely on information and belief, the Court notes Plaintiff uses the
phrase “information and belief” once in his Complaint. In the introductory paragraph,
Plaintiff informs the Court that his allegations are “based upon personal knowledge as to
himself and his own acts, and on information and belief as to all other matters….” Doc.
#1, at 1. Contrary to Defendants’ argument, Plaintiff’s allegations about the falsity of
Defendants’ representations are not stated with the caveat that they are based on
“information and belief.”
Plaintiff’s allegations, which the Court must accept as true, contain sufficient facts
showing the representations made by DeVry were false. Plaintiff alleges:
Defendants’ representations are false and misleading, because, without
limitation: (a) the actual percentage of DeVry graduates who, at or near
the time they graduated, found jobs that could be reasonably considered
“in their field” is in fact significantly and materially smaller than 90%; and
(b) Defendants’ own statistics showed that graduates of DeVry did not
have any higher income than graduates from other schools and that such
claim was false, misleading, deceptive and incomplete.
Doc. #1, ¶ 78. Plaintiff also contends, “Defendants continued to conceal the defective
nature of their product and services even after Class Members began to complain
about, and report the problems with, Defendants’ products and services.” Id. ¶ 88.
Moreover, Plaintiff claims:

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Defendants engaged in deceptive and unfair acts in connection with its
marketing, promoting, advertising, and selling DeVry’s products and
services, including by representing that: (a) as a result of obtaining a
DeVry degree, 90% of DeVry graduates from a specific year who were
actively seeking employment landed or obtained new jobs in their field of
study within six months of graduation; (b) after graduation the average or
median earnings of DeVry graduates is higher than the average or median
earnings of graduates from all other colleges and universities; and (c)
DeVry’s bachelor’s degree graduates specifically earn up to 15% more
than graduates from other colleges and universities. Each of these
representations are false and/or misleading and constitute a deceptive act
or practice in violation of the MMPA.
Id. ¶ 99. And Plaintiff asserts, “Defendants willfully and intentionally failed to disclose
one or more important and material facts that were only known to them and that Plaintiff
and the Class Members could not have discovered.” Id.3
These facts are sufficient to plausibly allege how Defendants executed the
alleged fraud. See Lemery v. Duroso, No. 4:09-CV-00167-JCH, 2009 WL 1176269, at
*4 (E.D. Mo. Apr. 30, 2009). Plaintiff has made the most diligent pre-complaint inquiry
within his power and stated enough facts to raise a reasonable expectation that
discovery will reveal additional evidence of falsity. See Pension Tr. Fund for Op. Eng’rs
v. DeVry Educ. Grp., Inc., No. 16-CV-5198, 2017 WL 6039926, at *9 (N.D. Ill. Dec. 6,
2017) (citations omitted) (fraud allegations related to 90% Placement and Higher
Income Claims met Rule 9(b)’s pleading requirements). Plaintiff’s allegations not only
show the factual basis of his claims but also provide Defendants with adequate notice
as to the reasons for Plaintiff believing the representations are false. Accordingly, the
Court finds Plaintiff sufficiently alleges falsity. Therefore, Defendants’ motion to dismiss
Plaintiff’s fraud-based claims is denied.

C.

Breach of Fiduciary Duty Claim

Defendants argues Plaintiff fails to set forth sufficient facts to allege a breach of
fiduciary duty. Defendants contend the relationship between a school and a student is a
contractual one, not that of a fiduciary. Plaintiff argues DeVry affirmatively accepted

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In addition to the allegations the Court has mentioned, Plaintiff sets forth other
allegations to demonstrate falsity. See Doc. #1, ¶¶ 76-79, 87-89, 99-100, 102.
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fiduciary obligations and held itself out as a fiduciary to students. According to Plaintiff,
DeVry stated in regulatory filings that it is obligated to act as a fiduciary for the funds it
administers as part of financial aid programs. Defendants argue this admission of
fiduciary obligation is not owed to the student but to the Department of Education.
To establish a claim for breach of fiduciary duty, a plaintiff must show (1) the
existence of a fiduciary duty, (2) a breach of that duty, (3) causation, and (4) damage.
See Preferred Physicians Mut. Mgmt. Grp. v. Preferred Physicians Mut. Risk Retention,
918 S.W.2d 805, 810 (Mo. Ct. App. 1996). The mere existence of a contractual or
business relationship does not create a fiduciary relationship or the presumption of such
a relationship. Chmieleski v. City Prods. Corp., 660 S.W.2d 275, 294 (Mo. Ct. App.
1983) (citing Sewell v. Ladd, 158 S.W .2d 752, 757 (Mo. Ct. App. 1942)). Missouri
applies a five-factor test to determine whether there is a fiduciary relationship. Id.
(1) as between the parties, one must be subservient to the dominant mind
and will of the other as a result of age, state of health, illiteracy, mental
disability, or ignorance; (2) things of value such as land, monies, a
business, or other things of value which are the property of the
subservient person must be possessed or managed by the dominant
party; (3) there must be a surrender of independence by the subservient
party to the dominant party; (4) there must be an automatic or habitual
manipulation of the actions of the subservient party by the dominant party;
and (5) there must be a showing that the subservient party places a trust
and confidence in the dominant party.
Id.
Plaintiff alleges Defendants breached their fiduciary duties by failing to review,
interpret, establish procedures for, and comply with regulations and the standard of care
and diligence of a fiduciary in arranging, administering, and handling Plaintiff’s student
loans and financial assistance. Doc. #1, ¶¶ 120-122. Plaintiff’s allegation that
Defendants “owed [him]…a fiduciary duty” is merely a legal conclusion. Id. Pleading a
conclusion is insufficient to survive a motion to dismiss. See Twombly, 550 U.S. at 555
(finding “factual allegations must be enough to raise a right to relief above the
speculative level.”) (citation omitted). Plaintiff does not plead sufficient facts to state a
plausible claim for breach of fiduciary duty. Revealingly, Plaintiff fails to plead sufficient
facts that would allow the Court to infer Plaintiff can plausibly meet the first element of a

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claim for breach of fiduciary duty, i.e., a fiduciary duty existed. Thus, Defendants’
motion to dismiss Plaintiff’s breach of fiduciary duty claim is granted.

D.

Conversion Claim

Defendants argue Plaintiff’s conversion claim should be dismissed because he
does not allege he involuntarily paid tuition to DeVry. Plaintiff argues Defendants’
fraudulent conduct, which resulted in conversion of his loans, precludes a finding that he
“voluntarily” gave them his funds.
“Conversion may be proved in one of three ways: (1) by tortious taking; (2) by
any use or appropriation to the use of the person in possession, indicating a claim of
right in opposition to the rights of the owner; or (3) by a refusal to give up possession to
the owner on demand.” Aldridge v. Francis, 503 S.W.3d 314, 317 (Mo. Ct. App. 2016)
(citation and internal quotations omitted). When a claim involves money, conversion is
not a proper theory. Gadberry v. Bird, 191 S.W.3d 673, 675 (Mo. Ct. App. 2006)
(citation omitted). “Money represented by a general or ordinary debt is not subject to a
claim for conversion.” Id. (citation omitted). Generally, “a claim for money may not be
in conversion because conversion lies only for a specific chattel which has been
wrongfully converted.” Id. (citation omitted). Nevertheless, “misappropriated funds
placed in the custody of another for a definite purpose may be subject to a suit for
conversion, when the plaintiff delivers funds to the defendant for a specific purpose, and
the defendant diverts those funds to another, different purpose.” Id. (citations
omitted).
Plaintiff alleges he was the lawful owner of student loan proceeds, and he paid
those proceeds to Defendants. Doc. #1, ¶ 126. He claims Defendants “interfered with
and subverted [his]…ownership interest in, or right to possess such student loan
proceeds.” Id. ¶ 127. Plaintiff contends he paid more than $16,000 for tuition. Id. ¶ 63.
While Plaintiff alleges Defendants “misappropriated” his student loan proceeds, he does
not allege Defendants “diverted” his student loan proceeds for “another, different
purpose.” Instead, his allegations demonstrate Defendants utilized the student loan
proceeds for the intended purpose – to wit, tuition, albeit at an allegedly “significantly
higher” price. Id. The Court finds Plaintiff has not sufficiently alleged a plausible claim

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of conversion. Accordingly, Defendant’s motion to dismiss Plaintiff’s conversion claim is
granted.

E.

Unjust Enrichment Claim

The extent of the parties’ arguments regarding Plaintiff’s unjust enrichment claim
is as follows. Defendants argue Plaintiff’s unjust enrichment claim fails because it is
derivative of his other claims, which, as discussed supra, they believe fail. Plaintiff
argues his unjust enrichment claim does not fail because his other claims survive.
Based on these arguments, Defendants’ motion fails because the Court concludes
Plaintiff has sufficiently alleged his fraud-based claims. Accordingly, Defendants’
motion to dismiss Plaintiff’s unjust enrichment claim is denied.

F.

Claims Against Adtalem

Defendants also argue Plaintiff failed to allege any actionable conduct by
Adtalem that rises beyond “threadbare recitals” and “conclusory statements.” Doc. #14,
at 14. Plaintiff alleges DeVry and Adtalem “jointly operated the for-profit school, DeVry
University.” Doc. #1, ¶¶ 1, 16. He also contends Adtalem “acting alone or in concert
with others,…has advertised, marketed, distributed, or sold educational products and
services to consumers and students.” Id. ¶ 12. Additionally, he claims that “with
respect to the acts and practices of [DeVry]” set forth in the Complaint, Adtalem “(a)
dominated or controlled” DeVry’s “acts and practices,” (b) “knew and approved” of
DeVry’s acts and practices, and (c) “benefitted from” DeVry’s acts and practices.” Id.
Plaintiff alleges “each and every Defendant was acting in concert with, and/or was an
agent and/or employee of each and every Defendant,” “each and every Defendants was
acting within the course and scope of a common enterprise,” each Defendant “was
acting with the consent and authorization of” the other Defendant, and the “actions of
each Defendant as alleged…were ratified and approved by every other Defendant
and/or its officers or managing agents.” Id. ¶ 14. Further, as explained in the
Complaint’s introductory paragraph, Plaintiff referred to DeVry and Adtalem collectively
as “Defendants” in his Complaint. Id. at 1. The Complaint sets forth the alleged

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misrepresentations “Defendants” made. Id. ¶¶ 1, 4, 14, 24-26, 28-40, 42, 46, 61, 76-79,
85-88, 98-103, 107-13, 132-33.
Contrary to Defendants’ argument, Plaintiff has not alleged “threadbare recitals”
and “conclusory statements.” Plaintiff’s allegations, which the Court must accept as
true, contain sufficient factual matters to state plausible claims against Adtalem.
Accordingly, the Court denies Defendants’ motion to dismiss Plaintiff’s claims against
Adtalem.

IV.

CONCLUSION

For all the foregoing reasons, Defendants’ motion to dismiss is granted with
regard to Plaintiff’s claims for breach of fiduciary duty and conversion and denied in all
other respects.
IT IS SO ORDERED.
/s/ Ortrie D. Smith
ORTRIE D. SMITH, SENIOR JUDGE
UNITED STATES DISTRICT COURT

DATE: October 9, 2019

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