Spencer et al v. Vatterott Educational Centers, Inc. et al

Filing 41

OPINION AND ORDER by Magistrate Judge Kimberly E. West : denying 28 Motion to Dismiss. ; granting in part and denying in part 9 Motion to Dismiss. Pltf required to file Amended Complaint by 4/12/13. (neh, Deputy Clerk)

IN THE UNITED STATES DISTRICT COURT FOR THE
EASTERN DISTRICT OF OKLAHOMA

JOHNNY SPENCER; DONNIE HALL;
MICHAEL CHAMBERS; and
ERIC WOODS, individually and
on behalf of all others
similarly situated,

)

)
)
)

)
)
)
)

Plaintiffs,

v.

Case No. CIV-12-116-KEW

)
)

VATTEROTT EDUCATIONAL
CENTERS, INC., a foreign for
profit business corporation;
and STEPHANIE SANDERS,
an individual,

)
)
)

)
)
)

Defendants.

)

OPINION AND ORDER

This matter comes before the Court on Defendant Vatterott
Educational Centers, Inc.'s Motion to Dismiss (Docket Entry #9) and
the Motion to Dismiss filed by Defendant Stephanie Sanders (Docket
Entry #28) .

Plaintiffs 1 initiated this action on September 30,

2011 in the District Court in and for Wagoner County,

Oklahoma

whereupon it was removed to this Court on March 13, 2012.
Plaintiffs allege in this proposed class action that Defendant
Vatterott Educational Centers, Inc.

("Vatterott"} operates a for-

profit trade and technical school with a campus located in Tulsa,
Oklahoma.
the

Plaintiffs were students at the campus between 2009 and

summer

Mechanic

of

2011,

Diploma,

enrolled

Heating

1

Air

in

the

programs

Conditioning

and

for

Electrical

Refrigeration

1
By the Stipulation of Dismissal entered February 17 1 2013 1
Plaintiffs Donnie Hall and Eric Woods dismissed their claims against
Defendants without prejudice to refiling.

Mechanic

Diploma,

Technology

Associate

and Associate

of

of

Occupational

Occupational

Studies-Electrical

Studies-Heating,

Air

Conditioning and Refrigeration Technology.
Plaintiffs allege they were advised that these programs could
be attended in either day or night classes.
that

they

were

("Sanders")

and

industries
friendly"

advised

for
-

other
which

that is,

by

both

Defendant

representatives
training was

Plaintiffs also state

of

being

Stephanie
Vatterott

Sanders
that

offered were

the

"felony

prior felony convictions would not hinder

Plaintiffs' ability to become employed after graduation from the
program.
Plaintiffs contend instructors would show up for class several
hours after it was scheduled to begin or would cancel the classes
altogether

and

that

the

missed classes

were

not

rescheduled.

Plaintiffs claim that as a result of these missed classes, they did
not

receive

instruction.

the

full

amount

of

contracted

for

educational

Therefore 1 they could not complete the program with

the knowledge expected and required of workers in their chosen
trade in order to secure employment.
Additionally, Plaintiffs assert in this action that the night
class program was terminated.
putative

class

members

from

This, they allege, prevented some
completing

the

hours

required

to

complete the program.
As class representatives/ Plaintiffs seek certification of two

2

separate classes, identified as follows:
First Class:
All citizens of the State of Oklahoma
enrolled at the Tulsa campus of Defendant Vatterott in
the
Electrical
Mechanic
Diploma 1
Heating,
Air
Conditioning
and
Refrigeration
Mechanic
Diploma/
Associate of Occupational Studies-Electrical Technology
and Associate of Occupational Studies-Heating 1 Air
Conditioning and Refrigeration Technology programs from
July 2006 until July 2011.
Second Class: All citizens of the State of Oklahoma who
are and/or were enrolled at any time at the Tulsa campus
of Defendant Vatterott 1 subsequent to being convicted of
a criminal felony, in the Electrical Mechanic Diploma,
Heating, Air Conditioning and Refrigeration Mechanic
Diploma, Associate of Occupational Studies-Electrical
Technology and Associate of Occupational Studies-Heating,
Air Conditioning and Refrigeration Technology programs
who were informed prior to enrollment that said programs
were "felony friendly'1 and that the fact said enrollees
had a prior felony conviction(s) would not impact said
enrollees (sic) potential of obtaining employment.
1

Plaintiffs state their first cause of action as Fraud 1 as to
both Sanders and Vatterott.

In this regard,

Defendants made representations that
friendly"
their

the programs were

and that prior criminal convictions would not

ability

Plaintiffs

Plaintiff assert

to

obtain

employment

in

their

chosen

"felony
impair
field.

contend they relied upon these statements to their

detriment when Defendants knew the representations were false.
· Plaintiffs' second stated claim is for Breach of Contract, as
against Vatterott only.

Plaintiffs contend Vatterott "agreed to

provide certain education, training and instruction in the fields
set forth herein and agreed to adequately prepare Plaintiffs and
all potential class members for employment positions in said fields
and actually place Plaintiffs and potential class members in their
3

first position of employment in said fields upon completion of the
respective program."
In compensation for these claims as alleged, Plaintiffs seek
both actual and punitive damages.
Through the pending Motions, Vatterott alleges Plaintiffs have
failed to plead the required factual allegations to establish the
necessary elements to a breach of contract action as required by
Fed.

R.

Civ.

P.

8{a).

It also contends the breach of contract

claim is barred by the educational malpractice doctrine.

Vatterott

seeks the dismissal of the breach of contract claim under the
authority of Fed. R. Ci v. P. 12 (b) ( 6) .

Both Defendants also assert

that Plaintiffs have not pled their claim for fraud with sufficient
particularity as required by Fed. R. Civ. P. 9{b).
Vatterott first contends Plaintiffs' claims fail to meet the
plausibility standard enunciated in United States Supreme Court
cases of Bell Atlantic Corp. v. Twombly, 550 U.S. 544

(2007) and

Ashcroft v. Iqbal, 556 U.S. 662 (2009).
Clearly, Bell Atlantic changed the legal analysis applicable
to dismissal motions filed under Fed. R. Civ. P. 12{b) {6), creating
a "refined standard
671

F. 3d 1188,

11

1191

on such motions.
(lOth Cir.

Khalik v. United Airlines,

2012) (citation omitted).

Atlantic stands for the summarized proposition that "[t]o survive
a motion to dismiss, a complaint must contain sufficient factual
matter,

accepted as true,

to

'state a claim for relief that is

4

plausible on its face.'''

Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949

(2009) quoting Bell Atlantic, 550 U.S. at 570.

The Supreme Court

did not parse words when it stated in relation to the previous
standard that ua complaint should not be dismissed for failure to
state a claim unless it appears beyond doubt that the plaintiff can
prove no set of facts in support of his claim which would entitle
him to relief 11 is ubest forgotten as an incomplete, negative gloss
on an accepted pleading standard. 11

Bell Atlantic,

550 U.S. at

546.
The Tenth Circuit has interpreted the plausibility standard as
referring uto the scope of the allegations in the complaint:

if

they are so general that they encompass a wide swath of conduct,
much of it innocent,

then the plaintiffs 'have not nudged their

claims across the line from conceivable to plausible.'"
Oklahoma, 519 F.3d 1242, 1247 (lOth Cir. 2008).

Robbins v.

The Bell Atlantic

case, however, did not intend the end of the more lenient pleading
requirements of Fed. R. Civ. P. 8(a) (2).

Khalik, 671 F.3d at 1191.

Rather, in Khalik, the Tenth Circuit recognized the United States
Supreme Court's continued endorsement of Rule 8's "short and plain
statement 11 requirement in the case of Erickson v. Pardus, 551 U.S.
89 (2007) wherein the Supreme Court found "[s] pecific facts are not
necessary; the statement need only 'give the defendant fair notice
of what the
Id.

at 93.

. claim is and the grounds upon which it rests.'

11

It is against this backdrop that the sufficiency of

5

Plaintiffs' original Petition is evaluated.
Vatterott contends Plaintiffs' breach of contract claim fails
because the

Petition does not

(1)

set forth the terms of the

contract; (2) the form of the contracti (3) the consideration given
in exchange for performance; and {4) facts sufficient to establish
whether Plaintiffs completed their obligations under the contract.
Oklahoma

law

which

governs

this

action

based,

in

part,

in

diversity, requires three elements for breach of contract:

(1) the

formation of a

actual

contract;

(2)

a

breach thereof;

damages suffered from that breach.

and

(3)

Digital Design Group, Inc. v.

Information Builders, Inc., 24 P.3d 834

1

843 {Okla. 2001).

While Plaintiffs refer in the Petition to an "agreement,n they
do

not

set

manifested.

forth

the

nature

of

the

agreement

or

how

it

is

In their response to the Motion 1 Plaintiffs state that

the "agreement" arises from an enrollment contract.

Indeed, it has

generally been found that is held generally "in the United States
that the

'basic legal relation between a student and a private

university or college is contractual in nature.
bulletins/

circulars/

and

regulations

of

the

The catalogues,
institution made

available to the matriculant become a part of the contract. n Ross
1

v. Creighton University, 957 F.2d 410

1

416 (7th Cir. 1992) quoting

Zumbrun v. University of Southern California 1 101 Cal.Rptr. 499,
504

(1972). Unfortunately,

within the Petition.

this representation is not contained

On the second element, Plaintiffs adequately

6

set forth how they allege Vatterott breached any such

"agreement.~~

They have also alleged with sufficient clarity the facts upon which
Certainly,

they assert actual damages.

the Petition meets the

plausibility standard under Twombly and Iqbal.
will

be

required

to

amend

to

set

forth

However, Plaintiffs
sufficient

facts

to

establish the formation of a contract.
More troubling is the legal sufficiency of the contract claim
under the educational malpractice doctrine.

The recognition of

this

Bishop v.

doctrine

is

a

matter

of

state

law.

Indiana

Technical Vocational College, 742 F.Supp. 524, 525 (N.D.Ind. 1990).
The parties have not cited and this Court has been unable to find
any Oklahoma state case law which discusses this doctrine.
Court

must

conclude,

overwhelming

number

however,
of

that

Oklahoma

jurisdictions

which

would
has

This

join

the

rejected

the

doctrine as a cognizable legal claim.
When

a

breach

of

contract

claim

is

asserted

against

an

educational institution such as Vatterott in this case, care must
be

taken

to

insure

that

the

contract

claim

repackaged educational malpractice claim.
As

the

Ross

court

stated,

"[t] o

is

not

simply a

Ross, 457 F.2d at 416.

state a

claim for

breach of

contract/ the plaintiff must do more than simply allege that the
education was
identifiable
honor.

11

not

good enough.

contractual

Instead,

promise that

Id. at 416-17.

7

the

he

must

point

defendant

to an

failed

to

When

Plaintiffs

contend

that

they

could

not

obtain

the

employment that they believed they would as a result of the breach
of the agreement with Vat terot t

they are dangerously close to

1

asserting a tort claim for educational malpractice.

A similar case

is found in Jamieson v. Vatterott Educational Center,
F.Supp. 2d 1153 (D. Kan. 2007).

Inc.,

473

The Court in Jamieson agreed that

an enrollment contract can give rise to a claim for breach of
contract where it is alleged that the number of hours or weeks of
instruction was not provided by the institution in violation of the
contract.

Id.

at

1160.

However,

it

rejected the

idea that

recovery for breach of contract can be premised upon the inability
to obtain suitable employment as a result of an inadequate or poor
education.

Id.

at

1161.

As

the

Court

recognized

from

the

excellent discussion in the case of Finstad v. Washburn Univ. of
Topeka{

845 P.2d 685

collaborative

process,

(Kan.

1993),

requiring

"[e]ducation is an intensely
interaction

teacher. A good student can learn from a

of

student

poor teacher;

with

a poor

student can close his mind to a good teacher. Without effort by a
student,

he cannot be educated .

. Both the process and the

result are subjective, and proof or disproof extremely difficult.
Id.

at 692.

11

To the extent Plaintiffs allege that they did not

receive the contracted upon educational services from Vatterott,
they have adequately stated a claim for breach of contract, subject
to the amendment which this Court has already required.

8

However,

to the extent they contend that they could not obtain employment
based upon the breach or that the ultimate education they received
was generally inadequate/ the claim is not permitted.
With regard to the fraud claim against them, both Defendants
contend Plaintiffs have failed to plead with particularity as to
(1)

the identity of the "other representativeS 11 of Vatterott 1 apart

from

Sanders,

fraudulent

who

according

representations

to
to

the

Petition

them;

{2)

allegedly

when

the

made

alleged

representations were made; {3) where the statements were made; (4)
how the representations were false;

and

(5)

how Plaintiffs were

damaged by the allegedly fraudulent representations.
Dismissal pursuant to Fed.

R.

Civ.

P.

9(b)

for failure to

plead fraud with particularity is considered from a review of the
text of the Complaint/ accepting as true all well-pleaded facts as
distinguished from conclusory allegations.

United States ex rel.

Sikkenga v. Regence Bluecross Blueshield of Utah
(lOth Cir. 2006).

1

472 F.3d 702, 726

The facts are viewed in the light most favorable

to the non-moving party.

Id.

"At a minimum, Rule 9(b) requires

that a plaintiff set forth the 'who, what, when

1

where and how' of

the alleged fraud/ and [they] must set forth the time, place, and
contents of the false representation 1

the identity of the party

making the false statements and the consequences thereof.
726-27 (quotations omitted) .

9

11

Id. at

Plaintiffs must specifically set forth the identity of the
parties making the allegedly fraudulent
identified Sanders

but

must

statements.

identify all

representations upon which they relied.

They have

other persons

making

The statements concerning

the course of education being "felony friendly// must be set forth
for each individual named Plaintiff in context of when it was said,
to

whom

it

was

stated,

where

it

was

said,

the

specific

representation made, and how each individual Plaintiff was damaged
as a result of the representations made to them.

Plaintiffs will

be given a single opportunity to amend to plead with the required
particularity.
IT IS THEREFORE ORDERED that Defendant Vatterott Educational
Centers,

Inc. 's Motion to Dismiss

(Docket Entry #9)

is hereby

GRANTED, in part, in that to the extent that Plaintiffs' breach of
contract claim seeks recovery for anything other than the failure
to deliver the contractually promised hours of instruction,
claim is DISMISSED WITH PREJUDICE.

the

The remainder of the Motion is

DENIED.
IT IS FURTHER ORDERED that the Motion to Dismiss filed by
Defendant Stephanie Sanders (Docket Entry #28) is hereby DENIED.
IT IS FURTHER ORDERED that Plaintiffs will be required to file
an Amended Complaint providing further specific factual basis for
the breach of contract and fraud claims as described herein by
APRIL 12, 2013.

10

IT IS SO ORDERED

this~ day

of March, 2013.

JUDGE

11