Pension Trust Fund For Operating Engineers v. DeVry Education Group, Inc. et al

Northern District of Illinois, ilnd-1:2016-cv-05198

Exhibit I

Interested in this case?

Current View

Full Text

Case: 1:16-cv-05198 Document #: 93-9 Filed: 03/30/18 Page 1 of 33 PageID #:1684 EXHIBIT I CaseCase: 2:16-cv-00579-MWF-SS 1:16-cv-05198 Document #: 93-926 Document Filed: 03/30/18 Filed Page 04/04/16 2 of133 Page ofPageID 32 Page#:1685#:214 ID #:2 4 1 CHRISTINA CHRISTINA V. V. TUSAN TUSAN 2 2 Cal Bar. No. Cal Bar. No. 192203; 192203; ctusan@ftc.gov ctusan@ftc.gov JOHN JOHN D.D. JACOBS JACOBS 33 Cal. Bar No. Cal. Bar No. 134154; 134154; jjacobs@ftc.gov jjacobs@ftc.gov THOMAS J. THOMAS J. SYTA SYTA 4 4 Cal. Bar No. Cal. Bar No. 116286; 116286; tsyta@ftc.gov tsyta@ftc.gov BARBARA CHUN BARBARA CHUN 55 Cal. Bar No. Cal. Bar No. 186907; 186907; bchun@ftc.gov bchun@ftc.gov 6 6 FAYE CHEN FAYE BARNOUW CHEN BARNOUW Cal. Bar No. Cal. Bar No. 168631; 168631; fbarnouw@ftc.gov fbarnouw@ftc.gov 7 7 FEDERAL TRADE FEDERAL TRADE COMMISSION COMMISSION 10877 Wilshire 10877 Wilshire Blvd., Blvd., Suite Suite 700 700 88 Los Angeles, CA Los Angeles, CA 90024 90024 Tel: (310) Tel: (310) 824-4343; 824-4343; Fax: Fax: (310) (310) 824-4380 824-4380 99 10 YAN FANG YAN FANG 10 Cal Bar No. Cal Bar No. 279737; 279737; yfang@ftc.gov yfang@ftc.gov 11 11 SARAH SARAH E.E. SCHROEDER SCHROEDER Cal Bar No. Cal Bar No. 221528; 221528; sschroeder@ftc.gov sschroeder@ftc.gov 12 12 FEDERAL TRADE FEDERAL TRADE COMMISSION COMMISSION 901 Market St., 901 Market St., Suite Suite 570 570 13 13 San Francisco, CA San Francisco, CA 94103 94103 14 14 Attorneys for Attorneys Plaintiff for Plaintiff 15 15 FEDERAL TRADE FEDERAL TRADE COMMISSION COMMISSION 16 16) Case No. 2:16-cv-00579-MWF-SSx Case No. 2:16-cv-00579-MWF-SSx 17 17 FEDERAL TRADE FEDERAL TRADE COMMISSION, COMMISSION,) 18 18 Plaintiff, Plaintiff,) PLAINTIFF FTC'S PLAINTIFF FTC'S OPPOSITION OPPOSITION TO TO v.) DEFENDANTS' MOTION DEFENDANTS' MOTION TO TO 19 19 v.) DISMISS COMPLAINT DISMISS COMPLAINT 20 20 DEVRY EDUCATION DEVRY EDUCATION GROUPGROUP) INC., formerly INC., known as formerly known as DeVry DeVry Inc., Inc.,) Date: Date: May 2, May 2, 2016 2016 21 21 aa corporation, corporation, et al., et al.,) Time: Time: 10:00 a.m. 10:00 a.m. 22 22) JJudge: udge: Michael W. Michael W. Fitzgerald Fitzgerald Defendants. Defendants.) 23 23) 24 24 25 25 26 26 27 27 28 28 Case aseCase: 2:16-cv-00579-MWF-SS 1:16-cv-05198 Document #: 93-926 Document Filed: 03/30/18 Filed Page 04/04/16 3 of233 Page ofPageID 32 Page#:1686#:215 ID #:2 5 1 1 TABLE TABLE OF CONTENTS OF CONTENTS 2 2 I. I. INT R ODUCTION ............................................................................................. 1 INTRODUCTION 1 3 II. II. ELEMENTS ELEMENTS OF A SECTION OF A SECTION 5 DECEPTION CASE 5 DECEPTION CASE .....................................1 1 4 III. LEGAL III. LEGAL STANDARD STANDARD ........................................................................................3 3 55 A. A. Rule 8(a)(2) and Rule 8(a)(2) and Rule 12(b)(6) ................................................................ 3 Rule 12(b)(6) 3 6 6 B. B. Rule 9(b) ..................................................................................................4 Rule 9(b) 4 7 7 IV. ARGUMENT IV. ARGUMENT ..................................................................................................... 5 5 A. The A. Rule 8(a) The Rule 8(a) Pleading Pleading Standard, Not the Standard, Not the Rule Rule 9(b) Pleading Standard, 9(b) Pleading Standard, 88 Applies to Applies to Defendants' Motion to Defendants' Motion to Dismiss Dismiss ............................................... 55 99 1. 1. Rule 9(b) Rule applies only 9(b) applies only when when intent intent to to defraud defraud or or knowledge knowledge 10 of falsity of is alleged falsity is alleged ..................................................................... 55 11 2. 2. Rule Rule 9(b) does not 9(b) does not apply apply here here because because the the Complaint Complaint does does notnot 12 allege allege fraud, fraud, intent to defraud, intent to defraud, or or knowledge knowledge of of falsity falsity ............ 9 9 B. The B. The Complaint Complaint States States aa Claim upon Which Claim upon Which ReliefRelief May May Be Be Granted Granted 13 Under Count Under Count II (DeVry's (DeVry's 90% 90% Claim) Because it Claim) Because it Describes Describes the the Who, Who, 14 14 What, When, What, When, Where Where and and How How of of the the Deceptive Deceptive Conduct Conduct with with Sufficient Sufficient 15 15 Particularity to Particularity to Apprise Apprise Defendants Defendants of of the the Charges Charges and and to to Enable Enable Them Them to Prepare to Prepare aa Defense Defense for Trial .................................................................10 for Trial 10 16 1. 1. The Complaint The Complaint allegations allegations satisfy satisfy Rule 8 because Rule 8 because they they go go well well 17 beyond making beyond making threadbare threadbare allegations that Defendants allegations that Defendants 18 violated Section violated Section 5…………………………………………… 5 10 10 19 19 2. 2. The The Complaint Complaint allegations satisfy Rule allegations satisfy Rule 9 9 because because they they sufficiently describe sufficiently describe the the time, time, place, place, and and content content of of the the false false 20 20 representations, the the fact that was was misrepresented, misrepresented, and the representations, fact that and the 21 21 parties involved parties involved in in the the deception deception............................................11 11 22 3. 3. Defendants' arguments Defendants' arguments lack lack merit merit.......................................... 13 13 23 a. Express a. vs. implied Express vs. implied representations representations .................................. 13 13 24 b. Materiality b. Materiality ......................................................................... 15 15 25 25 c. Lack of c. Lack of substantiation substantiation …………………………….…… 17 17 C. C. The The Complaint Complaint States States aa Claim Claim upon upon Which Which Relief May Be Relief May Be Granted Granted 26 26 Under Count Under II (DeVry's Count II (DeVry's Higher-Income Higher-Income Claim) Claim) …………………… 21 21 27 27 1. 1. The allegations The allegations exceed the requirements exceed the of Rules requirements of 8 and Rules 8 9….21 and 9....21 28 ii Case aseCase: 2:16-cv-00579-MWF-SS 1:16-cv-05198 Document #: 93-926 Document Filed: 03/30/18 Filed Page 04/04/16 4 of333 Page ofPageID 32 Page#:1687#:216 ID #:2 6 1 1 2. 2. Defendants' arguments lack Defendants' arguments lack merit merit …………………….……22 22 2 2 D. D. The Complaint The Complaint States States aa Claim upon Which Claim upon Which Relief Relief May May Be Be Granted Granted Against DeVry Against DeVry Education Education Group Group Inc………………………………… Inc 23 23 3 V. V. CONCLUSION CONCLUSION ................................................................................................25 25 4 55 6 6 7 7 88 99 10 11 12 13 14 14 15 15 16 17 17 18 19 19 20 20 21 21 22 23 24 25 25 26 26 27 27 28 28 ii ii Case aseCase: 2:16-cv-00579-MWF-SS 1:16-cv-05198 Document #: 93-926 Document Filed: 03/30/18 Filed Page 04/04/16 5 of433 Page ofPageID 32 Page#:1688#:217 ID #:2 7 1 1 TABLE TABLE OF AUTHORITIES OF AUTHORITIES 2 Aktieselskabet AF Aktieselskabet AF 21. 21. November November 2001 2001 v. Fame Jeans v. Fame Jeans Inc., Inc., 3 525 F.3d 8 525 F.3d 8 (D.C. (D.C. Cir. 2008) ................................................................................ 4 Cir. 2008) 4 4 Angermeir v. Angermeir v. Cohen, Cohen, 55 14 F. 14 F. Supp. 3d 134 Supp. 3d 134 (S.D.N.Y. (S.D.N.Y. 2014) 2014) ................................................................ 25 25 6 6 Ashcroft v. Ashcroft Iqbal, v. Iqbal, 556 U.S. 662 556 U.S. 662 (2009) (2009) ............................................................................................ 33 7 7 Balistreri v. Balistreri Pacifica Police v. Pacifica Police Dept., Dept., 88 901 F.2d 696 901 F.2d 696 (9th (9th Cir. 1988) ............................................................................... 3 Cir. 1988) 3 9 Bell Atl. Bell Atl. Corp. Corp. v. v. Twombly, Twombly, 10 10 550 U.S. 544 550 U.S. 544 (2007) (2007) ............................................................................................ 33 11 11 Carlon Carlon v. v. Thaman Thaman (In (In re NationsMart Corp. re NationsMart Corp. Sec.Sec. Litig.), Litig.), 12 12 130 F.3d 130 F.3d 309 309 (8th (8th Cir. 1997) ............................................................................... 77 Cir. 1997) 13 13 Cher Cher v. Forum Intl, v. Forum Int'l, LTD, LTD, 14 692 F.2d 692 F.2d 634 634 (9th (9th Cir. 1982) ............................................................................ 25 Cir. 1982) 25 15 15 Destfino v. Destfino Reiswig, v. Reiswig, 630 F.3d 630 F.3d 952 (9th Cir. 952 (9th 2011) ............................................................................ 24 Cir. 2011) 24 16 16 Eclectic Props. Eclectic Props. E., E., LLC LLC v. Marcus & v. Marcus & Millichap Millichap Co., Co., 17 17 751 F.3d 990 751 F.3d (9th Cir. 990 (9th 2014) ...................................................................... 19, Cir. 2014) 19, 20 20 18 18 Esmark, Inc. Esmark, Inc. v. NLRB, v. NLRB, 19 19 887 F.2d 887 F.2d 739 (7th Cir. 739 (7th 1989) ............................................................................ 25 Cir. 1989) 25 20 20 FTC v. FTC Bronson Partners, v. Bronson Partners, LLC, LLC, 21 564 F. Supp. 564 F. 2d 119 Supp. 2d 119 (D. (D. Conn. 2008) ............................................................... 15 Conn. 2008) 15 22 FTC v. FTC v. Consumer Health Benefits Consumer Health Benefits Ass Ass'n, 'n, 23 23 No. 10 No. 10 CIV. CIV. 3551 3551 ILG ILG RLM, 2012 WL RLM, 2012 WL 1890242 1890242 (E.D.N.Y. (E.D.N.Y. May May 23, 23, 2012) 2012) ....7 .... 7 24 24 FTC v. FTC v. Colgate-Palmolive Colgate-Palmolive Co., Co., 380 U.S. 380 U.S. 374 374 (1965) (1965) ............................................................................................ 22 25 25 26 26 FTC v. FTC v. Cantkier, Cantkier, 767 F. Supp. 767 F. 2d 147 Supp. 2d 147 (D.D.C. (D.D.C. 2011) 2011) ..................................... 4, 4, 11, 11, 12, 12, 17, 17, 18, 18, 19 19 27 27 FTC v. FTC v. Commerce Planet, Inc., Commerce Planet, Inc., 28 28 iii iii Plaintiff's Opposition Plaintiff's Opposition to to Motion Motion to to Dismiss Dismiss aseCase: Case 2:16-cv-00579-MWF-SS 1:16-cv-05198 Document Document #: 93-926 Filed: Filed 03/30/18 04/04/16 Page Page 6 of533 32 Page of PageID #:1689#:2 8 ID #:218 1 1 878 F. 878 F. Supp. 2d 1048 Supp. 2d 1048 (C.D. (C.D. Cal. 2012), aff'd Cal. 2012), aff'd in part, No. in part, No. 12-57064, 12-57064, 2016 2016 WL WL 828326 (9th 828326 (9th Cir. Mar. 3, Cir. Mar. 3, 2016), 2016), and and aff'd aff'd in part, vacated in part, vacated in part, remanded, in part, remanded, 2 2 No. 12-57064, No. 12-57064, 2016 2016 WL WL 828065 (9th Cir. 828065 (9th Mar. 3, Cir. Mar. 3, 2016) 2016) .................................. 22 33 FTC v. FTC Direct Mktg. v. Direct Mktg. Concepts, Inc., Concepts, Inc., 4 4 569 F. Supp. 569 F. 2d 285 Supp. 2d 285 (D. (D. Mass. Mass. 2008), 2008), aff'd, aff'd, 624 624 F.3d F.3d 1 1 (1st (1st Cir. 2010) ........... 22 Cir. 2010) 55 FTC v. FTC Figgie Int v. Figgie Int'l, '1, 6 6 994 F.2d 595 994 F.2d (9th Cir. 595 (9th 1993) .............................................................................. 22 Cir. 1993) 7 7 FTC v. FTC Freecom Comm'ns, v. Freecom Inc., Comm 'ns, Inc., 401 F.3d 401 F.3d 1192 1192 (10th (10th Cir. 2005) ....................................................................... 7, Cir. 2005) 7, 9 9 88 99 FTC v. FTC Ivy Capital, v. Ivy Inc., Capital, Inc., No. 2:11-CV-283 No. 2:11-CV-283 JCMJCM GWF, 2013 WL GWF, 2013 WL 1226413 1226413 (D. (D. Nev. Nev. March March 26, 26, 2013), 2013), 10 10 aff'd in aff'd part, vacated in part, vacated in part, remanded, in part, remanded, 616 F. App'x 616 F. App'x (9th (9th Cir. 2015) ........... 15 Cir. 2015) 15 11 11 FTC v. FTC John Beck v. John Beck Amazing Amazing Profits, Profits, LLC, LLC, 12 12 865 F. 865 F. Supp. 2d 1052 Supp. 2d 1052 (C.D. (C.D. Cal. 2012), aff'd, Cal. 2012), aff'd, No.No. 12-56665, 12-56665, 2016 2016 U.S.U.S. App.App. 13 13 LEXIS 4011 (9th LEXIS 4011 (9th Cir. Cir. Mar. Mar. 3, 3, 2016) 2016) ............................................................ 2, 2, 15 15 14 14 FTC v. FTC Lights of v. Lights of America, America, 769 F. Supp. 769 F. 2d 848 Supp. 2d 848 (C.D. (C.D. Cal. Cal. 2010) 2010) ............................................................. 7, 7, 8 8 15 15 16 FTC v. FTC Lunada Biomedical, v. Lunada Biomedical, Inc., Inc., 16 No. CV-15-3380-MWF No. CV-15-3380-MWF (C.D. (C.D. Cal. Feb. 23, Cal. Feb. 23, 2016) 2016) ...............................12, 12, 13, 13, 17 17 17 17 FTC v. FTC Pantron II Corp., v. Pantron Corp., 18 18 33 F.3d 33 F.3d 1088 1088 (9th (9th Cir. 1994) ............................................................................... 22 Cir. 1994) 19 19 FTC v. FTC Stefanchik, v. Stefanchik, 20 20 No. C04-1852RSM, No. C04-1852RSM, 20072007 WL WL 1058579 1058579 (W.D. (W.D. Wash.Wash. Apr. Apr. 3, 3, 2007), 2007), aff'd, aff'd, 559 559 21 21 F.3d 924 F.3d (9th Cir. 924 (9th 2009) ................................................................................... 25 Cir. 2009) 25 22 22 FTC v. FTC Sterling Precious v. Sterling Precious Metals, Metals, LLC, LLC, No. 12-80597-CIV, No. 12-80597-CIV, 2013 2013 WL WL 595713 (S.D. Fla. 595713 (S.D. Fla. Feb. Feb. 15, 15, 2013) 2013)......................... 77 23 23 24 24 FTC v. FTC Swish Mktg., v. Swish Mktg., No. 5:09-cv-03814, No. 5:09-cv-03814, 2010 2010 WL WL 653486 (N.D. Cal. 653486 (N.D. Cal. Feb. Feb. 22, 22, 2010) 2010) ...................... 88 25 25 FTC v. FTC v. US Sales Corp., US Sales Corp., 26 26 785 F. Supp. 737 (N.D. Ill. 785 F. Supp. 737 (N.D. Ill. 1992) 1992) ....................................................................... 22 27 27 FTC v. FTC v. Wellness Support Network, Wellness Support Network, 28 28 No. 10-4879, No. 10-4879, 2011 2011 WL WL 1303419 1303419 (N.D. (N.D. Cal. Cal. Apr. Apr. 4, 4, 2011) 2011) ......... 8, 8, 9, 11, 12, 9, 11, 12, 17 17 iv iv Plaintiff's Opposition Plaintiff's Opposition to to Motion Motion to to Dismiss Dismiss Case aseCase: 2:16-cv-00579-MWF-SS 1:16-cv-05198 Document #: 93-926 Document Filed: 03/30/18 Filed Page 04/04/16 7 of633 Page ofPageID 32 Page#:1690#:219 ID #:2 9 1 1 FTC v. FTC v. Wilcox, Wilcox, 926 F. Supp. 926 F. 1091 (S.D. Supp. 1091 (S.D. Fla. Fla. 1995) 1995) .................................................................... 22 2 2 FTC v. FTC v. World World Travel Travel Vacation Brokers, Inc., Vacation Brokers, Inc., 33 861 F.2d 861 F.2d 1020 1020 (7th (7th Cir. 1988) ............................................................................. 99 Cir. 1988) 4 4 FTC v. FTC v. Wyndham Wyndham Worldwide Worldwide Corp., Corp., 55 10 F. 10 F. Supp. 3d 602 Supp. 3d 602 (D.N.J. (D.N.J. 2014), 2014), aft aff'd, d, 799 F.3d 236 799 F.3d 236 (3d (3d Cir. 2015) .............15 Cir. 2015) 15 6 6 First Nationwide First Nationwide Bank Bank v. v. Gelt Funding Corp., Gelt Funding Corp., 7 7 27 F.3d 27 F.3d 763 (2d Cir. 763 (2d Cir. 1994) 1994) ............................................................................... 19 19 88 Fujisawa Pharm. Fujisawa Pharm. Co. Co. v. Kapoor, v. Kapoor, 99 814 F. 814 F. Supp. Supp. 720 (N.D. Ill. 720 (N.D. Ill. 1993) 1993) ..................................................................... 20 20 10 10 Gauvin Gauvin v. v. Trombatore, Trombatore, 682 F. 682 F. Supp. 1067 (N.D. Supp. 1067 (N.D. Cal. 1988) ................................................................. 20 Cal. 1988) 20 11 11 12 12 Grant Grant v. v. WMC Mortg. Corp., WMC Mortg. Corp., No. CIV2:10-1117WBSKJN, No. CIV2:10-1117WBSKJN, 2010 2010 WL WL 2509415 2509415 (E.D. (E.D. Cal. Cal. June 17, 2010) June 17, 2010) .. 24 24 13 13 Hale v. Hale Enerco Grp., v. Enerco Inc., Grp., Inc., 14 14 No. 1:10 No. 1:10 CV CV 00867-DAP, 2011 WL 00867-DAP, 2011 WL 49545 49545 (N.D. (N.D. Ohio Ohio Jan. Jan. 5, 2011) ............ 25 5, 2011) 25 15 15 Hudak v. Hudak Berkley Grp., v. Berkley Inc., Grp., Inc., 16 16 No. 13—CV-89, No. 13–CV–89, 2014 2014 WLWL 354676 354676 (D. (D. Conn. Conn. Jan. 23, 2014) Jan. 23, 2014) ........................... 25 25 17 17 In re In Actimmune Mktg. re Actimmune Mktg. Litig., Litig., 18 18 No. C No. C 08-02376 MHP, 2010 08-02376 MHP, 2010 WL WL 3463491 3463491 (N.D. (N.D. Cal.Cal. Sept. Sept. 1, 1, 2010), 2010), aft aff'd, 464 d, 464 F. App'x F. App'x 651 651 (9th (9th Cir. Cir. 2011) 2011) ................................................................................ 77 19 19 20 20 In re In re Charles Schwab Corp. Charles Schwab Sec. Litig., Corp. Sec. Litig., 257 F.R.D. 257 F.R.D. 534 (N.D. Cal. 534 (N.D. Cal. 2009) 2009) ......................................................................... 77 21 21 In re In Iphone 4S re Iphone 4S Consumer Litig., Consumer Litig., 22 22 No.C 12-1127 No.0 12-1127 CW, CW, 2014 2014 WL WL 589388 (N.D. Cal. 589388 (N.D. Cal. Feb. Feb. 14, 14, 2014), 2014), aft aff'd, No. 12- d, No. 12- 23 23 17805, 2016 17805, 2016 WL WL 758346 (9th Cir. 758346 (9th Cir. Feb. Feb. 25, 25, 2016) 2016) ....................................6, 6, 7, 20 7, 20 24 24 Kraft, Inc. Kraft, Inc. v. FTC, v. FTC, 25 25 970 F.2d 311 970 F.2d 311 (7th (7th Cir. 1992) .......................................................................14, Cir. 1992) 14, 15 15 26 26 In re In Nat'l Talent re Nat'l Assocs., Inc., Talent Assocs., Inc., 27 27 107 F.T.C. 107 F.T.C. 11 (1986) (1986) .....................................................................................20, 20, 21 21 28 28 In re In re Wm H. Wise Wm H. Wise Co., Co., v v Plaintiff's Opposition Plaintiff's Opposition to to Motion Motion to to Dismiss Dismiss Case aseCase: 2:16-cv-00579-MWF-SS 1:16-cv-05198 Document #: 93-926 Document Filed: 03/30/18 Filed Page 04/04/16 8 of733 Page ofPageID 32 Page#:1691#:220 ID #:2 0 1 1 53 F.T.C. 408 53 F.T.C. 408 (1956) (1956) ...................................................................................20, 20, 21 21 2 Kearns v. Kearns Ford Motor v. Ford Motor Co., Co., 567 F.3d 1120 567 F.3d 1120 (9th (9th Cir. 2009) ......................................................................... 5, Cir. 2009) 5, 66 3 4 Lone Star Lone Star Ladies Ladies Inv. Inv. Club Club v. Schlotzky's Inc., v. Schlotzky's Inc., 238 F.3d 238 F.3d 363 363 (5th (5th Cir. 2001) ............................................................................... 77 Cir. 2001) 55 Moore v. Moore Kayport Package v. Kayport Package Express, Express, 6 6 885 F.2d 885 F.2d 531 (9th Cir. 531 (9th 1989) ........................................................................ 4, Cir. 1989) 4, 24 24 7 7 Semegen v. Semegen v. Weidner, Weidner, 88 780 F.2d 727 780 F.2d (9th Cir. 727 (9th 1985) .............................................................................. 4 Cir. 1985) 4 9 Swartz v. Swartz KPMG LLP, v. KPMG LLP, 10 10 476 F.3d 476 F.3d 756 (9th Cir. 756 (9th 2007) ...................................................................... 23, Cir. 2007) 23, 24 24 11 11 United States ex United States ex rel. McCready v. rel. McCready v. Columbia/HCA Healthcare Corp., Columbia/HCA Healthcare Corp., 251 F. 251 F. Supp. 2d 114 Supp. 2d 114 (D.D.C. (D.D.C. 2003) 2003) .................................................................... 4 4 12 12 United States v. United States Bestfoods, v. Bestfoods, 13 13 524 U.S. 51 524 U.S. 51 (1998) (1998) ............................................................................................ 25 25 14 Vess Vess v. v. Ciba-Geigy Ciba-Geigy Corp. Corp. USA, USA, 15 15 317 F.3d 317 F.3d 1097 1097 (9th (9th Cir. 2003) .............................................................. 4, Cir. 2003) 4, 5, 5, 6, 6, 25 25 16 16 Walling Walling v. Beverly Enters., v. Beverly Enters., 17 17 476 F.2d 476 F.2d 393 393 (9th (9th Cir. 1973) ............................................................................ 13 Cir. 1973) 13 18 18 Statutes Statutes and and Rules Rules 19 19 15 U.S.C. 15 U.S.C. §§ 45(a) 45(a) (2012) (2012) ................................................................................ passim passim 20 20 15 U.S.C. 15 U.S.C. § § 77k (2012) ............................................................................................. 77 77k (2012) 21 Fed. R. Fed. R. Civ. P. 8(a) Civ. P. 8(a) ......................................................................................... passim passim 22 Fed. R. Fed. R. Civ. P. 9(b) Civ. P. 9(b) ..........................................................................................passim passim 23 23 Fed. R. Fed. R. Civ. P. 12(b)(6) Civ. P. 12(b)(6) ............................................................................................ 33 24 24 Other Other 25 25 37 Am. 37 Am. Jur. 2d Fraud Jur. 2d Fraud and and Deceit Deceit § § 23 23 (2010) (2010) ......................................................... 55 26 26 FTC Policy FTC Policy Statement Statement Regarding Regarding Advertising Advertising Substantiation, Substantiation, 104 104 F.T.C. F.T.C. 648, 648, 839839 27 27 (1984), appended (1984), appended to In re to In re Thompson Thompson Med. Med. Co., Co., 104 104 F.T.C. F.T.C. 648 648 ..............................3 3 28 28 vi vi Plaintiff's Opposition Plaintiff's Opposition to to Motion Motion to to Dismiss Dismiss Case aseCase: 2:16-cv-00579-MWF-SS 1:16-cv-05198 Document #: 93-926 Document Filed: 03/30/18 Filed Page 04/04/16 9 of833 Page ofPageID 32 Page#:1692 1 #:221 ID #:2 1 1 I. I. INTRODUCTION INTRODUCTION 2 The Federal Trade The Federal Trade Commission's Commission's Complaint Complaint alleges that Defendants alleges that Defendants DeVry DeVry 3 Education Education Group Group Inc. (DEG), DeVry Inc. (DEG), DeVry University, University, Inc. (DVU), and Inc. (DVU), and DeVry/New DeVry/New 4 York Inc. York Inc. violated violated Section Section 5 of the 5 of the FTC FTC Act, Act, which which prohibits prohibits deceptive deceptive 55 representations in representations or affecting in or affecting commerce. The Complaint commerce. The Complaint alleges alleges that that all all three three 6 6 Defendants violated Defendants violated Section Section 5 by disseminating 5 by disseminating (or (or causing the dissemination causing the dissemination of) of) 7 7 numerous advertisements, numerous advertisements, webpages, webpages, and and other other promotional promotional materials materials that that made made 88 two different two different deceptive deceptive representations representations to to induce induce consumers to enroll consumers to in DVU. enroll in DVU. 9 Defendants' Motion Defendants' Motion should should be be denied denied because because the the Complaint's detailed Complaint's detailed 10 10 factual allegations exceed factual allegations the pleading exceed the pleading standard standard of of Rule Rule 8(a), 8(a), which which rejects rejects 11 11 formulaic recitations of formulaic recitations of the the elements of aa cause elements of of action, cause of action, as as well well as as the the heightened heightened 12 12 pleading standard pleading standard of of Rule 9(b), which Rule 9(b), which requires that allegations requires that allegations of of fraud be specific fraud be specific 13 13 enough to give enough to give defendants defendants notice notice of of the the particular particular misconduct misconduct that that is is alleged alleged to to 14 constitute the fraud constitute the fraud charged so that charged so that they they can defend against can defend the charge. against the charge. 15 15 Rather than simply Rather than simply making making aa formulaic formulaic allegation that "Defendants allegation that "Defendants made made 16 16 deceptive representations," deceptive representations," the the FTC's FTC's Complaint Complaint lays out extensive lays out extensive facts that facts that 17 17 amply inform amply inform Defendants Defendants of of the the "who, "who, what, what, when, when, where, where, and and how" how" of of the the 18 18 conduct that the conduct that the FTC FTC alleges alleges violated violated Section Section 5. 5. The twenty-eight page The twenty-eight page sixty- sixty- 19 19 paragraph Complaint paragraph describes in Complaint describes in great great detail detail the the means means and and language that the language that the 20 20 Defendants used Defendants used to to communicate their deceptive communicate their deceptive representations, representations, alleges alleges that that each each 21 of these of these representations representations is is false and unsubstantiated, false and unsubstantiated, and and outlines outlines why, why, leaving leaving 22 Defendants with Defendants with no no doubt doubt as as to to the the exact nature of exact nature of the the misconduct misconduct with with which which they they 23 23 are charged. are charged. Courts in other Courts in other cases have found cases have found complaints with aa similar complaints with similar (or (or lesser) lesser) 24 24 level of level of detail detail were were sufficient sufficient to to defeat defeat motions motions to to dismiss dismiss under under either standard. either standard. 25 25 II. II. ELEMENTS ELEMENTS OF A SECTION OF A 5 DECEPTION SECTION 5 DECEPTION CASE CASE 26 26 The Complaint The Complaint alleges alleges that that Defendants Defendants violated violated Section 5(a) of Section 5(a) of the the FTC FTC Act, Act, 27 27 15 U.S.C. 15 U.S.C. §§ 45(a) 45(a) ("Section ("Section 5"). 5"). Section Section 5 prohibits "unfair 5 prohibits "unfair or or deceptive deceptive acts or acts or 28 28 practices in practices or affecting in or affecting commerce." An act commerce." An or practice act or practice is is properly properly deemed deemed 1 1 Plaintiff's Opposition Plaintiff's Opposition to to Motion Motion to to Dismiss Dismiss Case Case: ase 2:16-cv-00579-MWF-SS 1:16-cv-05198 Document #: 93-926 Document Filed: 03/30/18 Filed PagePage 04/04/16 10 of9 33 PageID of 32 Page#:1693 #:222 ID #:2 2 1 1 deceptive if deceptive if "first, "first, there there is is aa representation, representation, omission, omission, or or practice practice that, that, second, second, is is 2 likely to likely to mislead mislead consumers acting reasonably consumers acting reasonably under under the the circumstances, and third, circumstances, and third, 3 the representation, the representation, omission, omission, or or practice practice is is material." material." FTC FTC v. Pantron II Corp., v. Pantron 33 Corp., 33 4 F.3d 1088, F.3d 1088, 1095 1095 (9th (9th Cir. 1994) (adopting Cir. 1994) (adopting standard standard in in Cliffdale Assocs., Inc., Cliffdale Assocs., Inc., 103 103 55 F.T.C. 110, F.T.C. 110, 164-65 164-65 (1984)). (1984)). 6 6 Advertisers can Advertisers be held can be held liable liable for misleading consumers for misleading not only consumers not only with with 7 7 explicit explicit claims but also claims but also by by "innuendo." "innuendo." FTC FTC v. v. Wilcox, Wilcox, 926 F. Supp. 926 F. 1091, 1098 Supp. 1091, 1098 88 (S.D. Fla. (S.D. Fla. 1995) 1995) (citing (citing Regina Regina Corp. Corp. v. FTC, 322 v. FTC, 322 F.2d F.2d 765, 765, 768 (3rd Cir. 768 (3rd Cir. 1963)); 1963)); 99 see also see also FTC FTC v. Figgie Int'l, v. Figgie Int'l, 994 F.2d 595, 994 F.2d 595, 604 (9th Cir. 604 (9th Cir. 1993) 1993) (Section (Section 55 does does not not 10 10 recognize aa difference recognize difference between between implied implied and and express express claims). Because various claims). Because various 11 11 aspects and aspects and components of an components of an advertisement, website, or advertisement, website, or sales sales pitch pitch can work can work 12 12 together to together to convey convey aa message message or or representation representation that that no no single single part part conveys on its conveys on its 13 13 own, courts own, courts conduct conduct aa "net "net impression" impression" analysis to determine analysis to determine whether whether the the 14 representation as representation as formulated in the formulated in the complaint reflects aa message complaint reflects message that that consumers consumers 15 15 would reasonably would reasonably have have taken taken away. away. FTC FTC v. Direct Mktg. v. Direct Mktg. Concepts, Inc., 569 Concepts, Inc., F. 569 F. 16 16 Supp.2d 285, 298 Supp.2d 285, 298 (D. (D. Mass. Mass. 2008), 2008), aff'd, aff'd, 624 F.3d 1 624 F.3d 1 (1st (1st Cir. 2010); FTC Cir. 2010); FTC v. v. 17 17 Commerce Planet, Inc., Commerce Planet, Inc., 878 F. Supp. 878 F. 2d 1048, Supp. 2d 1048, 1063, 1065 (C.D. 1063, 1065 (C.D. Cal. 2012), aff'd Cal. 2012), aff'd 18 18 in part, No. in part, No. 12-57064, 12-57064, 2016 2016 WL WL 828326 828326 (9th (9th Cir. Mar. 3, Cir. Mar. 3, 2016) 2016) and and aff'd aff'd in part, in part, 19 19 vacated vacated in part, remanded, in part, No. 12-57064, remanded, No. 12-57064, 2016 2016 WL WL 828065 828065 (9th (9th Cir. Cir. Mar. Mar. 3, 3, 20 20 2016); FTC 2016); FTC v. v. US Sales Corp., US Sales Corp., 785 F. Supp. 785 F. Supp. 737, 737, 745 (N.D. Ill. 745 (N.D. Ill. 1992). 1992). 21 Whether an Whether an advertisement advertisement conveys the message conveys the message at at issue issue may may be be determined determined 22 by the by the fact-finder's fact-finder's examination of the examination of the advertisement advertisement itself. itself. US Sales Corp., US Sales Corp., 785 785 23 23 F. Supp. F. Supp. at at 745 (citing FTC 745 (citing FTC v. v. Colgate-Palmolive Colgate-Palmolive Co., 380 U.S. Co., 380 U.S. 374 374 (1965)). (1965)). 24 24 Businesses may Businesses may be be held held liable liable under under Section Section 5 not only 5 not only for making for making 25 25 representations that representations that are are false, but also false, but also for making representations for making representations for which they for which they 26 26 lacked aa reasonable lacked reasonable basis basis prior prior to to making making the the representation. representation. FTC FTC v. John Beck v. John Beck 27 27 Amazing Profits, Amazing Profits, LLC, LLC, 865 865 F. F. Supp. 2d 1052, Supp. 2d 1052, 1067 1067 (C.D. (C.D. Cal. 2012), aff'd, Cal. 2012), aff'd, 2016 2016 28 28 U.S. App. U.S. App. LEXIS 4011 (9th LEXIS 4011 (9th Cir. Cir. 2016). 2016). This substantiation requirement This substantiation requirement applies applies to to 22 Plaintiff's Opposition Plaintiff's Opposition to to Motion Motion to to Dismiss Dismiss Case seCase: 2:16-cv-00579-MWF-SS 1:16-cv-05198 Document #: 93-926 Document Filed: 03/30/18 Filed Page 04/04/16 11 of Page 1033 of PageID 32 Page#:1694#:223 ID #:2 23 1 1 all reasonable all reasonable interpretations of an interpretations of an advertisement, not just advertisement, not just express express claims. FTC's claims. FTC's 2 Policy Statement Policy Statement Regarding Advertising Substantiation Regarding Advertising (1984), appended Substantiation (1984), appended to to 3 Thompson Med. Co., Thompson Med. 104 F.T.C. Co., 104 F.T.C. 648, 648, at at 840, 1984 FTC 840, 1984 FTC LEXIS LEXIS 6, 6, at *437. at *437. 4 III. III. LEGAL LEGAL STANDARD STANDARD 55 A. A. Rule Rule 8(a)(2) and Rule 8(a)(2) and 12(b)(6) Rule 12(b)(6) 6 6 Federal Rule Federal Rule of of Civil Civil Procedure Procedure 8(a) 8(a) requires requires that that aa complaint complaint include include aa 7 7 "short and "short and plain plain statement statement of of the the claim showing that claim showing that the the pleader pleader is is entitled to entitled to 88 relief." Fed. relief." Fed. R. Civ. P. R. Civ. P. 8(a)(2). 8(a)(2). 9 A motion A motion to to dismiss dismiss brought brought pursuant pursuant to to Federal Federal Rule of Civil Rule of Procedure Civil Procedure 10 10 12(b)(6) tests 12(b)(6) tests the the legal legal sufficiency sufficiency of of the the claims claims asserted in the asserted in the complaint. complaint. 11 11 Dismissal under Dismissal under Rule 12(b)(6) is Rule 12(b)(6) is proper proper only only where where there there is is either either aa "lack "lack of of aa 12 12 cognizable legal theory" cognizable legal theory" or or "the "the absence absence of of sufficient sufficient facts facts alleged under aa alleged under 13 13 cognizable legal theory." cognizable legal theory." Balistreri Balistreri v. Pacifica Police v. Pacifica Police Dept., Dept., 901 901 F.2d F.2d 696, 699 696, 699 14 (9th Cir. (9th 1988). "Factual Cir. 1988). "Factual allegations allegations must must be be enough to raise enough to raise aa right to relief right to relief above above 15 15 the speculative the speculative level." Bell Atl. level." Bell Atl. Corp. Corp. v. v. Twombly, 550 U.S. Twombly, 550 U.S. 544, 555 (2007). 544, 555 (2007). 16 16 While aa complaint While that offers complaint that offers no no more more than than mere mere "labels "labels and and conclusions" or aa conclusions" or 17 17 "formulaic" or "formulaic" or "threadbare" "threadbare" recitation recitation of of the the elements of aa cause elements of of action cause of action is is 18 18 insufficient, aa complaint insufficient, does not complaint does not need need detailed detailed factual allegations. See factual allegations. See Twombly, Twombly, 19 19 550 U.S. at 550 U.S. at 555, Ashcroft v. 555, Ashcroft Iqbal, 556 v. Iqbal, U.S. 662, 556 U.S. 662, 678 (2009). Using 678 (2009). Using judicial judicial 20 20 experience and common experience and sense, the common sense, the Court must determine Court must determine whether whether aa complaint complaint 21 plausibly states plausibly states aa claim claim for relief. Iqbal, for relief. Iqbal, 556 556 U.S. U.S. at at 679. 679. 22 In ruling In ruling on on aa 12(b)(6) 12(b)(6) motion, motion, aa court is to court is to assume assume "all "all the the allegations allegations in in 23 23 the complaint the complaint are true (even are true (even if if doubtful doubtful in in fact) fact) .. .. .. [and] [and] must must give give the the plaintiff plaintiff 24 24 the benefit the benefit of of all all reasonable reasonable inferences inferences derived derived from the facts from the alleged." facts alleged." 25 25 Aktieselskabet AF Aktieselskabet AF 21. 21. November November 2001 2001 v. Fame Jeans v. Fame Jeans Inc., Inc., 525 F.3d 8, 525 F.3d 8, 18 18 (D.C. (D.C. 26 26 Cir. 2008) (internal Cir. 2008) (internal quotations quotations marks marks and and citations omitted).1 citations omitted)! 27 27 1 Defendants wrongly suggest (Mot. at 4:24-27, n.2) that any of Defendants' 1 Defendants' 28 28 (continued on next page. . .) 3 3 Plaintiff's Opposition Plaintiff's Opposition to to Motion Motion to to Dismiss Dismiss Case seCase: 2:16-cv-00579-MWF-SS 1:16-cv-05198 Document #: 93-926 Document Filed: 03/30/18 Filed Page 04/04/16 12 of Page 1133 11 of PageID 32 Page#:1695#:224 ID #:2 24 1 1 B. B. Rule Rule 9(b) 9(b) 2 Rule Rule 9(b) applies to 9(b) applies to complaints that allege complaints that "fraud," and allege "fraud," requires that and requires that aa 3 complaint state the complaint state the "circumstances "circumstances constituting constituting fraud" with particularity. fraud" with particularity. If If aa court court 4 determines that determines that Rule Rule 9(b) applies,2 the 9(b) applies,2 the allegations allegations alleging alleging fraudulent fraudulent conduct must conduct must 55 be "specific be "specific enough to give enough to give defendants defendants notice notice of of the the particular particular misconduct misconduct which which is is 6 6 alleged to alleged to constitute the fraud constitute the fraud charged so that charged so that they they can defend against can defend against the the charge charge 7 7 and not and not just just deny deny that that they they have have done done anything anything wrong." wrong." Semegen Semegen v. v. Weidner, Weidner, 780 780 88 F.2d 727, F.2d 727, 731 (9th Cir. 731 (9th 1985); see Cir. 1985); see also also Moore Moore v. Kayport Package v. Kayport Package Express, Express, Inc., Inc., 9 885 F.2d 885 F.2d 531, 531, 540 (9th Cir. 540 (9th 1989) ("A Cir. 1989) ("A pleading pleading is is sufficient sufficient under under rule rule 9(b) if it 9(b) if it 10 10 identifies the identifies the circumstances circumstances constituting constituting fraud so that fraud so that aa defendant defendant can prepare an can prepare an 11 11 adequate answer adequate answer from the allegations"). from the allegations"). To To make make the the defendant defendant aware aware of of the the 12 12 circumstances circumstances constituting the alleged constituting the alleged fraud, the plaintiff fraud, the plaintiff must must state state the the time, time, 13 13 place, and place, and content of the content of the false representations, the false representations, the fact misrepresented, and fact misrepresented, and the the 14 parties involved parties involved in the fraud. in the FTC v. fraud. FTC v. Cantkier, Cantkier, 767 F. Supp. 767 F. 2d 147, Supp. 2d 147, 151 151 (D.D.C. (D.D.C. 15 15 2011). Phrased 2011). Phrased another way, aa complaint another way, must allege complaint must the "who, allege the "who, what, what, when, when, 16 16 where, and where, how" of and how" of the the conduct conduct at issue. Vess at issue. Vess v. v. Ciba-Geigy Ciba-Geigy Corp. Corp. USA, 317 F.3d USA, 317 F.3d 17 17 1097, 1106 1097, 1106 (9th (9th Cir. Cir. 2003). 2003). 18 18 "A court "A should hesitate court should hesitate to to dismiss dismiss aa complaint under Rule complaint under Rule 9(b) 9(b) if the court if the court 19 19 is satisfied is satisfied (1) (1) that that the the defendant defendant has has been been made made aware aware of of the the particular particular 20 20 circumstances circumstances for which she for which she will will have have to to prepare prepare aa defense defense at trial, and at trial, (2) that and (2) that 21 plaintiff has plaintiff has substantial substantial prediscovery prediscovery evidence of those evidence of those facts." facts." U.S. ex rel. U.S. ex rel. 22 McCready v. McCready v. Columbia/HCA Healthcare Corp., Columbia/HCA Healthcare 251 F. Corp., 251 F. Supp. 2d 114, Supp. 2d 114, 116 116 (D.D.C. (D.D.C. 23 23 2003) (internal 2003) (internal quotation quotation marks marks and and citation omitted). citation omitted). 24 24 25 25 26 26 representations that are found in the ads attached to the Complaint must be accepted as true, and then cite to these representations to support their facts on pp. 4-5. 27 27 2 Plaintiff argues in Section IV.A below that neither of its claims "sounds "sounds in fraud" fraud" and 28 28 that Rule 9(b) is therefore inapplicable. 4 4 Plaintiff's Opposition Plaintiff's Opposition to to Motion Motion to to Dismiss Dismiss Case seCase: 2:16-cv-00579-MWF-SS 1:16-cv-05198 Document #: 93-926 Document Filed: 03/30/18 Filed Page 04/04/16 13 of Page 1233 of PageID 32 Page#:1696#:225 ID #:2 25 1 1 IV. IV. ARGUMENT ARGUMENT 2 A. A. The Rule The 8(a) Pleading Rule 8(a) Pleading Standard, Not the Standard, Not the Rule 9(b) Pleading Rule 9(b) Pleading 3 Standard, Applies to Standard, Applies to Defendants' Motion to Defendants' Motion to Dismiss Dismiss 4 The issue The issue in in this this or or any any other other FTC FTC case is not case is not whether whether Rule Rule 9(b) 9(b) always or always or 55 never applies never applies to to Section Section 5 of the 5 of the FTC FTC Act. Act. The issue is The issue is first, whether Rule first, whether Rule 9(b) 9(b) 6 6 applies only applies only when when scienter scienter or or knowledge of falsity knowledge of is pled, falsity is pled, and and second, second, whether whether the the 7 7 specific allegations specific allegations in in the the complaint do in complaint do in fact allege scienter fact allege scienter or or knowledge. knowledge. 88 Because scienter Because scienter or or knowledge is in knowledge is in fact fact required to apply required to apply Rule 9(b), and Rule 9(b), the and the 9 Complaint in this Complaint in this case alleges neither, case alleges neither, Rule Rule 9(b) does not 9(b) does not apply apply here. here. 10 10 1. 1. Rule Rule 9(b) applies only 9(b) applies only when when intent intent to to defraud defraud or or knowledge knowledge of of 11 11 falsity is alleged falsity is alleged 12 12 The Rule The Rule 9(b) standard applies 9(b) standard applies when when aa complaint "sounds in complaint "sounds in fraud." fraud." Vess, Vess, 13 13 317 F.3d 317 F.3d at at 1103-04. 1103-04. Rule Rule 9(b) may apply 9(b) may when aa complaint apply when directly alleges complaint directly alleges fraud, fraud, 14 such as such as when when fraud is an fraud is an essential essential element of the element of the claim. Id. at claim. Id. at 1103. 1103. If If aa claim claim 15 15 does not does not specifically specifically allege allege "fraud," "fraud," Rule Rule 9(b) may still 9(b) may still apply, apply, but but only only if if the the 16 16 complaint complaint alleges "a unified alleges "a unified course of fraudulent course of fraudulent conduct" (id.)––i.e., by conduct" (id.)—i.e., by "alleging "alleging 17 17 facts that necessarily facts that necessarily constitute constitute fraud" (id. at fraud" (id. 1105). at 1105). 18 18 In general, In general, fraud requires proof fraud requires proof of of aa false false representation of aa material representation of material fact, fact, 19 19 made with made with knowledge knowledge of of its its falsity and an falsity and an intent intent to to deceive, deceive, and and upon upon which which an an 20 20 action is action is taken taken in in justifiable justifiable reliance. reliance. 37 37 Am. Am. Jur. 2d Fraud Jur. 2d Fraud and and Deceit Deceit § § 23 23 21 (2010). In (2010). In California, California, the the elements of fraud elements of fraud are: (a) misrepresentation are: (a) misrepresentation (false (false 22 representation, concealment, representation, or nondisclosure); concealment, or nondisclosure); (b) (b) knowledge knowledge of of falsity (or falsity (or 23 23 "scienter"); (c) "scienter"); (c) intent to defraud, intent to defraud, i.e., i.e., to to induce induce reliance; (d) justifiable reliance; (d) justifiable reliance; reliance; 24 24 and (e) and (e) resulting resulting damage. damage. Kearns Kearns v. Ford Motor v. Ford Motor Co., Co., 567 F.3d 1120, 567 F.3d 1120, 1126 1126 (9th (9th 25 25 Cir. 2009). Cir. 2009). 26 26 Defendants suggest Defendants suggest that that the the Ninth Ninth Circuit has held Circuit has held that that Rule Rule 9(b) applies to 9(b) applies to 27 27 any case any alleging deception—such case alleging deception––such as as cases brought under cases brought under California's Unfair California's Unfair 28 28 Competition Competition Law (UCL) and Law (UCL) and Consumer Consumer Legal Legal Remedies Act (CLA)—without Remedies Act (CLA)––without 5 5 Plaintiff's Opposition Plaintiff's Opposition to to Motion Motion to to Dismiss Dismiss seCase: Case 2:16-cv-00579-MWF-SS 1:16-cv-05198 Document Document #: 93-926 Filed: Filed 03/30/18 04/04/16 Page Page 1333 14 of 32 Page of PageID #:1697#:2 26 ID #:226 1 1 requiring any requiring any allegations allegations of of intent. intent. Plaintiff Plaintiff disagrees. disagrees. In In Kearns, Kearns, which which 2 2 Defendants cite, Defendants cite, and and Vess, on which Vess, on which Kearns Kearns relies, relies, the the Ninth Ninth Circuit merely Circuit merely 33 rejected the rejected the plaintiffs' plaintiffs' arguments arguments that, that, because because fraud was not fraud was not an an essential essential element element 4 4 of either of either aa UCL UCL or or CLA CLA cause of action, cause of action, Rule Rule 9(b) 9(b) could could never apply to never apply to such such 55 actions. See actions. See Kearns Kearns at 1125, Vess at 1125, Vess at 1103. In at 1103. In both both cases the Ninth cases the Ninth Circuit Circuit stated stated 6 6 that determination that determination of of whether whether Rule Rule 9(b) 9(b) applies applies to to aa UCL UCL complaint or any complaint or any other other 7 7 claim requires aa court claim requires to look court to look at at the the specific specific factual allegations in factual allegations in the the complaint complaint 88 (not just (not just at at the the elements of the elements of the cause of action) cause of action) to to determine determine whether whether they they allege allege aa 99 unified course unified of fraudulent course of fraudulent conduct––i.e., make out conduct—i.e., make out aa claim claim for for fraud. fraud. Vess Vess at at 10 10 1103, 1105; 1103, 1105; Kearns Kearns at at 1125 1125 (citing (citing Vess) Vess) (a (a claim under CLRA claim under or UCL CLRA or UCL alleges alleges 11 11 fraud to the fraud to the extent it alleges extent it alleges "a "a unified unified course of fraudulent course of fraudulent conduct conduct and rel[ies] and rel[ies] 12 12 entirely on that entirely on that course of conduct course of as the conduct as the basis basis of of that that claim"). claim"). In In Vess, the court Vess, the court 13 13 found that some found that some of of the the plaintiff's plaintiff's allegations allegations did did not not sound sound in in fraud because they fraud because they 14 14 did not did not mention mention "fraud" "fraud" or or allege allege facts "that would facts "that would necessarily necessarily constitute constitute fraud," fraud," 15 15 and held and held that that Rule 9(b) was Rule 9(b) was therefore therefore inapplicable. 317 F.3d inapplicable. 317 F.3d at 1105-06. at 1105-06. 16 16 Defendants also Defendants also cite In re cite In re iPhone 4s Consumer iPhone 4s Litig., 2014 Consumer Litig., 2014 WL WL 589388 at*4 589388 at*4 17 17 (N.D. Cal. (N.D. Cal. Feb. Feb. 14, 14, 2014), 2014), aft aff'd, 2016 WL d, 2016 WL 758346 (9th Cir. 758346 (9th Feb. 25, Cir. Feb. 25, 2016), 2016), to to 18 18 support their support their contention that Rule contention that Rule 9(b) applies to 9(b) applies to all all deception deception claims in the claims in the Ninth Ninth 19 19 Circuit. Circuit. The The complaint in that complaint in that case (see Merrill case (see Merrill Decl. Decl. ¶ ¶ 4, 4, Ex. 3) alleged Ex. 3) that Apple alleged that Apple 20 20 intentionally misrepresented intentionally misrepresented the the performance performance of of its its iPhones' iPhones' "Siri" "Siri" function and function and 21 21 that Apple that Apple "knew "knew or or should should have have known" that Siri known" that Sin failed to perform failed to perform as as advertised advertised 22 22 (see, e.g., (see, e.g., Merrill Merrill Decl. Decl. ¶ 4, 4, Ex. 3 at Ex. 3 at p.4, p.4, ¶ 13 13 and and p. p. 25, 25, ¶ ¶ 86). The facts 86). The facts 23 23 supporting the supporting the UCL UCL claims were also claims were also incorporated incorporated into into counts alleging intentional counts alleging intentional 24 24 misrepresentations (see misrepresentations (see Merrill Merrill Decl., Decl., ¶ ¶ 4, 4, Ex. 3 at Ex. 3 at pp. pp. 33-34). 33-34). These These allegations allegations 25 25 explain the court's explain the court's conclusion that "[b]ecause conclusion that "[b]ecause Plaintiffs Plaintiffs allege that Apple allege that Apple deceived deceived 26 26 them, their them, their allegations allegations sound sound in in fraud and are fraud and are subject subject to to the the requirements requirements of of Rule Rule 27 27 9(b)." In re 9(b)." In re iPhone iPhone 4s 4s Consumer Litig. at Consumer Litig. at *4 (citing Kearns). *4 (citing Kearns). Kearns Kearns as well as as well as 28 28 Vess held that Vess held that it was necessary it was necessary to to review review the the underlying underlying allegations before allegations before 6 6 Plaintiff's Opposition Plaintiff's Opposition to to Motion Motion to to Dismiss Dismiss Case seCase: 2:16-cv-00579-MWF-SS 1:16-cv-05198 Document #: 93-926 Document Filed: 03/30/18 Filed Page 04/04/16 15 of Page 1433 of PageID 32 Page#:1698#:227 ID #:2 27 1 1 determining whether determining whether aa UCL UCL claim sounds in claim sounds in fraud. While the fraud. While the Ninth Ninth Circuit Circuit 2 affirmed the affirmed the application application of of Rule Rule 9(b) in iPhone, 9(b) in it cited iPhone, it its own cited its own decisions decisions in in Vess Vess 3 and Kearns. and Kearns. There There is no reason is no reason to to believe believe that that the the Ninth Ninth Circuit, in aa case Circuit, in case alleging alleging 4 intentional misrepresentations, intentional misrepresentations, sought sought to to go go beyond beyond Vess and Kearns Vess and Kearns to to declare declare all all 55 UCL actions UCL actions and and all all misrepresentation misrepresentation actions actions subject subject to to Rule 9(b). Rule 9(b). 6 6 Other Other courts, like the courts, like the Ninth Ninth Circuit Circuit in in Vess, have held Vess, have held that that cases alleging cases alleging 7 7 misrepresentations that misrepresentations that were were not not made made with with intent to deceive intent to deceive or or knowledge, such as knowledge, such as 88 in cases in brought under cases brought under Section 11 of Section 11 of the the Securities Act of Securities Act of 1933, 1933, 15 15 U.S.C. U.S.C. §§ 77k, 77k, 9 do not do not "sound "sound in in fraud" under Rule fraud" under Rule 9(b), at least 9(b), at least to to the the extent they do extent they do not not allege allege 10 scienter. See scienter. See Lone Lone Star Star Ladies Ladies Inv. Inv. Club Club v. Schlotzsky's Inc., v. Schlotzsky's Inc., 238 238 F.3d F.3d 363, 363, 368 368 11 11 (5th Cir. (5th 2001); Carlon Cir. 2001); Carlon v. v. Thaman Thaman (In (In re NationsMart Corp. re NationsMart Sec. Litig.), Corp. Sec. Litig.), 130 130 F.3d F.3d 12 12 309, 315 309, 315 (8th (8th Cir. Cir. 1997); 1997); In In re re Charles Schwab Corp. Charles Schwab Sec. Litig., Corp. Sec. Litig., 257 257 F.R.D. F.R.D. 534, 534, 13 13 545-46 (N.D. Cal. 545-46 (N.D. Cal. 2009); 2009); In In re Actimmune Mktg. re Actimmune Mktg. Litig., Litig., No. No. C C 08-02376 MHP, 08-02376 MHP, 14 2010 WL 2010 WL 3463491, 3463491, at *9, and at *9, and n.3 n.3 (N.D. (N.D. Cal. Cal. Sept. 1, 2010) Sept. 1, 2010) aff'd, aff'd, 464 464 F. F. App'x App'x 15 15 651 (9th 651 (9th Cir. Cir. 2011). 2011). 16 16 In fact, In fact, aa number number of of other other courts courts in FTC cases in FTC have found cases have or stated found or stated that that Rule Rule 17 17 9(b) does not 9(b) does not apply apply unless unless the the Complaint pleads scienter Complaint pleads scienter or or at at least least knowledge knowledge of of 18 18 falsity. See, e.g., falsity. See, e.g., FTC FTC v. v. Consumer Health Benefits Consumer Health Benefits Ass Ass'n, No. 10 'n, No. 10 CIV. 3551 ILG CIV. 3551 ILG 19 19 RLM, 2012 WL RLM, 2012 WL 1890242, 1890242, at at *7 (E.D.N.Y. May *7 (E.D.N.Y. May 23, 23, 2012) 2012) (for (for allegations to allegations to 20 20 "sound in "sound in fraud" under Rule fraud" under Rule 9(b), proof of 9(b), proof of the the same same general general elements of common elements of common 21 law fraud law fraud are required); FTC are required); FTC v. Sterling Precious v. Sterling Precious Metals, Metals, LLC, LLC, No. No. 12-80597-CIV, 12-80597-CIV, 22 2013 WL 2013 WL 595713, 595713, at at *3 (S.D. Fla. *3 (S.D. Fla. Feb. Feb. 15, 15, 2013) 2013) (declining (declining to to apply apply Rule Rule 9(b), 9(b), 23 23 persuaded that persuaded that Rule Rule 9(b) 9(b) contemplates proof of contemplates proof of elements of common elements of law fraud, common law fraud, 24 24 including scienter, including scienter, reliance, reliance, and and injury); injury); FTC FTC v. Freecom Comm'ns, v. Freecom Inc., 401 Comm 'ns, Inc., 401 F.3d F.3d 25 25 1192. 1203 1192. 1203 n.7 n.7 (10th (10th Cir. 2005) ("fraud" Cir. 2005) ("fraud" as as contemplated by Rule contemplated by 9(b) includes Rule 9(b) includes 26 26 scienter, reliance, scienter, reliance, and and injury). injury). 27 27 Defendants cite Defendants to courts cite to that "applied courts that "applied or or indicated indicated approval" of the approval" of the 28 28 heightened pleading heightened pleading standard standard of of Rule Rule 9(b) to Section 9(b) to Section 5 5 claims. claims. In FTC v. In FTC Lights of v. Lights of 77 Plaintiff's Opposition Plaintiff's Opposition to to Motion Motion to to Dismiss Dismiss Case seCase: 2:16-cv-00579-MWF-SS 1:16-cv-05198 Document #: 93-926 Document Filed: 03/30/18 Filed Page 04/04/16 16 of Page 1533 of PageID 32 Page#:1699#:228 ID #:2 28 1 1 America, 760 America, F. Supp. 760 F. 848, 852-55 Supp. 848, 852-55 (C.D. (C.D. Cal. 2010) ("LOA"), Cal. 2010) ("LOA"), the the FTC FTC sought sought to to 2 2 hold individuals hold individuals liable liable for the corporation's for the violations––unlike this corporation's violations—unlike this Complaint. Complaint. 33 The court The court found that the found that the complaint alleged aa unified complaint alleged unified course of fraudulent course of fraudulent conduct, conduct, 4 4 and sounded and sounded in in fraud, because it fraud, because it alleged alleged that that these these individuals "knew or individuals "knew or should should 55 have known" have that their known" that their conduct was deceptive conduct was deceptive (id. (id. at 852-53)3 and at 852-53)3 and was was analogous analogous 6 6 to aa claim to claim for negligent misrepresentation. for negligent misrepresentation. Id. Id. at 853.4 The at 853.4 The motion motion to to dismiss dismiss in in 7 7 FTC v. FTC Swish Mktg., v. Swish Mktg., No. No. 5:09-cv-03814, 5:09-cv-03814, 2010 2010 WL WL 653486, 653486, *2-4 (N.D. Cal. *2-4 (N.D. Cal. Feb. Feb. 88 22, 2010), 22, 2010), was, was, like like the the motion motion in in LOA, LOA, filed by an filed by an individual defendant. The individual defendant. The 99 court did not court did not reach the issue reach the issue of of whether whether to to apply apply Rule Rule 9(b). Id. at 9(b). Id. *4. In at *4. In its its 10 10 explanation of why explanation of why it it thought thought applying Rule 9(b) applying Rule "was aa real 9(b) "was prospect," and real prospect," why and why 11 11 the allegations the there could allegations there be compared could be to aa case compared to case for for common law fraud, common law the court fraud, the court 12 12 noted that, noted that, to to hold hold the the individual individual defendant defendant liable liable for restitution under for restitution under the the FTC FTC 13 13 Act, the Act, the FTC FTC must must prove prove that that the the individual had "knowledge individual had "knowledge that that the the corporation corporation .. .. 14 14 .. engaged in dishonest engaged in dishonest or or fraudulent fraudulent conduct." Id. at conduct." Id. at *3. *3. Similarly, Similarly, in FTC v. in FTC v. 15 15 Wellness Support Network, Wellness Support Network, Inc., Inc., No. No. 10-4879, 10-4879, 2011 2011 WL WL 1303419, 1303419, *9 (N.D. Cal. *9 (N.D. Cal. 16 16 April 4, April 4, 2011), 2011), the the court did not court did not decide decide whether whether Rule 9(b) applied. Rule 9(b) applied. While While the the court court 17 17 found the reasoning found the reasoning in the LOA in the LOA and and Swish Swish persuasive, persuasive, the the persuasive persuasive aspects aspects the the 18 18 court quoted discuss court quoted discuss the the knowledge requirement of knowledge requirement of the the individual individual liability test. Id. liability test. Id. 19 19 at *9. at *9. 20 20 Thus, for Thus, for Rule Rule 9(b) to apply, 9(b) to apply, the the complaint or claim complaint or must allege claim must allege that that the the 21 21 defendant acted defendant acted with with scienter scienter or or knowledge knowledge of of falsity. falsity. 22 22 23 23 3 3 In finding that the complaint alleged a unified course of fraudulent conduct, the court 24 24 noted in footnote 3 that the FTC is required to show that individual defendants knew that 25 25 their company had engaged in deceptive conduct to obtain monetary relief against them. 4 4 While the court rejected the proposition that a cause of of action (e.g., Section 5) must 26 26 include all the elements of fraud in order for Rule 9(b) to apply, it agreed with Vess that 27 27 the specific allegations of the complaint control whether the complaint "sounds "sounds in fraud." fraud." 28 28 LOA at 851-52. LOA 8 8 Plaintiff's Opposition Plaintiff's Opposition to to Motion Motion to to Dismiss Dismiss Case seCase: 2:16-cv-00579-MWF-SS 1:16-cv-05198 Document #: 93-926 Document Filed: 03/30/18 Filed Page 04/04/16 17 of Page 1633 of PageID 32 Page#:1700#:229 ID #:2 29 1 1 2. 2. Rule Rule 9(b) does not 9(b) does not apply apply here here because because the the Complaint does not Complaint does not 2 allege fraud, allege intent to fraud, intent to defraud, defraud, or or knowledge of falsity knowledge of falsity 3 This action This action does does not not meet meet the the first test under first test under Vess Vess for determining whether for determining whether 4 the Complaint the "sounds in Complaint "sounds in fraud" because fraud fraud" because is not fraud is not an an essential essential element of aa element of 55 Section Section 5 5 cause of action. cause of action. Like Like Section 11 of Section 11 of the the Securities Act, Section Securities Act, 5 Section 5 6 6 prohibits all prohibits all misrepresentations—no misrepresentations––no scienter scienter is is required. FTC v. required. FTC v. World World Travel Travel 7 7 Vacation Brokers, Inc., Vacation Brokers, Inc., 861 861 F.2d F.2d 1020, 1020, 1029 1029 (7th (7th Cir. 1988). Accordingly, Cir. 1988). Accordingly, under under 88 Vess Vess and Kearns, Rule and Kearns, Rule 9(b) 9(b) can can apply only if apply only if the the Complaint specifically alleges Complaint specifically alleges 99 facts necessarily constituting facts necessarily constituting fraud. fraud. 10 Nor does Nor does this this action action meet meet the the specific-allegations specific-allegations test test of of Vess and Kearns, Vess and Kearns, 11 11 because the because the FTC's FTC's Complaint, Complaint, like the complaints like the in Actimmune complaints in Actimmune and and Schwab, Schwab, does does 12 12 not include not include any any specific specific allegations allegations of of scienter scienter or or knowledge of falsity. knowledge of For this falsity. For this 13 same reason, same reason, aa number number of of cases in other cases in other districts districts have have declined declined to to find find Rule Rule 9(b) 9(b) 14 applicable in applicable in Section Section 5 5 actions. See, e.g., actions. See, e.g., Wellness Support(and cases Wellness Support(and cases cited cited 15 therein), 2011 therein), 2011 WL WL 1303419, 1303419, at at *8. *8. 16 Because the Because the Complaint Complaint alleges neither fraud alleges neither nor facts fraud nor that constitute facts that constitute fraud, fraud, 17 17 it should it should not not be be required to meet required to meet the the Rule Rule 9 standard. Policy 9 standard. Policy considerations considerations 18 18 further support applying further support applying Rule 8 in Rule 8 in cases like this cases like this in in which which the the elements of fraud elements of fraud 19 are not are not alleged. See, e.g., alleged. See, e.g., Freecom, Freecom, 401 401 F.3d F.3d 1192 1192 (citing (citing the the broad, broad, public- public- 20 serving remedial serving remedial purpose purpose of of an an FTC FTC deception deception claim, noting that claim, noting that an FTC an FTC 21 deception claim deception claim is "not aa private is "not private or or common law fraud common law action designed fraud action designed to to remedy remedy 22 aa singular singular harm, harm, but but aa government government action action brought brought to to deter deter deceptive deceptive acts acts and and 23 23 practices aimed practices aimed at at the the public public and to obtain and to obtain redress redress on on behalf behalf of of aa large large class of class of 24 24 third-party consumers" third-party (citations omitted).) consumers" (citations omitted).) Similarly, an FTC Similarly, an FTC action action differs differs from from 25 UCL actions UCL actions brought brought by by private private plaintiffs plaintiffs enforcing private rights. enforcing private rights. As As explained explained 26 below, even below, assuming that even assuming that Rule Rule 9(b) applies to 9(b) applies to Section 5 claims, Section 5 the Complaint claims, the Complaint 27 pleads the pleads the claims with sufficient claims with sufficient particularity. particularity. 28 99 Plaintiff's Opposition Plaintiff's Opposition to to Motion Motion to to Dismiss Dismiss Case seCase: 2:16-cv-00579-MWF-SS 1:16-cv-05198 Document #: 93-926 Document Filed: 03/30/18 Filed Page 04/04/16 18 of Page 1733 of PageID 32 Page#:1701#:230 ID #:2 30 1 1 B. B. The Complaint The Complaint States States aa Claim upon Which Claim upon Which Relief May Be Relief May Be Granted Granted 2 Under Count Under Count II (DeVry's (DeVry's 90% 90% Claim) Because It Claim) Because It Describes the Who, Describes the Who, 3 What, When, What, When, Where Where and and How of the How of the Deceptive Deceptive Conduct with Conduct with 4 Sufficient Particularity to Sufficient Particularity to Apprise Apprise Defendants Defendants of of the the Charges Charges and to and to 55 Enable Enable Them to Prepare Them to Prepare aa Defense Defense for Trial for Trial 6 6 1. 1. The Complaint allegations The Complaint allegations satisfy satisfy Rule Rule 8 8 because because they they go go well well 7 7 beyond making beyond making threadbare threadbare allegations allegations that that Defendants violated Defendants violated 88 Section Section 5 5 9 The Complaint The Complaint allegations allegations pertaining pertaining to to Count Count II are are significantly significantly more more 10 10 detailed than detailed than "threadbare" "threadbare" or or "formulaic" "formulaic" allegations of the allegations of the type type that that were were rejected rejected 11 11 in Twombly in and Iqbal. Twombly and Iqbal. Rather than simply Rather than simply alleging alleging "Defendants "Defendants made made 12 12 misrepresentations in misrepresentations in violation violation of of Section Section 5," the Complaint 5," the describes the Complaint describes the 13 13 underlying conduct underlying in great conduct in great detail. detail. And And unlike unlike in in Twombly, where an Twombly, where an inference inference 14 was necessary was necessary to to find that the find that the action giving rise action giving to liability rise to liability (i.e., (i.e., aa conspiracy) had conspiracy) had 15 15 occurred, in occurred, in this this case no such case no such inference inference is is necessary: necessary: the the actions giving rise actions giving rise to to the the 16 16 defendants' liability defendants' liability are alleged directly. are alleged directly. The The Complaint describes the Complaint describes the specific specific 17 17 representation, and representation, and then then provides provides numerous numerous examples of, among examples of, among other other things, things, 18 18 actual ads, actual ads, actual actual language in ads, language in ads, actual websites, and actual websites, and actual language in actual language in sales sales 19 19 pitches. pitches. 20 20 The Complaint The Complaint further further explains how and explains how and why why the the 90% representation is 90% representation is false false 21 and unsubstantiated. and unsubstantiated. For For example, rather than example, rather than simply simply stating stating that that "Defendants "Defendants 22 claim the percentage claim the percentage is is 90 90 and in fact and in it is fact it is not," not," the the Complaint alleges that Complaint alleges that the the 23 23 actual percentage actual percentage is is significantly significantly smaller smaller than than 90 because Defendants 90 because Defendants count count aa 24 24 substantial number substantial number of graduates5 who of graduates5 who should should not not have have been been counted, including aa counted, including 25 25 substantial percentage substantial percentage who who had had obtained obtained their their jobs jobs before before enrolling in DVU, enrolling in DVU, and and 26 26 27 27 5 5 "substantial" means "large According to Merriam-Webster, "substantial" "large in amount, size, or 28 28 number," contrary to Defendants' number," Defendants' assertion that the allegations in these paragraphs could (continued on next page. . .) 10 10 Plaintiff's Opposition Plaintiff's Opposition to to Motion Motion to to Dismiss Dismiss Case seCase: 2:16-cv-00579-MWF-SS 1:16-cv-05198 Document #: 93-926 Document Filed: 03/30/18 Filed Page 04/04/16 19 of Page 1833 of PageID 32 Page#:1702#:231 ID #:2 31 1 1 a significant a significant number number whose whose jobs jobs were were not not actually actually in in their their field of study. field of study. 2 Other Other courts have found courts have that complaints found that that alleged complaints that alleged the the defendant defendant made made aa 3 representation, provided representation, provided examples of the examples of the representation, representation, and alleged that and alleged that the the 4 representation was representation was false or unsubstantiated false or unsubstantiated met met the the requirements requirements of of Rule 8. See Rule 8. See 55 Cantkier, Cantkier, 767 F. Supp. 767 F. 2d at Supp. 2d at 157-58; 157-58; Wellness Support, 2011 Wellness Support, 2011 WL WL 1303419, 1303419, at at *10. *10. 6 6 In Cantkier, In the complaint Cantkier, the alleged that complaint alleged that the the defendant's defendant's two two websites websites included included aa 7 7 statement touting statement touting aa "97% "97% success success rate" rate" in in helping helping clients obtain mortgage clients obtain mortgage 88 reductions, alleged reductions, alleged that that the the defendants defendants had had represented represented having having aa 97% success rate, 97% success rate, 9 and alleged and that the alleged that the representation was false representation was false and not substantiated. and not substantiated. The The complaint complaint 10 10 did not did not attach attach aa copy of either copy of ad.6 (Merrill either ad.6 (Merrill Decl. Decl. at at ¶ ¶ 2, 2, Ex. 1.) The Ex. 1.) The court court found found 11 11 that this that this level level of of detail detail was was sufficient sufficient to to satisfy satisfy Rule 8 (and Rule 8 (and Rule Rule 9(b) as well). 9(b) as well). 12 12 Accordingly, Count Accordingly, Count II of of the the Complaint meets the Complaint meets the Rule 8 standard Rule 8 standard for stating for stating 13 13 aa claim claim for relief and for relief and should should not not be be dismissed. dismissed. 14 2. 2. The Complaint allegations The Complaint allegations satisfy satisfy Rule Rule 9 because they 9 because they 15 15 sufficiently describe sufficiently describe the the time, time, place, place, and and content of the content of the false false 16 16 representations, the representations, the fact that was fact that was misrepresented, misrepresented, and the parties and the parties 17 17 involved in involved the deception in the deception 18 18 The Complaint The Complaint sets sets out out the the who, who, what, what, when, when, where, where, and and how how regarding regarding the the 19 19 conduct that Count conduct that Count II alleges alleges is is false or misleading, false or misleading, and and does does so so with with sufficient sufficient 20 20 particularity to particularity to allow allow Defendants to prepare Defendants to prepare aa defense. defense. 21 The what, The what, when, when, where, where, and and how how are are set set forth in the forth in the 19 19 pages pages and and 30 30 22 paragraphs of paragraphs of the the Complaint Complaint (¶¶ (¶¶ 14-43) 14-43) that that include descriptions of include descriptions of and quotations and quotations 23 23 from numerous advertisements, from numerous advertisements, webpages, webpages, brochures, brochures, social social media media pages, pages, and and 24 24 other promotional other promotional material material in which Defendants in which have used Defendants have used "90%" "90%" (or (or aa 25 25 26 26 be referring to an unsubstantial "molehill" "molehill" amount (Mot. at 20:12-14). 27 27 6 6 Plaintiff is concurrently filing a request that the Court take judicial notice of this 28 28 complaint (CV-09-00894 (D.D.C.), ECF No. 93). 11 11 Plaintiff's Opposition Plaintiff's Opposition to to Motion Motion to to Dismiss Dismiss Case seCase: 2:16-cv-00579-MWF-SS 1:16-cv-05198 Document #: 93-926 Document Filed: 03/30/18 Filed Page 04/04/16 20 of Page 1933 of PageID 32 Page#:1703#:232 ID #:2 32 1 1 substantially similar substantially similar percentage—see percentage––see ¶ ¶ 17) 17) in in referring referring to to the the employment success employment success 2 of its of its graduates graduates within within their their field of study field of study within within six six months months of of graduation. graduation. These These 3 paragraphs detail paragraphs detail specific specific ads, ads, specific specific language, language, and and specific specific circumstances in circumstances in 4 which the which the representations representations were were made. made. The The Complaint also alleges Complaint also specific periods alleges specific periods 55 of times of times in in which which the the ads or claims ads or that are claims that are quoted quoted were were made made or or appeared. appeared. In In 6 6 addition, attached addition, attached to to the the Complaint are 13 Complaint are 13 exhibits that lay exhibits that lay out out specific specific ads ads and and 7 7 specific language specific language that that the the FTC FTC contends contends conveyed the message conveyed the message as as formulated in formulated in 88 Count I. Further, Count I. Further, as as shown shown in in Section IV.B.1 above, Section IV.B.1 above, the the Complaint Complaint explains why explains why 99 the 90% the 90% claim is false claim is and unsubstantiated. false and unsubstantiated. 10 10 With respect With respect to to the the "who," "who," the the Complaint describes the Complaint describes the parties parties who who made made 11 11 these representations these representations as as all all three Defendants.7 The three Defendants.' The Complaint alleges that Complaint alleges that the the three three 12 12 Defendants engaged Defendants in the engaged in the making making of of the the 90% 90% claim by various claim by various means—e.g., means—e.g., they they 13 "disseminated or "disseminated or caused to be caused to be disseminated" disseminated" or or "ran" "ran" or or "published" "published" specific specific ads ads 14 and other and other promotional promotional material material that that conveyed the 90% conveyed the 90% claim, or "have claim, or "have made" made" the the 15 15 claim on DVU's claim on DVU's website. website. See See rlf ¶¶ 20-25, 20-25, 27a, 27a, 32-38. 32-38. The The Complaint Complaint further further alleges alleges 16 that DVU that DVU representatives representatives have have made made statements statements and and claims claims conveying the 90% conveying the 90% 17 17 claim to prospective claim to prospective students students over over the the phone phone and and in in person person (¶¶ 39-43), and ME 39-43), that, and that, 18 18 with respect with respect to to all all acts in the acts in the Complaint that are Complaint that are ascribed to DVU, ascribed to DVU, Defendant DEG Defendant DEG 19 19 dominated or dominated or controlled those acts controlled those acts and practices, knew and practices, knew of of or or approved approved those those acts acts 20 20 and practices, and practices, and/or and/or benefitted benefitted from those acts from those acts and and practices practices (¶ 6). The Of 6). The Complaint Complaint 21 also alleges also alleges that that the the Defendants Defendants relied relied on on insufficient insufficient substantiation substantiation in in making making their their 22 90% 90% claim. claim. (¶¶ 44-46.) ME 44-46.) 23 23 Other courts Other have found courts have that complaints found that that similarly complaints that similarly alleged alleged that that the the 24 24 defendant made defendant made aa representation, representation, provided provided examples of the examples of the representation, and representation, and 25 alleged that alleged that the the representation was false representation was or unsubstantiated false or unsubstantiated met met the the requirements requirements of of 26 26 27 27 7 The acceptability of describing the actions of more than one defendant with the word 28 28 "defendants" is discussed in Section IV.D, below. "defendants" 12 12 Plaintiff's Opposition Plaintiff's Opposition to to Motion Motion to to Dismiss Dismiss Case seCase: 2:16-cv-00579-MWF-SS 1:16-cv-05198 Document #: 93-926 Document Filed: 03/30/18 Filed Page 04/04/16 21 of Page 2033 of PageID 32 Page#:1704#:233 ID #:2 33 1 1 Rule Rule 9. FTC v. 9. FTC Lunada Biomedical, v. Lunada Biomedical, Inc., Inc., No. No. CV-15-3380-MWF, CV-15-3380-MWF, ECF No. 94, ECF No. 94, 2 Slip Slip Op. at 7-8 Op. at (C.D. Cal. 7-8 (C.D. Cal. Feb. Feb. 23, 23, 2016); 2016); FTC FTC v. v. Cantkier, Cantkier, 767 F. Supp. 767 F. 2d at Supp. 2d at 156- 156- 3 57; FTC v. 57; FTC v. Wellness Support Network, Wellness Support Network, 2011 2011 WL WL 1303419, 1303419, at at *10 (accepting FTC's *10 (accepting FTC's 4 argument (see argument (see id. id. at *5) that at *5) that Rule 9(b) does Rule 9(b) does not not require require aa Section Section 5 5 complaint to complaint to 55 state "why" state "why" the the statements statements were were false or how false or how they they should should have have been been substantiated); substantiated); 6 6 see also see also Walling Walling v. Beverly Enters., v. Beverly Enters., 476 476 F.2d F.2d 393, 393, 397 397 (9th (9th Cir. 1973) (holding Cir. 1973) (holding that that 7 7 complaint stating that complaint stating that the the fraud fraud consisted of "entering consisted of "entering into into the the August August 26, 26, 1969 1969 88 agreement with agreement with only only aa limited limited intention intention of of performing" performing" satisfied satisfied Rule Rule 9(b) because 9(b) because 99 this allegation this "stated the allegation "stated the time, time, place place and and nature nature of of the the alleged alleged fraudulent fraudulent 10 activities"). activities"). 11 11 These allegations These allegations are thus sufficient are thus sufficient to to allow allow the the court to draw court to draw the the 12 12 reasonable inference reasonable inference that that the the Defendants Defendants are are liable liable for violating Section for violating Section 5, and are 5, and are 13 specific enough specific to give enough to give Defendants notice of Defendants notice of the the conduct that is conduct that is alleged to have alleged to have 14 violated Section violated 5 so Section 5 so that that they they can defend against can defend against the the charge and not charge and not just just deny deny that that 15 they have they have done done anything wrong. Accordingly, anything wrong. Accordingly, Count Count II of of the the Complaint Complaint meets meets the the 16 Rule Rule 9(b) standard for 9(b) standard stating aa claim for stating claim for relief and for relief and should should not not be be dismissed. dismissed. 17 17 3. 3. Defendants' arguments Defendants' lack merit arguments lack merit 18 18 Defendants argue Defendants argue that that the the Complaint Complaint fails to allege fails to allege that that the the 90% 90% claim was claim was 19 made expressly, made expressly, fails to allege fails to allege that that that that the the 90% 90% claims were material, claims were material, and and fails to fails to 20 allege that allege that the the 90% 90% claims lacked aa reasonable claims lacked reasonable basis. basis. As As explained below, all explained below, of all of 21 these arguments these arguments fail. fail. 22 a. a. Express vs. implied Express vs. implied representations representations 23 23 The Defendants' The Defendants' argument argument is that the is that the Complaint Complaint fails to include fails to include facts to facts to 24 24 support an support allegation that an allegation that Defendants Defendants "expressly" "expressly" made made the the 90% claim.88 However, 90% claim. However, 25 as explained as in Section explained in Section II, II, aa claim claim for relief under for relief under Section 5 lies Section 5 lies for making aa for making 26 27 8 "fails to allege 'express Defendants contend the Complaint "fails 'express falsity,'" falsity,'" but the substance 28 of their argument is that the Complaint fails to show the 90% 90% claim is an express claim. 13 13 Plaintiff's Opposition Plaintiff's Opposition to to Motion Motion to to Dismiss Dismiss seCase: Case 2:16-cv-00579-MWF-SS Document 1:16-cv-05198 Document #: 93-926 Filed Filed: 04/04/16 03/30/18 Page Page 2133 22 of 21 32 Page of PageID ID #:2 #:1705 34 #:234 1 1 deceptive representation deceptive representation regardless regardless of of whether whether the the representation representation is is express or express or 2 2 implied. Accordingly, implied. Accordingly, the the absence absence of of an an allegation that aa representation allegation that was representation was 33 express express rather than implied rather than implied does does not not provide provide grounds grounds for dismissing aa complaint for dismissing complaint 4 4 for for failing to state failing to state aa claim. claim. 55 Even if stating Even if stating aa claim claim for deceptive representations for deceptive representations under under Section Section 5 5 6 6 required alleging required alleging that that the the representation representation was was express, the Complaint express, the does in Complaint does in fact fact 7 7 show that show that the the 90% 90% claim was express claim was in some express in some if if not not all all of of Defendants' Defendants' ads. ads. 88 Express Express claims are ones claims are ones that that "directly "directly represent represent the the fact at issue fact at issue while while implied implied 99 claims do so claims do so in in an an oblique oblique or or indirect indirect way." way." Kraft, Kraft, Inc. Inc. v. FTC, 970 v. FTC, F.2d 311, 970 F.2d 311, 318, 318, 10 10 n.4 (7th n.4 (7th Cir. Cir. 1992). 1992). The The 90% 90% claim as alleged claim as in Count alleged in Count II is is that, that, as as aa result of result of 11 11 obtaining aa DVU obtaining DVU degree, degree, 90% of DVU 90% of DVU graduates graduates .. .. .. who who were were actively actively seeking seeking 12 12 employment landed or employment landed or obtained obtained new new jobs jobs in in their their field of study field of study within within six six months months 13 13 of graduation." of graduation." Defendants argue that Defendants argue that the the examples quoted in examples quoted the Complaint in the Complaint did did 14 14 not expressly not make this expressly make this claim because their claim because their advertisements advertisements did did not not expressly expressly 15 15 convey that the convey that the 90% statistic was 90% statistic was referring referring to to "new "new jobs." jobs." However, the Complaint However, the Complaint 16 16 cites at least cites at least three three different different instances instances of of claims that expressly claims that expressly characterized the characterized the 17 17 jobs that jobs that defendants defendants included included in in their their 90% statistic as 90% statistic as jobs jobs that that these these graduates graduates 18 18 landed, began, landed, began, or or found within six found within six months months of of graduation: graduation: "quickly "quickly land land jobs jobs in in 19 19 their fields their of study fields of study within within six six months months of of graduation graduation (learn (learn more)" more)" (¶ 28);9 "helped (¶ 28);9 "helped 20 20 thousands of thousands of students students begin rewarding careers begin rewarding (¶ 31); careers (¶ 31); "find "find employment in their employment in their 21 21 field of study field of study within within 66 months" months" (¶ (¶ 38) 38) (emphasis (emphasis added). added). 22 22 Other ads that Other ads that don't don't use use these these exact words make exact words make the the 90% 90% claim just as claim just as 23 23 strongly. For strongly. For example, Defendants' television example, Defendants' television ads ads include include language and graphics language and graphics 24 24 9 25 25 9 Defendants "get jobs" suggest that the "get jobs" and "land "land jobs" jobs" language could not possibly have expressly conveyed that the 90% statistic described graduates who got jobs or landed jobs 26 26 "learn more," because, by clicking the link to "learn more," consumers would have been taken to a 27 27 different web page with slightly different language. Regardless of what consumers might 28 28 have seen on another page, Defendants expressly made the claim on the initial page. 14 14 Plaintiff's Opposition Plaintiff's Opposition to to Motion Motion to to Dismiss Dismiss seCase: Case 2:16-cv-00579-MWF-SS Document 1:16-cv-05198 Document #: 93-926 Filed Filed: 04/04/16 03/30/18 Page Page 23 of 2233 32 Page of PageID ID #:2 #:1706 35 #:235 1 1 that drive that drive home home the the point point that that the the 90% 90% claim relates to claim relates to new jobs.10 Because new jobs.1° Because the the 2 2 strength of strength of aa claim bears on claim bears on the the issue issue of of whether whether it it was was material, material, this this issue issue is is 33 discussed further discussed below, in further below, in response response to to Defendants' Defendants' argument argument that that the the materiality materiality 4 4 of Defendants' of Defendants' 90% 90% claim is not claim is not sufficiently sufficiently pled. pled. 55 To the To the extent that Defendants extent that Defendants are are arguing arguing that that the the ads, statements, claims ads, statements, claims 6 6 and language and described in language described in the the Complaint Complaint fail to make fail to make the the representation representation as as 7 7 formulated in Count formulated in Count II (whether (whether expressly or by expressly or by implication), implication), that that issue issue cannot be cannot be 88 resolved in resolved in aa motion motion to to dismiss. dismiss. FTC FTC v. v. Wyndham Wyndham Worldwide Worldwide Corp., 10 F. Corp., 10 F. Supp. Supp. 99 3d 602, 3d 602, 631 (D.N.J. 2014), 631 (D.N.J. aff'd, 799 2014), aff'd, F.3d 236 799 F.3d 236 (3d (3d Cir. Cir. 2015) 2015) (citations (citations omitted). omitted). 10 10 b. b. Materiality Materiality 11 11 Defendants wrongly Defendants wrongly argue argue that that the the Complaint does not Complaint does not sufficiently sufficiently allege allege 12 12 that the that the 90% 90% claim was material. claim was material. A A material material representation is one representation is one that that involves involves 13 13 information that information that is is important to consumers, important to and that consumers, and that is is therefore therefore likely likely to to affect affect aa 14 14 consumer's consumer's choice of or choice of or conduct regarding aa product. conduct regarding product. Kraft, Kraft, 970 F.2d at 970 F.2d 322; FTC at 322; FTC 15 15 v. Bronson Partners, v. Bronson Partners, LLC, LLC, 564 F. Supp. 564 F. 2d 119, Supp. 2d 119, 135 135 (D. (D. Conn. 2008). "Express Conn. 2008). "Express 16 16 claims or deliberately-made claims or deliberately-made implied implied claims used to claims used to induce induce the the purchase purchase of of aa 17 17 particular product particular product or or service service are are presumed presumed to to be be material." material." FTC FTC v. Ivy Capital, v. Ivy Capital, 18 18 Inc., No. Inc., No. 2:11-CV-283, 2:11-CV-283, 2013 2013 WL WL 1224613, 1224613, at at *8 (D. Nev. *8 (D. Nev. Mar. Mar. 26, 26, 2013), 2013), aff'd aff'd in in 19 19 part and part and vacated and remanded vacated and remanded in part on in part on other other grounds, grounds, 616 Fed. Appx. 616 Fed. Appx. 360 360 (9th (9th 20 20 Cir. 2015) (quotations Cir. 2015) (quotations omitted). omitted). With With both both express and implied express and implied claims, claims, 21 21 information pertaining information pertaining to to the the central central characteristics of the characteristics of the product product or or service service is is 22 22 presumed to presumed to be be material. material. John John Beck Beck Amazing Amazing Profits, Profits, 865 865 F. F. Supp. 2d at Supp. 2d 1076. at 1076. 23 23 24 24 25 25 10 "Graduation 10 "Graduation Present" Present" ad (Compl. ¶ ¶ 22) (graduate obtaining new job is used to illustrate 26 26 meaning of 90% statistic); "Offer "Offer Letter" Letter" ad (id. ¶ ¶ 23) (images of graduates obtaining offer letters upon graduation used to illustrate meaning of 90% statistic); and 27 27 "Roommates" ad (id. ¶ "Roommates" ¶ 24 and Ex. C.1 at TR ¶¶ 6, 7, 8) (student looking forward to 28 28 graduating and beginning a career used to illustrate meaning of 90% statistic). 15 15 Plaintiff's Opposition Plaintiff's Opposition to to Motion Motion to to Dismiss Dismiss Case seCase: 2:16-cv-00579-MWF-SS 1:16-cv-05198 Document #: 93-926 Document Filed: 03/30/18 Filed Page 04/04/16 24 of Page 2333 of PageID 32 Page#:1707#:236 ID #:2 36 1 1 The Complaint The Complaint allegations allegations establish materiality of establish materiality of the the 90% 90% claim. claim. 2 Paragraphs 20 Paragraphs 20 and 39 of and 39 of the the Complaint Complaint allege allege that that Defendants Defendants disseminated disseminated 3 advertisements, and advertisements, and that that Defendants' Defendants' salespeople salespeople made made the the statements statements and and 4 representations described representations described in in IN ¶¶ 39-43, 39-43, "to "to induce induce prospective prospective students" students" to to purchase purchase 55 DVU's educational DVU's products and educational products and services services (or (or to to enroll). Paragraph 59 enroll). Paragraph 59 alleges that alleges that 6 6 "consumers suffered "consumers suffered and will continue and will to suffer continue to suffer substantial substantial injury injury as as aa result result of of 7 7 Defendants' violations Defendants' violations of of the the FTC FTC Act." Act." By By alleging alleging that that defendants defendants made made the the 88 90% 90% claim to induce claim to induce consumers to enroll, consumers to enroll, and that consumers and that suffered injury consumers suffered injury as as aa 9 result of result of this this claim, the Complaint claim, the Complaint alleges alleges that that the the purported purported success success rate rate of of DVU DVU 10 10 grads in grads in finding finding employment was likely employment was likely to to affect affect consumers' decision to consumers' decision to enroll, enroll, 11 11 that it that it was was made made with with the the purpose purpose of of persuading persuading consumers to decide consumers to decide to to enroll, and enroll, and 12 12 that it that it did did in in fact induce consumers fact induce to enroll. consumers to enroll. 13 13 The materiality The materiality of of Count Count I's I's 90% 90% claim claim concerning the success concerning the success rate rate of of 14 DeVry graduates DeVry graduates can also be can also be presumed presumed because because it it was was either either express or so express or so strongly strongly 15 15 implied that implied that intent to convey intent to the message, convey the message, and and thus thus materiality, materiality, can be presumed. can be presumed. 16 16 As argued As argued above, DeVry uses above, DeVry uses words words such such as as "landed" "landed" "obtained" "obtained" "began" "began" and and 17 17 "find" in "find" in aa number number of of its its ads ads and and claims, claims, removing any possible removing any possible ambiguity ambiguity as as to to 18 18 which jobs which jobs are the subject are the subject of of the the 90% 90% statistic. statistic. However, whether Defendants However, whether Defendants used used 19 19 the phrase the phrase "obtained "obtained careers" or instead careers" or instead used used the the phrase phrase "had "had careers" is aa careers" is 20 20 distinction without distinction without aa difference difference in in light light of of the the other other language language surrounding surrounding these these 21 words. The words. The statement statement that that "90% "90% of of DeVry DeVry University University grads grads actively actively seeking seeking 22 employment employment had had careers in their careers in their fields within six fields within six months months of of graduation" graduation" makes makes 23 23 the same the same claim that is claim that is made made in in ads that use ads that use the the phrase phrase "obtained "obtained careers." careers." The The 24 24 statement itself statement itself in in either version specifically either version specifically focuses on the focuses on the results results of of those those 25 25 graduates who graduates who were were actively actively seeking seeking employment, and on employment, and on the the six-month six-month time time 26 26 period around period graduation. A around graduation. A graduate graduate who who was was actively seeking employment actively seeking and employment and 27 27 "had aa career" "had within six career" within six months months of of graduation graduation is is aa graduate graduate who who was was seeking seeking aa job job 28 28 and thus and thus found found aa job job within within six six months months of of graduation. graduation. Both Both phrasings phrasings state state 16 16 Plaintiff's Opposition Plaintiff's Opposition to to Motion Motion to to Dismiss Dismiss Case seCase: 2:16-cv-00579-MWF-SS 1:16-cv-05198 Document #: 93-926 Document Filed: 03/30/18 Filed Page 04/04/16 25 of Page 2433 of PageID 32 Page#:1708#:237 ID #:2 37 1 1 exactly the same exactly the same proposition. proposition. At At the the very very least, the claim least, the is strongly claim is strongly implied. implied. 2 The equivalence The of the equivalence of the different different phrasings phrasings is is also also demonstrated demonstrated by by the the fact fact 3 that, in that, in all the ads all the ads and other representations and other representations quoted and cited quoted and cited in the Complaint, in the Complaint, 4 Defendants used Defendants used the the exact same statistic exact same statistic regardless regardless of of which which wording wording they they chose. chose. 55 They used They used the the same same 90% statistic in 90% statistic in conjunction with the conjunction with the "had "had careers" language as careers" language as 6 6 well as well as with, with, e.g., the "obtained e.g., the "obtained careers" language. Because careers" language. Because the the various various wordings wordings 7 7 are all are used to all used to describe describe the the same same statistic, statistic, Defendants Defendants obviously obviously understood understood the the 88 various wordings various wordings to to mean mean the the same same thing thing and intended to and intended to convey the same convey the same thing thing 9 regardless of regardless of the the exact wording. And exact wording. And the the only only meaning meaning of of the the 90% 90% claim that is claim that is 10 10 consistent with all consistent with all the the different different phrases phrases is is that that the the statistic statistic reflects reflects the the success success rate rate 11 11 of graduates of graduates seeking seeking employment near graduation employment near graduation in in finding finding aa job. job. 12 12 Thus, while Thus, while the the Complaint Complaint does does not not use use the the word word "materiality" "materiality" to to describe describe 13 13 the importance the importance of of the the 90% 90% claim to consumers' claim to decisions to consumers' decisions to enroll in DVU, enroll in the DVU, the 14 Complaint alleges sufficient Complaint alleges sufficient facts to establish facts to that this establish that this representation was material. representation was material. 15 15 In Cantkier, In the court Cantkier, the court found that the found that the complaint adequately alleged complaint adequately alleged materiality materiality on on 16 16 similar grounds: similar grounds: "[T]he "[T]he particular particular statements statements allegedly provided on allegedly provided on [the [the 17 17 defendant's] websites defendant's] websites could mislead aa reasonable could mislead reasonable consumer in the consumer in the way way the the FTC FTC 18 18 has claimed. has Further, the claimed. Further, the misrepresentations misrepresentations would would be be material material because because aa service's service's 19 19 prior success prior success rate rate and likelihood of and likelihood of success success convey material information, convey material information, i.e., i.e., 20 20 information that information that would would be be important important to to consumer consumer choice." choice." 767 F. Supp. 767 F. 2d at Supp. 2d at 158. 158. 21 c. c. Lack of substantiation Lack of substantiation 22 The Defendants The Defendants argue argue in their section in their section heading heading that that "the "the Complaint Complaint fails to fails to 23 23 allege that allege that the the '90% '90% claims' claims' lacked lacked aa reasonable reasonable basis" basis" (Mot. (Mot. at 17:2-3) but at 17:2-3) but then then 24 24 effectively rebut this effectively rebut this argument argument two two sentences sentences later later when when they they point point out out that that "The "The 25 25 FTC further FTC further alleges that these alleges that these records records 'do not provide `do not provide aa reasonable reasonable basis basis that that 26 26 substantiates Defendants' substantiates Defendants' 90% 90% claims.'" claims.'" This short allegation This short allegation is is sufficient sufficient to to state state 27 27 aa claim claim for lack of for lack of substantiation substantiation under under Section Section 5 and to 5 and to defeat defeat aa motion motion to to dismiss dismiss 28 28 under Rule under Rule 8 8 or or Rule Rule 9. 9. Cantkier, Cantkier, 767 F. Supp. 767 F. Supp. at 156-58; Wellness at 156-58; Support Wellness Support 17 17 Plaintiff's Opposition Plaintiff's Opposition to to Motion Motion to to Dismiss Dismiss Case seCase: 2:16-cv-00579-MWF-SS 1:16-cv-05198 Document #: 93-926 Document Filed: 03/30/18 Filed Page 04/04/16 26 of Page 2533 of PageID 32 Page#:1709#:238 ID #:2 38 1 1 Network, 2011 Network, 2011 WL WL 1303419, 1303419, at at *10; *10; cf. Lunada, ECF cf. Lunada, ECF No. No. 94 94 at at 6-7. Defendants 6-7. Defendants 2 go on, go on, however, however, arguing arguing that that "the "the only only records records that that the the FTC FTC alleges alleges fail to provide fail to provide 3 aa 'reasonable basis' for 'reasonable basis' the 90% for the 90% claim" are the claim" are the records records pertaining pertaining to to the the examples examples 4 of 2012 of 2012 graduates graduates set set forth in I¶¶ 45-46. forth in 45-46. Defendants Defendants misrepresent misrepresent or or misunderstand misunderstand 55 the Complaint the allegations regarding Complaint allegations regarding Defendant's Defendant's lack of substantiation lack of substantiation for this for this 6 6 claim. The Complaint claim. The Complaint explains that Defendants explains that have relied Defendants have relied upon upon files maintained files maintained 7 7 by DVU's by DVU's Career Career Services department to Services department to substantiate substantiate all all of of their their 90% 90% claims (¶ claims (¶ 88 44), not 44), not just just claims claims about DVU's 2012 about DVU's 2012 graduates; graduates; that that Defendants used these Defendants used these 99 records to records to calculate the 90% calculate the 90% figure that they figure that they use use in their advertisements in their advertisements and sales and sales 10 10 pitches (id.); pitches (id.); and and that that these these student student records (all of records (all of them) them) do do not not provide provide aa 11 11 reasonable basis reasonable basis that that substantiates substantiates Defendants' Defendants' 90% 90% claims claims (¶¶ 45-46). The OM 45-46). The 12 12 Complaint therefore alleges Complaint therefore alleges that that all all the the records records that that Defendants have relied Defendants have relied on on for for 13 13 any of any of their their 90% 90% claims were insufficient. claims were insufficient. Examples Examples from one year from one year are are provided provided 14 simply to simply to illustrate illustrate the the nature nature of of the the allegations. allegations. 15 Defendants next Defendants next argue argue that that the the detailed detailed information information in in rlf ¶¶ 44-47 44-47 just just isn't isn't 16 enough. These paragraphs, enough. These paragraphs, however, however, rather than simply rather than simply alleging alleging that that Defendants Defendants 17 17 90% 90% claim claim is is false false and unsubstantiated, describe and unsubstantiated, describe the the nature nature of of the the shortcomings shortcomings of of 18 18 Defendants' calculations––explaining Defendants' that Defendants calculations—explaining that Defendants counted counted aa substantial substantial 19 19 number of number of graduates graduates in in their their numerator numerator who who should should not not have have been been counted, counted, 20 20 including graduates including graduates whose whose jobs jobs were were not not related related to to attending DVU, and attending DVU, and grads grads 21 whose jobs whose jobs were were not not in in their their field––and additionally provides field—and additionally provides examples to help examples to help 22 illustrate what illustrate what Plaintiff Plaintiff means. means. These These paragraphs paragraphs also also explain that Defendants explain that Defendants 23 23 excluded excluded from their denominator from their denominator aa substantial substantial number number of of graduates graduates who who should should not not 24 24 have been have been excluded excluded from from Defendants' denominator because Defendants' denominator because they they were were actively actively 25 25 seeking employment, seeking and again employment, and again provides provides an an example. example. 26 26 Defendants argue Defendants argue that that the the numbers numbers and percentages need and percentages need to to be be quantified. quantified. In In 27 27 Cantkier, however, the Cantkier, however, the court court found that an found that an allegation allegation that that the the defendant defendant had had 28 28 misrepresented his misrepresented his clients' 97% success clients' 97% success rate rate was was sufficiently sufficiently pled pled under under Rule Rule 8 8 18 18 Plaintiff's Opposition Plaintiff's Opposition to to Motion Motion to to Dismiss Dismiss Case seCase: 2:16-cv-00579-MWF-SS 1:16-cv-05198 Document #: 93-926 Document Filed: 03/30/18 Filed Page 04/04/16 27 of Page 2633 of PageID 32 Page#:1710#:239 ID #:2 39 1 1 and Rule and 9(b), even Rule 9(b), though the even though the Complaint made no Complaint made no allegations allegations whatsoever whatsoever 2 regarding the regarding the defendant's defendant's actual success rate actual success rate and lacked any and lacked any discussion discussion of of why why the the 3 calculation of that calculation of that rate was deficient. rate was deficient. 767 F.Supp.2d at 767 F.Supp.2d at 156-58, 156-58, and Merrill Decl., and Merrill Decl., 4 ¶ 2, 2, Ex. Ex. 11 (Second (Second Am. Am. Compl. Compl. in in Cantkier). Cantkier). 55 To support To support their their contention that Rule contention that Rule 9(b) requires something 9(b) requires something more more than than the the 6 6 explanation of falsity explanation of and lack falsity and lack of of substantiation substantiation found found in ¶¶ 44-47 in ¶¶ 44-47 (see (see Mot. Mot. at at 7 7 19:8-14), and 19:8-14), and that that phrases phrases such such as "substantial percentage" as "substantial percentage" are unacceptable, are unacceptable, 88 Defendants first Defendants first cite cite Wellness Support. The Wellness Support. The court in Wellness court in Support, however, Wellness Support, however, 99 did not did not address address the the type type of of allegations allegations that that Defendants Defendants contend are deficient contend are deficient with with 10 10 these paragraphs these paragraphs in in the the instant instant Complaint. Complaint. In In fact, as noted fact, as noted above, the court above, the court found found 11 11 that the that the FTC's FTC's complaint satisfied Rules complaint satisfied 8 and Rules 8 9, even and 9, though the even though the complaint complaint lacked lacked 12 12 an explanation an of why explanation of why or or how how the the representations representations were were false or unsubstantiated. false or unsubstantiated. 13 Notably: "The Notably: "The Court rejects Defendants' Court rejects Defendants' assertions that the assertions that the FTC FTC was was required required to to 14 include allegations include allegations identifying identifying the the level level of of substantiation substantiation that that would would have have been been 15 required or required or the the standard standard for determining whether for determining whether the the statements statements were were true true or or false." false." 16 Wellness Support, 2011 Wellness Support, 2011 WL WL 1303419, 1303419, at *10. at *10. 17 17 Other Other cases that Defendants cases that Defendants cite are also cite are also inapposite. inapposite. In In Eclectic Eclectic Props. Props. East, East, 18 18 LLC v. LLC Marcus & v. Marcus & Millichap Millichap Co., the Ninth Co., the Ninth Circuit Circuit examined whether aa plaintiff examined whether plaintiff 19 19 adequately pled adequately pled "intent "intent to to defraud"; defraud"; it it declined declined to to accept the plaintiff's accept the plaintiff's asserted asserted 20 20 property value property value as as aa fact because other fact because other allegations in the allegations in the complaint undermined the complaint undermined the 21 plaintiff's value. plaintiff's value. 751 F.3d 990, 751 F.3d 998-99 (9th 990, 998-99 (9th Cir. 2014). Cir. 2014). 22 Defendants also Defendants also cite First Nationwide cite First Nationwide Bank Bank v. v. Gelt Funding Corp., Gelt Funding 27 F.3d Corp., 27 F.3d 23 23 763 (2d Cir. 763 (2d Cir. 1994). 1994). The issue in The issue in that that case, however, was case, however, was not not whether whether use use of of terms terms 24 24 such as such as "substantial "substantial percentage" percentage" could be used could be used in in describing describing why why aa representation representation 25 25 is false. is Instead, the false. Instead, the issue issue was was the the sufficiency sufficiency of of the the pleading pleading of of aa RICO RICO claim claim 26 26 based on based on aa misrepresentation misrepresentation of of the the value value of of loan loan property, property, aa cause of action cause of action which, which, 27 27 unlike Section unlike Section 5 of the 5 of the FTC FTC Act, Act, required required aa showing showing of of the the actual injury the actual injury the victim victim 28 28 sustained and sustained and aa showing showing of of causation between the causation between the fraud fraud and the amount and the amount of of injury. injury. 19 19 Plaintiff's Opposition Plaintiff's Opposition to to Motion Motion to to Dismiss Dismiss Case seCase: 2:16-cv-00579-MWF-SS 1:16-cv-05198 Document #: 93-926 Document Filed: 03/30/18 Filed Page 04/04/16 28 of Page 2733 of PageID 32 Page#:1711#:240 ID #:2 40 1 1 Id. at Id. at 769. 769. The The court court found the complaint found the deficient on complaint deficient on numerous numerous grounds grounds relating relating 2 2 to these to these specific specific requirements. requirements. Citing Citing guesswork guesswork and and inconsistencies inconsistencies in the in the 3 3 methodology used methodology used to to calculate the purported calculate the purported damages, damages, the the court court found that the found that the 4 4 "methodology employed "methodology by [plaintiff] employed by [plaintiff] in in determining determining the the magnitude magnitude of of the the 55 defendants' alleged defendants' overstatements of alleged overstatements of income income is is so so defective, defective, and the conclusions and the conclusions 66 reached so reached so defy defy logic, that no logic, that no 'reasonable inferences' can 'reasonable inferences' be drawn can be drawn therefrom." therefrom." Id. Id. 7 7 at 772 at (2d Cir. 772 (2d 1994). Nothing Cir. 1994). Nothing on on the the face of the face of the FTC's FTC's Complaint Complaint demonstrates demonstrates 88 any such any such utterly utterly defective defective or or logic-defying logic-defying calculations. calculations. 99 In re In re iPhone iPhone 4S 4S Consumer Litig. also Consumer Litig. also fails to support fails to support Defendants' Defendants' 10 10 contention that more contention that more specific specific numbers numbers must must be be alleged. In that alleged. In that case, the court case, the court 11 11 found that plaintiff's found that plaintiff's allegation allegation that that the the advertisements advertisements created the impression created the impression that that 12 12 Siri would operate Siri would operate "on "on aa consistent basis" was consistent basis" was unacceptably unacceptably ambiguous because ambiguous because 13 13 plaintiffs did plaintiffs did not not articulate articulate what what level of consistent level of performance Apple consistent performance Apple had had 14 14 promised. 2014 promised. 2014 WL WL 589388, at *5-6. 589388, at The deficiency *5-6. The deficiency with with the the complaint was complaint was 15 15 plaintiff's failure plaintiff's to specifically failure to specifically allege what Apple allege what Apple had had promised, promised, and what and what 16 16 expectations Apple had expectations Apple had created about Siri's created about performance, leaving Siri's performance, leaving no no standard standard by by 17 17 which to which to measure measure whether whether Apple Apple had had lived lived up up to to its its promises. promises. In this case, In this the case, the 18 18 promise at promise at issue issue is is clear clear and the standard and the standard is is clear. Defendants' claim clear. Defendants' was that claim was that 19 19 90% of its 90% of its graduates graduates who who were were actively actively seeking seeking employment employment found jobs in found jobs in their their 20 20 field within six field within six months months of of graduating. graduating. Thus, Thus, 90% is the 90% is the standard standard by by which which 21 21 Defendants' claim Defendants' is to claim is to be be measured. measured. The The Complaint Complaint alleges alleges Defendants Defendants fell fell 22 22 substantially short substantially short of of this this measurable measurable and and identifiable mark, and identifiable mark, and explains how. explains how. 23 23 Plaintiff is Plaintiff is not not required required to to go go further further and plead all and plead all its its evidence. Fujisawa Pharm. evidence. Fujisawa Pharm. 24 24 Co., Ltd. v. Co., Ltd. Kapoor, 814 v. Kapoor, 814 F. F. Supp. Supp. 720, 720, 726 (N.D. Ill. 726 (N.D. 1993).11 Ill. 1993).11 25 25 11 26 26 11 The other two cases Defendants cite, Nat'l Nat'l Talent Assocs., Inc., 107 F.T.C. 1, 6, 1986 WL 722094, *6 (1986), and Wm. H. WiseWise Co., 53 F.T.C. 408, 412-13, 1956 WL 16356, 27 27 Nat'l Talent Assoc. concerns a *4 (1956), have nothing to do with pleading standards. Nat'l 28 28 requested order modification. The discussion that Defendants quote from WiseWise is (continued on (continued on next next page page .. .. .) .) 20 20 Plaintiff's Opposition Plaintiff's Opposition to to Motion Motion to to Dismiss Dismiss Case seCase: 2:16-cv-00579-MWF-SS 1:16-cv-05198 Document #: 93-926 Document Filed: 03/30/18 Filed Page 04/04/16 29 of Page 2833 of PageID 32 Page#:1712#:241 ID #:2 41 1 1 Consistent with the Consistent with the holdings holdings in in Cantkier and Wellness Cantkier and Support, and Wellness Support, despite and despite 2 2 Defendants' insistence Defendants' to the insistence to the contrary, the explanations contrary, the in I¶¶ 44-47 explanations in 44-47 of of the the 33 Complaint Complaint are more than are more than sufficient sufficient to to explain why the explain why the 90% 90% claim was false claim was and false and 4 4 unsubstantiated and unsubstantiated to arm and to arm Defendants Defendants with with the the information information necessary necessary to to prepare prepare aa 55 defense. The defense. documentation at The documentation at issue issue is is their their documentation. documentation. Defendants Defendants do do not not 6 6 need additional need information to additional information to be be able to determine, able to determine, for for example, the number example, the number of of 7 7 graduates who graduates who had had their their jobs jobs before before they they enrolled in DVU, enrolled in DVU, or or to to be be able able to to analyze analyze 88 whether and whether and in in how how many many instances instances Defendants' Defendants' documentation documentation supported supported their their 99 representation that representation that any any given given graduate graduate was was employed employed in his field in his or was field or was actively actively 10 10 seeking employment. seeking employment. 11 11 C. C. The Complaint The Complaint States States aa Claim upon Which Claim upon Which Relief May Be Relief May Be Granted Granted 12 12 Under Count Under Count II (DeVry's Higher-Income II (DeVry's Higher-Income Claim) Claim) 13 13 1. 1. The allegations The allegations exceed the requirements exceed the requirements of of Rules Rules 8 and 99 8 and 14 14 As with As with Count Count I, the Complaint I, the allegations pertaining Complaint allegations pertaining to to Count Count II are II are 15 15 significantly more significantly more detailed detailed than than the the type type of of threadbare threadbare allegations that Twombly allegations that Twombly 16 16 and lqbal and Iqbal rejected. rejected. 17 17 The Complaint The Complaint also also sets sets out out the the who, who, what, what, when, when, where, where, and and how how regarding regarding 18 18 the conduct the that Count conduct that II alleges Count II is false alleges is or unsubstantiated, false or unsubstantiated, and does so and does so with with 19 19 sufficient particularity sufficient particularity to to allow allow Defendants Defendants to to prepare prepare aa defense. defense. The The "what" "what" 20 20 "when" "where" "when" "where" and and "how" "how" are are set set forth in ¶¶18, forth in ¶¶18, 20, 20, 26, 26, 36, 36, 41, 41, and and 56 56 and Ex. and Ex. 21 21 D). These D). These paragraphs paragraphs provide provide actual actual language language in in ads, ads, actual websites, and actual websites, and actual actual 22 22 language in language in sales sales pitches. pitches. The Complaint also The Complaint also alleges specific periods alleges specific periods of of times times in in 12 23 23 which ads which ads or or claims that are claims that are quoted quoted were were made made or or appeared. appeared.12 The The Complaint Complaint 24 24 25 25 unrelated to the misrepresentation alleged in the complaint in that case (that the 26 26 respondents had sent out collection letters that misrepresented that they originated from an independent debt collector). 53 F.T.C. at 410. 27 27 12 12 Defendants' erroneously describe the Complaint's Defendants' Complaint's description in ¶ 26 of the time 28 28 "since at least 2008." period in which this representation was made as "since 2008." (Mot. at 23:24, (continued on (continued on next next page page .. .. .) .) 21 21 Plaintiff's Opposition Plaintiff's Opposition to to Motion Motion to to Dismiss Dismiss Case seCase: 2:16-cv-00579-MWF-SS 1:16-cv-05198 Document #: 93-926 Document Filed: 03/30/18 Filed Page 04/04/16 30 of Page 2933 of PageID 32 Page#:1713#:242 ID #:2 42 1 1 further alleges that further alleges that the the three three Defendants Defendants "disseminated "disseminated or or caused to be caused to be 2 disseminated" the disseminated" the ads described in ads described in Paragraphs Paragraphs 20 20 and and 36, 36, that that Ex. D and Ex. D and the the claims claims 3 described in described in ¶ ¶ 26 26 appeared appeared on on DVU's DVU's webpage, webpage, and and that that DVU's Admissions DVU's Admissions 4 Advisors made Advisors made the the claims described in claims described in ¶ ¶ 43. 43. 55 The Complaint The Complaint also also describes describes Defendants' Defendants' substantiation substantiation for this claim, for this as claim, as 6 6 well as well as the the reason reason that that Plaintiff Plaintiff alleges that this alleges that this substantiation substantiation is insufficient. (¶¶ is insufficient. (¶¶ 7 7 48-50.) The 48-50.) The Complaint Complaint further alleges that further alleges that this this representation representation was was false and was false and was 88 not substantiated. not substantiated. (¶ (¶ 56.) 56.) 99 As explained As explained above, other courts above, other have found courts have that complaints found that that alleged complaints that alleged the the 10 10 defendant made defendant made aa representation, representation, provided provided examples of the examples of the representation, and representation, and 11 11 alleged that alleged that the the representation representation was was false or unsubstantiated false or unsubstantiated met met the the requirements requirements of of 12 12 both Rule both 8 and Rule 8 Rule 9. and Rule See Cantkier, 9. See Cantkier, Wellness Support Network, Wellness Support Network, and and Lunada. Lunada. 13 13 Accordingly, Count Accordingly, II of Count II of the the Complaint Complaint meets meets the the Rule Rule 8 and Rule 8 and Rule 9 standards for 9 standards for 14 stating aa claim stating claim for relief. for relief. 15 15 2. 2. Defendants' arguments Defendants' lack merit arguments lack merit 16 16 As with As with the the 90% 90% claim, claim, Defendants argue that Defendants argue that even more information even more information is is 17 17 necessary to necessary to describe describe why why their their claim is deceptive. claim is deceptive. However, However, they they fail to explain fail to explain 18 18 how more how more information information is is necessary necessary to to understand understand the the charge charge against them or against them or to to 19 19 prepare aa defense. prepare defense. They also fail They also to cite fail to cite any any cases that contradict cases that the Cantkier, contradict the Cantkier, 20 20 Wellness Support, and Wellness Support, and Lunada Lunada findings that this findings that this level level of of detail detail was was sufficient. sufficient. 21 The allegations The allegations in in the the Complaint Complaint describe describe the the specific specific circumstances of the circumstances of the 22 deceptive conduct deceptive and demonstrate conduct and demonstrate that that Plaintiff Plaintiff has has "substantial "substantial prediscovery prediscovery 23 23 evidence" of those evidence" of those facts. (See Mot. facts. (See Mot. at 24 (FTC at 24 (FTC conducted "extensive pre-trial conducted "extensive pre-trial 24 24 discovery").) Defendants' discovery").) Defendants' Motion Motion as as to to Count Count II should therefore II should therefore be be denied. denied. 25 25 D. D. The Complaint States The Complaint States aa Claim upon Which Claim upon Which Relief May Be Relief May Be Granted Granted 26 26 Against DeVry Against DeVry Education Education Group Inc. Group Inc. 27 27 28 28 n.13). In fact, this paragraph states that this webpage was available "starting "starting in 2013." 2013." 22 22 Plaintiff's Opposition Plaintiff's Opposition to to Motion Motion to to Dismiss Dismiss CaseCase: 2:16-cv-00579-MWF-SS 1:16-cv-05198 Document #: 93-926 Document Filed: 03/30/18 Filed Page 04/04/16 31 of Page 3033 of PageID 32 Page#:1714#:243 ID #:2 43 1 1 The Complaint The Complaint sufficiently sufficiently alleges alleges that that DEG DEG violated violated Section Section 5 because it 5 because it 2 2 identifies DEG's identifies DEG's role role in in the the deceptive deceptive conduct and states conduct and states the the basis basis of the claim of the claim 33 against DEG. against DEG. 4 4 As described As described above, above, the the actions actions that that are are alleged alleged to to be be deceptive deceptive in in this this case case 55 include the include the dissemination dissemination of advertisements, including of advertisements, including websites, websites, that that convey the convey the 6 6 90% 90% claim and the claim and the higher-income higher-income claim described in claim described in Counts Counts II and and II. II. After After 7 7 defining "Defendants" defining "Defendants" to to mean mean all all three three Defendants Defendants (¶ (¶ 6), 6), the the Complaint Complaint alleges alleges 88 that all that all three three Defendants Defendants engaged in the engaged in the dissemination dissemination of of advertisements that advertisements that 99 communicated the 90% communicated the and higher-income 90% and higher-income claims. (See ¶¶ claims. (See ¶¶ 18, 18, 20-25, 20-25, 27a, 27a, 32-38, 32-38, 10 10 41, and 41, and 56 56 and and Ex. Ex. D.) D.) For For example, Paragraph 20 example, Paragraph 20 alleges: alleges: "To "To induce induce prospective prospective 11 11 students to students to purchase purchase DVU's DVU's educational products and educational products and services, services, Defendants have Defendants have 12 12 disseminated, or disseminated, or caused to be caused to be disseminated, disseminated, advertisements advertisements for these products for these products and and 13 13 services," and services," and specifies specifies that that these these advertisements advertisements include include all all of of the the exhibits that are exhibits that are 14 14 attached to attached to the the Complaint. It further Complaint. It alleges that further alleges that "Defendants "Defendants have have widely widely 15 15 disseminated other disseminated other advertisements advertisements containing the same containing the same or substantially similar or substantially similar 16 16 statements and statements and depictions." depictions." Similarly, Similarly, Paragraph 22 alleges Paragraph 22 alleges that that "Defendants "Defendants have have 17 17 disseminated, or disseminated, or caused to be caused to be disseminated, disseminated, in in 2013 2013 on numerous national on numerous national cable cable 18 18 and satellite and satellite TV TV channels" the television channels" the television advertisement advertisement attached attached as as Exhibit A, Exhibit A, 19 19 titled "Graduation titled "Graduation Present." The Complaint Present." The also alleges, Complaint also alleges, among among other other things, things, that that 20 20 "Defendants" caused "Defendants" the deceptive caused the deceptive 90% 90% claim to be claim to be disseminated disseminated in in aa "tweet" "tweet" on on 21 21 DVU's public DVU's public Twitter page. Twitter page. 22 22 These allegations These allegations satisfy satisfy the the Rule 9(b) requirement Rule 9(b) requirement that that that that the the complaint complaint 23 23 identify the identify the role role of of each defendant in each defendant in the the alleged alleged fraudulent Swartz v. scheme. Swartz fraudulent scheme. v. 24 24 KPMG LLP, KPMG LLP, 476 476 F.3d F.3d 756, 756, 765 (9th Cir. 765 (9th Cir. 2007). 2007). The The role role of DEG as of DEG alleged in as alleged in the the 25 25 Complaint is that Complaint is that DEG DEG participated participated in in the the dissemination dissemination of of the the deceptive deceptive ads ads and and 26 26 representations and representations and relied relied on insufficient substantiation on insufficient substantiation in in making making its its claims. claims. 27 27 Defendants argue Defendants that it argue that it is somehow impermissible is somehow impermissible to to refer refer to to more more than than one one 28 28 defendant with defendant with the the collective term "Defendants." collective term "Defendants." The The cases Defendants cite cases Defendants in cite in 23 23 Plaintiff's Opposition Plaintiff's Opposition to to Motion Motion to to Dismiss Dismiss CaseCase: 2:16-cv-00579-MWF-SS 1:16-cv-05198 Document #: 93-926 Document Filed: 03/30/18 Filed Page 04/04/16 32 of Page 3133 31 of PageID 32 Page#:1715#:244 ID #:2 44 1 1 which this which this kind kind of of "lumping" "lumping" was was rejected, rejected, however, however, are are cases that involved cases that involved 2 2 multiple causes multiple causes of action, large of action, large numbers numbers of of defendants, defendants, and and unrelated unrelated defendants defendants 33 (or aa combination (or of these combination of these factors). See, e.g., factors). See, e.g., Destfino Destfino v. Reiswig, 630 v. Reiswig, F.3d 952, 630 F.3d 952, 4 4 958 (9th Cir. 958 (9th 2011) (fraud Cir. 2011) (fraud alleged alleged against against 29 29 individuals, individuals, 99 businesses, businesses, and and aa 55 church); Moore v. church); Moore Kayport, 885 v. Kayport, 885 F.2d F.2d 531, 531, 540 (9th Cir. 540 (9th 1989) (securities, Cir. 1989) (securities, RICO, RICO, 6 6 and other and other causes of action causes of action asserted asserted against against 77 entities individuals); Gauvin and 44 individuals); entities and Gauvin v. v. 7 7 Trombatore, 682 F. Trombatore, 682 F. Supp. 1067, 1071 Supp. 1067, 1071 (N.D. (N.D. Cal. 1988) (civil Cal. 1988) (civil rights rights violations violations 88 against 4 against 4 state state actors actors and and 77 private actors); Grant private actors); Grant v. v. WMC Mortg. Corp., WMC Mortg. No. Corp., No. 99 CIV2:10-1117WBSKJN, 2010 WL CIV2:10-1117WBSKJN, 2010 WL 2509415, 2509415, at at *3 (E.D. Cal. *3 (E.D. Cal. June 17, 2010) June 17, 2010) 10 10 (emotional-distress claims (emotional-distress asserted against claims asserted against 9 named defendants—including 9 named defendants—including aa 11 11 mortgage company, mortgage company, aa title title company, company, aa bank, bank, and and aa law law firm—and 100 doe firm—and 100 doe 12 12 defendants); Swartz, 476 defendants); Swartz, 476 F.3d F.3d at at 765 (RICO, unfair 765 (RICO, unfair competition, competition, fraud, fraud, and and civil civil 13 13 law conspiracy law conspiracy causes of action causes of action against 4 defendants, against 4 defendants, including including an an accounting accounting firm, firm, 14 14 aa law law firm, firm, and and aa bank). bank). In In such such cases cases courts understandably reject courts understandably reject as as implausible implausible 15 15 aa complaint's allegations that complaint's allegations that all all defendants defendants engaged in all engaged in all aspects aspects of of the the 16 16 fraudulent fraudulent conduct. conduct. Courts therefore require Courts therefore require in in such such cases that the cases that the complaint complaint 17 17 segregate defendants segregate defendants by by role, indicating in role, indicating in some some fashion which defendant fashion which defendant is is 18 18 alleged to alleged to have have participated participated in in which which conduct. conduct. 19 19 But there But there is no general is no general prohibition prohibition on on referring referring to to aa set set of defendants of defendants 20 20 collectively, such as collectively, such as in in cases where there cases where there is is only only one type of one type of cause cause of action of action 21 21 alleged against alleged against related defendants, or related defendants, when it or when it is is otherwise otherwise clear that an clear that an allegation allegation 22 22 pertains to pertains to all the defendants all the defendants and the allegation and the is plausible. allegation is plausible. Rule Rule 8(a) permits 8(a) permits 23 23 referring to referring to multiple multiple defendants defendants collectively where the collectively where the complaint notifies each complaint notifies each 24 24 defendant of defendant the basis of the basis upon upon which which relief relief is sought against is sought against the the defendant. defendant. 25 25 Angermeir v. Angermeir v. Cohen, 14 F. Cohen, 14 F. Supp. 3d 134, Supp. 3d 134, 144-45 144-45 (S.D.N.Y. (S.D.N.Y. 2014); Hale v. 2014); Hale Enerco v. Enerco 26 26 Grp., Inc., No. Grp., Inc., No. 1:10 1:10 CV CV 00867-DAP, 2011 WL 00867-DAP, 2011 WL 49545, 49545, at at *4 (N.D. Ohio *4 (N.D. Ohio Jan. Jan. 5, 5, 27 27 2011); Hudak v. 2011); Hudak Berkley Grp., v. Berkley Inc., No. Grp., Inc., No. 13—CV-89, 13–CV–89, 2014 2014 WL WL 354676, 354676, at at *4 *4 28 28 D. Conn. D. Conn. 2014); FTC v. 2014); FTC v. Consumer Health Benefits Consumer Health Benefits Ass Ass'n, No. 10 'n, No. 10 CIV. 3551 CIV. 3551 24 24 Plaintiff's Opposition Plaintiff's Opposition to to Motion Motion to to Dismiss Dismiss CaseCase: 2:16-cv-00579-MWF-SS 1:16-cv-05198 Document #: 93-926 Document Filed: 03/30/18 Filed Page 04/04/16 33 of Page 3233 of PageID 32 Page#:1716#:245 ID #:2 45 1 1 ILG RLM, ILG 2012 WL RLM, 2012 WL 1890242, at *9, 1890242, at n.14 (E.D.N.Y. *9, n.14 (E.D.N.Y. May 23, 2012). May 23, 2012). 2 The Complaint The Complaint plausibly plausibly alleges alleges that that DEG DEG participated participated in in the the dissemination dissemination 3 of deceptive advertisements. of deceptive Because it advertisements. Because it notifies notifies DEG DEG of the basis of the basis upon upon which which 4 relief is relief is sought sought against against DEG, the Complaint DEG, the should not Complaint should not be be dismissed. dismissed. 55 Defendants also Defendants point to also point to cases involving allegations cases involving allegations of alter ego of alter status. ego status. 6 6 Here, the Here, the Complaint Complaint alleges that DEG alleges that DEG is liable for is liable its own for its own participation participation in in the the 7 7 deceptive conduct. deceptive A parent conduct. A parent may may be be held held directly directly liable liable along along with with its its subsidiary subsidiary 88 for the parent's for the parent's participation participation in in acts acts that that give give rise rise to to liability liability under under the the statute. See, statute. See, 9 e.g., United e.g., States v. United States Bestfoods, 524 v. Bestfoods, U.S. 51, 524 U.S. 51, 64 (1998); Cher 64 (1998); Cher v. Forum Int'l, v. Forum Int'l, LTD, LTD, 10 10 692 F.2d 692 F.2d 634, 634, 640 640 (9th (9th Cir. Cir. 1982) 1982) (parent (parent held held liable liable in in false false advertising advertising case case for for 11 its participation its participation in in false ads disseminated false ads disseminated by by subsidiary); Esmark, Inc. subsidiary); Esmark, Inc. v. NLRB, v. NLRB, 12 887 F.2d 887 F.2d 739, 739, 755-756 (7th Cir. 755-756 (7th 1989); see Cir. 1989); also FTC see also FTC v. Stefanchik, No. v. Stefanchik, No. C04- C04- 13 13 1852RSM, 2007 1852RSM, 2007 WL WL 1058579, 1058579, at at *7 *7 (W.D. (W.D. Wash. Wash. Apr. Apr. 3, 3, 2007), aff'd, 2007), aft d, 559 F.3d 559 F.3d 14 924 (9th Cir. 924 (9th 2009) (a Cir. 2009) (a corporation's corporation's owner is liable owner is liable for violations of for violations of Section Section 5 if 5 if 15 15 the owner the participated in owner participated the deceptive in the deceptive corporate acts or corporate acts or had had authority authority to to control control 16 16 them). them). 17 17 By alleging By alleging that that DEG DEG disseminated disseminated the the deceptive deceptive ads ads at at issue, issue, the the Complaint Complaint 18 18 sufficiently alleges sufficiently alleges that that DEG DEG participated participated in in the the conduct giving rise conduct giving rise to to liability, liability, and and 19 19 provides sufficient provides sufficient notice notice to to DEG DEG of of its its role role in in the the deceptive deceptive conduct. conduct. 20 20 V. V. CONCLUSION CONCLUSION 21 For the For the foregoing reasons, Defendants' foregoing reasons, Defendants' Motion Motion should should be be denied. denied. 22 To the To the extent the Court extent the Court holds holds that that the the FTC FTC has has not not met met the the applicable applicable pleading pleading 23 23 standard, the standard, the FTC FTC should should be be permitted permitted to to amend amend its Complaint. Vess its Complaint. at 1108. Vess at 1108. 24 25 25 Dated: April Dated: April 4, 4, 2016 2016 FEDERAL TRADE FEDERAL TRADE COMMISSION COMMISSION 26 26 By: By: /s/ John Jacobs /s/ John Jacobs John D. Jacobs John D. Jacobs 27 27 Christina Tusan Christina Tusan 28 28 Attorneys for Attorneys Plaintiff for Plaintiff 25 25 Plaintiff's Opposition Plaintiff's Opposition to to Motion Motion to to Dismiss Dismiss