DAVID F. SUGERMAN ATTORNEY, PC

5/16/2017 1:25:10 PM 080303530

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IN THE CIRCUIT COURT OF THE STATE OF OREGON

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IN AND FOR THE COUNTY OF MULTNOMAH

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NATHAN SURRETT, individually and on 11 behalf of all other similarly-situated

individuals, and on behalf of herselfonly, 12 JENNIFER ADAMS fka JENNIFER

SCHUSTER, 13

Plaintiffs, 14

vs. 15

WESTERN CULINARY INSTITUTE, LTD; 16 LE CORDON BLEU NORTH AMERICA,

INC; and CAREER EDUCATION 17 CORPORATION,

Case No. 0803-03530

PLAINTIFF'S SEVENTH AMENDED COMPLAINT AND DEMAND FOR JURY TRIAL

CLASS ACTION- DAMAGES! EQUITABLE RELIEF

(UNLAWFUL TRADE PRACTICES ACT (ORS 646.608, and FRAUD),

Claims Not Subject to Mandatory Arbitration

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Defendants.

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20 Plaintiffs allege:

21 PRELIMINARY STATEMENT

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1. 23

This is an action for money damages and equitable relief brought by Jennifer Adams

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individually and by Nathan Surrett individually and on behalf of all similarly situated persons.

25 Plaintiffs allege claims for violation of the Unlawful Trade Practices Act, ORS 646.608, el seq.

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Page I - PLAINTIFF'S SEVENTH AMENDED COMPLAINT AND DEMAND FOR

JURY TRIAL

DAVID F. SUGERMAN ATTORNEY, PC

707 5\'1;1Washington St., Suite 600 - Portland, Oregon 97205 (503) 228-6474

1 and for fraud. To the extent allegations other than the certified allegations are alleged, Ms. Adams

2 alleges them solely on her own behalf.

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Plaintiffs allege that defendants operated a trade school, Western Culinary Institute now

4 known as Le Cordon Bleu College of Culinary Arts in Portland ("WCI") and that defendants

5 induced plaintiffs and similarly-situated students to enroll at, attend, and incur financial

6 obligations, by making uniform misrepresentations common to plaintiffs and the class regarding

7 the value of the education, benefit of the degree, exclusivity of the degree, nature of ongoing

8 career placement, job placement rates, and by uniformly omitting to disclose to plaintiffs and the

9 class information about post-graduate salaries. Plaintiffs initially filed the case for equitable

10 relief, giving written notice of the intention to seek damages as required by ORCP 32H. More

11 than 30 days after giving notice, plaintiffs filed an amended complaint adding claims for

12 damages for themselves and the proposed class.

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PARTIES

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2.

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Plaintiff Jennifer Adams attended WCI and paid tuition and incurred financial obligations

16 to do so as a result of misrepresentations and omissions made to plaintiff by defendants. Plaintiff

17 Adams attended WCI in 2006 and 2007, graduating in June, 2007. Plaintiff Nathan Surrett

18 enrolled and began attending WCI in May 2007 and graduated in September 2008. Plaintiff

19 Surrett paid tuition and incurred financial obligations as a result of misrepresentations and

20 omissions made to plaintiff and the class by defendants.

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3.

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Defendant Western Culinary Institute, Ltd. is a foreign corporation that operated Western

23 Culinary Institute, now known as Le Cordon Bleu College of Culinary Arts in Portland, an

24 Oregon trade school, located in Multnomah County. Defendant Western Culinary Institute, Ltd is

25 registered to do business in Oregon. Defendant-Western Culinary Institute, Ltd is a wholly-

26 Page 2 - PLAINTIFF'S SEVENTH AMENDED COMPLAINT AND DEMAND FOR JURY TRIAL

DAVID F. SUGERMAN ATTORNEY, PC

707 SW \'('ashington St., Suite 600 - Pordand, Oregon 97205 (503) 228?6~74

1 owned subsidiary of defendant Career Education Corporation. After the commencement of this

2 action, defendant Western Culinary Institute, Ltd. merged into Le Cordon Bleu North America,

3 LLC. Defendant Le Cordon Bleu North America, LLC is a foreign corporation.

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4.

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Defendant Career Education Corporation (CEC) is a foreign corporation that provides

6 support and oversight to defendant Western Culinary Institute, Ltd. and Le Cordon BIeu North

7 America, LLC in its subsidiary'S operations ofWCI.

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JURSIDICTION AND VENUE

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5.

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WCI operates in Multnomah County. Some of the acts complained of in this action took

11 place in Multnomah County.

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CLASS ALLEGATIONS

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6.

The class consists of all current and former students who enrolled at Western Culinary Institue14

15 now known as Le Cordon Bleu College of Culinary Arts in Portland-on or after March 5, 2006

16 (up to and including March 1,2010), who attended Western Culinay Institute/Le Cordon Bleu

17 College of Culinary Arts in Portland on or after March 5, 2006 (up to including March I, 20 I0)

18 and who made tuition payments or incurred financial obligations, excluding where applicable, all 19

officers and directors of defendants, attorneys for the class, any judge orjllror who sits on the 20

case, and any student who did not continue his or her studies due to academic ineligibility.

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7.

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Based on information and belief, plaintiff estimates that the class consists of

24 approximately 2,000 people. Regardless of the exact number, the class is so numerous that

25 joinder is impracticable because of the large size and geographic dispersion of the class.

26 Page 3 - PLAINTIFF'S SEVENTH AMENDED COMPLAINT AND DEMAND FOR JURY TRIAL

DAVID F. SUGERMAN ATTORNEY, PC

707 SW Washington St., Suite 600 - Portland, Oregon 97205 (503) 228-6-174

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8.

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There are questions offact and law common to the class in that each class member has

3 suffered an injury as a result of defendants' conduct. Common questions oflaw and fact

4 predominate over any questions affecting only individual class members.

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Common questions include:

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A. Whether defendants violated the Unlawful Trade Practices Act by representing

7 that WCI had characteristics, benefits, or qualities that it did not have. ORS 646.608( I)(e);

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B. Whether defendants violated the Unlawful Trade Practices Act, ORS

9 646.608(1 )(t) when, concurrent with delivery of services, defendants failed to disclose known

10 defects or material nonconformity;

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C. Whether defendants violated the Unlawful Trade Practices Act by falsely

12 representing the nature of the transaction or obligation. ORS 646.608( I)(k);

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D. Whether plaintiff and members of the class may state a claim for equitable relief

14 under the UTPA for violations ofORS 646.608;

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E. Whether defendants acted willfully as defined by ORS 646.638(1);

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F. Whether, by making uni form misrepresentations and omissions to the class,

17 defendants violated the Oregon Administrative Rules, including:

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1. OAR 583-030-0035(8)(d);

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2. OAR 583-030-0035(9);

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3. OAR 583-030-0035(11 )(e);

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4. OAR 583-030-0035( 12);

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5. OAR 583-030-0035( 12)(a);

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6. OAR 583-030-0035(20);

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G. Whether the mandatory arbitration clause in the students' form contract is

25 unconscionable and unenforceable;

26 Page 4 - PLAINTIFF'S SEVENTH AMENDED COMPLAINT AND DEMAND FOR JURY TRIAL

DAVID F. SUGERMAN ATTORNEY, PC

707 SW Washington St., Suite 600 - Portland, Oregon 97205 (503) 228?6-174

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H. Whether CEC can claim the benefits of the mandatory arbitration clause when

2 CEC was not a signatory of the contract;

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I. Whether defendants made false representations regarding the value of the

4 education, benefit of the degree, exclusivity of the degree, nature of ongoing career placement,

5 and job placement rates to members of the class;

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J. Whether such representations were material;

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K. Whether plaintiffs and members of the class had a right to rely on such statements

8 for their fraud claims;

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L. Whether plaintiff and members ofthe class may prove reliance on a class-wide

10 basis;

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M. Whether the defendants knew, but failed to provide to the plaintiffs and the class,

12 information about post-graduate salaries that should have been disclosed;

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N. Whether defendants made representations and/or promises regarding the value of

14 the education, benefit of the degree, exclusivity of the degree, nature of ongoing career

15 placement, and job placement rates;

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o. Whether defendants fraudulently concealed from plaintiffs and the class that they

17 made misrepresentations and omitted material facts.

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9.

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The claims of the named plaintiff are typical of the claims of the class in that:

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A. The fraud and UTPA claims involve identical conduct in making uniform

21 representations and misrepresentations and omissions about the characteristics and value of the

22 WCI program;

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8. Defendants operated WCI in a standardized manner with respect to

24 representations and omissions to prospective students, and defendants set policies for WCI and

25 oversaw its operations;

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Page 5 - PLAINTIFF'S SEVENTH AMENDED COMPLAINT AND DEMAND FOR JURY TRIAL

DAVID F. SUGERMAN ATTORNEY, PC

707 S\'\' Washington St., Suite 600 - Portland, Oregon 97205 (503) 228? 6474

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C. The injuries suffered by the named plaintiff and the class members differ only in

2 the amount of damage; and

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D. The named plaintiff's claims for relief are based upon the same legal theories as

4 are the claims of the class members.

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10.

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The named plaintiff will fairly and adequately protect and represent the interests of the

7 class in that:

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A. His claims are typical of the claims of the class members;

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S. He is represented by attorneys who are qualified and competent counsel who will

10 vigorously prosecute this litigation; and

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C. His interests are not antagonistic to or in conflict with the interests of the class

12 members.

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II.

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A class action is superior to other available methods for the fair and efficient adjudication

15 of this case in that:

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A. Common questions oflaw and fact predominate over factors affecting only

17 individual members;

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B. As far as plaintiff knows, no class action that purports to include WCI students

19 has been commenced;

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C. Individual class members have little interest in controlling the litigation due to the

21 high cost of each individual action, the risk of fees and costs, and because plaintiff and his

22 attorneys will vigorously pursue the claims;

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D. The forum is desirable as defendants do business here;

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26 Page 6 - PLAINTIFF'S SEVENTH AMENDED COMPLAINT AND DEMAND FOR JURY TRIAL

DAVID F. SUGERMAN ATTORNEY, PC

707 SW Washington St., Suite 600 - Po rdand, Oregon 97205 (503) 228?6-174

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E. A class action will be an efficient method of adjudicating the claims of the class

2 members who have suffered monetary damages as a result of the same type of conduct by

3 defendants; and

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F. In the aggregate, class members have claims for relief that are significant in scope

5 relative to the expense of the litigation.

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12.

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More than 30 days before seeking damages, plaintiff complied with the requirements of

8 ORCP 32H by delivering notice and demand on defendants in writing by service on their

9 registered agent and by certi tied or registered mail, return receipt requested.

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ALLEGATIONS OF FACT

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13.

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Defendants' WCI purports to provide trade school education to plaintiffs and class

13 members that will prepare them for careers in the food service and hospitality industries.

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14.

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Defendants made uniform misleading representations and omissions common to

16 plaintiffs and the class regarding the value of the WCI education, benefit of the degree,

17 exclusivity of the degree, nature of ongoing career placement, job placement rates, post-graduate

18 salaries, and its operation under the regulations of Oregon's Office of Degree Authorization, in

19 violation of the Oregon Unlawful Trade Practices Act, including:

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A. Offering student admission without receipt of evidence that the applying student

21 could reasonably expect to benefit from the education obtained in violation of duties under OAR

22 583-030-0035(9) and in violation of OAR 583-030-0035(12); OAR 583-030-oo35(12)(a); OAR

23 583-030-0035(20) and ORS 646.608(1)(e), \ (k), and (I)(t);

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B. Affirmatively representing in the WCI catalog that the Le Cordon Bleu curriculua

25 gives students greater opportunities to acquire the knowledge and skills necessary to excel in the

26 Page 7 - PLAINTIFF'S SEVENTH AMENDED COMPLAINT AND DEMAND FOR JURY TRIAL

DAVID F. SUGERMAN ATTORNEY, PC

707 SW Washington St., Suite 600 - Portland, Oregon 97205 (503) ?'8?6474

1 cUlinary/hospitality world, when in fact Le Cordon Bleu training does not provide those benefits

2 in violation of OAR 583-030-0035(12); OAR 583-030-0035(12)(a); OAR 583-030-0035(20) and

3 ORS 646.608(1)(e), I(k), and (I)(t);

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C. Affirmatively representing in the WCI school catalog that the school trains

5 students for entry level jobs, but failing to disclose that those entry level jobs do not require that

6 training in violation of OAR 583-030-0035(12); OAR 583-030-0035(12)(a); OAR 583-030-

7 0035(20) and ORS 646.608(1)(e), I(k), and (I)(t);

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D. Affirmatively representing in the WCI catalog that the school trains students for

9 entry level positions but failing to disclose that their training would not improve students'

10 qualifications for entry level positions in violation of OAR 583-030-0035(12); OAR 583-030-

11 0035(12)(a); OAR 583-030-0035(20) and ORS 646.608(1 )(e), 1(k), and (I )(t);

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E. Knowing, but failing to disclose, that WCI training would qualify graduates for

13 mostly low paying, poverty-wage jobs in violation of OAR 583-030-0035( 12); OAR 583-030-

14 0035(12)(a); OAR 583-030-0035(20) and ORS 646.608(1)(e), I(k), and (I)(t);

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F. Knowing, but failing to disclose, that WCI students will incur debts that cannot be

16 repaid with low paying jobs for which their education qualifies them in violation of OAR 583-

17 030-0035(12); OAR 583-030-0035(12)(a); OAR 583-030-0035(20) and ORS 646.608(1)(e),

18 1(k), and (I )(t);

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G. Knowing, but failing to disclose, that most WCI graduates will not eam enough to

20 allow them to pay off school loans in violation of OAR 583-030-0035(12); OAR 583-030-

21 0035(12)(a); OAR 583-030-0035(20) and ORS 646.608(1)(e), 1(k), and (I)(t);

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H. Knowing, but failing to disclose, that defendants were so concemed about loan

23 defaults given the imbalance between WCI tuition and expected wages that CEC paid to Sallie

24 Mae 25 percent or more of sub-prime loans that Sallie Mae made to WCI students in violation of

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26 Page 8 - PLAINTIFF'S SEVENTH AMENDED COMPLAINT AND DEMAND FOR JURY TRIAL

DAVID F. SUGERMAN ATTORNEY, PC

707 SW Washington St., Suite 600 - Pordand, Oregon 97205 (503) 228?6474

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