On November 28, 2022, a federal court in Maryland denied in its entirety a motion to dismiss the class action reverse redlining and consumer fraud case filed by Relman Colfax and its co-counsel, the National Student Legal Defense Network (“Student Defense”). As a result, the case will move forward with discovery.
Relman Colfax and Student Defense filed the case in January 2022 on behalf of three former students in Walden University’s Doctor of Business Administration (“DBA”) program, as well as a proposed class of similarly situated students and former students. The complaint alleges that Walden, a for-profit online university, engaged in reverse redlining by intentionally targeting Black and female students for its DBA program while misrepresenting the cost and credit requirements of the degree as part of an expensive predatory scheme. The complaint alleges that scheme ultimately cost members of the proposed classes more than $28.5 million in excess tuition. In her opinion denying Walden’s motion, U.S. District Court Judge Julie R. Rubin of the U.S. District Court for the District of Maryland characterized the essential claim as follows: Walden “got rich on this scheme – as Plaintiffs were compelled to incur mounds of additional and unanticipated loan debt in order to get to the program finish line while Defendants got paid by the course credit.”
Plaintiffs Aljanal Carrol, Claudia Charles, and Tiffany Fair brought class-wide discrimination claims under Title VI of the Civil Rights Act of 1964 and the Equal Credit Opportunity Act (“ECOA”), as well as individual state law claims under Minnesota consumer protection laws.
Judge Rubin denied Walden’s motion in its entirety, holding that Plaintiffs “reverse redlining” theory was cognizable as intentional violations of Title VI of the Civil Rights Act of 1964, and that Plaintiffs adequately alleged facts concerning Walden’s targeted advertising towards Black students and misrepresentation of the cost of the DBA program. Judge Rubin also held that the plaintiffs’ Equal Credit Opportunity Act claims could proceed under both disparate impact and intentional discrimination theories, holding that the plaintiffs’ discrimination claims were sufficiently connected to the underlying credit transactions. Finally, Judge Rubin allowed plaintiffs’ state law consumer protection claims to proceed, holding that Minnesota law should apply and that plaintiffs had stated claims for fraudulent misrepresentation and violations of the state’s consumer protection statutes.
The Relman Colfax litigation team includes Glenn Schlactus, Tara Ramchandani, Lila Miller, Alexa Milton and Ted Olds with paralegal support from Don Scales and Kelis Johnson. Relman Colfax is assisted by co-counsel at the National Student Legal Defense Network.
A copy of the opinion is available here.