United States District Court, E.D. Michigan, Southern Division
ORDER GRANTING PLAINTIFF'S MOTION FOR CLASS CERTIFICATION (DKT. 34) AND APPOINTING PLAINTIFF'S COUNSEL AS CLASS COUNSEL
TERRENCE G. BERG, District Judge.
This is a personal injury case in which a former student of a now-closed online school is suing on the ground that her pre-paid tuition was not refunded. Plaintiff Anita Toler filed her complaint on behalf of herself and a class of similarly situated persons on February 2, 2013. (Dkt. 1.) Plaintiff alleges that Defendants Global College of Natural Medicine, Inc. ("GCNM"), and Heather Johnstone collected millions of dollars in advance tuition from students despite being aware of their precarious financial and regulatory situation and did not refund students' tuition payments after abruptly closing in November 2012. (Id. ) On May 22, 2013, Plaintiff requested and was granted a Clerk's entry of default against Defendants, who have not moved to set these default entries aside. (Dkts. 16-17.) Plaintiff has not moved for a default judgment.
Before the Court is Plaintiff's motion for class certification and to appoint Plaintiff's counsel as class counsel. (Dkt. 34.) Plaintiff seeks to certify a class defined as:
All individuals who entrusted tuition in advance to GCNM and were active students in a distance education program through GCNM as of November 2012.
(Id. at ¶ 9.)
Ordinarily, the parties would be afforded an opportunity to present evidence at a hearing on the maintainability of the class action. In this case, however, Defendants have defaulted and do not oppose this motion, thereby waiving any argument in opposition. See, e.g., Harvis v. Roadway Exp. Inc., 923 F.2d 59, 61 (6th Cir. 1991). Moreover, as Plaintiff notes in her reply in support of this motion, Defendants "have repeatedly been non-responsive" in both this case and in Defendant Johnstone's bankruptcy proceeding. (Dkt. 37, pp. 3-4.)
The Sixth Circuit has held that the maintainability of a class action "may be determined by the court on the basis of the pleadings, if sufficient facts are set forth." In re American Medical Sys., Inc., 75 F.3d 1069, 1079 (6th Cir. 1996) (quoting Weathers v. Peters Realty Corp., 499 F.2d 1197, 1200 (6th Cir. 1974)). Although such a situation is uncommon, given the substance of Plaintiff's pleadings and Defendants' non-responsiveness to this motion and throughout this case, granting a hearing in this situation would likely prove unproductive and is therefore unnecessary. Because Plaintiff's motion is unopposed, only damages remain to be decided, and the requirements of Fed.R.Civ.P. 23 have been met, Plaintiff's motion will be granted and Plaintiff's counsel shall be appointed as class counsel in this case.
I. FACTUAL BACKGROUND
A clerk's entry of default was entered against Defendants in this case on May 22, 2013. (Dkts. 16-17.) Defendants have not moved to set these entries aside. Defendants are therefore deemed to have admitted all of Plaintiff's well-pleaded allegations. Visioneering Const. v. U.S. Fidelity and Guar., 661 F.2d 119, 124 (6th Cir. 1981).
GCNM was a licensed postsecondary school that marketed and sold distance education programs in natural health to students throughout the United States. (Dkt. 1, ¶¶ 25-26.) Students could earn certificates as well as Bachelor of Science, Master of Science and Ph.D degrees in programs such as Master Herbalist, Nutritional Consultant, and Holistic Health Practitioner. (Id. at ¶ 27.) Tuition ranged from approximately $1, 000 for the Master Herbalist and Nutritional Consultant programs to more than $10, 000 for the Ph.D. program. (Id. at ¶ 37.) Students took courses in their own homes. (Id. at ¶ 28.)
Students were required to pre-pay for their programs of choice; they either paid the entirety of their tuition in advance or paid a substantial amount before starting coursework and the balance soon thereafter. (Id. at ¶ 39.) Plaintiff paid Defendants approximately $3, 120 in tuition for her self-paced Bachelor of Science program in holistic health. (Id. at ¶ 43.) Plaintiff maintains that GCNM collected at least $5, 000, 000.00 in advance tuition for education programs that the students had not finished and thus GCNM had not yet earned when the school closed without warning in November 2012. (Id. at ¶ 40-41.) After GCNM closed, it did not refund the unearned tuition. (Id. at ¶ 46, 67.)
On February 4, 2013, Plaintiff filed her complaint alleging that Defendants collected "millions of dollars in advance tuition" from Plaintiff and other individuals who "were enrolled in programs of distance education through Defendants" and failed to refund any tuition after GCNM abruptly closed in November 2012 (Id. at ¶¶ 1-4.) Defendants failed to respond to Plaintiff's complaint. On May 21, 2013, Plaintiff requested a Clerk's Entry of Default as to Defendants. (Dkts. 14-15.) Plaintiff's request was granted a Clerk's Entry of Default was entered against Defendants on May 22, 2013 for "failure to plead or otherwise defend." (Dkts. 16-17.) Defendants never moved to set aside these entries and thus remain in default.
On July 3, 2013, a stipulated order was filed requiring Defendants to produce insurance and financial documents by July 26, 2013. (Dkt. 21.) When Defendants failed to produce any of the required documents, Plaintiff filed a motion for contempt and sanctions on August 15, 2013. (Dkt. 23.) Defendants failed to respond both to Plaintiff's motion (Dkt. 23) and to the Court's September 5, 2013 Order to Show Cause (Dkt. 25). In response, the Court granted Plaintiff's motion for contempt and ordered Defense counsel, Mr. Brian Graham, to pay $2, 740 in attorneys' fees to Plaintiff's counsel within 30 days of the entry of the order (Dkt. 28, p. 2).
When Plaintiff's counsel noted in Plaintiff's motion to reopen this case that Mr. Graham had never paid the fees (Dkt. 30, ¶ 4), the Court issued an order for Mr. Graham to show cause in person why he had not complied with the order (Dkt. 32). On February 4, 2015, the parties confirmed during the oral argument on Plaintiff's motion to reopen the above-captioned case that Mr. Graham had only recently paid those fees. The show cause order was therefore vacated. (Dkt. 33.)
While this case was pending, on September 12, 2013, Defendants filed petitions for relief in Bankruptcy. (Dkt. 26.) As a result, a bankruptcy stay took effect and this case was administratively closed on September 30, 2013 without prejudice to the rights of the parties. (Dkt. 29.) Defendant GCNM's bankruptcy case was closed on March 12, 2014. ( In re Global College of Natural Medicine, Inc., No. 13-36174 (N.D. Ill. 2013, Dkt. 31).) Defendant Heather Johnstone's attempt to discharge her debt to Plaintiff in this case was denied by United States Bankruptcy Judge Carol Doyle on November 13, 2014. ( In re Heather A. Johnstone, No. 13-36162 (N.D. Ill. 2013, Dkt. 44).) Johnstone's bankruptcy case was closed on November 17, 2014. ( Id., Dkt. 48.)
Plaintiff filed her motion to reopen the above-captioned case on December 22, 2014. (Dkt. 30.) Because the motion was unopposed and Defendants no longer enjoyed any bankruptcy protection preventing the case from being reopened, Plaintiff's motion was granted and the case was reopened on February 6, 2015. (Dkt. 33.) Plaintiff then filed her motion for class certification and to appoint Plaintiff's counsel as class counsel on February 13, 2015. (Dkt. 34.)
II. LEGAL STANDARD
Class certification is governed by Fed.R.Civ.P. 23. The Court "has broad discretion in deciding whether to certify a class, but that discretion must be exercised within the framework of Rule 23." In re American Medical Sys., Inc., 75 F.3d at 1079; see also Pilgrim v. Universal Health Card, LLC, 660 F.3d 943, 946 (6th Cir. 2011). In determining a motion for class certification, a court does not assess ...