Panel tosses class action suit because of named plaintiffs' bankruptcy filings

By Kenneth Lowe | Oct 15, 2014


Students who claimed a company fraudulently offered them useless classroom credit won’t be able to move forward with a class action suit because they didn’t properly edit their paperwork, an Illinois appeals panel ruled.

With the intention of forming a class, Rachel Deweese and Shakena Jamerson sued Washington D.C.-based Stratford Career Institute Inc. in 2012 in Cook County Circuit Court, alleging the company had “wrongfully sold ‘high school diploma’ correspondence courses” even though the courses were “of no recognized academic value."

The circuit court dismissed the suit and a panel of the First District Appellate Court reaffirmed that ruling in an unpublished order handed down Sept. 30. Justice Mary K. Rochford wrote the order, with justices Thomas E. Hoffman and Bertina E. Lampkin concurring.

Stratford bills itself as a correspondence course program on its website, though in its Frequently Asked Questions section, it tells prospective enrollees they “would have to contact the school that you are interested in applying to” for any information on credit transfer.

On behalf of the panel, Rochford explained in her order that Deweese paid Stratford $799 when she enrolled in 2008, was awarded a “high school diploma” and subsequently discovered it availed her nothing when she attempted applied to a college. Jamerson’s experience was similar.

“[Deweese] discovered that her Stratford diploma was illegitimate when, in July of 2009, she could not obtain admission to Everest College in Chicago after one of its admissions personnel informed Ms. Deweese that Stratford was a ‘diploma mill’ providing credentials unacceptable for admission,” Rochford wrote.

In their original suit, Deweese and Jamerson alleged Stratford had violated the Illinois Consumer Fraud and Deceptive Business Practices Act and sought rescission of their enrollment agreements with Stratford, an injunction barring Stratford from continuing to offer its high school diploma program and similar relief on behalf of a class of similarly situated individuals.

Stratford successfully moved to dismiss the suit and the plaintiffs filed an amended complaint May 15, 2013, where they made similar allegations, though more detailed ones, the panel's ruling notes. In a June 24, 2013 filing, Stratford again moved to dismiss the complaint, which the circuit court granted with prejudice on Dec. 16, 2013.

In dismissing the complaint, the circuit court concluded the plaintiffs' individual claims under the Consumer Fraud Act were insufficiently pled, that Stratford’s disclaimers effectively precluded any claim of misrepresentation and that the enrollment agreements as alleged by plaintiffs did not support a claim for breach of contract.

The circuit court, in rejecting the motion to create a class, further held that there was insufficient commonality among the proposed class members to allow the suit to go forward as a class action.

Deweese and Jamerson filed their appeal Jan. 3, 2014, and while that was pending, Stratford apparently discovered they had filed for bankruptcy.

In those filings, Stratford alleged, the plaintiffs made no mention of their suit and argued that the omission should prevent them from leading a class action suit against it.

“In their reply brief, counsel for plaintiffs contended that he too was unaware of plaintiffs' prior bankruptcy filings before the filing of Stratford's appellate brief in this matter,” Rochford notes in the panel's order.

Stratford argued that because the plaintiffs had failed to disclose their potential claims against it in their bankruptcy proceedings, they were each judicially estopped from pursuing the claims.

“While we utilize slightly different reasoning, we agree that plaintiffs' bankruptcy filings require us to affirm the circuit court's dismissal of this suit,” Rochford wrote.

The panel also rejected the plaintiffs' request that their attorney be given more time to find new class representatives.

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