Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-1_14-cv-01678/USCOURTS-caed-1_14-cv-01678-9/pdf.json

Nature of Suit Code: 440
Nature of Suit: Other Civil Rights
Cause of Action: 28:1332 Diversity-Other Contract

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IN THE UNITED STATES DISTRICT COURT FOR THE

EASTERN DISTRICT OF CALIFORNIA

O’DEAN M. GRANT, 

Plaintiff, 

v. 

CAPELLA UNIVERSITY, SOPHIA 

PATHWAYS, AND DOES 1-12, 

Defendants. 

__________________________________/

1:14-cv-1678-AWI-JLT

ORDER GRANTING DEFENDANTS’ 

MOTION TO DISMISS WITH 

PREJUDICE

ORDER DENYING PLAINITFF’S 

MOTION FOR JUDGMENT ON THE 

PLEADINGS

(Docs. 56, 58)

I. Defendants’ motion to dismiss

Plaintiff O’Dean Grant (“Plaintiff”) filed a Third Amendment Complaint (“TAC”),

alleging causes of action for negligence, negligent misrepresentation, and fraudulent 

misrepresentation. Doc. 55 at 6-9. Defendants Capella University, Inc. and Sophia Learning, 

LLC (“Defendants”) move to dismiss based on a lack of Article III standing and for failure to 

state a claim. Plaintiff has filed no opposition. For the following reasons, this action will be 

dismissed with prejudice based on Plaintiff’s repeated failure to state a claim.1

A. Background

Plaintiff is or was a transfer student, taking online classes at Capella University 

(“Capella”). Prior to his education at Capella, Plaintiff was a student at California State 

 

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Plaintiff has also filed a motion for judgment on the pleadings. In light of the dismissal and because the motion is 

not appropriately before the Court, that motion will be denied.

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University, Bakersfield (CSUB). Doc. 55 at 7:3-5, 9:10-12. Plaintiff alleges that he earned 115 

units at CSUB before he transferred to Capella. See Doc. 55 at 9:10-12. He claims that he exited 

Capella with the same number of units that he entered with. See Doc. 55 at 9:10-12. Plaintiff 

contends that he now carries approximately $40,000 in student loan debt, generated during his 

time as a student at Capella. Doc. 55 at 5. 

Plaintiff has advanced three primary theories through the course of this litigation: (1) that 

Defendants unlawfully diverted federal student loan and grant funds, (2) that Defendants misled 

Plaintiff into believing that all of his education credits would transfer from California State 

University, Bakersfield, to Capella and (3) that Defendants somehow purposefully prevented 

Plaintiff from succeeding in the courses that he took at Capella. See Doc. 40 at 2; Doc. 54 at 3. 

This Court has twice before dismissed Plaintiff’s complaint, explaining the specific pleading 

deficiencies and granting him leave to amend.

In the most recent iteration of Plaintiff’s complaint he essentially reasserts the same

claims. He first alleges that “Capella ... [negligently or fraudulently] dispers[ed] plaintiff’s 

federal[ly] allotted grant funds.” Doc. 55 at 7:1-2, 9:14-17. Plaintiff contends that Defendants 

“stole [his] grants and used them for their own personal use,” forcing Plaintiff to “borrow 

through loans” to pay his tuition. Doc. 55 at 8:13-15. Plaintiff alleges that a total of $40,000 to 

$50,000 in loan and grant funds that were unlawfully diverted. Doc. 55 at 7:22-25. Second, 

Plaintiff alleges that “Capella ... failed to credit or transfer all the units [P]laintiff was eligible to 

receive through [Capella’s] own admission ... standards ... as advertised by the universit[y’]s 

web[]site and [Plaintiff’s] enrolling advisor....” Doc. 55 at 8:23-26. Plaintiff acknowledges that 

he “did not apply for those other credits”—presumably referring to the units earned at California 

State University Bakersfield. However, it appears that Plaintiff understood his student advisor to 

have indicated that Defendants would accept more of Plaintiff’s academic transfer units than 

were actually accepted. See Doc. 55 at 8:23-9:2. Third, Plaintiff alleges that Defendants 

employed a “strategy to discourage [Plaintiff] by blocking, hindering[,] and impeding [P]laintiff” 

from successfully completing his education. See Doc. 55 at 8:15-20. Plaintiff seems to suggest 

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that Defendants somehow made it difficult or impossible to access his course work. See Doc. 55 

at 8:19-21 (“Plaintiff has pictures on his phone that shows green and black screen, yet shows the 

course objective but not allow access to course-work... also, I have a picture that states that ‘this 

is the FBI drug surveillance unit’ (sic).”) 

Plaintiff alleges that Capella “was set up, operated and controlled by the FBI, who are 

freemasons- free-monsters where they concealed facts about their true profession and who they 

were, and what they truly offered. (sic)” Doc. 55 at 9:7-10. From what the Court can infer, 

Plaintiff seems to suggest that the FBI also caused Plaintiff to incur loans and/or encounter 

academic struggles at CSUB. See Doc. 55 at 8:7-13 (“The intent, objective, plaintiff asserts, was 

to duplicate the strategy they were successful with at CSUB in which plaintiff did not discern 

...until the pattern was being repeated; i.e. the pressure that places plaintiff into the position that 

he would have to take more classes over again thus placing him in jeopardy of losing financial 

aid or academic disciplinary actions that would subsequently kick me out.”)

B. Legal Standard

Under Federal Rule of Civil Procedure 12(b)(6), a claim may be dismissed where a 

plaintiff fails “to state a claim upon which relief can be granted.” Fed. R. Civ. P. 12(b)(6). A 

dismissal under Rule 12(b)(6) may be based on the lack of a cognizable legal theory or on the 

absence of sufficient facts alleged under a cognizable legal theory. Johnson v. Riverside 

Healthcare Sys., 534 F.3d 1116, 1121 (9th Cir. 2008); Navarro v. Block, 250 F.3d 729, 732 (9th 

Cir. 2001). 

In reviewing a complaint under Rule 12(b)(6), all allegations of material fact are taken as 

true and construed in the light most favorable to the non-moving party. Mollett v. Netflix, Inc., 

795 F.3d 1062, 1065 (9th Cir. 2015); Marceau v. Blackfeet Hous. Auth., 540 F.3d 916, 919 (9th 

Cir. 2008). However, the Court is not required “to accept as true allegations that are merely 

conclusory, unwarranted deductions of fact, or unreasonable inferences.” In re Gilead Scis. Sec. 

Litig., 536 F.3d 1049, 1056-57 (9th Cir. 2008); Sprewell v. Golden State Warriors, 266 F.3d 979, 

988 (9th Cir. 2001). To avoid a Rule 12(b)(6) dismissal, “a complaint must contain sufficient 

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factual matter, accepted as true, to state a claim to relief that is plausible on its face.” Ashcroft v. 

Iqbal, 556 U.S. 662, 278 (2009); see Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 570 (2007). 

“A claim has facial plausibility when the plaintiff pleads factual content that allows the court 

draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 

U.S. at 678. The Ninth Circuit has distilled the following principles from Iqbal and Twombly:

First, to be entitled to the presumption of truth, allegations in a complaint or 

counterclaim may not simply recite the elements of a cause of action, but must 

contain sufficient allegations of underlying facts to give fair notice and to enable 

the opposing party to defend itself effectively. Second, the factual allegations that 

are taken as true must plausibly suggest an entitlement to relief, such that it is not 

unfair to require the opposing party to be subjected to the expense of discovery 

and continued litigation.

Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011). If a Rule 12(b)(6) motion is granted, 

the “district court should grant leave to amend even if no request to amend the pleading was 

made, unless it determines that the pleading could not possibly be cured by the allegation of 

other facts.” Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir. 2000) (en banc). In other words, 

leave to amend should be granted unless amendment would be futile. Gompper v. VISX, Inc., 

298 F.3d 893, 898 (9th Cir. 2002); see Petersen v. Boeing Co., 715 F.3d 276, 282 (9th Cir. 2013) 

(requiring that “leave to amend ... be granted with extreme liberality”) (internal quotation marks 

omitted). A party's “repeated failure to cure deficiencies” is “a strong indication that the [party] 

has no additional facts to plead” and “that any attempt to amend would be futile[.]” Zucco 

Partners, LLC v. Digimarc Corp., 552 F.3d 981, 988, 1007 (9th Cir. 2009) (internal quotation 

marks omitted).

C. Discussion

Although Plaintiff’s TAC complaint is lengthier than the prior version, the newly alleged 

material does not cure the deficiencies previously identified. From what the court can glean from 

the TAC, Plaintiff appears to believe that the Federal Bureau of Investigation has worked in 

combination with Defendants and the California State University system to thwart Plaintiff’s 

attempts to further his education, forcing Plaintiff to continue to take out additional student 

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loans. See Doc. 55. Plaintiff has failed to allege any factual material that would support his 

theory. Because the Court has afforded Plaintiff multiple opportunities to amend his complaint 

and outlined the requirements, to no avail, the Court will dismiss this action with prejudice. See

Doc. 54 at 4-5 (warning plaintiff that he had only one more opportunity to amend).

1. Unlawful Diversion of Student Loan and Grant Funds

Plaintiff has separated his theory regarding student loan and grant fund diversion into two 

causes of action: fraud and negligence. Both causes of action are premised on the same alleged 

conduct. The only distinction is the state of mind attributable to Defendant. See Doc. 40 at 5. 

This section addresses both.

When this Court dismissed Plaintiff’s First Amended Complaint it explained that Plaintiff 

needed to explain “the basis for [his] belief that federal grants were issued to Capella or 

Sophia[,] the amount that he believes was issued,” Doc. 40 at 9:3-4, and Defendants’ roles in 

“stealing ... $25,000 to $30,000 worth of federally protected grant money.” Doc. 40 at 6:2-3. 

Plaintiff was further instructed to explain “when those funds were awarded, and the basis for his 

belief that those funds were not applied to his student account.” Doc. 40 at 8:2-3. 

Plaintiff has alleged that while at CSUB he received “$12,500[.00] in student Stafford 

loan[s] and [$]5,645.00 [in] Pell Grants for each quarter.” Doc 55 at 7:5-6; see Doc. 55 at 16 

(detailing the estimated Pell Grant and Stafford Loan eligibility amounts).

2 He contends that he 

received the same amount in loans and grants while a student at Capella. Doc. 55 at 7:3-5. 

However, Capella “sporadically dispersed [to] plaintiff ... $400.00 ... here, $200.00 ... there, 

and $84 here, yet continuously [forced] plaintiff to take out loans to cover [the cost of] classes 

and to pay for books....” Doc. 55 at 7:10-14. In another portion of Plaintiff’s complaint he seems 

to allege that Defendants “kept/withheld” all of plaintiff’s grant funds. Doc. 55 at 9:12-15; See

Doc. 55 at 5. Equally confusing is Plaintiff’s apparent belief that Defendants (and possibly the 

FBI) are also responsible for a similar pattern of refusing to properly distribute student grant 

funds while Plaintiff was a student at CSUB. Doc. 55 at 8:7-15.

 

2 Alternatively, Plaintiff claims that Defendants “defraud[ed] plaintiff out of ... “$9,000.00 dollars per quarter.” 

Doc. 55 at 7:25-26. 

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It is clear that Plaintiff believes that Defendants received federal student grant funds that 

Plaintiff never received the benefit of. However, Plaintiff has again failed to provide sufficient 

factual allegations for the Court to be able to determine whether the Pell Grant funds that 

Plaintiff alleges to have been provided to Defendants were correctly distributed. Based on 

Plaintiff’s factual allegations, any number of lawful scenarios may have taken place; for 

instance, the Pell Grants awarded may simply not have covered the full amount of Plaintiff’s 

tuition. In that case, it would not be surprising (or tortious) for Defendants to have facilitated 

issuance of student loans to pay for the remainder of Plaintiff’s tuition and education-related 

expenses. 

As with the FAC, “Plaintiff only offers vague, conclusory statements that federal grant 

funds were afforded to Plaintiff and that Defendants improperly diverted those grants.” Doc. 40 

at 3:15-16. This time, feasibility of amendment inquiry is different. Plaintiff has repeatedly failed 

to articulate any basis in fact for his allegations. It appears that Plaintiff can plead no additional 

facts that might allow him to state a plausible claim. Plaintiff’s claims regarding Defendants’ 

alleged failure to properly distribute his loan and grant funds will be dismissed with prejudice.

Plaintiff will not be given leave to amend.

2. Transfer of Student Credits

Plaintiff’s TAC contains allegations that Defendants misrepresented that they would 

accept transfer units that they in fact would not accept. For instance, Plaintiff alleges that 

Capella’s website and the student advisor that helped Plaintiff enroll in courses both led Plaintiff 

to believe that all of the units that he earned at CSUB would transfer to Capella. Plaintiff alleges 

that Defendants failed to honor their promise.3

“Claims involving misrepresentation sound in fraud and are subject to the heightened 

pleading standard of Rule 9(b) of the Federal Rules of Civil Procedure.” Doc. 40 at 6 (citation 

omitted). “The Ninth Circuit has ‘interpreted Rule 9(b) to mean that the pleader must state the 

time, place, and specific content of the false representations as well as the identities of the parties 

 

3

Plaintiff also seems to suggest that Capella University is actually “operated and controlled by the FBI, who are 

freemasons....” Doc. 55 at 9:7-8. 

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to the misrepresentation.’ ” Doc. 40 at 6 (quoting Alan Neuman Prods. Inc. v. Albright, 862 F.2d 

1388, 1392-93 (9th Cir. 1988) (some internal quotation marks omitted). As the Court previously 

instructed Plaintiff, he was “required to allege the content and date of the statement or statements 

by a specified defendant advising (or promising) Plaintiff regarding the transfer of his 1674

educational units.” Doc. 40 at 7. Plaintiff failed to identify who made the specific representation 

and what the specific representation was. Simply indicating that Capella’s website and one of its 

advisors generally advised him that his credits would transfer is inadequate to meet the 

specificity requirements Rule 9(b). Again, as Plaintiff has been afforded multiple opportunities to 

amend and continues to fail to state a claim, this claim will be dismissed with prejudice. Plaintiff 

will not be given leave to amend.

3. Placement of Barriers in Plaintiff’s Path

Plaintiff’s final allegation is that Defendants, apparently in conjunction with officials 

from the CSU system and the FBI, have conspired to prevent him from completing his 

coursework at Capella. In support of this allegation, Plaintiff informs the court that he “has 

pictures on his phone that shows green and black screen, yet shows the course object but not 

allow access to the course-work... also, I have a picture that states that ‘this is the FBI drug 

surveillance unit.’ (sic)” Doc. 55 at 8:18-21.

Plaintiff has not provided sufficient factual allegations to indicate that Defendants 

engaged in any actionable conduct related to purposefully inhibiting Plaintiff’s completion of his 

coursework. This claim will be dismissed with prejudice. Plaintiff will not be given leave to 

amend.

4. Conclusion

Having determined that none of the ascertainable theories in Plaintiff’s TAC state a 

claim, the Court will dismiss this action, in whole, with prejudice.

 

4

Plaintiff’s only reference to the number of educational units at issue in the TAC was to note that Defendants did 

credit him with 115 educational units from CSUB. Even considering all of the complaints that Plaintiff has filed, in 

combination, the Court cannot determine whether the educational units that Plaintiff seeks recognition for were 

recognized at CSUB, where those units were earned, or even if Plaintiff specifically discussed transfer of those units 

to Capella with any of Defendants’ staff. The detail necessary for the Court to understand Plaintiff’s claim is simply 

lacking.

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II. Plaintiff’s motion for judgment on the pleadings

Plaintiff moves for judgment on the pleadings. Federal Rule of Civil Procedure 12(c) 

permits a party to seek judgment on the pleadings “[a]fter the pleadings are closed—but early 

enough not to delay trial.” As Defendants correctly note, judgment on the pleadings is 

inappropriate before an answer has been filed because the pleadings have not closed. Doc. 63 at 

1 (citing In re Villegas, 32 B.R. 742, 744-745 (B.A.P. 9th Cir. 1991). “A motion for judgment on 

the pleadings should [only] be granted where it appears the moving party is entitled to judgment 

as a matter of law.” Geraci v. Homestreet Bank, 347 F.3d 749, 751 (9th Cir. 2003). Moreover, if 

there is a material dispute regarding the facts of the parties’ pleadings, a motion for judgment on 

the pleadings cannot be granted. Fleming v. Pickard, 581 F.3d 922, 925 (9th Cir. 2009).

In this case, no answer has been filed; the limited facts articulated are likely in dispute; 

and, as decided above, even taking all of the facts as true, Plaintiff’s allegations fail to state a 

claim. Plaintiff is not entitled to judgment as a matter of law. Plaintiff’s motion for judgment on 

the pleadings will be denied.

III. Order

Based on the foregoing, IT IS HEREBY ORDERED that:

1. Defendants’ motion to dismiss is GRANTED as follows:

a. Plaintiff’s TAC is DISMISSED in whole, with prejudice.

2. Plaintiff’s motion for judgment on the pleadings is DENIED. 

The Clerk of the Court is respectfully directed to close this case.

The Clerk of the Court is further respectfully directed to mail a copy of this order to 

Plaintiff.

IT IS SO ORDERED.

Dated: April 12, 2016 

 SENIOR DISTRICT JUDGE

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