Court Opinion

ID: 2758025
Source: CourtListenerOpinion
Date Created: 2014-12-05 20:00:56.815536+00
Date Added: 2024-06-11T12:26:14.776593
License: Public Domain

UNPUBLISHED

                   UNITED STATES COURT OF APPEALS
                       FOR THE FOURTH CIRCUIT

                             No. 13-2265

MELVIN MURPHY,

                 Plaintiff – Appellant,

           v.

CAPELLA EDUCATION COMPANY,

                 Defendant - Appellee.

Appeal from the United States District Court for the Eastern
District of Virginia, at Alexandria.    Claude M. Hilton, Senior
District Judge. (1:13-cv-00655-CMH-TRJ)

Argued:   October 29, 2014                 Decided:   December 5, 2014

Before NIEMEYER, WYNN, and THACKER, Circuit Judges.

Affirmed by unpublished per curiam opinion.       Judge Wynn wrote a
separate opinion concurring in the result.

ARGUED: John Chapman Petersen, SUROVELL ISAACS PETERSEN & LEVY
PLC, Fairfax, Virginia, for Appellant.    Brendan David O’Toole,
WILLIAMS MULLEN, Richmond, Virginia, for Appellee.     ON BRIEF:
Jason Frank Zellman, Stephen Patrick Pierce, SUROVELL ISAACS
PETERSEN & LEVY PLC, Fairfax, Virginia, for Appellant. Todd R.
Sorensen, CAPELLA EDUCATION COMPANY, Minneapolis, Minnesota, for
Appellee.

Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:

              Melvin     Murphy    (“Appellant”)         appeals    the     district

court’s      dismissal     of     his    amended    complaint       (the    “Amended

Complaint”), which purports to bring fraud-based claims against

Appellee Capella Education Co. (“Capella”).                   The district court

dismissed the Amended Complaint pursuant to Rule 9(b) of the

Federal Rules of Civil Procedure because Appellant failed to

allege fraud with sufficient particularity.

              The   Amended     Complaint      alleges    that     Appellant     paid

large sums of tuition in pursuit of a Ph.D., only to fail the

comprehensive examinations, which was a required step on the

path to earning a Ph.D.            He does not allege with particularity

that       anyone   at   Capella        assured    him   he   would       pass   such

examinations, that he would complete the program in a certain

period of time, or that statements in the published materials

sent by Capella made any such representations.                     He also alleges

that an unspecified number of nameless individuals shared the

same experience, and thus Capella is essentially a “diploma mill

without the diplomas.”            J.A. 103 (internal quotation marks and

punctuation omitted). 1         Such allegations must meet the heightened

       1
       Citations to the “J.A.” refer to the Joint Appendix filed
by the parties in this appeal.

                                           2
pleading    standard          set      forth      in    the     Federal    Rules.         Because

Appellant fails to meet this standard, we affirm.

                                                   I.

            The Amended Complaint, which we are obliged to view in

the light most favorable to Appellant, see Anand v. Ocwen Loan

Servicing, LLC, 754 F.3d 195, 198 (4th Cir. 2014), contains the

following allegations.

                                                   A.

            Murphy,           a     resident        of     Fairfax     County,          Virginia,

received a bachelor’s degree from American University and an

M.B.A. from the University of Phoenix.                           He then sought to obtain

a   Ph.D.   for    purposes         of      his    professional       development         in    the

business      management            field.              Having     seen     several        online

advertisements          for       Capella’s         doctoral       programs       in     business

management,       Appellant            contacted          Capella     and     expressed          an

interest.          Capella          “aggressively             responded”     to        Appellant,

“calling and emailing him and providing him with brochures and

other marketing materials in an effort to enroll him in its

doctoral program.”            J.A. 104.

            In     response            to    his        inquiries,    Capella          sent     two

publications       to     Appellant:              the    2008     University       Guide       (the

“Guide”) and the “What Can I Do?” Brochure (the “Brochure”).

The Guide is a 40-page color booklet that, inter alia, describes

the   Ph.D.       program         in     Organization           and   Management         with     a

                                                   3
specialization       in    Leadership       (the   “Leadership     Ph.D.”).     The

Guide includes the following description of the Leadership Ph.D.

program:

            Enhance your ability to manage and lead in
            today’s     fast-paced,     global     business
            environment    with    the    Leadership    PhD
            specialization.     The curriculum offers a
            strong foundation in key business functions,
            along with focused leadership courses that
            allow you to carve your niche in such areas
            as      global      leadership,      leadership
            development, entrepreneurial leadership, and
            upper-echelon leadership.       You will also
            conduct and apply advanced doctoral research
            to the actual challenges facing complex,
            21st-century   organizations.      People   who
            choose    this   specialization    are    often
            pursuing faculty positions or leadership or
            consulting roles in a variety of military,
            government,     business,     and     nonprofit
            settings.

J.A. 176.      The Guide also contains testimonials and photographs

of individuals purporting to be Capella students.                     One of these

purported students is Sidney Wynn, who, like Appellant, is an

African-American veteran.             The Guide indicates that Wynn earned

a   master’s      degree   and   was       enrolled   in   the   Organization   and

Management Ph.D. program at Capella.                   The statement below his

picture reads, “I chose the Capella master’s degree program as a

way to move myself forward and provide an edge when I return to

civilian life.”       Id. at 164.

            The    Brochure      is    a    four-page      brochure   stating   the

following:

                                             4
            The    Leadership    specialization   prepares
            leaders for today’s fast-paced and complex
            global    enterprise    system    . .    .   .
            Executives, mid-level managers, and those in
            the initial stages of their careers are
            prepared to develop real-world answers to
            the challenges of the twenty-first century
            organization.    This specialization prepares
            doctoral leaders to lead, consult, or teach
            in the area of leadership from an informed,
            strategic    viewpoint,    creating practical
            solutions to real-world problems.

J.A. 199.     The Brochure also lists “[c]ommon job titles” for

graduates    of    the    Leadership     Ph.D.   program,    including      faculty

member, dean, leadership consultant, CEO, CFO, president, and

director.    Id.

            In addition to the Guide and the Brochure, Capella

enrollment    counselors       also      confirmed   to    Appellant      that    the

Leadership Ph.D. existed, that he “would earn that degree once

he had fulfilled the requisite coursework,” and that “the degree

would be useful in his chosen profession.”                J.A. 108-09.

                                          B.

            Based on the representations made in the Guide, in the

Brochure,    and   by     enrollment     counselors,      Appellant     applied    to

Capella’s Leadership Ph.D. program in late 2008 and enrolled in

the program in 2009.          From 2009 to 2011, he performed well and

was very involved in school activities.                   He communicated with

his advisor and took classes on a quarterly basis.                      He attended

three   residency        programs   or   “colloquia,”      where   he    met   other

                                           5
Capella students.          J.A. 110.         Throughout the program, Appellant

was    “in    regular     contact”     with       his    advisors      about    progress,

course       selection,    and    difficulties           with    his   studies.        Id.

Appellant estimates he emailed and called such advisors twice a

month.        Appellant earned a GPA of 3.75, along with a $5,000

scholarship to apply toward his tuition.                        He was even selected

as a “Capella Ambassador,” and in that capacity he discussed the

school’s      academic    offerings      with      new    and    potential      students.

Id.

               After finishing his course work, in the fall of 2011,

Appellant took the comprehensive examinations, or “Comps,” which

is the last step before a Capella Ph.D. student begins to write

his or her dissertation.               According to the Amended Complaint,

the Comps are “purportedly . . . written exam[s] which feature[]

multiple       essay     questions      in       which    the     doctoral      candidate

demonstrates       knowledge      of    the       subject       matter,    as   well    as

writing,      research,    and    critical        thinking      proficiency.”          J.A.

111.     If a student fails the Comps on the first try, he or she

may try again, but on the second failed attempt, the student is

dis-enrolled.          The Comps term is treated as a course, requiring

approximately       $4,000       in    tuition      per     term.         Students     are

permitted to receive feedback during the process of writing the

Comps and, in response, perform a “rewrite,” but this process

                                             6
normally lengthens the Comps process, adding more to the tuition

bill.       Id. at 112-13.

               Appellant’s initial attempt at passing the Comps was

in    the    fall    of    2011.      As   the   “author     of   several    books     and

multiple published articles,” he “expected to pass the writing

skills portion.”            J.A. 112.       However, after submitting a draft

for feedback, he received “arbitrary and pretextual” negative

criticism, and thus exercised his option to perform a rewrite.

Id.     After completing the rewrite, in December 2011, Capella

informed Appellant that he failed the Comps.                      He thus decided to

take an intervention writing class, a remedial course that cost

an additional $4,000.              He received an “A” in that class.

               In the summer of 2012, Appellant once again attempted

to take the Comps, paying another $4,000 to do so.                          After being

subject       to    “technical       and   arbitrary    criticism,”         Appellant’s

essay was flagged for plagiarism, “apparently because he failed

to enclose a direct quote in quotation marks.”                          J.A. 113.      The

essay was returned to him ungraded, and he was again given the

option of a rewrite.               He did so, and was later informed that he

failed the Comps for a second time, meaning that he would be

dis-enrolled.             After     Appellant     appealed        his   second    failed

attempt, Capella informed Appellant that he could take the Comps

a    third    time    if    he     re-enrolled    in   the    Comps      course   at   an

additional cost of $4,000.                 At this point, Appellant had spent

                                             7
over $70,000 in tuition.                 He elected not to pay the additional

$4,000 “for what experience had shown him to be a fruitless

endeavor.”         Id. at 114.          Capella also informed him that he could

use the coursework thus far completed to earn a master’s degree,

but   only     if    he    paid    an    additional            $4,000   toward    a     capstone

course.       Appellant rejected this offer because he already held a

master’s       degree.          Appellant        never         received     a    degree    from

Capella.

                                                C.

              On     April      30,     2013,        Appellant      filed       suit     against

Capella       in    the    Circuit       Court       of    Fairfax      County,        Virginia,

alleging violation of the Virginia Consumer Protection Act (the

“VCPA”).       Capella removed the matter to the Eastern District of

Virginia and soon thereafter filed a motion to dismiss pursuant

to Rule 12(b)(6).              The district court granted the motion on July

25, 2013, explaining that the complaint did not state a VCPA

violation with sufficient particularity, but giving Appellant 14

days to amend his complaint.                  On August 8, 2013, Appellant filed

the Amended Complaint alleging (1) violation of the VCPA; (2)

fraud; and (3) constructive fraud.

               In the Amended Complaint, Appellant claims he enrolled

in    Capella       because       of    the     “false         advertising”       and     “false

statements” made by Capella and its representatives.                                  J.A. 107.

He    avers    that       he   contacted      over        50    other   Capella        students,

                                                 8
“[m]ost” of whom were “pursuing a [Leadership Ph.D.] degree,”

and    “[e]ach      person”       stated       that    he        or    she    received        similar

enrollment brochures; did not know about the Comps requirement

or the overall low rate of passage; enrolled, took classes, and

received       a    high    GPA     without       any       indication            or       warning    of

deficiency; took the Comps and failed them based on “arbitrary

and     subjective         reasons    unrelated             to     the       substance        of     the

subject”; took remedial classes or retook the Comps and thus

paid    more       tuition;    and    finally,             became       dis-enrolled          without

receiving a Ph.D. after having paid at least $60,000 in tuition.

Id. at 114-15.

               Appellant      also    alleges          Capella          awards         a    “miniscule

number     of       doctoral       degrees        (less           than       10%       of     enrolled

candidates)”        and     awards    no       degrees       at       all    in    the      Leadership

Ph.D.     program.           J.A.     115.            He     also        avers      that       Capella

administers the Comps in such a way as to maximize its financial

yield (that is, by “requiring every candidate to use at least a

‘second’ quarter to complete the Comps”), and uses the Comps to

“systematically dismiss doctoral candidates who have otherwise

completed the course work.”                     Id. at 116; see also id. at 117

(The    Comps      were    used     “as    a    pretext          to    punitively           dis-enroll

students (after they spend all their available funds).”).

                                                 9
             Appellant categorizes Capella’s alleged falsities as

“False Statements” and “Material Omissions.”             The alleged False

Statements are the following:

             (1) “the existence of the Leadership Ph.D.
             degree”;

             (2) “the existence of successful graduates
             who   had  obtained the  Leadership  Ph.D.
             degree”; and

             (3) “the existence      of    satisfied   customers
             like Mr. Wynn[.]”

Id.   at   107.    These     statements    were   allegedly   “repeated   and

reiterated    by   Capella    enrollment    counselors.”      Id.   (internal

quotation marks omitted).          The alleged Material Omissions are

the following:

            (1)   “[T]here   was   no   doctoral   degree
            available in the [Leadership Ph.D. program]
            and thus no ‘graduates’ of that program”;

            (2) “[S]tudents like Mr. Wynn . . . did not
            actually exist and/or were not enrolled in
            the represented programs and never made the
            statements attributed to them”;

            (3) “[A] doctoral candidate in any subject
            must pass the [Comps] in order to be
            eligible for the Ph.D. and most candidates
            fail these exams”; and

            (4) “[T]he overwhelming majority of doctoral
            ‘candidates’ (at least 90%) did not actually
            obtain   their    desired  degree   and   NO
            candidates in the Leadership Ph.D. program
            actually   obtained   that degree   in  that
            field.”

                                     10
Id. at 108.         Appellant also alleges that no one from Capella

informed him that his progress was subpar, that he was unlikely

to pass the Comps, or that he would fail to complete the program

for any other reason.

                                                  D.

            Capella       filed          a    motion         to   dismiss     the     Amended

Complaint      on   August         26,   2013.          On   September      20,     2013,   the

district court ordered the case be stricken from the docket.

The    court    entered        a    three-page          memorandum        opinion    granting

Capella’s      motion     on       October        4,    2013.       The    district     court

reasoned that Appellant’s claims were not “supported with . . .

particularity” pursuant to Rule 9(b) of the Federal Rules of

Civil Procedure, explaining, “[Appellant] rather attributes the

same   indefinite       statements           to    [Capella’s]      various       promotional

materials and unidentified agents at indefinite times.”                                Murphy

v. Capella Educ. Co., No. 1:13-cv-655, 2013 WL 5525688, at *1

(E.D. Va. Oct. 4, 2013) (J.A. 259-60).                            Appellant timely noted

this appeal.

                                                  II.

            We review a district court’s dismissal of a complaint

pursuant to Rule 12(b)(6) de novo.                           See United States ex rel.

Oberg v. Pa. Higher Educ. Assistance Agency, 745 F.3d 131, 136

(4th Cir. 2014).         Appellant argues that the dismissal was error

because the Amended Complaint satisfies the pleading standards

                                                  11
of both Rule 8(a) 2 and Rule 9(b) of the Federal Rules of Civil

Procedure.          We assume arguendo that the Amended Complaint is

sufficiently        “plausible       on    its    face”    pursuant     to     Rule   8(a),

i.e., that Appellant “plead[ed] factual content that allows the

court to draw the reasonable inference that the defendant is

liable for the misconduct alleged.”                  Ashcroft v. Iqbal, 556 U.S.
662, 678 (2009); see also Bell Atl. Corp. v. Twombly, 550 U.S.
544,       555    (2007).      We    thus    proceed       to    discuss      the   Amended

Complaint’s viability pursuant to Rule 9(b).                          See United States

ex rel. Ahumada v. NISH, 756 F.3d 268, 280 (4th Cir. 2014)

(Allegations          of    fraud         must     “meet        the    more     stringent

‘particularity’ requirement of Federal Rule of Civil Procedure

9(b)”        in     addition        to    the     requirements         of      Rule    8). 3

       2
       Rule 8(a) provides, “A pleading that states a claim for
relief must contain . . . a short and plain statement of the
claim showing that the pleader is entitled to relief.” Fed. R.
Civ. P. 8(a)(2).
       3
       Although Ahumada was a False Claims Act case, its holding
-- that both Rule 8(a) and 9(b) hurdles must be jumped at the
motion to dismiss stage -- applies equally to all fraud cases.
See United States ex rel. Nathan v. Takeda Pharms. N. Am., Inc.,
707 F.3d 451, 456 (4th Cir. 2013) (“The multiple purposes of
Rule 9(b) . . . are as applicable in cases brought under the
[FCA] as they are in other fraud cases.”); see also United
States ex rel. Cafasso v. Gen. Dynamics C4 Sys., Inc., 637 F.3d
1047, 1055 (9th Cir. 2011) (“[C]laims of fraud or mistake . . .
must, in addition to pleading with particularity, also plead
plausible allegations.”); Am. Dental Ass’n v. Cigna Corp., 605
F.3d 1283, 1290 (11th Cir. 2010) (“[T]he Twombly plausibility
(Continued)
                                             12
                                     III.

          Rule 9(b) provides, “In alleging fraud . . . , a party

must   state   with    particularity       the   circumstances   constituting

fraud . . . .        Malice, intent, knowledge, and other conditions

of a person’s mind may be alleged generally.”                 Fed. R. Civ. P.

9(b) (emphasis supplied).           We have explained that the purpose

of this higher pleading standard is to “provid[e] notice to a

defendant of its alleged misconduct, . . . prevent[] frivolous

suits, . . . eliminat[e] fraud actions in which all the facts

are learned after discovery, and . . . protect[] defendants from

harm to their goodwill and reputation.”              United States ex rel.

Nathan v. Takeda Pharm. N. Am., Inc., 707 F.3d 451, 456 (4th

Cir. 2013) (internal quotation marks omitted).

           In order to satisfy Rule 9(b), a plaintiff must “at a

minimum, describe the time, place, and contents of the false

representations, as well as the identity of the person making

the misrepresentation and what he obtained thereby.”                    Nathan,
707 F.3d at 456 (internal quotation marks omitted) (emphasis

supplied).     He or she must set forth “the who, what, when,

where,   and   how    of   the   alleged    fraud”   before    access   to   the

standard applies to all civil actions[.]”); United States ex
rel. Grubbs v. Kanneganti, 565 F.3d 180, 186 (5th Cir. 2009)
(“Rule 9(b) supplements but does not supplant Rule 8(a)’s notice
pleading.”).

                                       13
discovery    process   should    be   granted.      United    States    ex    rel.

Wilson v. Kellogg Brown & Root, 525 F.3d 370, 379 (4th Cir.

2008)     (internal    quotation      marks    omitted).       Against        this

backdrop, we proceed to analyze the Amended Complaint.

                                       A.

                 Alleged Fraud and Constructive Fraud

            Counts Two and Three of the Amended Complaint purport

to allege Virginia common law fraud and constructive fraud.                     In

order to succeed on such claims, a plaintiff must prove (1)

false representation of a material fact; (2) made intentionally,

in the case of actual fraud, or negligently, in the case of

constructive fraud; (3) reliance on that false representation to

plaintiff’s detriment; and (4) resulting damage.                 Caperton v.

A.T. Massey Coal Co., Inc., 740 S.E.2d 1, 9 (Va. 2013).                  In the

Amended     Complaint,      Appellant         asserts   that      the        false

representation    element       is    satisfied    by   the    alleged       False

Statements and Material Omissions. 4           Therefore, we look to each

of these items to determine if a particularized fraud claim has

been pleaded.

     4
       “Virginia law recognizes that an omission may constitute a
false representation in certain circumstances.”         Weiss v.
Cassidy Dev. Corp., No. 206766, 2003 WL 1563425 at *4 (Vir. Cir.
Ct. 2003) (citing Van Deusen v. Snead, 441 S.E.2d 207, 211 (Va.
1994)).

                                       14
                                          1.

                                 False Statements

                                          a.

            The first alleged False Statement set forth in the

Amended     Complaint       is    that        Capella    represented        that    the

Leadership Ph.D. degree actually “exist[ed],” when in reality

the program was a “sham” and Capella was a “diploma mill without

the diplomas.”       J.A. 107, 110, 103 (internal quotation marks and

punctuation omitted).            More specifically, Appellant claims that

the Brochure and the Guide “consciously gave the impression that

a Capella student could enroll, take the requisite classes and

obtain a Ph.D. in the Leadership program.”                      Id. at 107.         This

“was a false statement” because Capella “has never awarded a

Leadership Ph.D. in Organization and Management and it never

will, as the program itself has been discontinued.”                    Id.

            After    examining      the       specific    allegations    underlying

these general assertions, we conclude that Appellant has failed

to plead “the who, what, when, where, and how of the alleged

fraud.”      Wilson, 525 F.3d    at    379   (internal      quotation      marks

omitted).    First, Appellant states broadly that Capella “had no

track record of producing doctoral graduates,” and attempts to

support   this      claim   by     stating      that     of   the   5,018    students

enrolling in doctoral programs in 2008, “not a single one had

earned a degree through 2010.”                J.A. 103.       But he does not link

                                          15
the two by alleging that any doctoral student enrolling in 2008

should have earned such a degree in two years.                    To the contrary,

the   Amended      Complaint     shows   that      Appellant     himself     was   not

eligible to take the Comps until two years after he enrolled,

and one cannot write his or her dissertation and earn a degree

until finishing the Comps.             Nor does Appellant allege that any

agent of Capella assured him he would have a degree in two

years.

              Second, Appellant claims, of students who enrolled in

Capella seeking a doctorate degree in 2008 or 2009, “less than

10% would actually receive such a degree.”                      J.A. 103; see also

id.   at    115    (“Capella    awards   a    miniscule     number      of   doctoral

degrees . . . and it awards no Ph.D. degrees in the fraudulent

‘Leadership Ph.D. program.’”).                But again, Appellant does not

allege      that   students    enrolling      in   2008   and    2009   should     have

received their degrees by the time the Amended Complaint was

filed in August 2013.           In fact, he appears to have relied only

on his own vague investigative work.                  See id. at 115 n.3 (“In

his investigation, Mr. Murphy has not contacted a single student

in    the    Leadership       Ph.D.   program      that   actually      obtained     a

Ph.D.”).

              Third, Appellant explains that the Comps evinced an

effort to “weed out” students after “they have paid the maximum

possible tuition.”        J.A. 115.      He claims Capella administers the

                                         16
Comps “in such a manner as to maximize its financial yield,

i.e., by requiring every candidate to use at least a ‘second’

quarter to complete the Comps” and alleges that his failed Comps

were based on “arbitrary and pretextual” criteria.                        Id. at 116,

112.       These allegations, too, fail for lack of particularity.

Appellant        does    not    provide       the    specific    criteria       used    to

evaluate his Comps, does not explain how it is arbitrary, and

does       not   provide      any   specific        instances    of    anyone       besides

himself      being      “weed[ed]      out”   and/or    having    to    use     a   second

quarter to take the Comps.               J.A. 115. 5     Cf. Kohler v. Hirst, 460

F.   Supp.       412,   420    (E.D.    Va.    1978)    (“[P]laintiff      has       merely

       5
       Even if Appellant did provide the criteria used for the
Comps review, we are certainly not in the business of reviewing
academic determinations, nor should we be.    See Regents of the
Univ. of Mich. v. Ewing, 474 U.S. 214, 225 n.11 (1985)
(“University faculties must have the widest range of discretion
in making judgments as to the academic performance of students
and their entitlement to promotion or graduation.” (internal
quotation marks omitted)); Sandlin v. Johnson, 643 F.2d 1027,
1029 (4th Cir. 1981) (“Decisions by educational authorities
which turn on evaluation of the academic performance of a
student as it relates to promotion are peculiarly within the
expertise of educators and are particularly inappropriate for
review in a judicial context.”); Clark v. Whiting, 607 F.2d 634,
638 (4th Cir. 1979) (review of “denial of academic promotion
premised   on   purely  academic   considerations  .   .   .  is
inappropriate”); see also Bd. of Curators of Univ. of Missouri
v. Horowitz, 435 U.S. 78, 90 (1978) (“Like the decision of an
individual professor as to the proper grade for a student in his
course, the determination whether to dismiss a student for
academic reasons requires an expert evaluation of cumulative
information and is not readily adapted to the procedural tools
of judicial or administrative decisionmaking.”).

                                              17
stated a conclusion; she has not alleged, even briefly, how or

why   defendants’           conduct     was        arbitrary    and    capricious.”).

Although    he     generally       refers      to     “over    fifty   other   Capella

students”    who      had    a   similar      experience,       this   alone   is    not

sufficient.      J.A. 114.         He does not describe the “time, place,

and contents of the false representations,” nor does he identify

the people making such representations or the people receiving

them. 6   United States ex rel. Owens v. First Kuwaiti Gen. Trading

& Contracting Co., 612 F.3d 724, 731 (4th Cir. 2010).

            Finally, we cannot ignore Capella’s citation to the

National    Center     for       Education     Statistics       (“NCES”)    Digest    of

Education Statistics, which shows that from 1999-2009, Capella

awarded 3,421 doctoral degrees and was ranked 41st among the 60

institutions conferring the most doctoral degrees in the nation.

See   Digest     of    Educational         Statistics,         National    Center    for

Education    Statistics,              http://nces.ed.gov/programs/digest/d10/

tables/dt10_336.asp (last visited Nov. 14, 2014) (saved as ECF

opinion attachment). 7            These statistics contradict Appellant’s

      6
       Indeed, per his own allegation, these unnamed 50 people
were not all enrolled in the program about which Appellant
complains.   See J.A. 114 (“Most of these [50] were pursuing a
doctoral degree in the [Leadership Ph.D.] program.” (emphasis
supplied)).
      7
       We can take judicial notice of the statistics available on
this website. See Fed. R. Evid. 201(c)(1) (authorizing a court
to take judicial notice without a request from a party); Philips
(Continued)
                                              18
assertion       that   Capella     is     simply       a   diploma       mill    without      the

diplomas.

                                               b.

            The second alleged False Statement is based on the

following allegations:             the Guide featured “individuals . . .

identified as . . . successful graduates of Capella,” when they

were not, J.A. 105; and over 50 other Capella students received

enrollment        brochures        with        people       “falsely           portrayed      as

‘successful’ . . . graduates[] of the Leadership Ph.D. program,

or   a    similar      doctoral         program,”          id.     at     114-15.           These

allegations likewise fail to reach the level of particularity

required    under      Rule   9(b).            Except      for   Wynn         (who    was   never

actually     portrayed        as    a     Ph.D.        “graduate”         in     the    Guide),

Appellant does not mention anyone specifically who was portrayed

as a Capella graduate, let alone a Leadership Ph.D. graduate;

indeed,     a     close   review          of     the       Guide        and     the    Brochure

demonstrates the opposite -- there are no statements or pictures

of anyone purporting to be a graduate of the Leadership Ph.D.

program.

v. Pitt Cnty. Mem’l Hosp., 572 F.3d 176, 180 (4th Cir. 2009)
(“In reviewing a Rule 12(b)(6) dismissal, we may properly take
judicial notice of matters of public record” including “publicly
available statistics.” (internal quotation marks and alteration
omitted)).

                                               19
              Therefore, Appellant’s claims relating to the second

alleged False Statement also fail to allege with particularity

that Capella made a false representation to Appellant.

                                            c.

              As    to   the   third     alleged     False     Statement,       Appellant

claims    that      enrollment       counselors        and     the     Guide    portrayed

certain    students         and      graduates         as     “satisfied        with    the

[Leadership        Ph.D.]      program,”     when      in     fact,     such    satisfied

students did not “exist[].”                 J.A. 121, 107.              On this point,

Appellant also alleges that when Capella sent the Guide to him,

Wynn was no longer a Capella student, much less pursuing the

Leadership Ph.D.          Further, Appellant alleges, the statement in

the   Guide    attributable         to   Wynn    was     “fabricated,”         “deceptive,

dishonestly [sic] and openly false.”                        Id. at 105-06.        Indeed,

Appellant goes so far as to allege that Wynn was “mythical,”

despite the fact that he acknowledges his existence by alleging

that Wynn had not been a student since 2007.                        Id. at 116, 106.

              However,      Appellant      fails    to      describe    accurately     the

“contents of the false representations.”                        Nathan, 707 F.3d at

455-56    (internal       quotation      marks     omitted).          Again,     the   only

student   he       mentions    by   name    is     Wynn.       He    claims     that   Wynn

“endorsed Capella’s academic program” and was “a current student

in the Leadership Ph.D. program,” both of which he claims were

false.    J.A. 105.         However, a close examination of Wynn’s quote

                                            20
in the Guide belies these claims:               Wynn’s quote reads, “I chose

the Capella master’s degree program as a way to move myself

forward and provide an edge when I return to civilian life.”

J.A. 164 (emphasis supplied).               Thus, the endorsement was of the

master’s program, not the Leadership Ph.D. program.                          Appellant

fails to allege how endorsement of the master’s program served

as the basis for a false representation with regard to the Ph.D.

program.     Furthermore, the Guide does not specify that Wynn was

a current student in the Leadership Ph.D. program, as Appellant

alleges; rather, it simply states that Wynn was enrolled in the

Organization and Management program, of which Leadership is but

one concentration.

             Therefore, while the first and second alleged False

Statements fail for particularity, this one fails not only for

want   of        particularity,     but      also    because      the        supporting

allegations are actually belied by the attached exhibits.                            See

Cooksey     v.    Futrell,   721 F.3d 226,    234    (4th   Cir.       2013)   (In

reviewing        the   dismissal   of   a    complaint,     “[w]e       must    .    .   .

consider         documents    incorporated          into    the        complaint         by

reference.” (internal quotation marks omitted)); Veney v. Wyche,

293 F.3d 726, 730 (4th Cir. 2002) (At the motion to dismiss

stage, we need not “accept as true allegations that contradict

matters     properly     subject   to     judicial    notice      or    by   exhibit.”

(internal quotation marks omitted)).

                                          21
                                                   2.

                                      Material Omissions

                                                   a.

            Based        on     the    above       analysis,          the       first    and       second

alleged Material Omissions -- i.e., a doctoral degree was not

available in the Leadership Ph.D. program and thus there were no

“graduates”    of        that    program,          and   students           like    Wynn       did    not

actually    exist        and/or        were       not    enrolled          in    the     represented

programs and never made the statements attributable to them --

likewise do        not    rise        to   the     level       of    particularity            required

under Rule 9(b) to constitute a false representation.

                                                   b.

            The     third        alleged          Material      Omission           --    a    doctoral

candidate     in     any        subject       must       pass        the        Comps,       and     most

candidates     fail       these        exams       --     is        also    not     pleaded          with

sufficient particularity to support a claim of fraud.                                              First,

to the extent Appellant alleges he did not know that he had to

pass the Comps to earn a degree, this allegation is belied by

the Guide, which itself mentions the comprehensive examinations

in two places.        See J.A. 169 (“In [Ph.D. colloquia] Track 3, you

affirm     competencies,              gain        insight       into        the     comprehensive

examination,        and       focus        on       advanced          research           methods[.]”

(emphasis    supplied));           id.       at    192    (listing          tuition          costs    for

“comprehensive examination” for Ph.D. students).

                                                   22
               Second, to the extent Appellant alleges that no one

told   him     that     most    candidates        fail    the   Comps,      he   does   not

sufficiently allege that this equates to an omission or false

representation of a “material fact.”                     Caperton, 740 S.E.2d at 9.

He does not specifically allege why -- even if he knew that

“most candidates” fail the exams -- he would have declined to

enroll.      Indeed, Appellant himself states that he enrolled “with

expectations” of a doctoral degree, not assurances.                          Id. at 112.

See Supervalu, Inc. v. Johnson, 666 S.E.2d 335, 342 (Va. 2008)

(“[F]raud       ordinarily        cannot     be      predicated        on    unfulfilled

promises or statements regarding future events.”).

               To   the   contrary,     he     admits      that   as    an   “author     of

several books and multiple published articles, [he] expected to

pass the writing skills portion,” and this belief was not based

on a false representation or omission on the part of Capella,

nor does he allege it to be.                      J.A. 112.       Appellant alleges

generally that he was doing well in his classes, keeping in

touch with his advisors, and receiving no negative feedback, but

again,    he    fails     to    link   these      facts    with   the    third    alleged

Material Omission.             He does not specifically allege that Capella

represented that his success in the course work portion of the

program would equate to success on the Comps.                       To the contrary,

Capella actually provided a colloquia to “gain insight” into the

                                             23
Comps, which implies that successfully finishing the course work

does not ensure success on the Comps.               J.A. 169.

                                          c.

             The   fourth     alleged     Material    Omission   --    i.e.,   the

overwhelming       majority    of     doctoral    candidates     (at   least     90

percent) did not actually obtain their desired degree and no

candidates    in     the   Leadership     Ph.D.   program   actually    obtained

that degree in that field -- also fails for particularity, based

on the analysis set forth in Sections III.A.1.a-c, supra.

                                          B.

                            Alleged VCPA Violations

             Count    One     of    the   Amended    Complaint    alleges      that

Capella violated four subsections of the VCPA:

             •    Va.    Code   Ann.    §   59.1-200(A)(5)
             (“Subsection     5”)     (prohibiting     the
             misrepresentation that “goods or services
             shave certain quantities, characteristics,
             ingredients, uses, or benefits”);

             •    Va.    Code   Ann.    §   59.1-200(A)(8)
             (“Subsection     8”)     (prohibiting     the
             advertisement of goods or services with
             “intent not to sell them as advertised, or
             with the intent not to sell at the price or
             upon the terms advertised”);

             •    Va.   Code    Ann. §    59.1-200(A)(13)
             (“Subsection     13”)   (prohibiting     the
             enforcement of a void or unenforceable
             penalty clause); and

             •    Va.   Code  Ann.   §   59.1-200(A)(14)
             (“Subsection 14”) (prohibiting the use of

                                          24
               deception, fraud, or misrepresentation                             in
               connection with a consumer transaction).

Each of these claims is premised on the alleged False Statements

and Material Omissions.

               By       its        terms,         subsection           5         requires        a

“misrepresent[ation],” Va. Code Ann. § 59.1-200(A)(5), and as

explained       supra,      Appellant        does    not    allege         with    specificity

facts that would constitute a misrepresentation.                                      This claim

fails.

               As the basis for his subsection 8 claim, Appellant

alleges       Capella    “advertised          a   purported       doctoral         program      in

[Leadership] and then provided a different, undisclosed program

with significant additional time and costs . . . without any

possibility of obtaining a degree.”                        J.A. 119.             But Appellant

fails    to    allege       with    particularity         what   sort       of    program      was

advertised         (e.g.,     a    program    that    should      take          five   years,    a

program in which he would pass the Comps on the first try, or a

program that should cost a certain amount).                                 Therefore, this

claim fails as well.

               Subsection          13   prohibits         the    use       of     a     void    or

unenforceable penalty clause in “any contract or lease,” or an

attempt       to    collect       penalties       under    a    void       or    unenforceable

clause.       Va. Code Ann. § 59-1.200(A)(13).                    Appellant alleges no

such contract, lease, or clause at play in this matter; rather,

                                              25
he   attempts     in   vain   to   liken    the       remedial   coursework    to   an

unlawful penalty clause.           This claim also fails.

            Finally,          subsection              14       prohibits       using

misrepresentation,       deception,     or       false     pretense   in   connection

with a consumer transaction.            As explained above, Appellant has

not made sufficiently particular allegations of such deceptive

behavior.       This claim likewise fails.

                                           C.

                              Other Deficiencies

            In addition to the deficiencies mentioned above, we

note    several        discrepancies            and    mischaracterizations         in

Appellant’s case, which further weaken the Amended Complaint.

            •    Appellant   characterized  the  Leadership
                 Ph.D. program as a “sham,” J.A. 110,
                 called it “fraudulent,” id. at 115, and
                 stated that Capella falsely portrayed that
                 the program “exist[ed]” at all, id. at
                 116.     But Appellant admits that he
                 participated in the program for nearly
                 three years, earning high marks and even
                 encouraging others to enroll in Capella.
                 See id. at 110.

            •    Appellant used Wynn as a central character
                 -- indeed, the only named student -- in
                 the Amended Complaint, but then stated at
                 oral argument, “Mr. Wynn is a side issue.”
                 Oral Arg. at 17:07-09, Murphy v. Capella
                 Educ. Co., No. 13-2265, (4th Cir. Oct. 29,
                 2014),    available   at    http://www.ca4.
                 uscourts.gov/oral-argument/listen-to-oral-
                 arguments#audiocurrent.

            •    Appellant    claims    Capella    falsely
                 represented that Wynn was “satisfied with

                                           26
              the [Leadership Ph.D.] program,” J.A. 121,
              but his quote in the Guide says no such
              thing, see id. at 164.

          •   Appellant claims the list of “common job
              titles” in the Brochure “confirms the
              actual existence of graduates who have
              completed the Ph.D. Leadership program and
              found employment,” J.A. 106-07 (emphasis
              in original), and shows that Capella made
              false representations about “the future
              employment prospects of its ‘graduates,’”
              id. at 116. But the Brochure says no such
              thing.

                                  IV.

          Appellant   has   not   pleaded   with   particularity   that

Capella made any false representations of material facts to him,

or that its conduct rises to the level of a VCPA violation.

Thus, his claims fail under Rule 9(b) of the Federal Rules of

Civil Procedure.   The judgment of the district court is

                                                             AFFIRMED.

                                  27
WYNN, Circuit Judge, concurring in the result:

     Because   some   of   the   allegations   in   Plaintiff’s   Amended

Complaint fail the test of particularity under Rule 9(b) and

others are so riddled with factual holes and inconsistencies

that they cannot support a plausible claim for relief under Rule

12(b)(6) of the Federal Rules of Civil Procedure, see Ashcroft

v. Iqbal, 556 U.S. 662, 678 (2009), I concur in the result

reached by the majority opinion.

                                    28