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United States ex rel. Barrett v. Beauty Basics, Inc.

United States District Court, N.D. Alabama, Southern Division

June 11, 2015

UNITED STATES, ex rel. JENNIFER BARRETT, QUANA BURPO, VICKY CLEMMONS, RANDI CREIGHTON, NADIA IVORY, VICKIE McNEELY and JOY URIBE, on behalf of THE UNITED STATES OF AMERICA, Plaintiffs,
v.
BEAUTY BASICS, INC., Defendant.

MEMORANDUM OPINION

SHARON LOVELACE BLACKBURN, UNITED STATES DISTRICT JUDGE

This case is before the court on Defendant Beauty Basics, Inc.’s Motion to Dismiss Plaintiffs’ Amended Complaint. (Doc. 20.)[1] Upon consideration of the motion, the supporting and opposing memoranda, arguments of counsel and the relevant law, the court finds, for the reasons stated below, that defendant’s Motion is due to be granted, and the Complaint is due to be dismissed with leave for plaintiffs (hereafter “plaintiffs” or “relators”) to file a motion to amend their complaint.

STANDARD OF REVIEW

A complaint is required to contain a “short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). When a plaintiff alleges fraud or mistake, the complaint must “state with particularity the circumstances constituting fraud or mistake.” Fed.R.Civ.P. 9(b). A defendant may move to dismiss a complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) if the plaintiff has failed to state a claim upon which relief may be granted. To survive a 12(b)(6) motion, the complaint “does not need detailed factual allegations”; however, the “plaintiff’s obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (internal quotation marks and citations omitted). Accordingly, “[f]actual allegations must be enough to raise a right to relief above the speculative level . . . on the assumption that all the allegations in the complaint are true (even if doubtful in fact).” Id. (citations and footnote omitted). The plaintiff need not prove his case, but must plead “enough facts to state a claim to relief that is plausible on its face.” Id. at 570 (emphasis added).

Additionally, “[w]hen considering a motion to dismiss, all facts set forth in the plaintiff’s complaint ‘are to be accepted as true and the court limits its consideration to the pleadings and exhibits attached thereto.’” Grossman v. Nationsbank, N.A., 225 F.3d 1228, 1231 (11th Cir. 2000) (quoting GSW, Inc. v. Long Cnty., 999 F.2d 1508, 1510 (11th Cir. 1993)). Further, all “reasonable inferences” are drawn in favor of the plaintiff. St. George v. Pinellas Cnty., 285 F.3d 1334, 1337 (11th Cir. 2002). However, “‘[u]nsupported conclusions of law or of mixed fact and law have long been recognized not to prevent a Rule 12(b)(6) dismissal.’” Dalrymple v. Reno, 334 F.3d 991, 996 (11th Cir. 2003) (quoting Marsh v. Butler Cnty., 268 F.3d 1014, 1036 n.16 (11th Cir. 2001)). Therefore, though the court must accept all factual allegations as true, it is “not bound to accept as true a legal conclusion couched as a factual allegation.” Iqbal, 556 U.S. at 678 (citation omitted).

FACTUAL BACKGROUND

Relators are former students of the Aveda Institute, an entity wholly owned by defendant Beauty Basics, Inc., who enrolled at various times from 2012 to 2013. (Doc. 19 ¶ 10.) In order to qualify for Higher Education Act Title IV student financial aid, institutions must meet be accredited by a regional accreditation authority. (Id. ¶ 11.) Defendant was accredited by the National Accrediting Commission of Career Arts and Sciences (“NACCAS”) during 2012 and 2013, and “[t]his accreditation was used by [d]efendant to obtain Higher Education Act Title IV student financial aid funds, ” which each relator received while enrolled. (Id. ¶¶ 11-12.) Specifically, relators received loans and/or Pell Grants on the following dates and in the following amounts:

1. Vicky McNeely, 2/13/13 ($7, 000)
2. Joy Uribe, 5/1/13 ($4, 000) ($3, 051.66)
3. Jennifer Barrett, 1/16/13 ($7, 000)
4. Randi Creighton, 6/21/13 ($4, 000) ($3, 000) ($4, 100)
5. Quanda Burpo, 12/12/12 ($3, 559.98) ($6, 442.54)
6. Nadia Ivory, 1/1/12 ($4, 512.78)
7. Vicky Clemmons, 11/28/12 ...

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