Reply in Support of Class Certification Excelsior College Filed by John Hermina and George Hermina of the Hermina Law Group

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IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF NEW YORK

CAROLINE CASTELLAW, CHERYL CARNES, KATHRYN ROSE. AMANDA WILSON, HELEN SPOSATO, KACY MCDONOUGH, SHERRY TAITZ, MARLA HUBER, JOY MARIE CZAPSKI, DANIEL QUICK, CHARITY RICHERT, DIANE RUBENS, KAREN BLANKEN, WANDA PENNINO, JILLIAN PHELAN, DEBORAH MCCARVER, DEBRA ALEXANDER, DONALD WELLS, CELESTE HOBAN, SIMON RAWSON, ILEANA MARIN, ROBIN WRIGHT, ZAVIDA BAL, BRENDA BERTUCCI, LEANN TOGAREPI, REBECCA BERNER, No. 14-cv-01048 (JBW)(RLM) CHRISTINA FRYE, MARCIA BROWN, AARON CHILDRESS, JENNY ST. AUBIN, RHONDA CAIN, HEIKE BAKER, STACEY DORR, CARMEN RICHARD-GOULD, LORI SCHIMSCHOCK, and JEFFERY C. SIMPSON

Plaintiffs, on behalf of themselves and similarly-situated others.

v. REGENTS COLLEGE D/B/A EXCELSIOR COLLEGE 7 Columbia Circle Albany, New York 12203 And EXCELSIOR COLLEGE 7 Columbia Circle Albany, New York 12203 Defendant.

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PLAINTIFFS’ REPLY TO DEFENDANT’S OPPOSITION TO PLAINTIFFS’ MOTION FOR CLASS ACTION CERTIFICATION

COME NOW THE PLAINTIFFS, Caroline Castellaw, Cheryl Carnes, Kathryn Rose,

Amanda Wilson, Helen Sposato, Kacy McDonough, Sherry Taitz, Marla Huber, Joy Marie

Czapski, Daniel Quick, Charity Richert, Diane Rubens, Karen Blanken, Wanda Pennino, Jillian

Phelan, Deborah McCarver, Debra Alexander, Donald Wells, Celeste Hoban, Simon Rawson,

Ileana Marin, Robin Wright, Zavida Bal, Brenda Bertucci, Leann Togarepi, Rebecca Berner,

Christina Frye, Marcia Brown, Aaron Childress, Jenny St. Aubin, Rhonda Cain, Heike Baker,

Stacey Dorr, Carmen Richard-Gould, Lori Schimschock, Jeffrey C. Simpson, and the 39 newly

added Plaintiffs, on behalf of themselves and similarly-situated others, by and through their

undersigned counsel, and in reply to Excelsior’s Opposition to Plaintiffs’ Class Action

Certification Motion, they state:

As the attached Memorandum of law will establish, this case is the result of numerous

complaints by a specific group of individuals who were deceived into enrolling into a program,

which Excelsior operates out of a single location in New York. The omissions of failing to

inform the Plaintiffs of material information, and the false representations are all uniform. All

of Plaintiffs’ complaints relate to a single program: Excelsior’s ADN program. The Plaintiffs

were deceived in precisely the same manner: Excelsior kept all material information regarding its

CPNE a secret until Plaintiffs were too invested in the program. While the level of damages may

differ, the Plaintiffs were injured in the same manner: they were deceived into paying thousands

of hard-earned dollars in annual fees, CPNE fees, workshops’ fees, among other expenses.

There can be no better approach to this case than class action treatment.

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WHEREFORE, your Plaintiffs respectfully request that this Honorable Court:

a) Enter an order certifying this matter as a class action; and

b) Grant your Plaintiffs any such other and further relief as to this Court may

appear just and proper.

Respectfully Submitted,

THE PLAINTIFFS,

BY: /s/ John Hermina Their Attorneys John W. Hermina, Esquire Hermina Law Group 8327 Cherry Lane Laurel, Maryland 20707 301-776-2003 410-792-2727

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Certificate of Service

I hereby certify that on this 24th day of July 2014, a copy of this Reply to Opposition to

Plaintiffs’ Motion for Class Action Certification was served via the Court’s ECF system::

Joan M. Gilbride, Esquire Kaufman Borgeest & Ryan LLP 120 Broadway, 14th Floor New York, NY 10271 BY: /s/ John Hermina

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IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF NEW YORK

CAROLINE CASTELLAW, CHERYL CARNES, KATHRYN ROSE. AMANDA WILSON, HELEN SPOSATO, KACY MCDONOUGH, SHERRY TAITZ, MARLA HUBER, JOY MARIE CZAPSKI, DANIEL QUICK, CHARITY RICHERT, DIANE RUBENS, KAREN BLANKEN, WANDA PENNINO, JILLIAN PHELAN, DEBORAH MCCARVER, DEBRA ALEXANDER, DONALD WELLS, CELESTE HOBAN, SIMON RAWSON, ILEANA MARIN, ROBIN WRIGHT, ZAVIDA BAL, BRENDA BERTUCCI, LEANN TOGAREPI, REBECCA BERNER, No. 14-cv-01048 (JBW)(RLM) CHRISTINA FRYE, MARCIA BROWN, AARON CHILDRESS, JENNY ST. AUBIN, RHONDA CAIN, HEIKE BAKER, STACEY DORR, CARMEN RICHARD-GOULD, LORI SCHIMSCHOCK, and JEFFERY C. SIMPSON

Plaintiffs, on behalf of themselves and similarly-situated others.

v. REGENTS COLLEGE D/B/A EXCELSIOR COLLEGE 7 Columbia Circle Albany, New York 12203 And EXCELSIOR COLLEGE 7 Columbia Circle Albany, New York 12203 Defendant.

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MEMORANDUM OF LAW IN SUPPORT OF PLAINTIFFS’ MOTION FOR CLASS ACTION CERTIFICATION

COME NOW THE PLAINTIFFS, Caroline Castellaw, Cheryl Carnes, Kathryn Rose,

Amanda Wilson, Helen Sposato, Kacy McDonough, Sherry Taitz, Marla Huber, Joy Marie

Czapski, Daniel Quick, Charity Richert, Diane Rubens, Karen Blanken, Wanda Pennino, Jillian

Phelan, Deborah McCarver, Debra Alexander, Donald Wells, Celeste Hoban, Simon Rawson,

Ileana Marin, Robin Wright, Zavida Bal, Brenda Bertucci, Leann Togarepi, Rebecca Berner,

Christina Frye, Marcia Brown, Aaron Childress, Jenny St. Aubin, Rhonda Cain, Heike Baker,

Stacey Dorr, Carmen Richard-Gould, Lori Schimschock, Jeffrey C. Simpson, and the 39 newly-

added Plaintiffs, by and through their undersigned counsel, and, in reply to Defendant’s

Opposition to Plaintiffs’ Motion for Class Action Certification, they state the following:

INTRODUCTION:

On July 14, 2014, the Plaintiffs filed their Second Amended Complaint (ECF Document

52) pursuant to Order of the Honorable Magistrate Judge Roanne L. Mann dated April 29, 2014.

See, Judge Mann’s Order - ECF Document 19. The Second Amended Complaint further

demonstrates the need that this matter be certified as a class action. Indeed, the claims of the 75

Plaintiffs arise out of the same uniform fraudulent practices of Excelsior, which resulted in

significant harm to consumers. Below, the Plaintiffs will further establish that class action

treatment is the most efficient manner for resolution of Plaintiffs’ claims, which resulted from

Excelsior’s violations of the law.

ARGUMENTS

I. THE PLAINTIFFS HAVE CLEARLY DEFINED THEIR CLASSES:

Defendant’s Opposition to the Class Action Motion was filed several days after the

Plaintiffs filed their Second Amended Complaint. (See, Defendant’s Memorandum at 1,

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referring only to 36, instead of 75 Plaintiffs). Yet, the Defendant appears to be ignoring the fact

that a new Complaint was filed, adding further proof that Excelsior’s deceptive practices were

much more common and widespread, and that the list of injured consumers is much more

significant, than Excelsior represents. In footnote 2 of its Memorandum, the Defendant states

that: “Plaintiffs assert that New York law is applicable to the facts of this case” suggesting that

New York law should not apply. First, the Plaintiffs have already briefed their Conflict of Laws

position. ECF Document 53. Secondly, it is not only Plaintiffs who believe that New York law

is applicable to this case. The Defendant has impliedly joined the Plaintiffs in this argument by

filing several papers and by arguing orally that the Court should apply New York law. See, ECF

Documents 15, 16, 20, and 23, and Defendant’s argument on June 3, 2014.1

Moreover, the Defendant is incorrect in stating that the Plaintiffs have not established

“injury” with respect to one of the proposed classes. Defendant’s Memorandum, footnote 3.

The Plaintiffs have alleged that Defendant’s program is so completely fraudulent in nature that

substantially everything Excelsior represents concerning the program is fraudulent. The

Defendant has never denied that it misleads consumers into believing that it provides “formal

instruction.” Second Amended Complaint, ¶¶ 10, 20, 29, 35-38, 41, 43, 46, 47, 50, 53, 59, 63,

69, 70, 71, 72, 77, 79, 81, 83, 87-90, and 114. Defendant had ample opportunity to deny that

Excelsior has misrepresented its “formal instruction” status to the Plaintiffs and to the Internal

Revenue Service. Rather than show how its representation is not false, Excelsior opted to state

that: “[so far as it knows] at no time has either the State of New York or the United States”

questioned Excelsior’s status. ECF Document 33-4, at page 7. Stated differently, Excelsior

argues that simply because it has not been “caught” until now, it should not be charged with 1 See, also, Plaintiffs’ argument on pages 12-14 of their Choice of Law Memorandum (ECF Document 53) wherein Plaintiffs cite authority in support of their position that Excelsior legally waived any argument that New York law does not apply.

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violations of the New York GBL. In this case, every Plaintiff who took Defendant’s program

was promised instruction by “nationally-recognized” faculty. Second Amended Complaint ¶ 12.

This misrepresentation proved untrue across the board. See, Plaintiffs’ Memorandum In

Opposition to Motion to Dismiss, page 7, ECF Document 21-1, wherein Excelsior’s “professor”

is quoted as stating that her “job as a clinical examiner has little resemblance to that of clinical

instructors in traditional nursing programs. When employed by Excelsior College, I do little

talking and no coaching. Instead, I literally follow a student around the nursing unit with a

clipboard in hand.”2 Every Plaintiff, named and unnamed, has suffered from injury resulting

from the false and misleading statement that Excelsior provides “nationally-recognized”

professors. Excelsior cannot overcome the fact that it misrepresented itself to all of the Plaintiffs

when it stated that it provides nationally recognized faculty. By way of one example, a New

York court has found that Excelsior does not provide instruction, let alone faculty, that is

nationally recognized. That New York case was the result of a suit brought by Excelsior to

compel the New York State Education Department to pay a particular type of financial aid to

Excelsior students. See, Excelsior College v. N.Y. State Ed. Dep’t, 306 A.D.2d 675; 761

N.Y.S.2d 700; 2003 N.Y. App. Div. LEXIS 6655, where the court stated: “[Excelsior]

acknowledges that ‘it does not offer an instructional program’ for its degree applicants. In its

own words, it is an ‘evaluator’ of educational experiences, not a provider of collegiate

instruction. (emphasis added).” A Plaintiff attending Defendant’s program and not receiving

the instruction promised has been injured, even if eventually Excelsior permits her to pass, for

she did not receive the “education” that Excelsior promised. The fact that a Plaintiff is assisted

2 The Clinical Examiner Role: An Out-of-the-Ordinary Opportunity to Help Make a Nurse, Creative Nursing, p. 162; vol. 14; No. 4 (2008).

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by Excelsior to pass when the pass is not earned does not erase the harm suffered. For example,

when “Defendant’s Examiner assisted [Plaintiff Jillian Phelan] on six (6) different occasions

during her examination,” the Plaintiff did not receive the learning Excelsior represented it would

give her as a consumer.3 Second Amended Complaint at ¶ 40. This Plaintiff suffered the injury

of paying for a program, which turned out to be so subjective and so arbitrary whereas Excelsior

guarantees that its test is “fair and objective,” which is clearly a false and a misleading

statement.4 Id., ¶ 19. Thus, Defendant’s claim that “one of Plaintiffs’ proposed classes has no

claim because the proposed class members have not been injured” is inaccurate. See,

Defendant’s Memorandum at page 2.

Next, the Defendant complains that the Plaintiffs have failed to articulate common claims

of fact. Thus, beginning on page 2 of its Memorandum, the Defendant lists for the Court issues

that Excelsior claims are unique to each Plaintiff and that are not common to the Plaintiffs as a

class. Once again, Excelsior refuses to acknowledge that it violates the GBL – as it did in this

case - not only by making representations that are false, but also by engaging in omissions.

It is well established that “[o]missions, as well as acts, may form the basis of a deceptive

practices claim.” In re Evergreen Mut. Funds Fee Litig., 423 F. Supp. 2d 249, 264, Fed. Sec. L.

Rep. (CCH) P693,822 (S.D.N.Y. 2006)(citing, Stutman v. Chemical Bank, 95 N.Y.2d 24, at 29,

731 N.E.2d 608, 709 N.Y.S. 2d 892 (N.Y. 2000). Whether in papers that it filed with this Court,

or at oral argument, Excelsior has simply refused to recognize that it may violate the law not

only by engaging in fraudulent acts, but also by failing to inform consumers of certain material

facts that, if withheld, would result in subsequent harm. Here, Excelsior did not provide the 3 In every instance where a consumer was arbitrarily passed by Excelsior, the Plaintiff complained that the Defendant made other representations in connection with its ADN program. Here, Ms. Phelan was promised “a rigorous curriculum” and “individualized conferences,” neither of which representation was honored by Excelsior. 4 New York law prohibits the making of false guarantees in connection with educational services. See, Drew v. Sylvan Learning Ctr. Corp., 16 Misc. 3d 836, at 842, 842 N.Y.S.2d 270, (N.Y. Civ. Ct. 2007).

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Plaintiffs with pass rates at the time they applied to enroll. This fact is virtually

unchallenged. The Plaintiffs submit that whether the Defendant mailed catalogues (after the

enrollment process was completed) is immaterial. First, mailing the catalogues after a consumer

has already enrolled is immaterial to the deception. Secondly, the Plaintiffs have alleged that

they were not aware of the pass rate. (See, Drew v. Sylvan Learning Ctr. Corp., supra., 16 Misc.

3d 836, at 842)(stating that “[h]iding [a] written disclaimer within the progress report and

diagnostic assessment is unacceptable.”). Thirdly, the Plaintiffs allege that the pass rate is false,

deceptive and conflicts with another fraudulent representation that the pass rate will be 65% or

greater. Second Amended Complaint, at ¶¶ 20, 27, 29, stating “Defendant withholds the accurate

pass rates, particularly for military personnel”, and ¶¶ 55, 62, 65, and 97-98.

The Defendant also fails to address Excelsior’s failure to provide graduation rates,

contrary to Federal law requirements. See, Id., ¶¶ 14, 20, 35, 38, 42-45, 47, 53, 55, 62, 63, 67,

77, 99 and 106. The Defendant has never denied that it fails to disclose graduation rates as to its

seven-year program.

Another omission of fact that Defendant has never denied that it failed to make is

regarding the transferability of credits. See, Id. ¶¶ 22, 34, 35, 37, 38, 41, 43, 44, 60, 62-64,

67-72, 75, 78, 79, 83, 87, 89, 94, 97, 100, 106, and 110. In essence, the harm is that Plaintiffs

sign up for a nursing “education” program, which is not educational; the test-out courses turn out

to be not courses at all; and the credits earned are not transferrable to any bona fide educational

institute to which Plaintiffs apply. The Defendant does not deny that its test-out credits are not

transferrable. Instead, it suggests that the Plaintiffs should have inquired of the institution to

where they wished to transfer, and this excuse is troubling on many levels. The Plaintiffs have

no such duty; and when they apply to Excelsior’s fraudulent program the last thing consumers

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contemplate is what they should do after they fail a program that they were not aware was

fraudulent.

The Defendant has also never denied that it misrepresents to consumers that Plaintiffs

would be provided with “nationally recognized faculty.” It has also never denied that it made a

false guarantee that its CPNE is fair and objective. Certainly, these facts are common to all

Plaintiffs and the fact that Plaintiffs may have been defrauded in other ways is as irrelevant as

the fact that the Plaintiffs are of different ages, races and backgrounds.

a. TheClassesAreAdequatelyDefined:

The Defendant begins its Memorandum with a list that it claims constitutes “individual

questions.”5 These questions were not asked by Plaintiffs, but rather by Excelsior. Plaintiffs’

Complaint established a pattern of fraud whereby Excelsior failed to inform consumers of

graduation rates, pass rates, and lack of transferability of credits, among other things. While

Excelsior is unable to accept that omissions may form the basis for violations of the Consumer

Protection Act, such is the state of the law. If Excelsior mailed documents, after enrollment had

occurred, such a claim does not mean that the documents were seen or reviewed. Thus, the

question as to “which version” Plaintiffs viewed is a red herring. The same is true with respect

to the workshops. The question is whether Excelsior concealed information from the Plaintiffs

about the workshops, not “which workshops” were taken. Moreover, differences in the amounts

of damages and how much a student paid Excelsior is easily ascertainable.6 In an effort to create

a confusion Excelsior even asks “[h]ow many credits did each student transfer to Excelsior

5 While the list provided by the Defendant, on page 2 of its Memorandum, contains hypothetical scenarios, irrelevant circumstances, and allegations not made by Plaintiffs, an effort will be made to respond to each. 6 At the hearing before this Court on June 3, 2014, Excelsior’s counsel stated, as to the cost of Defendant’s ADN program, that “[i]t varies based upon student, but my [] client has told me is that the average cost to graduate is approximately $6,000.” June 3, 2014 Transcript at page 6, lines 20-22. The actual cost of the test is ascertainable. The cost of each test-out course is also ascertainable, and the Defendant is able to state through its system the exact amounts paid by 1st time takers, second time takers, etc…

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toward that student’s [ADN]?” This is immaterial to the litigation. The common fact here is that

Excelsior failed to inform the Plaintiffs that any and all credits earned at Excelsior are worthless,

since no one will accept them. It is immaterial whether a student completed a general education

requirement, because the allegations are clear that none of Excelsior’s credits are transferrable,

and the Plaintiffs were under no duty to inquire as to a matter that Excelsior should have

disclosed to them. “What were the individual circumstances” of the Plaintiffs is an irrelevant

inquiry, although the Defendant has conceded that it sells the fraudulent program to busy

“adults” who are LPNs and paramedics. The Defendant did not make this inquiry when it

defrauded the Plaintiffs out of their hard-earned funds. “Was each student actually deceived by

Excelsior’s alleged misrepresentations and/or omissions?” The Plaintiffs would not have filed

their claims if they were not defrauded by Excelsior. The Complaint in this action provided

sufficient information as to when the various Plaintiffs enrolled and where each Plaintiff took the

deceptive CPNE. Again, the hospitals where Excelsior uses patients to test Plaintiffs are so

temporary in nature that Defendant cannot seriously claim they are separate branches of

Excelsior. See, Plaintiffs’ Conflict of Laws Memorandum, ECF Document 53, and Declaration

of Plaintiff Joy Marie Czapski stating that “[t]here is no real connection between the consumer

and the assessment center.” The appeals process is a sham and is only one part of Defendant’s

uniform scheme to defraud consumers. Excelsior, finally, adds to the list of questions, a question

that the parties have already briefed, but in the interest of completeness, the Plaintiffs will

answer, again. “Which of the twenty-two states’ laws must be applied to each student’s claims?”

As Plaintiffs have argued in ECF Document 53, together with Exhibits and Attachments,

Excelsior has waived any objection to New York law because it used that same law to make

arguments in the case; Excelsior has acknowledged that it sent materials (which Plaintiffs claim

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is deceptive) out of New York; and the authority weighs in favor of applying New York law to

this case.

The Plaintiffs were defrauded in substantially the same manner. As this Court pointed

out in Haynes v. Planet Automall, Inc., 276 F.R.D. 65, 77 (E.D.N.Y. 2011), quoting Moore v.

PaineWebber, Inc., 306 F.3d 1247, at 1255 (2d Cir. 2002): “generalized proof may be used to

establish the elements of a material misstatement when ‘members of the class received materially

uniform representations’.” In this case, the Plaintiffs received the same representations and

omissions. Although Defendant attempted to recast Plaintiffs’ allegations by filing a premature

Motion for Summary Judgment with thousands of pages and untested affidavits,7 the Plaintiffs

respectfully request that this Court should not delay the issuance of a certification order. The

Plaintiffs believe that they have shown that this case should proceed as a class action.

In support of the proposition that Plaintiffs have not demonstrated identifiable classes,

Excelsior cites the case of Shady Grove Orthopedic Assocs., P.A. v. Allstate Ins. Co., 293 F.R.D.

287, 295 (E.D.N.Y. 2013). In that case, Allstate objected to certification contending, inter alia,

that “the level of individual inquiry necessary to determine whether or not a violation has, in fact,

occurred, is far too high to warrant certification of any plaintiff class.” The court in Shady

Grove rejected Allstate’s contention and granted certification as to Allstate’s violations of N.Y.

Ins. Law § 5106 and the N.Y.C.R.R. provision. The court in Shady Grove declined to grant

certification pursuant to GBL § 349 because there was a single practice alleged and the

7 The Motion for Summary Judgment was filed contrary to the Court’s Orders, over several days, contained thousands of pages, and gave Plaintiffs only a ten-day opportunity to respond. Moreover, no written or deposition discovery was had (Excelsior only provided Plaintiffs with a table containing numbers for the certification motion), and Excelsior refused to submit the Summary Judgment affiants for their deposition. ECF Document 54, and, see, authority cited by the Plaintiffs in the Opposition to Premature Motion, including G-1 Holdings, Inc. v. Baron & Budd, 213 F.R.D. 146, at 149, “untested affidavits are not acceptable.” Excelsior should not succeed in its attempt to litigate this matter by ambush, and this Honorable Court should grant Plaintiffs’ Motion for Certification without succumbing to Defendant’s improper tactics.

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allegation was “conclusory” in nature. Id. 293 F.R.D. at 308. More importantly, the practice in

question, in Shady Grove, related to the failure to make timely payments, which did not lend

itself to the type of activity contemplated by the Consumer Protection Act, since a claimant could

not show that she was deceived by a failure to pay upon a claim. Id. Casale v. Kelly, 257 F.R.D.

396 (S.D.N.Y. 2009), which was cited in Defendant’s Memorandum, is also helpful to the

Plaintiffs. There, the court granted certification, in full, to four classes, pursuant to Rule

23(b)(3), citing in In re Visa Check/Mastermoney Antitrust Litig. V. Visa, United States, 280 F.3d

124, at 146 (2d Cir. N.Y. 2001), wherein the Second Circuit stated that the consumers were

“allegedly aggrieved by a single policy of the defendants. Given the strong commonality of the

violation and the harm …, this is precisely the type of situation for which the class action device

is suited.” See, also, Casale v. Kelly, supra., 257 F.R.D. 396, 414, at fn 130. In Casale, the

Southern District of New York established subclasses to address potential defenses. Id. at 415. In

the case sub judice, the Plaintiffs have proposed classes that contemplate the nature and degree

of the harm and the potential defenses.

The Defendant incorrectly asserts that Plaintiffs’ proposed classes are overbroad

(Defendant’s memorandum at 7), and Excelsior cites two cases from foreign jurisdictions in

support of this proposition.8 In Oshana v. Coca-Cola Co., 472 F.3d 5069, 509 (7th Cir. 1006), the

plaintiffs brought their case essentially alleging that Coca-Cola failed “to disclose that fountain

Diet Coke and bottled Diet Coke are not the same product.” Excelsior suggests that the Oshana

case should somehow be persuasive as to its proposition that certification should not be granted

where, as Excelsior claims, some Plaintiffs were deceived and some were not. The Seventh

8 Ironically, Excelsior appears to criticize Plaintiffs for citing “case law from other jurisdictions.” Defendant’s Memorandum at page 2. As will be shown, the foreign cases cited by Excelsior are far from applicable to the facts of this case, and, in one instance, the citation is erroneous and the facts of the case are far afield. 9 The actual citation is 472 F.3d 506, and not as noted in Excelsior’s Memorandum at page iv and page 8 of its brief.

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Circuit, in Oshana, was specifically referring to the fact that some Coca-Cola consumers “may

have bought fountain Diet Coke because it contained saccharin, and some people may have

bought fountain Diet Coke even though it had saccharin. (italics in original).” 472 F.3d 506, at

514. The Plaintiffs are unable to begin to compare their case to that of Oshana because the

differences in the fact patterns between the two cases could not be any greater. Indeed, Plaintiffs

would not deliberately purchase a fraudulent educational program because it is unfair and

subjective and even though they would waste their hard-earned funds purchasing credits that they

cannot transfer to any institution.

Moreover, Excelsior cites Sanders v. Apple, Inc., 672 F. Supp. 2d 978, 991 (N.D. Cal.

2009), in support of its argument that Plaintiffs class definition is too broad. In Sanders, the

California court was not referring to a group of identifiable class of consumers who were

defrauded in connection with a specific service, product or program. Instead, the Sanders

plaintiffs sought consideration on behalf of “all persons within the United States who own a 20-

inch Aluminum iMac.” Id. Not surprisingly, the court struck the class action allegations with

leave to amend, noting that because the definition was so broad, it would include individuals

who, not only were not deceived, but also “individuals who suffered no damages.” Id. Each and

every named Plaintiff in this action was defrauded in connection with the CPNE. Each and

every Plaintiff has alleged that the Defendant withheld all the material facts concerning the

CPNE until after each Plaintiff was “irreversibly committed.” Second Amended Complaint, at ¶

18. It was after that time that Plaintiffs discovered that the numerous representations and

omissions were absolutely false. There was no “nationally recognized faculty” and the

“guarantee” that the CPNE was fair and objective was simply a false statement designed to enroll

consumers into the deceptive CPNE program. It was only after the failures that Plaintiffs learned

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that Excelsior withheld graduation rates and pass rates, and it was only after the failures that

Plaintiffs learned that the credits would not be transferred because Excelsior is not, and was

never, an educator, contrary to its representations. Certainly, the horrifying facts of this case

cannot compare to a consumer’s displeasure with the content of a fountain/bottled drink. This

case also cannot be compared to a case where a plaintiff who seeks to assist “all persons within

the United States.” For this reason, Excelsior’s discussion of hypothetical scenarios regarding

“friends or families” on page 8 of the Memorandum do not apply to the facts of this case. The

Plaintiffs have brought forth specific situations regarding acts of deception perpetrated by

Excelsior. Indeed, Plaintiffs’ Complaint neither alleges nor raises any of the hypothetical fact

patterns discussed by Excelsior.

Finally, the Defendant appears to conflate the requirement that a plaintiff meet her burden

of showing that certification is appropriate versus the requirement of proving the case on the

merits at this stage. In making a certification determination, a court need not assess any aspect of

the merits unrelated to a Rule 23 requirement. Casale v. Kelly, supra., 257 F.R.D. 396, 408.

Thus, Defendant’s discussion of countless hypothetical scenarios that have little-to-no

relationship to the facts of this case should be disregarded.

b. The Statute of Limitations Does Not Render Plaintiffs’ ClaimsOverbroad:

As a general rule, a cause of action for violations of § 340 and § 350 must be brought

within three years of the date of injury. Statler v. Dell, Inc., 775 F. Supp. 2d 474, 484 (E.D.N.Y.

2011) (citing, Gaidon v. Guardian Life Ins. Co. of America, 96 N.Y.2d 201, 750 N.E.2d 1078,

727 N.Y.S.2d 30, 35 (2001), and M & T Mortg. Corp. v. Miller, 2009 U.S. Dist. LEXIS 106716,

2009 WL 3806691 *2 (E.D.N.Y. 2009)). “While claims under the Deceptive Practices Act are

governed by a three-year statute of limitations (cite omitted) equitable tolling is available in

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cases of fraudulent concealment.” M & T Mortg. Corp. v. Miller, 323 F. Supp. 2d 405, 411

(E.D.N.Y. 2004). In addition, under New York’s “separate accrual rule,” a new claim accrues

each time a plaintiff discovers, or should have discovered, a new injury caused by violations of

the statute. See, Blue Cross and Blue Shield of N.J., Inc. v. Philip Morris, Inc., 178 F.Supp.2d

198, 271-73 (E.D.N.Y. 2001), rev’d in part on other grounds, 344 F.3d 211 (2nd Cir.

2003)(stating that “[d]etermination of the limitations period is complicated when the same

pattern of activity results in multiple injuries spread over time (cite omitted).”) See, also, Gaidon

v. Guardian Life Ins. Co. of America, Supra., 96 N.Y.2d 201, at 210 where the court found that

actions were not time barred where actions were commenced after plaintiffs were required to pay

additional premiums.

The statute of limitations issue was first raised by the Defendant in its Motion to Dismiss

Plaintiffs’ Complaint. In response to Defendant’s Motion, the Plaintiffs provided argument and

submitted several declarations. The Plaintiffs would respectfully direct the Court to ECF

Document 21-1. In essence, the relevant portion of the Memorandum and the Declarations

showed that Plaintiffs’ claims were not subject to dismissal because Excelsior continued to

collect payment within the limitations period, and in some instances through the present; the

violation of the law occurred within the statute of limitations; and the Plaintiff discovered the

violation of the law within the statute of limitations. ECF Document 21-1, Memorandum of Law

In Opposition to Motion to Dismiss at pages 28-31. The Plaintiffs acknowledge that in one

instance, a Plaintiff was hindered in filing her claim, but, as Plaintiffs argued, Plaintiff Celeste

Hoban’s claim was tolled as a result of her being diagnosed “with metastatic breast cancer that

had spread to her lung, her liver and lymphatic system.” Id. at page 29. The Plaintiffs submit

that this Court could grant Plaintiffs certification in the case, notwithstanding any statute of

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limitations issue. See, Clark v. Astrue, 274 F.R.D. 462, 468 (S.D.N.Y. 2011) where Judge Stein

found that certain of the plaintiffs “are properly within the class.” The court also found that

certain claims were untimely, Id. at 470, but granted Plaintiffs’ class action motion. Id. at 472.

Defendant’s argument that Plaintiffs’ claims require subjective determinations does not

require a separate section, and the Plaintiffs can simply address it in this paragraph. Although it

makes the general claim, Excelsior does not explain how “the proposed classes … require

subjective determinations.” Defendant’s Memorandum at page 10. The Defendant makes the

argument that lost wages creates an issue on certification. Yet, in making this argument,

Excelsior ignores the case law of this Circuit. See, In re: Visa Check/Master Money Antitrust

Litigation, 280 F.3d 124 (2d Cir. 2001), cert. denied, 122 U.S. 2382 (2002). There, the court

noted that “[c]ommon issues may predominate when liability can be determined on a class-wide

basis, even when there are some individualized damage issues. (cite omitted).” A district court

need not determine a measure of damages in deciding class action certification. Id. 280 F.3d

124, at 142. Citing a case from Illinois, the Defendant proceeds to suggest that there is an issue

as to the word “forced” in relation to Excelsior’s practice of substituting degrees when

consumers are failed three times. Yet, a review of Ramirez v. Palisades Collection LLC, 250

F.R.D. 366, 370 (N.D. Ill. 2008), does not reveal support for the proposition suggested by the

Defendant. The Defendant appears to misread Ramirez. The class definition in that case related

to suits filed by “all individuals with Illinois addresses” who, inter alia, were sued over a credit

card debt over a time period. Id. The court in that case, rejected defendants’ attacks as to the

definition and granted certification stating: “these attacks fail and do not warrant discussion. …

Ramirez's amended class definition is sufficient). Thus, even if Ramirez had any binding or

persuasive authority, which it does not, it does not aid the Defendant.

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c. The Plaintiffs Have Met The Commonality and TypicalityRequirements

The Plaintiffs have posed a question of fact and a question of law, both of which apply

uniformly to all of the Plaintiffs. The question of fact is whether Excelsior’s conduct in failing to

disclose information regarding its ADN program, including the graduation rate, the CPNE pass

rate and total lack of transferability of credit, and in making a false guarantee that its CPNE was

fair and objective and its false representations regarding a phantom “nationally-recognized”

faculty caused harm to Plaintiffs. The question of law in this case is whether these omissions

and acts violate the Consumer Protection Act, §§ 349 and 350, and whether such acts also

constitute a breach of contract.

The Defendant makes the argument that this class action does not pose any question of

fact or law. Defendant’s Memorandum, at page 12. In connection with this argument, Excelsior

proposes to dispose of a factual issue on the merit. It states, “[t]he existence, and amount of

those fees were disclosed to all prospective and enrolled students in Excelsior’s promotional

material and its website.” In support of this claim, Excelsior cites to several Declarations of

individuals that Excelsior refused to produce for depositions. The Declarations were part of an

attachment consisting of thousands of pages of materials, which were filed over the course of

several days. Because the last of the papers arrived on July 7, 2014, the Plaintiff had ten (10)

days to respond. In filing its Motion for Summary Judgment, the Defendant knew that a hearing

would be held before this Court in August (the hearing was changed from August 11 to August

18). Excelsior knew that Plaintiffs would have an extremely limited amount of time to respond

to their Motion for Summary Judgment. Excelsior also knew that to adequately represent their

clients, counsel would have to discuss the extensive filing. Excelsior was served with discovery.

Instead of responding, it provided a table. There was no substantive discovery in the case,

20

whether written or in the form of depositions. Without the benefits of any substantive discovery,

without the benefit of a single deposition, and with only ten days to respond, the Plaintiffs could

not present this Court with proof that the Declarations are misleading and are incomplete. Yet,

Defendant felt it to be appropriate to tackle the merits of the case in the instant Motion and in its

premature Motion for Summary Judgment. In addition to its improper actions in submitting the

Motion for Summary Judgment, Excelsior suggests that discussing the merits of the case is

proper at this stage. Its discussion of the merits here is also clearly improper. See, Casale v.

Kelly, supra., 257 F.R.D. 396, indicating that in making a certification determination, a court

need not assess any aspect of the merits unrelated to a Rule 23 requirement.

Defendant’s discussion of typicality appears to repeat the statute of limitations “defense”

which Excelsior states it intends to raise. As Plaintiffs have stated, even if there is such an issue,

this Court may simply utilize the approach taken by Judge Stein in Clark v. Astrue, 274 F.R.D.

462, 472 (S.D.N.Y. 2011). The Plaintiffs have shown that common questions predominate over

any questions affecting only individual class members and that class action is superior to other

available methods for fairly and efficiently adjudicating the controversy. While Excelsior states

that Plaintiffs “cannot satisfy either prong of the Rule 23(b)(3) requirement,” it fails to explain

how that is so. It is only on page 18 that Defendant begins to discuss this matter, reiterating,

essentially, the same questions that it posed on pages 2 and 3 of its Memorandum. None of these

questions are material to the Court’s determination as to the issue of certification. In this regard,

Defendant’s Motion appears to be unnecessarily repetitive. It is well established that if there

exists a common legal grievance, New York courts should grant class certification,

notwithstanding possible differences regarding some factual issues or in the amount or measure

of damages. See Weinberg v. Hertz Corp., 116 A.D.2d 1, 6-7 (1st Dept 1986), aff’d, 69 N.Y.2d

21

979 (1987); Thompson v. Whitestone Savings & Loan Ass’n, 101 A.D.2d 833, 834 (2d Dept

1984); see also 2 Weinstein, Korn & Miller, New York Civil Practice, & 901.11 at 9-49 to 9-50

(1996).

Inasmuch as the Plaintiffs have presented a common legal grievance in their carefully

detailed Complaint, showing a uniform practice of consumer fraud on the part of Excelsior, the

minor difference, which Excelsior suggests, but do not actually exist, should not preclude

certification.

The Defendant raises the conflict of laws issue, which it waived, again, in its

Memorandum, even though it was previously fully briefed. The Defendant has admitted that

New York law applies when it provided evidence that it mailed the deceptive materials to

consumers and when its counsel acknowledged that such conduct would suffice as grounds for

applying New York law. Further, the Plaintiffs have shown how Excelsior, by its transactions

with Plaintiffs, subjected itself to the application of New York law. The Plaintiffs have

discussed these and other arguments and have submitted evidence and Declarations in support of

their arguments in this regard.

The Defendant makes the same arguments with respect to the breach of contract claim as

they did in their Motion to Dismiss. After taking thousands of Plaintiffs’ hard-earned dollars,

Excelsior appears to argue that Plaintiffs must prove the existence of a contract. Defendant’s

Memorandum, at page 19. The Defendants appear to add the same types of questions to the

remainder of their argument as to the breach of contract. Certainly the same questions of fact

and law would apply to Excelsior’s significant breaches. In violating the Consumer Protection

Act, Excelsior also breached its obligations to Plaintiffs.

Finally, the Defendant argues that a class action in this case would not be manageable.

22

Defendant’s Memorandum, at page 20. Excelsior states that “[t]o the extent Plaintiffs rely on In

re Visa Check/Master Money Antitrust Litig., [supra.] …, this case is clearly distinguishable.”

The Plaintiffs did rely on the cited case in their Memorandum. See, ECF Document 32-1,

Memorandum at page 21, stating that the case “consisted of every business in the United States,

large and small, which accepted Visa and/or MasterCard credit cards. The class literally

consisted of millions of business in all of the fifty states ranging in size from WalMart to the

local dry cleaner.” Needless to say, Excelsior additional pro forma argument is also unavailing

and does not take into consideration the view as to manageability in the Second Circuit. In In re

Visa Check/Master Money Antitrust Litig., supra., for Judge and now Justice Sotomayor

explained,

[The] failure to certify an action under Rule 23(b)(3) on the sole ground that it would be unmanageable is disfavored and "'should be the exception rather than the rule.'" (cite omitted). . . . There are a number of management tools available to a district court to address any individualized damages issues that might arise in a class action, including: (1) bifurcating liability and damage trials with the same or different juries; (2) appointing a magistrate judge or special master to preside over individual damages proceedings; (3) decertifying the class after the liability trial and providing notice to class members concerning how they may proceed to prove damages; (4) creating subclasses; or (5) altering or amending the class…”

280 F. 3d 124, at 140-41. In short, the Plaintiffs have also shown that this class action will be

manageable. In this case, the size of the class is likely not to exceed 9000 defrauded consumers,

which will be manageable.

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CONCLUSION

This case raises important issues for a sizeable class, which are common to all. Plaintiffs

share all of these issues and are committed to bringing them to a resolution on behalf of all class

members. The only practical method for adjudicating Plaintiffs’ claims is through class

certification. Accordingly, the Court should certify the class as proposed. The Plaintiffs reiterate

that there are strong policy considerations in favor of a liberal application of the class action rule.

See e.g., Kahan v. Rosenstiel, 424 F.2d 161, 169 (3rd Cir. 1970) (“[T]he interests of justice

require that in a doubtful case... any error, if there is to be one, should be committed in favor of

allowing the class action.”). Once a Plaintiff has made a preliminary legal showing that the

requirements of Rule 23 have been met under this pleading standard, the burden of proof shifts to

the defendant to demonstrate that the Rule cannot be satisfied. See 2 H. Newberg & A. Conte,

Newberg on Class Actions, §7.22, at 7-74 to 7-75 (3d Ed. 1992). We submit that the Defendant

has failed to meet that burden, and class certification should be granted.

WHEREFORE, the Plaintiffs request that this Court enter an Order granting Plaintiffs’

Motion for Class Certification.

Respectfully Submitted,

THE PLAINTIFFS,

BY: /s/ John Hermina Their Attorneys John W. Hermina, Esquire Hermina Law Group 8327 Cherry Lane Laurel, Maryland 20707 301-776-2003

410-792-2727

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Certificate of Service

I hereby certify that on this 24th day of July 2014, a copy of this Reply was served via the

Court’s ECF system:

Joan M. Gilbride, Esquire Kaufman Borgeest & Ryan LLP 120 Broadway, 14th Floor New York, NY 10271 BY: /s/ John Hermina