Grand Canyon U. grads hit snag in suit over ‘worthless’ degrees
Joe Duhownik
PHOENIX (CN) — Former Grand Canyon University students who claim they were deceived into completing “useless” degree programs lack standing to request compensation for already-forgiven federal student loans, but may be entitled to other forms of relief, a federal judge ruled.
Representing an undefined number of former students, GCU graduate Katie Ogdon says the Phoenix-based Christian university intentionally misled her and others into unaccredited degree programs that do not qualify students for licensure in the states they are from. Ogdon, who planned to become a mental health therapist in California, learned only after she graduated that her master’s degree in psychology does not qualify her to be a licensed therapist in the state.
In a ruling published Tuesday evening, Senior U.S. District Judge Douglas Rayes granted in part GCU’s motion to dismiss, agreeing with the university that Ogdon’s 2023 loan forgiveness forfeited her right to any legal claim connected to those loans.
“We are pleased that the court dismissed significant portions of this case and remain confident the facts will confirm that GCU acted appropriately and transparently,” GCU spokesperson Bob Romantic said in an email to Courthouse News. “Our commitment has always been — and continues to be — serving students with integrity and equipping them for meaningful careers and lives of purpose. While certain narrow claims were permitted to proceed at this early procedural stage, which is common in litigation, we look forward to proving in court that such allegations are fundamentally flawed and without merit.”
In the complaint, Ogdon specifically names out-of-pocket costs and other damages that weren’t addressed through her loan forgiveness. For now, those claims survive.
“Ogdon cannot seek money damages or restitution related to the forgiven loans, but she may for any other losses or expenses incurred,” wrote Rayes, a Barack Obama appointee.
Alongside monetary damages, Ogdon requested injunctive relief for false advertising and unfair competition in the form of a court order that the university stop making misleading statements about its degree programs.
However, the judge found Ogdon and Gurjit Singh, representing a subclass of students from New York, lack standing for injunctive relief because they haven’t shown an imminent threat of future harm.
In a February hearing, attorneys for the plaintiff class argued that graduates suffer reputational harm by carrying “these worthless degrees.” Rayes found the argument ineffective and dismissed the injunctive relief claims.
“Plaintiffs point to several places in the complaint to support their contention that they have sufficiently alleged imminent future harm, but none are convincing,” he wrote. “The complaint does not allege that plaintiffs will be harmed by defendants again, let alone allege that harm is certainly impending.”
Rayes also denied the university’s motion to dismiss Singh’s claims under New York General Business Law.
The university argued that no reasonable person would be fooled by GCU’s programs when information on licensing and accreditation is available to the public. Specifically, the university’s academic catalog expressly states that Singh’s degree program would not lead to licensure.
But because the catalog is not incorporated in the pleadings, it is inappropriate for a judge to consider at this stage.
“A document may be incorporated by reference only when the complaint refers extensively to the document or the document forms the basis of the plaintiff’s claim and the mere mention of the existence of a document is insufficient to incorporate the contents of a document,” Rayes said.
Similarly, the judge said he can’t grant a motion to dismiss the students’ RICO claims at this stage in the proceedings.
The students argue they relied on express statements made by class counselors who told them they were in the right programs for their desired career paths. GCU says the harm cannot be blamed on counselors when the students could have done their own research instead.
“At bottom, this is an argument that Singh’s reliance on the school counselors’ representations was not reasonable because complete and accurate information was accessible elsewhere," Rayes wrote. “The court previously rejected defendants’ reliance arguments, explaining that reasonable reliance generally is a fact question inappropriate for resolution at the motion to dismiss stage.”
The plaintiffs have not responded to a request for comment.