3:16-cv SEM-TSH # 1 Page 1 of 14 IN THE UNITED STATES DISTRICT COURT FOR THE CENTRAL DISTRICT OF ILLINOIS SPRINGFIELD DIVISION

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1 3:16-cv SEM-TSH # 1 Page 1 of 14 E-FILED Wednesday, 07 September, :45:48 PM Clerk, U.S. District Court, ILCD IN THE UNITED STATES DISTRICT COURT FOR THE CENTRAL DISTRICT OF ILLINOIS SPRINGFIELD DIVISION RUBY BLACKWELL, INDIVIDUALLY AND ON ) BEHALF OF ALL OTHERS SIMILARLY SITUATED, ) ) Plaintiff, ) ) v. ) Case No. 3:16-cv ) ITT EDUCATIONAL SERVICES, INC., and ) Judge: DOE DEFENDANTS 1-10, ) ) Magistrate: Defendants. ) ) JURY TRIAL DEMANDED CLASS ACTION COMPLAINT AND DEMAND FOR JURY TRIAL Plaintiff Ruby Blackwell (hereinafter referred to as Plaintiff ) by her undersigned attorneys, on her own behalf and on behalf of all others similarly situated, upon personal knowledge as to herself and her own acts, and upon information and belief as to all other matters, brings this putative class action against Defendant ITT Educational Services, Inc. and Doe Defendants 1-10 (hereinafter collectively referred to as ITT Tech or Defendant ), and alleges as follows: NATURE OF THE CASE 1. Until September 6, 2016, ITT Tech was a provider of postsecondary degree programs in the United States. 2. ITT Tech utilized a nationwide campus, with locations in 39 states. 3. One such ITT Tech location was located in Springfield, Illinois. 4. Nationwide, ITT Tech had approximately 40,000 students enrolled in its for-profit college programs. 1

2 3:16-cv SEM-TSH # 1 Page 2 of Nationwide, as of December 31, 2015, ITT Tech had approximately 4,100 full-time employees. 6. Upon information and belief, the number of full time employees remained substantially the same, until September 6, 2016, when ITT Tech terminated the vast majority of its employees estimated at 8,000 including over 4,000 full-time employees. 7. The now-former employees of ITT Tech were not given 60 days notice of their employment loss or the nationwide shuttering of ITT Tech. 8. As a result, Plaintiff brings this putative class action under the Worker Adjustment and Retraining Notification Act (the WARN Act ), 29 U.S.C et seq., to recover unpaid wages owed to herself and to all others similarly situated due to ITT Tech s acts. THE PARTIES 9. Plaintiff Ruby Blackwell is an individual citizen of the State of Illinois. Ms. Blackwell resides in Springfield, Illinois. 10. Defendant ITT Educational Services, Inc. is a Delaware Corporation with limited partnership with its principal place of business at North Meridian Street, Carmel, Indiana 46032, and may be served through its registered agent, The Corporation Trust Company, Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware, Doe Defendants 1-10 may include other related entities that are currently unknown to Plaintiffs who should be named in this litigation and may be discovered as discovery in this litigation progresses. JURISDICTION AND VENUE 12. This Court has federal-question subject-matter jurisdiction pursuant to 29 U.S.C. 2104(a)(5) and 28 U.S.C

3 3:16-cv SEM-TSH # 1 Page 3 of This Court has personal jurisdiction over ITT Tech, as ITT Tech is actively engaged in the management and operation of its for-profit colleges in this State, including the ITT Tech campus located in Springfield, Illinois, in addition to, upon information and belief, other active, regular, and systematic business conducted in this District. 14. Venue is proper in this District pursuant to 28 U.S.C and in the Springfield Division because a substantial part of the events or omissions giving rise to Plaintiff s claims are alleged to have occurred in Sangamon County, Illinois. FACTUAL ALLEGATIONS ITT TECH S FOR-PROFIT COLLEGE SCHEME 15. ITT Tech was a for-profit college which offered a variety of degree programs across its nationwide campus. 16. ITT Tech marketeds its education to students who wanted a hands on learning experience. 17. ITT Tech is listed on the New York Stock Exchange under the ticker symbol ESI. 18. ITT Tech has, upon information and belief, approximately 137 locations which make up its nationwide campus. 19. ITT Tech operated these locations as a single, integrated business, with the same corporate oversight and structure. 20. ITT Tech employed more approximately 8,000 employees immediately prior to its September 6, 2016 mass termination. 3

4 3:16-cv SEM-TSH # 1 Page 4 of 14 THE DEPARTMENT OF EDUCATION S OVERSIGHT AND REGULATION OF ITT TECH 21. On or about August 19, 2014, ITT Tech was cited by the U.S. Department of Education ( DOE ) for its late submission of annual compliance audits and audited financial statements. 22. As a result of this financial responsibility failure, 34 C.F.R (a)(3), and beginning in October 2014, the DOE permitted schools owned and operated by ITT to participate in the Title IV, HEA programs only under a Provisional Program Participation Agreement ( PPPA ) for three award years. 23. As a further result of this financial responsibility failure, in August 2014, the DOE also required ITT Tech to post an irrevocable, five-year Letter of Credit in the amount of $79,707, Since August 2014, the DOE has been actively monitoring ITT Tech s ongoing operations and finances. ITT Tech was obviously aware of the DOE s monitoring, and concerns the DOE had about ITT Tech s operations. 25. The DOE also monitored civil litigation filed against ITT Tech by federal and state law enforcement agencies. 26. On or about April 22, 2016, the DOE received notification that ITT Tech institutions operating under the Indianapolis, Indiana, and Spokane Valley, Washington OPEIDs received a Show-Cause Directive Letter ( Directive Letter ) dated April 20, 2016 from ITT Tech s accreditor, the Accrediting Council for Independent Colleges and Schools ( ACICS ). 27. ACICS directed ITT to show cause why its grants of accreditation should not be withdrawn by suspension or otherwise conditioned. 4

5 3:16-cv SEM-TSH # 1 Page 5 of On or about June 6, 2016, the DOE issued a letter to ITT, wherein the DOE both summarized the bases cited by ACICS in its April 20, 2016 directive and described the increased financial risk to the DOE, Title IV funds, students, and taxpayers posed by potential ACICS action. 29. The DOE required ITT Tech to increase its surety from $79,707,879 to $123,646, On or about July 2016, the DOE permitted ITT to provide the increased surety in three installments of $14,646,101 on July 20, 2016, September 30, 2016, and November 30, On or about August 2, 2016, ACICS held a hearing regarding the show cause imposed on ITT Tech in Indianapolis and Spokane Valley. 32. On or about August 17, 2016, ACICS informed the DOE that ACICS continued both institution on Show Cause after ITT Tech had submitted information requested by the accrediting agency and participated in the hearing. 33. ACICS continued to question ITT Tech s compliance with a number of ACICS accreditation standards. 34. On or about August 17, 2016 ACICS reiterated its concern about the financial stability of ITT Tech. 35. ACICS also noted the below-standard student achievement outcomes reported for retention rates for eight campuses. 36. On or about August 17, 2016, ACICS determined that ITT Tech was not in compliance and was unlikely to become in compliance with ACICS Accreditation Criteria. 37. In accordance with this finding, ITT Tech was deemed to have failed to meet the requirements established by its accreditors, as required by its PPPA. 5

6 3:16-cv SEM-TSH # 1 Page 6 of On August 25, 2016, based on the ACICS determination, and facts set out in multiple letters sent to ITT Tech, the DOE imposed a number of conditions on ITT Tech s continued participation in Title IV and HEA programs. 39. These conditions included: (1) an increased letter of credit/surety; (2) a change to method of payment requirements; (3) notification requirements for oversight or financial events; (4) additional reporting requirements; and (5) additional operational requirements. 40. Each of these conditions were detailed in the DOE s August 25, 2016 letter to ITT Tech. 41. On or about August 25, 2016, the DOE made clear that ITT s failure to meet any of these requirements will demonstrate to the Department that ITT is incapable of meeting the fiduciary and financial responsibility standards established by the Higher Education act and the Department s regulations. 42. As the above-facts show, ITT Tech s impending failure was known to it since at least Still, ITT Tech shielded its employees from the ever-approaching doom, until it dropped its September 6 bombshell. THE SEPTEMBER 6, 2016 MASS TERMINATION 43. On September 2, 2016, Plaintiff was told that the following Tuesday September 6, 2016 was being paid as a comp day and that attendance was not required. 44. On a conference call held on September 2, 2016, Plaintiff s District Manager announced that certain news was coming, without revealing the character of this news, and further said that this impending news would potentially attract media attention to ITT Tech. 45. Additionally, during this conference call, Plaintiff was told to check her ITT Tech , as important news was coming. 6

7 3:16-cv SEM-TSH # 1 Page 7 of Plaintiff, as instructed, did not go to ITT Tech on September 6, However, on September 6, 2016, Plaintiff received an stating that she was being terminated, and another stating that ITT Tech was closing. 48. No warning of ITT Tech s nationwide closing or the September 6, 2016 termination was given by ITT Tech to Plaintiff or other ITT Tech employees prior to an sent on September 6, 2016 by Erica Bisch informing ITT Tech employees that they were terminated that day. CLASS ACTION ALLEGATIONS 49. Plaintiff brings this action pursuant to the WARN Act and Rules 23(a), 23(b)(2), and 23(b)(3) of the Federal Rules of Civil Procedure on behalf of herself and, upon information and belief, approximately 4,000 employees who worked at ITT Tech across the United States who were terminated without cause and without proper notice on or about September 6, The Class is referred to herein as the Class, unless otherwise indicated. Plaintiff reserves the right to add, amend, modify, or further define the Class, add subclasses, and/or to move for certification of a class or classes, including subclasses, defined differently than set forth above depending on the facts or law as discovered in this action. 51. Plaintiff asserts claims against ITT Tech individually and on behalf of all Class members for violations of the law as set forth below. 52. The members of the Class are ascertainable from objective criteria. 53. If necessary to preserve the case as a class action, the Court itself can redefine the Class, create additional classes or subclasses, or both. 54. The requirements of Rule 23(a) are satisfied for the Class because the members of the Class are so numerous and geographically dispersed that joinder of all its members is 7

8 3:16-cv SEM-TSH # 1 Page 8 of 14 impracticable. Although the exact number and identity of each class member is unknown at this time, early investigation indicates that approximately 4,000 full-time employees worked at ITT Tech and, upon information and belief, the vast majority, if not all of these individuals have suffered an employment loss. Therefore, the numerosity requirement of Rule 23(a)(1) is met. 55. The commonality requirement of Rule 23(a)(2) is satisfied because there are questions of law or fact common to Plaintiff and the other members of the proposed Class that predominate over questions affecting only individual members of the Class. Among those common questions of law or fact are, but are not limited to, the following: a. whether Plaintiff and other similarly-situated individuals were employed by ITT Tech; b. whether Plaintiff and other similarly-situated individuals suffered an employment loss; c. whether ITT Tech ordered this employment loss; d. whether Plaintiff, and other similarly-situated individuals, were entitled to notice of the mass layoff by ITT Tech under the WARN Act; e. whether ITT Tech gave proper notice of the nationwide closing of all ITT Tech campuses under the WARN Act; and f. whether the ITT Tech is subject to any potential defenses provided for in the WARN Act. 56. Plaintiff s claims are typical of the claims of the proposed Class that she seeks to represent, as described above, because the claims arise from the same course of conduct and actions by ITT Tech and are based on the same legal theories. Further, Plaintiff has sustained legal injuries arising from ITT Tech s conduct, as alleged herein, and Plaintiff seeks the same forms of relief for herself and the proposed Class. Therefore, the typicality requirement of Rule 23(a)(3) is satisfied. 8

9 3:16-cv SEM-TSH # 1 Page 9 of Because her claims are typical of the proposed Class that Plaintiff seeks to represent, Plaintiff has every incentive to pursue those claims vigorously. Plaintiff has no conflicts with, or interests antagonistic to, the proposed Class. Plaintiff, a victim of ITT Tech s illegal and unscrupulous acts and practices, including alleged violations of the WARN Act, is committed to the vigorous prosecution of this action, which is reflected in their retention of competent counsel experienced in complex and challenging litigation. 58. Plaintiff s counsel satisfies the requirements of Rule 23(g) to serve as counsel for the proposed class. Plaintiff s counsel (a) has identified and thoroughly investigated the claims set forth herein, (b) has been in the past, and is currently, involved in complex labor and employment litigation, including WARN Act litigation; (c) has knowledge of the applicable law and devotes a substantial amount of practice to employment and labor law issues; and (d) is committed to the vigorous prosecution of this action. Accordingly, Plaintiff satisfies the adequacy of representation requirements of Rule 23(a)(4). 59. This action also meets the requirements of Rule 23(b)(3). Common questions of law or fact, including those set forth above, exist as to the claims of all members of the proposed Class and predominate over questions affecting only individual class members, and a class action is the superior method if not the only method for the fair and efficient adjudication of this controversy. 60. Class treatment will permit large numbers of similarly-situated ex-employees to prosecute their respective claims in a single forum simultaneously, efficiently, and without the unnecessary duplication of evidence, effort, and expense that numerous individual actions would produce. Further, by prosecuting this case as a class action class members who may be (or already 9

10 3:16-cv SEM-TSH # 1 Page 10 of 14 are) afraid of retaliation by ITT Tech may receive just compensation for ITT Tech s violations of the WARN Act without fear of retaliation for seeking a just recovery. 61. Further, notice may be provided to members of the proposed class by first-class mail to addresses maintained for each Class member by ITT Tech, and through alternative means, including electronic mail ( ), social network posting (i.e., Facebook posts), and community postings. CLAIM FOR RELIEF COUNT I ON BEHALF OF THE CLASS FAILURE TO GIVE NOTICE PURSUANT TO THE WARN ACT 62. Plaintiff incorporates by reference the allegations set forth in all proceeding paragraphs of this Class Action Complaint as if fully set forth herein. 63. ITT Tech is a business enterprise subject to the provisions of the WARN Act, 29 U.S.C et seq., as an employer because ITT Tech employs 100 or more employees, excluding part-time employees. 64. Upon information and belief, ITT Tech employed approximately 4000 full-time employees immediately prior to the September 6, 2016 nationwide termination of substantially all ITT Tech employees. 65. Defendants are engaged in interstate commerce and its employees, including ITT Tech staff and administration, are engaged in interstate commerce. 66. The WARN Act, 29 U.S.C establishes that [a]n employer shall not order a plant closing or mass layoff until the end of a 60-day period after the employer serves written notice of such an order to each representative of the affected employees as of the time of the notice or, if there is no such representative at that time, to each affected employee. 10

11 3:16-cv SEM-TSH # 1 Page 11 of Further, the term affected employees is defined by 29 U.S.C. 2101(a)(5) employees who may reasonably be expected to experience an employment loss as a consequence of a proposed plant closing or mass layoff by their employer. 68. Plaintiff and Class members are affected employees. 69. Thus, ITT Tech should have given Plaintiff and Class members 60-days notice of ITT Tech s closing. 70. No exception to the WARN Act is applicable here. 71. The actions taken by the Department of Education, as discussed above, were not unforeseen, and did not require the nationwide closure of ITT Tech. 72. Instead, ITT Tech had years of notice that the DOE and ACICS were unhappy with ITT Tech s actions and performance. 73. ITT Tech knew or should have known that failing to comply and/or participate in an ACICS Show-Cause proceeding would materially hinder ITT Tech s ability to do business. 74. Further, upon information and belief, ITT Tech made the choice not to comply with the new DOE and/or ACICS conditions, and to simply close its doors (potentially out of spite), regardless of the negative effects on students and staff. 75. Defendants did not act in good faith or with reasonable grounds for believing that their actions were not a violation of the WARN Act. 76. Upon information and belief, ITT Tech chose to close its business, a truly unusual nationwide campus, including the termination of an estimated 8,000 employees, without proper notice, instead of continuing operation with a revised irrevocable letter of credit and a few other DOE and/or ACICS conditions. 11

12 3:16-cv SEM-TSH # 1 Page 12 of ITT Tech failed to give adequate reasons, under the WARN Act, as to why the its entire business was closing. 78. Accordingly, Plaintiff is authorized to bring this action against ITT Tech for its violation of the WARN Act pursuant to 29 U.S.C. 2104(a)(1). 79. Plaintiff and Class members are entitled to back pay for each day of ITT Tech s violation at a rate of compensation not less than the higher of the average regular rate received by such employee during the last 3 years of the employee s employment or the final regular rate received by such employee. 80. Additionally, Plaintiff and Class members are entitled to benefits under an employee benefit plan described in 1002(3) of this Title 29, including the cost of medical expenses incurred during the employment loss which would have been covered under an employee benefit plan if the employment loss had not occurred, if applicable. 81. ITT Tech s liability shall be calculated for the period of the violation, up to a maximum of 60 work days. 82. At all relevant times hereto, Plaintiff and Class members have been entitled to the rights, protections, and benefits provided under the WARN Act. 83. As alleged herein, ITT Tech failed give the notice required by the WARN Act prior to the termination of Plaintiff and Class members. 84. Upon information and belief, ITT Tech could have given 60-days notice, but chose not to in an attempt to avoid payment of 60-days wages to Plaintiff and Class members. 85. If any purported release was signed by Plaintiff or Class members, such a release is invalid as it lacks consideration as ITT Tech paid no severance here. 12

13 3:16-cv SEM-TSH # 1 Page 13 of Accordingly, Plaintiff and Class members are aggrieved employees, have suffered economic harm due to Defendants actions, and are therefore entitled to 60-days back pay and continued benefits, pre- and post-judgment interest, reasonable attorney s fees, and the costs of this action, all in an amount to be determined at trial. PRAYER FOR RELIEF WHEREFORE Plaintiff, individually and on behalf of all others similarly situated, pray for relief as follows: A. an order from the Court certifying the Class identified herein as a class action pursuant to FED. R. CIV. P. 23(b) and (c) and appointing Plaintiff as class representative and appointing her counsel to represent the Class; B. an order from the Court awarding Plaintiff and Class members unpaid wages, salary, commission, bonuses, accrued holiday pay, accrued vacation pay, pension and 401(k) contributions and other ERISA benefits for 60 working days following the Plaintiff and/or Class members termination, that would have been covered and paid under the then applicable employee benefit plans had that coverage continued for that period, all determined in accordance with the WARN Act, 29 U.S.C. 2104(a)(1), in an amount to be proven at trial; C. an order from the Court awarding Plaintiff and Class members pre-judgment and postjudgment interest, as well as reasonable attorneys and expert-witness fees and other costs as may be available under law; and D. an order from the Court awarding such other and further relief as this Court may deem just and proper. 13

14 3:16-cv SEM-TSH # 1 Page 14 of 14 DEMAND FOR JURY TRIAL Plaintiffs request a jury trial on all issues so triable. Respectfully submitted, PLAINTIFF RUBY BLACKWELL, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED Dated: September 7, 2016 By: /S/ Brandon M. Wise Brandon M. Wise IL Bar No Paul A. Lesko IL Bar No PEIFFER ROSCA WOLF ABDULLAH CARR & KANE, APLC 818 Lafayette Ave., Floor 2 St. Louis, MO Ph: Ph: bwise@prwlegal.com plesko@prwlegal.com COUNSEL FOR PLAINTIFF AND THE PUTATIVE CLASS MEMBERS 14