Wright LLC Education Lawsuit: Ornelas Rename and Settlement

The Wright v. Capella University lawsuit was a 2018 federal class action in which two former doctoral students accused Capella University and its parent, Capella Education Company, of misleading students about how long their degrees would take and how much they would cost. After a 2019 ruling dismissed most claims and left Maurice Jose Ornelas as the sole remaining class representative, the case was re-captioned Ornelas v. Capella University, Inc. and settled on confidential terms in 2022.

Who Sued Capella and Why

On April 20, 2018, Carolyn Wright and Debbra Kennedy filed a class action complaint in the U.S. District Court for the District of Minnesota.¹ Wright had been enrolled in a Doctor of Nursing Practice program; Kennedy in a Doctorate of Education program.²

The complaint described what the plaintiffs called a “bait-and-switch” doctoral program. Recruiting emails, website copy, and admissions conversations represented that students could finish within a specific, relatively short timeframe, but the programs were allegedly designed to run far longer. The lawsuit pointed to “unnecessary hurdles” to graduation, including high faculty turnover and inconsistent, delayed feedback on student work, all of which allegedly stretched enrollment and extracted additional tuition. Because Capella’s programs were primarily online, students were isolated from one another, which the lawsuit said kept them from recognizing that their struggles were systemic rather than personal.³

An amended complaint filed in August 2018 added several more plaintiffs: Maurice Jose Ornelas, Sherry Bailey Brannen, Candace Norris, Shauna Matelski, Geoffrey Goldstein, Lois Mason, and Jacqueline Carter.⁴ It asserted five categories of legal claims: common-law fraud, statutory fraud under the Minnesota Uniform Deceptive Trade Practices Act and the Minnesota Prevention of Consumer Fraud Act, breach of contract, breach of the covenant of good faith and fair dealing, and unjust enrichment.¹

Plaintiffs were represented by attorneys from Reinhardt Wendorf & Blanchfield and from the firm that would become Lesko Law LLC, including Garrett D. Blanchfield, Roberta A. Yard, and Paul Lesko.⁵

How the 2019 Ruling Narrowed the Case

Capella moved to dismiss the entire amended complaint. On May 6, 2019, Judge Wilhelmina Marie Wright granted the motion in part and denied it in part, cutting deeply into the case.¹

On standing, the court sided with the plaintiffs. Capella had argued that two students, Mason and Carter, could not sue because their programs were still ongoing or they had withdrawn. The court held that the students suffered a real injury the moment they enrolled and paid tuition based on allegedly false representations, and did not need to wait until a projected graduation date to sue.⁶

On fraud, most plaintiffs lost. The court found that marketing phrases like “designed to be completed in [X] years” or descriptions of “structured” programs suggested a possibility of finishing within that timeframe, not a guarantee for the average student. For lead plaintiff Carolyn Wright, who pointed to a claim that she could “earn your DNP” in “just two years,” the court reasoned that her own data showing longer completion times was “not incompatible” with the possibility that some student could finish that quickly. Because she did not allege it was impossible, the claim was dismissed.⁷ Plaintiff Goldstein’s claims were separately dismissed for failing to plead fraud with the specificity federal rules require.⁶

One plaintiff’s fraud claims survived: Maurice Jose Ornelas. He alleged that a Capella recruitment email told him a “typical learner” in his PhD program would finish in about three years. Capella’s own Gainful Employment disclosure to the federal government showed the program actually took roughly 75 months, more than twice the represented timeline. The court found this was a plausible false statement of material fact rather than puffery, because it described what typical students actually experienced and was directly contradicted by Capella’s own data.¹ Ornelas’s statutory fraud claims survived on the same basis.⁶

Capella also argued that the educational-malpractice doctrine barred the entire lawsuit. The court disagreed, holding that the doctrine applies only to challenges about the quality of teaching or pedagogy. Ornelas’s claims rested on objective enrollment statistics about time and cost, not on subjective judgments about how well anyone was taught.¹

All breach-of-contract and good-faith claims were dismissed outright. The court found no “specific and definite offer” about program length that could form a binding promise. The unjust-enrichment claims were allowed to proceed as an alternative theory.⁶ In all, roughly 42 of the original 45 counts were dismissed, leaving Ornelas as the sole remaining putative class representative.³

Renaming to Ornelas and Expanded Claims

Ornelas moved in October 2020 for leave to file a second amended complaint, seeking to add six new plaintiffs and new claims.⁸ On April 2, 2021, Magistrate Judge Elizabeth Cowan Wright granted the motion in part, finding that proposed plaintiffs April Powers and Jennifer Proffitt had non-futile claims, including consumer protection claims under Idaho and Michigan state law. The magistrate also allowed Ornelas to pursue graduation-rate-misrepresentation claims, finding them not “clearly frivolous.”⁹

Capella appealed the magistrate’s order. Judge Wilhelmina Wright affirmed it on September 22, 2021, and the second amended complaint was then filed.¹⁰ The case was formally re-captioned Ornelas, et al. v. Capella, et al., with seven named plaintiffs and additional proposed sub-classes.¹¹

How the Case Settled

In January 2022, the parties reached an agreement in principle to settle on confidential terms.¹⁰ The settlement became effective on April 20, 2022, and a joint stipulation of dismissal with prejudice was filed on April 25, 2022.¹¹ The case was formally terminated on May 17, 2022.⁴

The financial terms were never publicly disclosed. Strategic Education, Inc., Capella’s parent company, told investors it did not expect the litigation to have a “material adverse effect” on its financial position.³ Because the settlement was confidential, there is no public class notice describing eligibility or payment amounts for former Capella students.

Related Federal Actions Affecting Capella Students

The private lawsuit was not the only proceeding touching Capella during this period. In April 2021, the U.S. Department of Education initiated a fact-finding process involving more than 1,000 Capella students who had filed borrower defense to repayment applications, a federal mechanism that allows students to seek loan discharges when their school engaged in certain misconduct. The complaints mirrored the class action’s allegations: misleading claims about program length and cost.³ Capella submitted individualized responses by August 2021. As of mid-2022, it had received no further communication from the Department and no indication that any claims had been decided on the merits.¹¹

Separately, Capella was among roughly 150 institutions named in Sweet v. Cardona (later Sweet v. McMahon), a class action in federal court in California that challenged the Department of Education’s handling of borrower defense applications. That settlement received final court approval on November 16, 2022, and became effective on January 28, 2023.¹² Under its terms, the Department agreed to discharge more than $6 billion in federal student loans for approximately 200,000 borrowers who had filed claims against listed institutions where the agency found evidence of misconduct.¹³ In a July 2022 filing, the Department stated that granting automatic relief under the Sweet settlement did not constitute an adjudication of a borrower defense claim and therefore provided no basis for initiating a recoupment proceeding against any of the listed schools.¹¹

1
GovInfo. Wright v. Capella University, Case No. 18-cv-1062
2
Twin Cities Pioneer Press. Class-Action Lawsuit Alleges Capella University Lied About Time, Cost of Advanced Degrees
3
Yahoo News. Capella University Settles Lawsuit Over Doctoral Degree Programs
4
CourtListener. Ornelas v. Capella University, Inc., Case No. 18-cv-1062
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Top Class Actions. Capella University Class Action Says Degree Process Bait and Switch
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Courthouse News Service. Wright v. Capella University, Order on Motion to Dismiss
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vLex. Wright v. Capella Univ., Inc.
8
CourtListener. Ornelas v. Capella University, Inc., Docket Page 2
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Cetient. Ornelas v. Capella University, Inc.
10
U.S. Securities and Exchange Commission. Strategic Education, Inc. SEC Filing, Litigation Disclosure
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U.S. Securities and Exchange Commission. Strategic Education, Inc. SEC Filing, Legal Proceedings
12
Federal Student Aid. Sweet v. McMahon Settlement Information
13
NASFAA. Judge Grants Final Approval to Borrower Defense Settlement