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Federal Judge Allows Recruiter Suit Against EDMC to Continue in Goldberg Kohn Case

May 11, 2012
Pittsburgh Post-Gazette

Parts of the federal lawsuit against Downtown-based Education Management Corp., alleging that the for-profit post-secondary education provider used an illegal recruiter compensation system, will continue, a judge decided Friday.

"This is a massive and complex case," U.S. District Judge Terrence F. McVerry wrote at the end of a 50-page opinion. "It is certainly possible that EDMC has properly compensated its [recruiters] in compliance with all government requirements. Indeed, the Court has concluded that claims based on EDMC's Compensation Plan 'as written' must be dismissed.

"However, the Court concludes that the claims based on the Plan 'as implemented' will not be dismissed. At this stage of the proceedings, the Court merely concludes that Plaintiffs' allegations of a company-wide fraud, viewed in the light most favorable to Plaintiffs and assumed to be true, are cognizable.

"Plaintiffs are entitled to take discovery in an effort to prove these allegations."

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