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Cases

Lambda School (now Bloom Institute of Technology)

Since May 2021, Student Defense has filed multiple arbitration demands and one court case on behalf of former students against the online coding bootcamp Lambda School (now doing business as Bloom Institute of Technology). The students allege that Lambda’s use of false job placement rates and other deceptive marketing practices entitles them to relief, including cancellation of the Income Share Agreements (“ISAs”) that the school uses as a type of loan to fund tuition, refunds of payments made, and damages. Case documents are attached at the bottom of the page. 

Background

Lambda touts itself as a pathway for its students to achieve career success. To attract students, Lambda advertised an 85.9% job placement rate, while internal documents reveal school executives told investors only about half of students were employed in relevant jobs within six months of graduation. But the misdeeds did not stop there: in 2019, the California Bureau for Private Postsecondary Education (BPPE) ordered the school to cease operations and submit a closure plan. In violation of California law, Lambda continued to enroll students anyway.

Lambda is an online coding bootcamp based in California, that offers courses in web development, programming, and other subjects. Lambda charges $30,000 for its program, more than double the reported average price of online coding bootcamps. Lambda’s business model is predicated on convincing prospective students to pay this large amount by promising that they will not owe any tuition unless they find a job that pays $50,000 or more per year. Through this financial arrangement, known as an Income Share Agreement (ISA), Lambda students agree to pay the school a portion of their post-graduation income instead of traditional, fixed loan payments.  

Lambda's ISAs contain arbitration clauses that force students seeking to vindicate their rights into arbitration, and to do so individually (rather than as a class).

Linh Nguyen, Jonathan Stickrod, and Heather Nye v. Lambda

On May 13, 2021, Student Defense filed arbitration demands (below) on behalf of Linh Nguyen, Jonathan Stickrod, and Heather Nye, the first three former Lambda students to file claims over Lambda’s job placement rates and operation without a license.  

Arbitrators in all three matters rejected Lambda’s attempts to dismiss the cases and, in January 2022, Lambda was ordered to produce documents related to Claimants’ job placement rate claims. Between January and June of 2022, Lambda produced over 1,800 documents to Claimants. Hearings in all three matters were scheduled for July and August 2022.

On July 11, 2022, all three former students reached a settlement of their dispute. While the terms of the settlement are confidential, they issued the following joint statement: 

“After more than one year of litigation, we are excited to announce that we have reached a settlement of our arbitrations against Lambda/Bloom Tech. We would like to thank Student Defense, CalebAndonian, and Cotchett, Pitre & McCarthy for helping us achieve this result, which will allow us each to move forward with our lives.”  

Linh Nguyen, Jonathan Stickrod, and Heather Nye were represented on these matters by Student Defense, CalebAndonian, and Cotchett, Pitre & McCarthy.

Emily Bruner v. Lambda and Austen Allred

On April 15, 2022, Student Defense filed another legal challenge against Lambda/Bloom Tech. The case was filed in California state court on behalf of former student Emily Bruner and names the school’s CEO, Austen Allred, as a defendant in his personal capacity.

While Lambda shunted most of its students into mandatory arbitration agreements, a tactic frequently used by unscrupulous for-profit colleges to shield themselves from full accountability for their actions, Ms. Bruner opted out of her arbitration clause, allowing her to file the civil lawsuit against Lambda and Mr. Allred. 

While this is the first court case filed against Lambda with these allegations, it joins many other arbitrations filed in the last year (by Student Defense and others) alleging that Lambda misled students with false job placement rates, operated illegally without approval from the California Bureau for Private Postsecondary Education (BPPE), and misrepresented practices around the financing of ISAs.

Tragically, Ms. Bruner passed away in May 2022, but her case remained ongoing on behalf of her estate, which is administered by her mother, Amber Bruner, and represented by Student Defense, Black & Buffone PLLC, and Cotchett, Pitre & McCarthy LLP.

In May 2023, Ms. Bruner's estate reached a settlement of their dispute. While the terms of the settlement are confidential, Ms. Bruner's estate issued the following statement:

"On behalf of my late daughter, Emily Bruner, I am excited to announce that her estate has reached a settlement of the lawsuit she filed against Lambda School/Bloom Tech and Lambda’s CEO, Austen Allred. I would like to thank Student Defense, Black & Buffone, and Cotchett, Pitre & McCarthy for helping us achieve this result, which will allow our entire family to move forward and focus on creating a better future for Emily’s son.”

Daniel Milano, Clayton Wilkerson & John Kernan v. Lambda (Bloom Tech) and Austen Allred

On September 9, 2022, Student Defense filed another round of arbitrations against Lambda/Bloom Tech. These arbitrations were filed on behalf of former students Daniel Milano, Clayton Wilkerson & John Kernan, and, like the Bruner matter, name the school’s CEO, Austen Allred, as a defendant in his personal capacity.

Claimants are represented by Student Defense, Black & Buffone PLLC, and Cotchett, Pitre & McCarthy LLP. 

In February 2023, Daniel, Clayton, and John reached settlements of their disputes. While the terms of the settlements are confidential, they issued the following joint statement:

“We are excited to announce that we have reached a settlement of our arbitrations against Lambda School/Bloom Tech. We would like to thank Student Defense, Black & Buffone, and Cotchett, Pitre & McCarthy for helping us to achieve this result, which will allow us to move forward with our lives.”

Krystal Guzman and Shanda Woods v. Lambda (Bloom Tech) and Austen Allred

On October 6, 2022, Student Defense filed another round of arbitrations against Lambda/Bloom Tech. These arbitrations were filed on behalf of former students Krystal Guzman and Shanda Woods, and, like the Bruner, Milano, Wilkerson and Kernan matters, name the school’s CEO, Austen Allred, as a defendant in his personal capacity.

On February 2, 2023, Krystal and Shanda reached settlements of their disputes. While the terms of the settlements are confidential, they issued the following joint statement: 

“We are excited to announce that we have reached a settlement of our arbitrations against Lambda School/Bloom Tech. We would like to thank Student Defense for helping us to achieve this result, which will allow us to move forward with our lives.” 

Case Documents

Nguyen v. Lambda

Stickrod v. Lambda

Nye v. Lambda

Bruner v. Lambda (filed in Superior Court, California)

Milano v. Lambda

Wilkerson v. Lambda

Kernan v. Lambda

Guzman v. Lambda

Woods v. Lambda