Friday, December 18, 2020

reasonable consumer wouldn't expect advertised in-person classes in pandemic (but contract claims survive)

Ford v. Rensselaer Polytechnic Institute, No. 20-CV-470, 2020 WL 7389155 (N.D.N.Y. Dec. 16, 2020)

This is a putative class action against RPI for breach of contract, false advertising, and related claims based on the mid-semester pandemic shutdown of early 2020. The court dismisses false advertising and conversion claims but declines to dismiss the contract/unjust enrichment claims at this stage. One question of more general import: How many institutions had something like the following:

Plaintiffs allege that they were drawn to defendant in part because of “The Rensselaer Plan 2024” (the “Plan”), a framework of programs, some enacted, some yet hypothetical, designed to afford its students a unique educational experience. The language of the Plan has a flavor of commitment, and most of its substantive clauses begin with the phrase “we will.”  

Of particular relevance, RPI claims in the Plan that it “will ... [o]ffer a complete student experience, highlighted by[ ] Clustered Learning, Advocacy, and Support for Students” (“CLASS”). Defendant’s CLASS program, which it has actively incorporated into student life, is designed to improve counseling, academic skill development, community building, and other purported benefits that “originate within the residential setting.” Defendant’s catalog defines the CLASS program as “built around a time-based clustering and residential commons program.” To help facilitate CLASS, defendant mandates that all first- and second-year students, as well as transfer students, live on campus.  

However, after the pandemic began, RPI cancelled all university-sponsored events, required students to move out of on-campus housing, and moved classes online. RPI issued refunds for Spring 2020 room and board fees, but reduced these reimbursements by the net of a reimbursed student’s financial aid. 

Contract: For a student contract claim, “only specific promises ... in a school’s bulletins, circulars[,] and handbooks, which are material to the student’s relationship with the school,” are enforceable.” In other words, “[g]eneral policy statements and broad and unspecified procedures and guidelines will not suffice.” The court therefore refused to recognize “an implied promise for on-campus education based on the nature of defendant’s dealings with the school,” but did consider the CLASS program to qualify based on the allegations. RPI’s catalog claims that the CLASS program provides a “time-based clustering and residential commons program” touted as an “award-winning First-Year Experience” that “extends learning across the spectrum of student residential life,” which “fits the bill of a specific promise,” at least for Rule 12 purposes. Generic and vague terms such as “fair and equal treatment” “are of an entirely different character than the specific programs the Plan formulates.”

Although Paynter v. New York University, 319 N.Y.S.2d 893 (Sup. Ct. App. Div. 1st Dep’t 1971), dismissed a breach of contract claim after the defendant university completely shut classes down in response to civil unrest, “there is a world of difference between canceling some classes—in the absence of any affirmative guarantee on the number of classes to be held—and not affording students services and benefits for an extended period of time despite such a promise.” And in Chong v. Northeastern University, which dismissed a similar pandemic breach of contract claim against a university, “the plaintiffs in that case failed to provide any promise more concrete than a document that amounted to an agreement to pay tuition in exchange for classes,” though, notably, the court allowed plaintiffs’ claims alleging a breach of contract for not refunding those plaintiffs’ activity fees to proceed.

Nor was this a disguised and prohibited “educational malpractice” claim. Plaintiffs were arguing that, “regardless of fault, the value of the on-campus experience defendant plausibly promised them is greater than the value of the remote experience they received. That can be true even if defendant made every choice reasonably, or even perfectly…. [M]uch as defendant would make of the fact that it was forced to shut down, that does not answer whether it or its students should bear the cost of that outcome.” True, RPI also lost from shutting down, but maybe it should bear more of the loss.

As for the refunds-minus financial aid, plaintiffs sufficiently alleged that this was unfair because financial aid was paid in a flat amount based on family income regardless of whether they live on campus or purchase a meal plan:

Because plaintiffs have plausibly alleged a promise of room and board in exchange for their payment of the associated fees, RPI is saddled with an ongoing duty of good faith and fair dealing in carrying out that promise. Withholding repayment to plaintiffs for a service that they did not receive because of an entirely unrelated consideration could plausibly violate that duty, and thus plaintiffs’ claims must survive for now. In addition, the Court is concerned that defendant’s policy in fact seems to directly target the students most in need of a refund.

Unjust enrichment claims, pled in the alternative, and promissory estoppel claims likewise survived (despite uncertainty about the ultimate validity of promissory estoppel given the actual contract), but conversion failed because there was no way to identify plaintiffs’ specific money in the pool of RPI funding.

GBL §§ 349 and 350: It was not enough to allege that RPI advertised on-campus learning. Even without an intent requirement, “[n]o reasonable consumer would expect a university to remain open for in-class instruction in the face of a pandemic and a state-mandated shutdown, regardless of whether the school advertised on-campus learning as a strength.” In a footnote, the court pointed out that §350 doesn’t have a distinct reliance requirement, contrary to the Second Circuit’s “frequent imputation …, which the New York Court of Appeals has specifically identified as an error.”


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