UC Regents Beat Student Suits Over COVID-19 Fee Refunds

By Hailey Konnath
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Law360 (November 10, 2020, 11:06 PM EST) -- A California federal judge this week dismissed a pair of proposed class actions accusing the Regents of the University of California of withholding campus fee refunds in the midst of pandemic-related closures, ruling that the regents are entitled to qualified immunity under the 11th Amendment of the U.S. Constitution.

The students claim in their suits that the UC Regents should reimburse students for services that they are no longer receiving due to the pandemic and should also refund prorated portions of their campus fees. Meanwhile, the state-run university system's regents and its former President Janet Napolitano have argued that they're entitled to qualified immunity because they're state officials.

At a hearing in early October, U.S. Magistrate Judge Sallie Kim expressed sympathy for the students but said she was leaning toward throwing out the suits. Under the students' theory, anyone unhappy with the services provided could file suit against the government, rendering the 11th Amendment without meaning, the judge said.

In a Tuesday order, Judge Kim nixed both suits with prejudice, finding that the 11th Amendment indeed bars the students' claims, at least in federal court. The U.S. Supreme Court has held that the regents are "an instrumentality of the state of California" and the Ninth Circuit has repeatedly ruled the same, she said.

"Plaintiffs seek a remedy for asserted violations of their rights in the form of financial compensation," Judge Kim said. "The state of California is therefore the substantial party in interest in these cases and is entitled to invoke its sovereign immunity from suit."

As for the students' claims against Napolitano, neither complaint states a claim for relief against her in her individual capacity, the judge said. And even if they had, she is also entitled to qualified immunity, the judge said.

"If every citizen who pays a state instrumentality for services — for example to get a driver's license from the Department of Motor Vehicles — could argue that their funds had been improperly seized under the Fifth Amendment whenever that citizen was dissatisfied with those services, the 11th Amendment would be effectively vitiated," Judge Kim said.

The judge also rejected the students' arguments that qualified immunity doesn't bar claims for injunctive relief, which is what they seek. The students are trying to "disguise their breach of contract claim as a constitutional takings claim," an attempt she said was "unavailing."

"The funds at issue were paid to UC pursuant to a contract, in exchange for services, with no expectation that the funds would be held for any specific purpose or redistributed on plaintiffs' behalf," Judge Kim said. "There is no fiduciary relationship created over the funds at issue."

University of California spokesperson Claire Doan said in a statement Tuesday that UC is pleased Judge Kim "agrees that the UC Board of Regents and former President Napolitano are immune from suit in federal court, and that this litigation rightly belongs in state court."

The cases were filed separately in April by UC students Noah Ritter and Claire Brandmeyer. They're among dozens of suits launched against U.S. universities that have moved classes online during the pandemic but have also declined to refund a portion of the spring 2020 tuition or campus fees. UC students have also filed similar suits in state court.

In October, counsel for Ritter and Brandmeyer urged Judge Kim not to dismiss the cases. Adam J. Levitt of DiCello Levitt Gutzler LLC told the judge that unlawful taking is a constitutional violation and that the UC Regents "have taken hundreds of millions of dollars from class members."

"Qualified immunity is not applicable here," Levitt said at the time.

But the UC Regents' attorney, Karen Johnson-McKewan of Orrick Herrington & Sutcliffe LLP, argued that the 11th Amendment is applicable here and bars the claims against the UC Regents and Napolitano.

Johnson-McKewan also argued that once the university collected the spring 2020 campus fees from students, those fees became the university's property.

Judge Kim said during the hearing that she intended to dismiss the suits but wasn't sure yet if she would grant the students leave to amend their complaints.

Last week, a University of San Diego student hit her school with a similar suit, telling the California federal court that USD has refused to reimburse students for services it no longer provides.

In April, Fordham University student Kareem Hassan hit his school with a similar putative class action in New York federal court, claiming students at the institution "lost the benefit of the education for which they paid, without having their tuition and some other fees refunded to them."

Ivy League students have also sued Columbia and Cornell universities. And Michigan State University, Pace University, the University of Miami and Drexel University have also been accused of withholding fee refunds.

The students are represented by Eric M. Poulin and Roy T. Willey IV of Anastopoulo Law Firm, John C. Bohren of Bohren Law, C. Moze Cowper and Noel E. Garcia of Cowper Law PC, Adam J. Levitt and Laura E. Reasons of DiCello Levitt Gutzler LLC and Matthew S. Miller of Matthew S. Miller LLC.

The University of California is represented by Karen Johnson-McKewan of Orrick Herrington & Sutcliffe LLP.

The case is Ritter et al. v. The Regents of the University of California, case number 3:20-cv-02925, and the related case is Brandmeyer v. The Regents of the University of California, case number 4:20-cv-02886, both in the U.S. District Court for the Northern District of California.

--Additional reporting by Hannah Albarazi. Editing by Jay Jackson Jr.

For a reprint of this article, please contact reprints@law360.com.

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