Law360 (June 1, 2021, 6:48 PM EDT) -- A New Jersey federal judge has kept alive a proposed class action over Monmouth University's transition to all-remote instruction due to the coronavirus outbreak, rejecting traditional breach of contract claims but permitting a quasi-contract claim that the school improperly kept tuition and fees after ceasing in-person classes.
U.S. District Judge Michael A. Shipp on Monday said Monmouth student Lexi Fittipaldi and her mother, Jodi, may go after the university under the quasi-contract theory set forth in the 1991 state court decision in Beukas v. Board of Trustees of Fairleigh Dickinson University , which he said applied a "'good faith and fair dealing'" standard to a similar dispute.
Analyzing the Fittipaldis' amended complaint "in the light most favorable" to them, "plaintiffs (at a minimum) allege that Monmouth acted arbitrarily and other than in good faith by failing to reduce the cost per credit due to the remote instruction," Judge Shipp said in his written opinion on Monmouth's motion to dismiss.
As an example, the judge cited a passage from the complaint alleging Monmouth reduced the per-credit cost for summer courses last year by 15% "due to the remote instruction."
That passage alleged that "the fact that defendant reduced the price of online-only summer session courses demonstrates defendant's own belief that the online-only courses are worth less than in-person courses."
The judge said he "finds it appropriate to consider the bona fides of Monmouth's decision making and the fairness of its COVID-19 remote learning implementation upon a full factual record."
His opinion marks a departure from the April 14 ruling in Dougherty v. Drew University , in which U.S. District Judge Kevin McNulty applied the Beukas standard to a similar proposed class action in tossing tuition reimbursement claims but letting a student and her mother pursue fee refund claims.
Drew University "tried its best to provide students with an education, albeit in a different format," and "it is not plausibly alleged that the Doughertys could overcome the Beukas standard," Judge McNulty said.
As alternative grounds for dismissal, the judge found that the tuition claims could not go forward in light of a "reservation of rights" clause in Drew's academic catalog, which enabled the school to make academic program changes.
In his own decision in the Monmouth case, Judge Shipp noted that "Drew's [reservation of rights] provision is substantially more comprehensive than Monmouth's provision."
The judge said he is "not inclined to analyze Monmouth's provision on a motion to dismiss," and added that, based on the amended complaint, "it is not clear which fees would be subject to and/or amenable to a standard contract analysis."
"Based on the amended complaint in the present matter, the court declines to distinguish between plaintiffs' tuition claims and fee claims," the judge said.
The Fittipaldis' lawsuit is one of several proposed class actions launched against colleges and universities in the Garden State and across the country over the institutions' termination of in-person classes as a result of the pandemic during the spring semester of 2020.
Monmouth switched to all-remote learning around when Gov. Phil Murphy issued an executive order directing that "all institutions of higher education" cease in-person instruction starting on March 18, 2020.
As in a number of similar cases, Lexi Fittipaldi — who is majoring in cybersecurity — has said she and other students did not get the in-person experiences they paid for and were entitled to a refund of the prorated share of tuition and fees for the services Monmouth failed to provide.
The university approved prorated refunds or credits on unused room contracts, meal plans and parking fees, but not tuition or other fees, according to the judge's opinion. The Fittipaldis have claimed they were not refunded any of the nearly $20,000 they paid for the semester, the opinion said.
In addition to permitting a quasi-contract claim, Judge Shipp allowed the Fittipaldis to pursue their claims of conversion, unjust enrichment and money had and received.
The conversion claim should be considered on a "full factual record," the judge said. As for the other two claims, if the Fittipaldis' allegations are correct, Monmouth "could have plausibly experienced a windfall where it collected full tuition in exchange for services or amenities that it did not provide plaintiffs after classes moved online."
"This windfall, as alleged, may be inequitable as it may qualify as defendant unjustly enriching itself with student tuition monies where it did not fully provide the services presumedly promised tuition-paying students," Judge Shipp said.
Counsel for the parties did not immediately respond to requests for comment Tuesday.
The Fittipaldis are represented by Andrew Obergfell and Sarah N. Westcot of Bursor & Fisher PA.
Monmouth is represented by Angelo A. Stio III and Michael E. Baughman of Troutman Pepper.
The case is Jodi Fittipaldi et al. v. Monmouth University, case number 3:20-cv-05526, in the U.S. District Court for the District of New Jersey.
--Editing by Marygrace Murphy.
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