534 F.Supp.3d 363
D.N.J.2021Background:
- In March 2020 Drew University suspended in-person instruction and moved to virtual teaching due to COVID-19; Angel Dougherty (student) completed the spring semester online.
- Angel’s mother Crista paid part of Angel’s spring tuition (~$8,000) plus an art fee ($75), parking fee ($200), and technology fee ($125); no refunds were given.
- The Doughertys sued in state court on behalf of a putative class, asserting breach of contract, unjust enrichment, conversion, and money had and received, seeking pro rata refunds for the lost in-person experience.
- Drew removed under CAFA and moved to dismiss under Rule 12(b)(6); the court examined standing, contract standards, the Catalog’s reservation-of-rights, and whether fee claims differ from tuition claims.
- Court concluded Angel had Article III standing (Crista need not be dismissed), dismissed tuition-based claims, retained federal jurisdiction over remaining claims, and allowed fee-based breach and unjust enrichment claims to proceed.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing (parent payor) | Crista can sue as payer for refund; Angel alleges injury | Parent-payor lacks standing once child is adult (per some out-of-state decisions) | Angel has standing; Crista also has standing or at least is not dismissed; case proceeds |
| Breach of contract — tuition | Catalog promises in-person instruction; virtual delivery was inferior; seek pro-rata refund | University acted reasonably in response to pandemic; Beukas standard (good faith/fairness) applies; Catalog permits changes | Tuition-based breach dismissed: under Beukas the University acted in good faith; reservation-of-rights in Catalog also bars tuition claim |
| Reservation-of-rights / force majeure | Plaintiffs: clause ambiguous or inapplicable; may still seek diminution damages | Reservation permits program changes and alternatives; covers campus closure and virtual classes | Reservation-of-rights is enforceable and authorizes University’s response; not ambiguous here |
| Unjust enrichment / quasi-contract — tuition | Equitable recovery for retained tuition when service not provided | Quasi-contract claims should be subject to same deference as contract claims (Beukas) | Unjust enrichment for tuition dismissed under Beukas standard |
| Conversion & money had and received — tuition | Tuition or right to in-person education is property converted | Education is intangible; claim is contract disguised as tort; money not identifiable as specific chattel | Dismissed: conversion not applicable to intangible education or to a mere debt; money had and received duplicative |
| Fee claims (art, parking, tech) & CAFA jurisdiction | Fees are part of same class claims; seek refunds for facilities not provided | CAFA removal justified originally; reservation-of-rights covers program changes | Court retained jurisdiction (CAFA anchored at removal); breach and unjust enrichment claims for fees survive as ordinary contract/facilities claims; conversion and money-had claims dismissed |
Key Cases Cited
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) (plausibility standard for pleadings)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (application of Twombly plausibility standard)
- Beukas v. Bd. of Trs. of Fairleigh Dickinson Univ., 605 A.2d 708 (N.J. Super. Ct. App. Div. 1992) (court applies good-faith/fairness standard when university materially alters program)
- Mittra v. Univ. of Med. & Dentistry of N.J., 719 A.2d 693 (N.J. Super. Ct. App. Div. 1998) (deferential review for academic/disciplinary matters)
- Napolitano v. Trs. of Princeton Univ., 453 A.2d 263 (N.J. Super. Ct. App. Div. 1982) (courts avoid rigid contractual treatment of university-student relationship)
- Perry v. Thomas, 482 U.S. 483 (1987) (whether a contract inures to a nonparty is a merits question, not standing)
- Mission Prods. Holdings, Inc. v. Tempnology, LLC, 139 S. Ct. 1652 (2019) (money changing hands presents a live controversy for standing)
- Judon v. Travelers Prop. Cas. Co. of Am., 773 F.3d 495 (3d Cir. 2014) (removing party bears amount-in-controversy burden under CAFA)
- St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283 (1938) (post-removal events that reduce the amount in controversy do not oust jurisdiction)