229 F. Supp. 3d 1266
M.D. Ala.2017Background
- Thirty-seven Nigerian students at Alabama State University (ASU) received Nigerian government sponsorships meant to cover tuition, fees, insurance, room and board, textbooks, and personal expenses; Nigeria remitted sponsorship funds to ASU with instructions that unused funds be disbursed to the students.
- Plaintiffs allege ASU restricted use of their sponsor funds to school expenses, used the students’ accounts to pay unrelated university expenses, emptied the 2013–14 credit balances when 2014–15 payments were late, and thereafter refused to return or properly credit the students when funds were received.
- Plaintiffs sent administrative requests (including a letter from a Nigerian official and counsel’s demand letters); ASU refused, stating no direct financial agreement existed between the students and the university.
- Plaintiffs sued asserting four claims: Title VI national-origin discrimination, breach of fiduciary duty, third-party beneficiary breach of contract (as intended beneficiaries of the Nigeria–ASU sponsorship agreement), and unjust enrichment.
- The university moved to dismiss under Rule 12(b)(6). The court limited its review to the complaint (declining to convert to summary judgment) because the underlying Nigeria–ASU contract was not before the court and discovery had not occurred.
- The court denied the motion to dismiss, finding the complaint plausibly alleged facts sufficient to state all four claims at the 12(b)(6) stage.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Title VI (national-origin discrimination) | ASU intentionally withheld/discriminated against Nigerian students by confiscating their sponsored funds and treating Nigerian recipients worse than other scholarship recipients | ASU disputes the allegations and relies on extrinsic materials; argues no actionable intent shown | Claim survives 12(b)(6): Plaintiffs plausibly alleged intentional discrimination by a federally funded entity; disparate impact allegations support intent at pleading stage |
| Breach of fiduciary duty (Alabama law) | ASU exercised dominion and control over students’ funds, creating a confidential/fiduciary relationship that ASU breached | ASU contends Alabama law does not recognize a general fiduciary duty of universities to students; lack of precedent supports dismissal | Claim survives 12(b)(6): Court assumes for pleading purposes that fiduciary/confidential relationship plausibly existed based on ASU’s control over funds |
| Third-party beneficiary breach of contract | Students are intended beneficiaries of the Nigeria–ASU sponsorship contract and ASU breached by failing to deliver funds | ASU points to absence of a direct contractual relationship with students and relies on extrinsic documents not before the court | Claim survives 12(b)(6): Complaint plausibly alleges intent to benefit students and a breach of the sponsorship arrangement |
| Unjust enrichment | Retention of sponsored funds after wrongful withholding and breach of fiduciary duty constitutes unconscionable conduct making retention unjust | ASU argues it was entitled to handle funds as it did (relying on extrinsic defenses) | Claim survives 12(b)(6): Alleged breach of fiduciary duty supports the unconscionability element required for unjust enrichment under Alabama law |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (pleading standard: factual allegations must plausibly show liability)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (established the plausibility standard for complaints)
- Resnick v. AvMed, Inc., 693 F.3d 1317 (11th Cir.) (accept allegations as true on Rule 12(b)(6) review)
- Alexander v. Sandoval, 532 U.S. 275 (private causes of action under Title VI limited to intentional discrimination under §601)
- Michel v. NYP Holdings, Inc., 816 F.3d 686 (11th Cir.) (consideration of materials outside pleadings converts motion to summary judgment)
- Reno v. Bossier Parish School Bd., 520 U.S. 471 (impact may be probative of intent in discrimination inquiries)
- Horsley v. Feldt, 304 F.3d 1125 (11th Cir.) (conditions under which courts may consider attachments without converting a motion)
- Jones v. City of Columbus, 120 F.3d 248 (11th Cir.) (summary judgment inappropriate without adequate discovery)