602 F.Supp.3d 901
W.D. Va.2022Background
- Liberty University moved most residential classes online around March 23, 2020, and curtailed or closed many on-campus services (dining, recreation, convocations, campus activities) amid the COVID-19 pandemic.
- Students paid Spring 2020 semester fees (room and board, dining plans, activity/student center fees, parking decals, program/course fees, etc.).
- Liberty offered a limited $1,000 credit toward Fall 2020 (or to graduating students) to some students who did not return to campus; refunds were otherwise largely refused.
- Three students filed a putative class action asserting breach of contract, unjust enrichment, conversion, and violation of the Virginia Consumer Protection Act (VCPA); the case was at the Rule 12 stage.
- The court accepted the complaint’s factual allegations as true and denied Liberty’s Rule 12(e)/motion to strike; it allowed plaintiffs to proceed pseudonymously for now.
- Court holdings: breach of contract and unjust enrichment claims survive the motion to dismiss; conversion and VCPA claims dismissed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Breach of contract | Plaintiffs allege students paid fees for specific on-campus services/activities and Liberty materially altered or ceased those services yet retained fees. | Liberty says plaintiffs failed to plead reasonably certain contract terms or identify the specific student contracts/fees. | Plaintiffs plausibly pleaded contractual obligations and breach; breach claim survives. |
| Unjust enrichment | Alternative to contract: plaintiffs conferred benefit (fees) that Liberty retained without providing services; equitable relief required. | Liberty says express contracts cover the subject matter and thus bar unjust enrichment. | Unjust enrichment may be pled in the alternative where enforceability/applicability of contracts is disputed; claim survives. |
| Conversion | Plaintiffs claim Liberty wrongfully retained fees and deprived students of the right to services. | Liberty says conversion requires tangible property or an identifiable/segregated fund; rights to services or unsegregated money cannot be converted. | Dismissed: no possessory interest in services and no segregated/identifiable fund alleged. |
| VCPA (consumer protection) | Plaintiffs assert Liberty misrepresented campus status as "open" and used deceptive credit offer to justify keeping money, causing losses. | Liberty invokes the economic loss rule and contends plaintiffs failed to plead reliance and damages with particularity under Rule 9(b). | Dismissed: plaintiffs failed to plead actionable misrepresentation (reliance/damages) and the allegations primarily sound in contract/unjust enrichment. |
| Motion for more definite statement & anonymity | Plaintiffs seek to proceed under pseudonyms and contend disclosure risks retaliation; they provided declarations and limited-disclosure offers. | Liberty sought identities, specific fees paid, and contract terms to prepare defense. | Denied as to Rule 12(e)/strike; court permits pseudonymous filings provisionally with conditions to mitigate prejudice. |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (plausibility standard for Rule 12(b)(6))
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (legal conclusions not entitled to assumed truth on motion to dismiss)
- ACA Fin. Guar. Corp. v. City of Buena Vista, 917 F.3d 206 (4th Cir. 2019) (motion to dismiss tests claim sufficiency)
- CGI Fed., Inc. v. FCi Fed., Inc., 814 S.E.2d 183 (Va. 2018) (existence of express contract covering subject matter can preclude unjust enrichment)
- Shaffer v. George Washington Univ., 27 F.4th 754 (D.C. Cir. 2022) (students may plead unjust enrichment in the alternative where contract applicability/enforceability is unresolved)
- Mackey v. McDannald, 842 S.E.2d 379 (Va. 2020) (conversion requires wrongful dominion over tangible property or documented intangible merged with a document)
- PGI, Inc. v. Rathe Prods., Inc., 576 S.E.2d 438 (Va. 2003) (conversion can apply to withheld settlement proceeds when funds are identifiable)
- Grayson v. Westwood Buildings L.P., 859 S.E.2d 651 (Va. 2021) (measure of recovery for unjust enrichment and treatment of retained benefits)