Keller
Supreme Court Case No. 23S-PL-60
Indiana Supreme Court
November 21, 2023
Argued: April 11, 2023 | Interlocutory Appeal from the Marion Superior Court No. 49D01-2005-PL-15026 The Honorable Matthew C. Kincaid, Special Judge On Petition to Transfer from the Indiana Court of Appeals No. 22A-PL-337
Opinion by Justice Molter
Chief Justice Rush and Justices Massa, Slaughter, and Goff concur.
After Ball State University switched to providing only online instruction for the 2020 spring semester due to the COVID-19 pandemic, Plaintiff Keller Mellowitz sued the university for breach of contract and unjust enrichment. He seeks to recover tuition and fees for in-person instruction and services he alleges the university promised him. Critical here, he wants to litigate his claims as a class action, representing similarly situated students to recover their tuition and fees toо. But after he sued, the General Assembly passed, and Governor Holcomb signed, Public Law No. 166-2021, which, retroactive to March 1, 2020, prohibits class action lawsuits against postsecondary educational institutions for contract or unjust enrichment claims to recover losses stemming from COVID-19.
Based on that law, the trial court entered an order directing that while Mellowitz may pursue his claims against Ball State on his own behalf, he may not pursue a class action on behalf of other students. Through an interlocutory appeal of that order, the Court of Appeals reversed, agreeing with Mellowitz that the class action restriction was unconstitutional. We granted transfer, vacating the Court of Appeals opinion, and we now affirm the trial court’s order.
First, we conclude the law does not violate the constitutional separation of powers because its limited scope (applying only to a narrow category of claims arising from COVID-19 against a defined group of defendants during a narrow period of time) reflects that it predominantly furthers a public policy objective—reducing postsecondary educational institutions’ litigation exposure for their emergency responses to the pandemic—rather than a judicial administration objective. Second, the law does not unconstitutionally take Mellowitz’s property without just compensation because he has no property right to sue on behalf of others through a class action. And finally, the law does not unconstitutionally impair Mellowitz’s contract with Ball State because the General Assembly did not relieve Ball State of any of its contractual obligations to Mellowitz, which is why the trial court is permitting him to pursue his individual claims against the university.
Facts and Procedural History
In the spring of 2020, Mellowitz was a student at Ball State University who had paid tuition along with mandatory fees for student services, university technology, student recreation, student health, and student transportation. About midway through the semester, on March 6, Governor Holcomb issued Executive Order 20-02 declaring that the rapid COVID-19 spread was a public health emergency. The pandemic response at all levels of government quickly ratcheted up, and just a few weeks later, the Governor issued Executive Order 20-08, which, among many other things, ordered individuals to remain at home with limited exceptions and ordered non-essential businesses to close. Educational institutions like Ball State were permitted to continue educating students, but only through distance education. Ball State сomplied with the Governor’s order by canceling all in-person classes, closing campus facilities, and sending students home.
As the spring semester concluded, Mellowitz sued Ball State and its board of
Roughly a year later, on April 29, 2021, the Governor signed Public Law No. 166-2021, which was retroactive to March 1, 2020. One provision in that law, codified as
Mellowitz argued the trial court should deny the motion because Section 7 is unconstitutional either because it is a procedural law improperly usurping the judicial power, it takes his property without just compensation, or it impairs his contract with Ball State. The Attorney General intervened to defend the constitutionality of the statute, and after a hearing, the trial court granted Ball State’s motion, rejecting Mellowitz’s arguments. The court ordered Mellowitz to file an amended complaint removing any allegations related to other class members, and it denied class certification. Mellowitz then moved to certify the trial court’s ruling for interlocutory appeal, which the court granted.
Mellowitz appealed, and the Court of Appeals reversed the trial court’s order, agreeing with Mellowitz that Section 7 was a procedural statute conflicting with Trial Rule 23 and therefore a nullity. Mellowitz v. Ball State Univ., 196 N.E.3d 1256, 1257–58 (Ind. Ct. App. 2022). Ball State and the State then separately petitioned for transfer, which we granted, 205 N.E.3d 196 (Ind. 2023), thus vacating the Court of Appeals opinion,
Appellate Jurisdiction
Before turning to the issues on appeal, we begin by clarifying the basis for our appellate jurisdiction.
Given the uncertainty, Mellowitz prudently covered all the bases by filing a Notice of Appeal for an
appeal as of right from an order compelling the execution of a document (i.e., signing the amended complaint pursuant to
Because the trial court certified its order for interlocutory review, it makes no difference in this case, but the distinction between
Standard of Review
This appeal concerns only the interpretation and constitutionality of a statute, which are questions we consider de novo. State v. S.T., 82 N.E.3d 257, 259 (Ind. 2017) (constitutionality of statutes); State v. Int’l Bus. Machines Corp., 964 N.E.2d 206, 209 (Ind. 2012) (interpretation of statutes).
Discussion and Decision
Mellowitz raises three issues on appeal. First, he argues Section 7 runs afoul of the constitutional separation of powers because it limits class actions, which he contends is the prerogative of the judiciary, not the legislature. As we explain below, our recent decision in Church v. State, 189
N.E.3d 580, 590 (Ind. 2022), forecloses this argument because the statute predominantly furthers a public policy objective rather than a judicial administration objective.
Second, Mellowitz argues that retroactively applying the statute to his claim has the effect of taking his property without just compensation in violation of the state and federаl constitutions because the statute eliminates his cause of action. We conclude the trial court was correct to reject this argument because Mellowitz’s cause of action is for breach of contract and unjust enrichment, and the trial court is permitting him to continue pursuing those claims. Mellowitz has no property right to sue on behalf of others through a class action.
Third, Mellowitz argues the statute impairs his contract with Ball State, again in violation of the state and federal constitutions. This argument fairs no better because the General Assembly did not relieve Ball State of any contractual obligations to Mellowitz, and, again, the trial court is permitting Mellowitz to pursue his individual claims against the university.
Because the trial court correctly concluded the statute is constitutional and precludеs a class action in this case, we affirm.
I. Shielding postsecondary educational institutions from pandemic-related class action claims is within the General Assembly’s legislative authority.
Although Mellowitz can sue Ball State to recoup his own tuition and fees, the trial court concluded Section 7 bars him from maintaining a class action to recover tuition and fees on behalf of other
19.2 But he arguеs the trial court should have disregarded the statute because he contends it is unconstitutional. As he sees it, our Court promulgated Trial Rule 23 to govern which lawsuits may proceed as class actions, and Section 7 forbids even class actions that satisfy the rule’s requirements. Because promulgating rules governing procedure in trial courts is within our domain, Mellowitz argues the legislature unconstitutionally usurped our judicial power when it enacted Section 7.
We instead share the trial court’s view that the statute is constitutional. Without running afoul of our Indiana Constitution’s separation of powers, our judiciary may accommodate statutes altering judicial processes when the statutes predominantly further public policy objectives rather than judicial administration objectives, so long as the statutes do not undermine the truth-seeking function of litigation, and they do not otherwise interfere with the judiciary’s ability to fulfill its constitutional obligations. Recently, in Church, 189 N.E.3d at 590, we announced a new framework for this analysis of whether a statute reflects a valid legislative enactment or the usurpation of judicial power. And under that framework, we conclude Section 7 is a valid legislative enactment.
A. Our Constitution generally precludes the legislature from micromanaging court procedures.
The
State ex rel. Bicanic v. Lake Cir. Ct., 260 Ind. 73, 76, 292 N.E.2d 596, 598 (1973) (“The Supreme Court hаs the inherent power to create rules of procedure and [that] right has been recognized by the Indiana General Assembly.”).
Generally speaking, laws which establish rights and responsibilities are substantive (the legislative prerogative), and laws which “merely prescribe the manner in which such rights and responsibilities may be exercised and enforced” are procedural (the judicial prerogative). Church, 189 N.E.3d at 588 (quotations omitted). So under our separation of powers, if a “statute is a substantive law, then it supersedes our Trial Rules, but if such statute merely establishes a rule of procedure, then our Trial Rules would supersede the statute.” Id. (cleaned up).
Like most state legislatures, оur General Assembly responded to this concern with an anti-SLAPP law. To invoke the law, a defendant files a motion to dismiss explaining the lawsuit is based on constitutionally protected speech,
The General Assembly was addressing a substantive concern: a chill on citizens’ free speech rights. It was not trying to micromanage the courts. But because the source of the substantive harm is procedural—the abuse of court procedures—so too is the remedy of altering motion practice, shortening deadlines, resequencing discovery, and expediting a ruling. Gresk, 96 N.E.3d at 568 (“Anti–SLAPP statutes establish key procedural tools to safeguard First Amendment rights.” (emphasis added)). While we do not foreclose the possibility that in an appropriate case we could conclude aspects of the anti-SLAPP law encroach on the judicial power, the law illustrates that “except at the extremes, the terms substance and procedure precisely describe very little except a dichotomy, and what they mean in a particular context is largely determined by the purposes for which the dichotomy is drawn.” Church, 189 N.E.3d at 589 (cleaned up).
B. Our judiciary may accommodate statutes altering procedures if the statutes predominantly further public policy objectives and do not interfere with the orderly dispatch of judicial business.
Because substance and procedure sometimes coalesce, we have said that “the power to make rules of procedure in Indiаna is neither exclusively legislative nor judicial.” State ex rel. Blood v. Gibson Cir. Ct., 239 Ind. 394, 399, 157 N.E.2d 475, 477 (1959). And when the legislature enacts laws with procedural means to achieve substantive policy objectives beyond the orderly dispatch of judicial business, we
That means doing what we can to accommodate legislation that predominantly furthers public policy objectives, so long as the legislature is not usurping the judicial prerogative of managing the courts. For example, we do not yield to statutes that we conclude interfere with litigation’s truth-seeking function or with our ability to fulfill our constitutional obligations, including our obligations to ensure that all litigants are treated equally, that
Sometimes we cooperate with the General Assembly by expressly incorporating legislative accommodations into our rules. As examples, our Trial Rules defer to statutes specifying what form to use when initiating certain cases,4 how to maintain confidentiality in cases presenting safety concerns,5 how to serve parties,6 which cases courts should prioritize,7 and when courts should issue written findings and conclusions supporting a
judgment.8 Our Appellate Rules likewise defer to statutes еstablishing when to initiate an appeal in certain circumstances,9 which appeals to prioritize,10 and how to request relief outside of motion practice.11 Our cooperation
When we have not anticipated legislation in our own rules, we have sometimes still expressed our “assent” to a statute while resolving a case. Humbert v. Smith, 664 N.E.2d 356, 356 (Ind. 1996). In Humbert, we considered a paternity statute requiring courts to admit into evidence blood test results in circumstances where our
We have also evaluated statutes and concluded the procedural elements are means to public policy ends, so the statutes are valid legislative enactments. Just a few months before the Court of Appeals issued its decision in this case, our Court decided Church, which established a new framework for evaluating whether a statute is, overall, a substantive law or a procedural law for purposes of deciding whether the law is a valid legislative exercise. We explained this is not “a mechanical test that simply stops when it finds a process.” Church, 189 N.E.3d at 590. Instead, we evaluate the statute’s “predominant purpose.” Id. at 589. “If the statute predominantly furthers judicial administration objectives, the statute is procedural. But if the statute predominantly furthers public policy objectivеs involving matters other than the orderly dispatch of judicial business, it is substantive.” Id. at 590 (quotations omitted).
At issue in Church was a statute limiting depositions of child sex crime victims even if the depositions are otherwise permitted
necessary and in the interests of justice due to other extraordinary circumstances.
But even with these procedural elements, we concluded the statute “is substantive because it predominantly furthers public policy objectives.” Church, 189 N.E.3d at 590. We agreed with the State that the statute “creates substantive protections for child victims of sex crimes that guard against needless trauma inflicted through compelled discovery depositions by declining to grant defendants in this limited set of circumstances the substantive right to take discovery depositions.” Id. at 590–91 (cleaned up). And while depositions are an important litigation tool, we concluded that limiting depositions in these circumstances would not interfere with the judiciary’s truth-seeking function nor undermine the defendant’s constitutional rights. Id. at 597. Instead, we noted the
As with the anti-SLAPP law, procedure was the source of the harm, so the rеmedy was too, but the objective was substantive—the legislature was trying to protect children, not micromanage the orderly dispatch of litigation.
C. Section 7 does not encroach on the judicial power.
Likewise, we conclude Section 7 is a valid legislative enactment. To be sure, just as depositions are “procedural devices,” Hickman v. Taylor, 329 U.S. 495, 505 (1947), so too are class actions, State ex rel. Firestone v. Parke Cir. Ct., 621 N.E.2d 1113, 1114 (Ind. 1993) (discussing “the procedural device of class actions”). But like in Church, everything about Section 7 and the context of its enactment conveys the General Assembly was tweaking a procedural rule to predominantly further a public policy objective—which here, both sides agree is to limit the university’s litigation exposure for pandemic-related contract claims during a global crisis.
Section 7 does that in two related ways. The first is by limiting any potential payouts to only students who sue the university; there is no recоvery for members of a putative class who do not assert a claim.
The second is by removing the potential for excessive settlement pressure. Sometimes class certification “can coerce the defendant into settling on highly disadvantageous terms, regardless of the merits of the suit,” because litigating on a class-wide basis greatly increases “the magnitude of the potential damages.” Creative Montessori Learning Ctrs. v. Ashford Gear LLC, 662 F.3d 913, 915 (7th Cir. 2011) (quotations omitted). To illustrate this magnitude, the University of Notre Dame’s amicus brief reports that a federal putative class action against Notre Dame asserting similar pandemic-related claims converts an individual thirty-thousand dollar claim into a class claim for over one hundred million dollars. Another amicus brief reports that members of the Independent Colleges of Indiana face class claims exceeding their total endowments.
institutions)14 for a narrow period of time (state of disaster emergency declared between February 29, 2020 and April 1, 2022).15
As in Church, Section 7 reflects “a careful legislative balancing of policy considerations.” 189 N.E.3d at 591 (quotations omitted). Mellowitz argues the balance is unfair because Ball State received substantial federal pandemic relief funds, and he contends that precluding class actions has the practical effect of shifting the COVID-19 financial burden onto students who did not receive that sort of relief in an era when students already shoulder substantial student-loan debt. But those are policy arguments that must be resolved by our General Assembly. “In determining whether legislation is violative of constitutional restraints the courts will confine themselves to the question, not of legislative policy, but of legislative power.” Dep’t of Fin. Insts. v. Holt, 231 Ind. 293, 301–02, 108 N.E.2d 629, 634 (1952).
Mellowitz further emphasizes that when explaining the test we announced in Church, we cited cases that in turn cited a Michigan Law Review Article, and that article says that whethеr to permit a class action is a matter of “judicial procedure” which court rules should cover. Charles W. Joiner & Oscar J. Miller, Rules of Practice and Procedure: A Study of Judicial Rule Making, 55 Mich. L. Rev. 623, 648 (1957). That is true, as far as it goes. Class actions are quintessentially procedural devices, just as depositions, bifurcated discovery, motions to dismiss, and summary judgment motions are procedural devices. So the analysis here might be different if the legislature were banning class actions altogether, see, e.g., Budden v. Bd. of Sch. Comm’rs of City of Indianapolis, 698 N.E.2d 1157, 1162 (Ind. 1998) (acknowledging that sometimes class actions are “essential to the assertion of any claim at all”), just as the analysis in Church may have been different if the legislature were banning depositions altogether, and the analysis in the anti-SLAPP context might be different if the legislature
were superseding
But in this context too, the legislature adopted a much narrower approach, and the Church test presupposes we are confronting a statute that arguably entails both substantive and procedural components. We are then required to assess whether the predominant purpose is substantive or procedural, which is consistent with the explanation in the Michigan Law Review article that “there are areas in which it is not clear whether the legislature or the judiciary should establish the necessary rules,” and “theory must give way to reality.” Joiner & Miller, supra, at 629. Here, the reality is that the legislature’s predominant purpose was substantive.
Further illustrating the point, this is not the first time the General Assembly has altered class action procedures to address substantive concerns, and the class action prohibition here is the inverse of the
Responding to these public policy concerns, the “statute imposes a number of procedural rules governing public lawsuits, including provisions that are designed to consolidate all litigation in one forum and the requirement that a bond be posted.” Bonney, 849 N.E.2d at 479 (emphasis added). To save public projects from needless delay and death by a thousand litigation cuts, the statute dirеcts that a public lawsuit “is a class suit (whether captioned as such or not).”
nor affords them new remedies.” Dible v. City of Lafayette, 713 N.E.2d 269, 275 (Ind. 1999).
But just like the anti-SLAPP law and the child deposition statute in Church, even though the
Because Section 7 predominantly furthers public policy objectives rather than judicial administrative objectives, and because it does not undermine the truth-seeking function of litigation or the courts’ constitutional obligations, the trial court was correct to conclude it is a valid legislative enactment.
II. Section 7 is not an unconstitutional taking.
Mellowitz next argues that retroactively16
rejected this argument, explaining that “[a] class action is not a vested property right capable of being taken,” App. at 20, and we agree.
Mellowitz conflates the class action device with its underlying cause of action, but they are not the same. A “cause of action” is “[a] group of operative facts giving rise to one or more bases for suing,” “a factual situation that entitles one person to obtain a remedy in court from another person,” or “[a] legal theory of a lawsuit.” Cause of Action, Black’s Law Dictionary (11th ed. 2019). A “class action” is “[a] lawsuit in which the court authorizes a single person or a small group of people to represent the interests of a larger group.” Class Action, Black’s Law Dictionary (11th ed. 2019). In this case, Mellowitz has a cause of action for his сontract and unjust enrichment claims, but the class action is just one potential means of pursuing his cause of action. A class action is not itself a cause of action, which is why if there is no underlying individual cause of action, there is no class action. See Bd. of Rev. of Assessments for Lake Cnty. v. Kranz, 224 Ind. 358, 360, 66 N.E.2d 896, 897 (1946) (“It is filed as a class action, but if the named plaintiffs, hereinafter called appellees, have no cause of action, neither has the class of which they are a part and for whom they sue.”)
Even so, Mellowitz also argues that precluding the class action at least has the effect of eliminating his underlying cause of action, just as shortening a statute of limitations might. He reasons that “Section 7 removes the only effective remedy for redress for Mellowitz and his fellow students” because the cost and difficulty of pursuing individual claims mаy make them uneconomical. Resp. to Trans. at 21. But this argument fails on the facts and law.
As to the facts, there is no support in the record for the assertion that the only way it is worthwhile for students to pursue pandemic-related claims to recover tuition and fees is through a class action. Mellowitz does not tell us the amount of his claim, but Notre Dame reports that a similar claim by one of its students is for roughly thirty thousand dollars. Even setting aside the difference in public and private school tuition, our state courts routinely handle individual claims for amounts in this ballpark. And we have no way of knowing how many students have sued and why others have not—e.g., whether other students have foregone lawsuits because individual suits are not worth it, or instead because the distance
learning and other services their schools provided led them to conclude they do not have a valid claim. We cannot simply
As to the law, Mellowitz presents a novel takings argument, pointing to Guthrie v. Wilson, 240 Ind. 188, 162 N.E.2d 79 (1959), as his best case from our Court in support. That was a case in which a minor’s medical malpractice cause of action accrued before the enactment of a statute shortening the statute of limitations, and our Court interpreted the statute to apply prospectively, rather than retroactively, because “any legislative attempt to take away immediately and completely all legal means for the enforcement of [a vested] right . . . would amount to a subversion of the right itself.” Id. at 82. But here the General Assembly has not “take[n] away immediately and completely all legal means” for Mellowitz to pursue his contract claims. Id. Just the opposite, the General Assembly preserved Mellowitz’s right to sue Ball State on his own behalf, which the trial court is permitting him to do.
Because Mellowitz has no property right to maintain a class action, his takings claim fails.
III. The statute does not unconstitutionally impair Ball State’s contract obligations to Mellowitz.
Finally, Mellowitz argues that Section 7 violates the Contract Clauses in the state and federal constitutions.
rights and obligations which the parties agreed to in their contract.” Evansville-Vanderburgh Sch. Corp. v. Moll, 264 Ind. 356, 370, 344 N.E.2d 831, 841 (1976).
A plaintiff can only prevail on a Contract Clause claim if the law operates as “a substantial impairment of a contractual relationship,” with “the severity of [the] impairment . . . measured by factors that reflect the high value the Framers placed on the protection of private contracts.” Clem v. Christole, Inc., 582 N.E.2d 780, 783–84 (Ind. 1991) (quotations omitted). The Framers understood that “[c]ontracts enable individuals to order their personal and business affairs according to their particular needs and interests.” Id. at 784 (quotations omitted). And “[o]ncе arranged, those rights and obligations are binding under the law, and the parties are entitled to rely on them.” Id. (quotations omitted).17
The trial court rejected Mellowitz’s Contract Clause argument because his “individual claim for breach of implied contract (alternatively unjust enrichment) remains and has not been impaired by the statute.” App. at 20. Again, we agree. Section 7 does
Section 7 only prohibits Mellowitz from seeking to enforce other students’ alleged contracts, but he does not point to any agreement he had with Ball State that guaranteed he could enforce other students’ rights, and it is not enough to simply point out that Trial Rule 23 was part of the background law when Mellowitz and the university entered a contraсt. Bryson v. McCrary, 102 Ind. 1, 10, 1 N.E. 55, 60 (1885) (explaining “there are no vested rights in the law generally”). Mellowitz argues that precluding him from representing a class deprives him of his only effective remedy to enforce his own individual rights under his alleged contract with the university. But we must reject that argument for the same reason we
rejected it in the takings context—we cannot accept the invitation to simply assume Mellowitz is without an effective contract remedy because Section 7 is presumed constitutional unless Mellowitz demonstrates otherwise, and he has not demonstrated that his suit against Ball State to recover his own tuition and fees is an inadequate means for enforcing his alleged contract rights.
Conclusion
For these reasons, we affirm the trial court’s decision.
Rush, C.J., and Massa, Slaughter, and Goff, JJ., concur.
ATTORNEYS FOR APPELLANT
Eric S. Pavlack
Colin E. Flora
Pavlack Law, LLC
Indianapolis, Indiana
ATTORNEYS FOR APPELLEES
Brian J. Paul
Jane Dall Wilson
Paul A. Wolfla
Jason M. Rauch
Faegre Drinker Biddle & Reath LLP
Indianapolis, Indiana
ATTORNEYS FOR APPELLEE-INTERVENOR
Theodore E. Rokita
Attorney General of Indiana
Benjamin M. L. Jones
Assistant Section Chief, Civil Appeals
James A. Barta
Deputy Solicitor General
Abigail R. Recker
Deputy Attorney General
Indianapolis, Indiana
ATTORNEYS FOR AMICI CURIAE INDIANA UNIVERSITY,
PURDUE UNIVERSITY, UNIVERSITY OF NOTRE DAME DU LAC,
AND INDEPENDENT COLLEGES OF INDIANA
Brian E. Casey
Sarah E. Brown
Barnes & Thornburg LLP
South Bend, Indiana
ATTORNEY FOR AMICUS CURIAE INDEPENDENT COLLEGES OF
INDIANA
Jodie Ferise
Independent Colleges of Indiana
Indianapolis, Indiana
ATTORNEYS FOR AMICUS CURIAE INDIANA LEGAL
FOUNDATION
Maggie L. Smith
Darren A. Craig
Frost Brown Todd LLC
Indianapolis, Indiana