Jones v. Adm'rs of the Tulane Educ. Fund

51 F.4th 101

Sylvia JONES, on behalf of herself and all others similarly situated, Plaintiff—Appellant,

v.ADMINISTRATORS OF the TULANE EDUCATIONAL FUND, doing business as Tulane University of Louisiana, also known as Tulane University, Defendant—Appellee,John Ellis, on behalf of himself and all other individuals similarly situated, Plaintiff—Appellant,v.Tulane University, Defendant—Appellee.

No. 21-30681

United States Court of Appeals, Fifth Circuit.

FILED October 11, 2022

Michael Tompkins, Leeds Brown Law, P.C., Carle Place, NY, Yvette Golan, Golan Firm, P.L.L.C., Washington, DC, for Plaintiffs-Appellants.

Michael Scott Barnard, Jessica Mannon, Brennan Holden Meier, Heather L. Peckham, Elizabeth Marie Dulong Scott, Akin Gump Strauss Hauer & Feld, L.L.P., Dallas, TX, James M. Garner, Esq., Christopher T. Chocheles, Martha Y. Curtis, Esq., Sher Garner Cahill Richter Klein & Hilbert, L.L.C., New Orleans, LA, for Defendant-Appellee.

Julie Durel Livaudais, Esq., Douglas L. Grundmeyer, Esq., Rosalie Haug, Chaffe McCall, L.L.P., New Orleans, LA, Sharonda R. Williams, Esq., Fishman Haygood, L.L.P., New Orleans, LA, for Amicus Curiae Loyola University New Orleans.

Before Smith, Clement, and Haynes, Circuit Judges.

Edith Brown Clement, Circuit Judge:

Two former students of Tulane University, on behalf of a putative class of current and former students, sued the University for failing to provide a partial refund of tuition and fees after Tulane switched from in-person instruction with access to on-campus services to online, off-campus instruction during the COVID-19 pandemic. The district court agreed with Tulane that the students' complaint should be dismissed for failure to state a claim. For the following reasons, we REVERSE and REMAND for further proceedings consistent with this opinion.

I. BACKGROUND

A. FACTUAL ALLEGATIONS

We recite the well-pleaded facts as alleged in the Consolidated Complaint, viewing them in the light most favorable to the plaintiffs.¹

Tulane University is a private university in New Orleans, founded over 170 years ago. In its advertising materials, the University touted the benefits of living on and studying at its campus location: "[W]hen you choose to study here, you're not just choosing a campus. You're choosing a place to live and work.... That means your education is inextricably tied to the world around you." Among its advertised facilities and services were Tulane's "on-campus gym," a state-of-the-art recreational facility; the physical facilities that are "a focal point for campus life"; the "theatrical performances, concerts and speakers on campus throughout the year"; the "on-campus clinic, pharmacy and counseling staff"; the "many ways to get involved on campus"; and the campus's "convenient[ ] locat[ion] across the street from" Audubon Park. The University advertised an in-person, on-campus life associated with its offer of educational instruction.

In the 2019–2020 academic year, Tulane offered instruction to over 14,000 students across ten constituent schools. Historically, the University has provided in-person, on-campus services for most programs and online instruction for some programs. Under Tulane's credit hour policy, students enrolled in in-person courses receive "one academic hour (50 min) of contact time each week [per credit hour] ... for the full academic semester." Students enrolled in online courses were not promised "contact time" but, rather, a commensurate "amount of content and/or student effort." At enrollment each semester, including the Spring 2020 semester, students had access to Tulane's course catalog, which specified instruction in each class at certain times and at specific campus locations.

According to the Consolidated Complaint, Tulane typically charged substantially less for its online course offerings than for in-person tuition. For example, for the Spring 2020 semester, residential undergraduate students paid $2,199 per credit hour for in-person classes at the School of Professional Advancement. Online students paid $476 per the equivalent credit hour.

The University also charged certain fees each semester, including:

• An academic service fee of $1,400 for "access to the University's computer services, data, voice, and internet hook-ups, ... tutoring and counseling services, on-line library, inter loan services and other support services, such as, the language and science laboratories[.]"

• A student activity fee of $120 for "students to participate in or attend supported activities ... and admission to many events, movies, and lectures."

• A campus health fee of $320 for "access to primary care, preventive care, [ ] medical referrals at the Health Center[,] ... counseling services, mental health care coordination, health education programs, drug/alcohol counseling, and Tulane Emergency Medical Services."

• A student recreation center fee of $180 for "membership to the Reily Recreation Center."

• And "supplemental fees per course," such as "laboratory" fees, charged "to cover the costs of materials and supplies consumed."

On March 11, 2020, Tulane announced that "[a]ll classes will be conducted online beginning Monday, March 23 through the end of the semester." Some classes moved into a video format. Other classes converted to self-study, some with recorded videos and some without. On or about March 13, the University stopped providing access to all on-campus services and facilities and told students to move out of their residential halls. Tulane did not refund any amount of tuition or fees.²

Plaintiff John Ellis was an undergraduate student during the Spring 2020 semester. He paid approximately $26,380 for residential tuition and more than $1,900 in fees. Plaintiff Sylvia Jones was a graduate student in the A.B. Freeman School of Business during the Spring, Summer, and Fall 2020 semesters. In the Spring 2020 semester, she paid $26,380 for residential tuition and $1,400 in fees. Both Ellis and Jones alleged that they have not received a refund of any tuition or fees.

B. DISTRICT COURT PROCEEDINGS

In September 2020, Plaintiffs Ellis and Jones each sued the Administrators of the Tulane Educational Fund, seeking partial refunds for tuition and fees. In November, Tulane moved to dismiss each suit, arguing that the plaintiffs had signed an express, fully-integrated contract that foreclosed their claims. Before the district court ruled on the motions, the suits were consolidated. In December, Plaintiffs Ellis and Jones, on behalf of a putative class of current and former students³ (collectively, the Students), filed the Consolidated Complaint. The Consolidated Complaint alleged that Tulane breached its contract with the Students by retaining the full amount of pre-paid tuition and fees for the Spring 2020 semester⁴ but failing to provide the previously bargained for in-person, on-campus services. The Students also alleged unjust enrichment and conversion claims. They seek damages.

Tulane moved to dismiss the Consolidated Complaint under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim, urging again that the Students had signed an express, fully-integrated contract that governed the University's commitment to provide refunds. Tulane also argued that the Students' breach-of-contract claim was barred as a claim of educational malpractice; that the claim of unjust enrichment failed for lack of an allegation that Tulane's retention of the pre-paid tuition and fee money was unjustified; and that the claim of conversion failed because the Students ratified the educational instruction they received. The Students opposed and sought leave to amend.

The district court denied the motion to amend and dismissed all claims with prejudice. Assuming without deciding that the Students had plausibly alleged a promise of in-person instruction and on-campus services, the district court found that the breach-of-contract claim was barred under Louisiana law as a claim of educational malpractice. The court dismissed the claims of unjust enrichment and conversion for failure to plausibly allege that Tulane's decision to transition to online instruction was unjust or tortious. The Students timely appealed the order.⁵

II. STANDARD OF REVIEW

We review a grant of dismissal under Rule 12(b)(6) for failure to state a claim de novo. Petrobras Am. , 9 F.4th at 253. A complaint must contain factual matter sufficient to "state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). A facially plausible claim "allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). This does not amount to a specific probability, but requires "more than a sheer possibility that a defendant has acted unlawfully." Id. While a complaint need not contain "detailed factual allegations," alleging facts " ‘merely consistent with’ a defendant's liability ... ‘stops short of the line between possibility and plausibility[.]’ " Id. (quoting Twombly , 550 U.S. at 557, 127 S.Ct. 1955 ). We construe the complaint in the light most favorable to the plaintiffs. Petrobras Am. , 9 F.4th at 253.

III. DISCUSSION

A. BREACH-OF-CONTRACT CLAIM

The thesis of the Students' breach-of-contract claim is that Tulane breached material terms of the parties' contract for educational services by failing to provide in-person instruction and on-campus facilities but retaining the pre-paid tuition and fees.

First , we hold that the claim is not barred as a claim of educational malpractice because the Students do not challenge the quality of the education received but the product received. Second , we reject Tulane's argument that the breach-of-contract claim is foreclosed by an express agreement between the parties, because the agreement at issue plausibly does not govern refunds in this circumstance. And third , we conclude that the...