McCants v. Nat'l Collegiate Athletic Ass'n

201 F.Supp.3d 732

Rashanda MCCANTS and Devon Ramsay, individually and on behalf of all others similarly situated, Plaintiffs,

v.The NATIONAL COLLEGIATE ATHLETIC ASSOCIATION and the University of North Carolina at Chapel Hill, Defendants.

1:15-cv-176

United States District Court, M.D. North Carolina.

Signed August 12, 2016

Michael D. Hausfeld, Sathya S. Gosselin, Hausfeld LLP, Washington, DC, Robert Flynn Orr, Campbell Shatley, PLLC, Asheville, NC, Jeannine M. Kenney, Hausfeld LLP, Philadelphia, PA, for Plaintiffs.

James T. Williams, Jr., Jennifer K. Van Zant, Justin Nathaniel Outling, Brooks Pierce McLendon Humphrey & Leonard, LLP, Greensboro, NC, Stephen D. Brody, O'Melveny & Myers, LLP, Washington, DC, Stephanie A. Brennan, N.C. Department of Justice, Raleigh, NC, Lisa M. Gilford, Skadden Arps Slate Meagher & Flom, LLP, Los Angeles, CA, for Defendants.

MEMORANDUM OPINION AND ORDER

LORETTA C. BIGGS, District Judge

Plaintiffs, Rashanda McCants ("McCants") and Devon Ramsay ("Ramsay"), brought this putative class action in state court against the National Collegiate Athletic Association (the "NCAA") and the University of North Carolina at Chapel Hill ("UNC-Chapel Hill"), alleging various state claims against each Defendant. The NCAA removed the case to this Court. Following removal, UNC-Chapel Hill and the NCAA moved to dismiss the claims against them for failure to state a claim under Rule 12(b)(6) of the Federal Rules of Civil Procedure, among other grounds. (ECF Nos. 19, 20.) The Court heard oral argument in this matter, and for the reasons that follow, the Court grants the NCAA's motion to dismiss.¹

Plaintiffs assert claims of negligence and breach of fiduciary duty against the NCAA. Specifically, Plaintiffs allege in their Complaint that from 1989 to 2011, UNC-Chapel Hill enrolled a number of students in independent studies classes in the African and Afro-American Studies Department ("AFAM"), which involved no instruction, no faculty supervision, and required no class attendance. (ECF No. 5 ¶¶ 4, 145, 147.) These classes were managed by an AFAM administrator who registered students for the class, assigned paper topics, and administered grades. (Id. ¶¶ 149–50.) Thousands of students enrolled in these classes, a majority of whom were part of the general student population, and student-athletes accounted for a disproportionately high percentage of enrollments. (Id. ¶¶ 145, 161.) UNC-Chapel Hill officials steered student-athletes to these "academically unsound classes"² to maintain their eligibility to play sports. (Id. ¶¶ 154, 163.)

McCants and Ramsay were among the students who enrolled in these AFAM classes. McCants attended UNC-Chapel Hill from 2005 to 2009 on an athletic scholarship and played on the women's basketball team. (Id. ¶ 9.) Ramsay was also on an athletic scholarship, attending UNC-Chapel Hill from 2007 to 2012, where he played on the football team. (Id. ¶ 12.) While at UNC-Chapel Hill, McCants enrolled in two of the AFAM classes, one in the spring of 2006 and the other in the spring of 2008. (Id. ¶ 10.) Ramsay took one of these classes in the fall of 2007. (Id. ¶ 13.) McCants graduated from UNC-Chapel Hill in 2009 with a degree in Communications and Media Productions, and Ramsay graduated from UNC-Chapel Hill in 2012 with a degree in Public Policy. (Id. ¶¶ 9, 12.)

The NCAA moves to dismiss Plaintiffs' claims of negligence and breach of fiduciary duty for failure to state a claim of relief pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure.³ (ECF No. 21 at 1.)

I. LEGAL STANDARD

The purpose of a motion made under Rule 12(b)(6) of the Federal Rules of Civil Procedure"is to test the sufficiency of a complaint." Edwards v. City of Goldsboro , 178 F.3d 231, 243 (4th Cir.1999). A complaint may fail to state a claim upon which relief can be granted in two ways: first, by failing to state a valid legal cause of action, i.e. , a cognizable claim, see Holloway v. Pagan River Dockside Seafood, Inc. , 669 F.3d 448, 452 (4th Cir.2012) ; or second, by failing to allege sufficient facts to support a legal cause of action, see Painter's Mill Grille, LLC v. Brown , 716 F.3d 342, 350 (4th Cir.2013). "To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ " Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). Although a plaintiff need only plead a short and plain statement of the claim establishing that he or she is entitled to relief, this standard "demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation." Iqbal , 556 U.S. at 677–78, 129 S.Ct. 1937 (quoting Twombly , 550 U.S. at 555, 127 S.Ct. 1955 ). Nor is the court required to accept "labels and conclusions" or "a formulaic recitation of the elements of a cause of action." Twombly , 550 U.S. at 555, 127 S.Ct. 1955. The factual allegations "must be enough to raise a right to relief above the speculative level." Id. In other words, a claim is plausible when the complaint alleges facts that allow the court "to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal , 556 U.S. at 678, 129 S.Ct. 1937.

Further, where, as in this case, subject matter jurisdiction is based on diversity of citizenship, the court must apply the substantive law of the forum state. See Private Mortg. Inv. Servs., Inc. v. Hotel & Club Assocs., Inc. , 296 F.3d 308, 312 (4th Cir.2002). In doing so, the court has an obligation to apply the law as determined by the state's highest court, i.e. , the North Carolina Supreme Court. See id. When the state's highest court has not addressed directly or indirectly the issue before the federal court, the state's appellate courts' decisions, though not binding, constitute the best indicia of what the state law is unless the court is convinced by other persuasive data that the state's highest court would rule otherwise. Id. The court must apply state laws as they currently exist and cannot expand them. Burris Chem., Inc. v. USX Corp. , 10 F.3d 243, 247 (4th Cir.1993) ; Myers v. Sessoms & Rogers, P.A. , 781 F.Supp.2d 264, 269 (E.D.N.C.2011) ("Federal courts applying state laws should not create or expand a state's common law or public policy.").

II. NEGLIGENCE

Plaintiffs, in support of their negligence claim against the NCAA, assert that "[t]he NCAA has voluntarily assumed a duty to protect the education and educational opportunities of student-athletes (including the provision of academically sound courses) participating in NCAA-sponsored athletic programs at NCAA member institutions." (ECF No. 5 ¶ 235.) Specifically, they claim "the NCAA had a duty of reasonable care to Plaintiffs ... to institute, supervise, regulate, monitor, and provide adequate mechanisms to safeguard the education and educational opportunities of student-athletes at NCAA member schools—and to detect and prevent the provision of academically unsound courses to student-athletes." (Id. ¶ 236; see id. ¶ 48.) The NCAA denies that it has assumed such a duty and argues that Plaintiffs' Complaint fails to allege facts which demonstrate a plausible claim for relief against the NCAA. (ECF No. 21 at 1, 11.) The Court agrees with the NCAA.

"Actionable negligence presupposes the existence of a legal relationship between parties by which the injured party is owed a duty by the other, and such duty must be imposed by law." Pinnix v. Toomey , 242 N.C. 358, 87 S.E.2d 893, 897 (1955). A legal duty is an obligation that requires an individual "to conform to a certain standard of conduct, for the protection of others against unreasonable risks." Oberlin Capital, L.P. v. Slavin , 147 N.C.App. 52, 554 S.E.2d 840, 846 (2001) (quoting Davis v. N.C. Dep't of Human Res. , 121 N.C.App. 105, 465 S.E.2d 2, 6 (1995) ). "In the absence of a legal duty owed to the plaintiff by [the defendant], [the defendant] cannot be liable for negligence." Stein v. Asheville City Bd. of Educ. , 360 N.C. 321, 626 S.E.2d 263, 267 (2006) (alterations in original) (quoting Cassell v. Collins , 344 N.C. 160, 472 S.E.2d 770, 772 (1996), abrogated on other grounds by Nelson v. Freeland , 349 N.C. 615,507 S.E.2d 882 (1998) ). Whether a legal duty exists is a matter of law for the court to decide.⁴ Steele v. City of Durham , 782 S.E.2d 331, 334 (N.C.Ct.App.2016).

North Carolina courts have consistently recognized a common law rule that "imposes on every person engaged in the prosecution of any undertaking [a duty] to use due care, or to so govern his actions as not to endanger the person or property of others." Pinnix , 87 S.E.2d at 897 ; see Toone v. Adams , 262 N.C. 403, 137 S.E.2d 132, 136 (1964). The North Carolina Supreme Court has explained that a duty frequently arises out of a contractual relationship, "the theory being that accompanying every contract is a common-law duty to perform with ordinary care the thing agreed to be done." Pinnix , 87 S.E.2d at 898. The duty sued on in a negligence action, however, "is not the contractual promise but the duty to use reasonable care in affirmatively performing that promise." Oates v. Jag, Inc. , 314 N.C. 276, 333 S.E.2d 222, 225 (1985) (quoting Navajo Circle, Inc. v. Dev. Concepts Corp. , 373 So.2d 689, 691 (Fla.Dist.Ct.App.1979) ).

This common law duty may also arise when a person, although under no obligation to do so, "voluntarily undertakes to provide needed services" to another.⁵ Lampkin v. Hous. Mgmt. Res., Inc. , 220 N.C.App. 457, 725 S.E.2d 432, 438, rev. denied , 366 N.C. 242,731 S.E.2d 147 (2012). Such an undertaking has been identified by the North Carolina courts as the "voluntary undertaking" doctrine or the "assumption of duty" theory.⁶ Id. Under this doctrine, there must be "some showing of an act or acts by the defendant indicating that the defendant actually engaged in some...