Mellowitz v. Ball State Univ.

196 N.E.3d 1256

Keller J. MELLOWITZ, on behalf of himself and all others similarly situated, Appellant-Plaintiff,

v. BALL STATE UNIVERSITY and Board of Trustees of Ball State University, Appellees-Defendants,andState of Indiana, Appellee-Intervenor

Court of Appeals Case No. 22A-PL-337

Court of Appeals of Indiana.

Filed October 5, 2022

Attorneys for Appellant: Eric S. Pavlack, Colin E. Flora, Pavlack Law, LLC, Indianapolis, Indiana

Attorneys for Appellees: Jane Dall Wilson, Paul A. Wolfla, Jason M. Rauch, Faegre Drinker Biddle & Reath LLP, Indianapolis, Indiana

Attorneys for Appellee-Intervenor State of Indiana: Theodore E. Rokita, Attorney General, Abigail R. Recker, Deputy Attorney General, Indianapolis, Indiana

Attorney for Amicus Curiae Independent Colleges of Indiana: Jodie Ferise, Indianapolis, Indiana

Attorneys for Amicus Curiae University of Notre Dame du Lac: Brian E. Casey, Sarah E. Brown, Barnes & Thornburg LLP, South Bend, Indiana

Crone, Judge.

Case Summary

[1] Ball State University student Keller J. Mellowitz filed a putative class-action complaint against Ball State and its board of trustees, asserting claims for breach of contract and unjust enrichment based on Ball State's retention of tuition and fees after it cancelled in-person classes and closed campus facilities as a result of the COVID-19 pandemic. After the complaint was filed, the Indiana General Assembly enacted Public Law 166-2021, part of which was later codified as Indiana Code Chapter 34-12-5. Indiana Code Section 34-12-5-7 (Section 7) bars class actions against postsecondary educational institutions for claims of breach of contract and unjust enrichment arising from COVID-19. Ball State filed a motion for relief based on Section 7, and the trial court ordered Mellowitz to file an amended complaint eliminating his class allegations. Mellowitz now appeals, arguing that Section 7 is a procedural statute that impermissibly conflicts with Indiana Trial Rule 23, which governs class-action procedures, and thus Section 7 is a nullity. We agree, and therefore we reverse and remand for further proceedings.

Facts and Procedural History

[2] According to Mellowitz's complaint, he was enrolled at Ball State for the spring 2020 academic semester. To enroll, he was required to pay "numerous fees to Ball State[,]" including "in-person tuition, student services fees, university technology fees, student recreation fees, student health fees, and student transportation fees." Appellant's App. Vol. 2 at 24. In March 2020, Ball State sent students home, cancelled in-person classes, and closed campus facilities as a result of COVID-19. On May 1, 2020, Mellowitz filed a putative class-action complaint against Ball State and its board of trustees "on behalf of himself and all others similarly situated[,]" asserting claims of breach of contract and unjust enrichment and seeking "recovery of tuition and fees" for "services that were terminated or otherwise not provided prior to the conclusion" of the semester. Id. at 22, 23.

[3] In April 2021, Governor Eric Holcomb signed into law House Enrolled Act 1002, which became Public Law 166-2021. Section 13 of the law was codified as Indiana Code Chapter 34-12-5 and was made effective retroactive to March 1, 2020. Indiana Code Section 34-12-5-7 provides that "[a] claimant may not bring, and a court may not certify, a class action lawsuit against a covered entity for loss or damages arising from COVID-19 in a contract, implied contract, quasi contract, or unjust enrichment claim." For purposes of Chapter 34-12-5, a "covered entity" means "a governmental entity" and "an approved postsecondary educational institution[.]" Ind. Code § 34-12-5-5. A "governmental entity" means, among other things, a "state educational institution" such as Ball State. Ind. Code §§ 34-12-5-5(1), 34-6-2-110(7), 21-7-13-32(b). An "approved postsecondary educational institution" may be either public (such as Ball State) or private (such as amicus University of Notre Dame du Lac). Ind. Code §§ 34-12-5-5(2), 21-7-13-6.¹ And "arising from COVID" means, among other things, "caused by or resulting from ... the implementation of policies and procedures to ... prevent or minimize the spread of COVID-19[.]" Ind. Code §§ 34-12-5-3, 34-6-2-10.4(c)(1)(A).²

[4] Relying on Section 7, Ball State filed a motion for relief pursuant to Indiana Trial Rule 23(D)(4), which provides that in the conduct of an action brought as a class action, the court may "requir[e] that the pleadings be amended to eliminate therefrom allegations as to representation of absent persons, and that the action proceed accordingly[.]" Mellowitz filed a response asserting that Section 7 is a procedural statute that impermissibly conflicts with Trial Rule 23, which renders it a nullity. In the alternative, Mellowitz asserted that if Section 7 is substantive rather than procedural, it results in an unconstitutional taking of property without just compensation and an unconstitutional impairment of contract rights. Because Mellowitz questioned the constitutionality of Section 7, the attorney general was permitted to intervene on the State's behalf pursuant to Indiana Code Section 34-33.1-1-1(a).

[5] In February 2022, after a hearing, the trial court issued an order granting Ball State's motion, finding that Section 7 does not conflict with Trial Rule 23 and does not result in an unconstitutional taking or an unconstitutional impairment of contract rights. The court ordered Mellowitz to file "an amended complaint excising allegations as to [his] representation of absent persons" within thirty days. Appealed Order at 3. This interlocutory appeal ensued.

Discussion and Decision

[6] Mellowitz contends that the trial court erred in granting Ball State's motion for relief because Section 7 is a procedural statute that impermissibly conflicts with Trial Rule 23. "[W]hen a trial court's ruling involves a pure question of law, such as the interpretation or constitutionality of a statute, our standard of review is de novo." Church v. State , 189 N.E.3d 580, 585 (Ind. 2022).

[7] "[T]he power to make rules of procedure in Indiana 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). "Before the Indiana Rules of Trial Procedure, including Rule 23, came into force in 1970, rules of pleading and procedure in this State were largely governed by statute." Budden v. Bd. of Sch. Comm'rs of City of Indpls. , 698 N.E.2d 1157, 1162 n.8 (Ind. 1998). But, as Mellowitz correctly observes, the power to make procedural rules "is not a power equally shared." Appellant's Br. at 27. "It is a fundamental rule of Indiana law that when a procedural statute conflicts with a procedural rule adopted by the supreme court, the latter shall take precedence." Key v. State , 48 N.E.3d 333, 339 (Ind. Ct. App. 2015) (citing Bowyer v. Ind. Dep't of Nat. Res. , 798 N.E.2d 912, 916 (Ind. Ct. App. 2003) ). "Thus, when a procedural statute conflicts with the Indiana Rules of Trial Procedure, the trial rules govern, and phrases in statutes that are contrary to the trial rules are considered a nullity." Id. "To be ‘in conflict,’ it is not necessary that the rule and the statute be in direct opposition." Id. (quoting Bowyer , 798 N.E.2d at 917 ). "The rule and statute need only be incompatible to the extent both could not apply in a given situation." Id.

[8] In Church , our supreme court reaffirmed the supremacy of its procedural rules but acknowledged that its "rules ‘cannot abrogate or modify substantive law.’ " 189 N.E.3d at 588 (quoting State ex rel. Zellers v. St. Joseph Cir. Ct. , 247 Ind. 394, 401, 216 N.E.2d 548, 553 (1966) ). "If the 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. (quoting Blood , 239 Ind. at 399, 157 N.E.2d at 477 ) (alterations in Church ). The court noted that it had "long held that laws are substantive when they establish rights and responsibilities, and laws are procedural when they ‘merely prescribe the manner in which such rights and responsibilities may be exercised and enforced.’ " Id. (quoting Blood , 239 Ind. at 400, 157 N.E.2d at 478 ).

[9] The court observed, however, that "[e]xcept 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." Id. at 589 (quoting Sun Oil Co. v. Wortman , 486 U.S. 717, 726, 108 S.Ct. 2117, 100 L.Ed.2d 743 (1988) ). The court noted that "even if statutes establishing substantive rights are ‘packaged in procedural wrapping,’ that does not alter their true nature." Id. (quoting State ex rel. Loyd v. Lovelady , 108 Ohio St.3d 86, 840 N.E.2d 1062, 1064 (Ohio 2006) ). The court further noted that "[i]n upholding a statute limiting disclosure of prescription records notwithstanding its alleged conflict with their trial rules, the Kentucky Supreme Court distinguished procedural laws which ‘predominantly foster accuracy in fact-finding’ from substantive laws which ‘predominantly foster other objectives.’ " Id. (quoting Cabinet for Health & Fam. Servs. v. Chauvin , 316 S.W.3d 279, 285 (Ky. 2010) ). The court agreed with what it characterized as "this predominant purpose distinction" and adopted what it deemed to be "a more thoughtful test that looks at the statute's predominant objective." Id. at 589, 590. The test is this: "If the statute predominantly furthers judicial administration objectives, the statute is procedural. But if the statute predominantly furthers public policy objectives ‘involving matters other than the orderly dispatch of judicial business,’ it is substantive." Id. at 590 (quoting People v. McKenna , 196 Colo. 367, 585 P.2d 275, 277 (1978) ).

[10] Here, the procedural rule that Section 7...