Nouri v. Univ. of Scranton

1

MICHAEL NOURI, on behalf of himself and all others similarly situated, Plaintiff, v. UNIVERSITY OF SCRANTON, Defendant.

Civil Action No. 3:23-CV-01362

United States District Court, M.D. Pennsylvania

August 19, 2024

MEMORANDUM

KAROLINE MEHALCHICK UNITED STATES DISTRICT JUDGE

Plaintiff Michael Nouri (“Plaintiff”) initiated this lawsuit on behalf of himself and all others similarly situated on August 16, 2023, by filing a complaint (“the Complaint”) against the Defendant University of Scranton (“the University”) alleging a breach of implied contract claim or, in the alternative, an unjust enrichment claim. (Doc. 1). Presently before the Court is a motion to dismiss filed by the University. (Doc. 10). For the following reasons, the motion shall be DENIED. (Doc. 10).

I. Background and Procedural History

The following background is taken from the Complaint.^[1] (Doc. 1). At all relevant times, Plaintiff was a tuition-paying student at the University. (Doc. 1 ¶ 4). In March 2020, in response to the Covid-19 pandemic, the University's campus shut down and the school transitioned to online-only education for the remainder of the semester. (Doc. 1, ¶ 6). According to the Complaint, as a result of this, all on-campus education, services, and amenities were no longer available to Scranton students for the remainder of the Spring 2020 semester. (Doc. 1, ¶ 7). Despite students' inability to access on-campus benefits, including housing, educational and recreational facilities, and dining, the University refused to provide students with a pro-rated refund for the tuition and fees they paid to attend. (Doc. 1, ¶¶ 8, 39). This includes a mandatory fee used to fund “on-campus services and facilities offered by [the University] to its students.” (Doc. 1, ¶¶ 36-37). These services and facilities include student health programming, wellness facilities, studios, study spaces, fitness centers, and student events. (Doc. 1, ¶ 42).

Plaintiffs assert that the University retained tuition and fees for services not provided to students. (Doc. 1, ¶ 12). Seeking restitution, compensatory damages, and all other forms of equitable monetary relief, on August 16, 2023, Plaintiff filed this lawsuit on behalf of himself and other alleged student class members. (Doc. 1, at 25-26). Plaintiff alleges a breach of an implied contract by claim and, in the alternative, an unjust enrichment claim against the University. (Doc. 1, ¶¶ 65-73, 74-84).

On October 11, 2023, the University filed the instant motion to dismiss. (Doc. 10). On October 25, 2023, the University filed a brief in support of their motion. (Doc. 13). On December 8, 2023, Plaintiff filed a brief in opposition. (Doc. 16). On December 22, 2023, the University filed a reply brief. (Doc. 17). Accordingly, the motion is fully briefed and ripe for discussion. (Doc. 13; Doc. 16; Doc. 17).

II. Legal Standard

Rule 12(b)(6) of the Federal Rules of Civil Procedure authorizes a defendant to move to dismiss for “failure to state a claim upon which relief can be granted.” Fed.R.Civ.P. 12(b)(6). “Under Rule 12(b)(6), a motion to dismiss may be granted only if, accepting all well-pleaded allegations in the complaint as true and viewing them in the light most favorable to the plaintiff, a court finds the plaintiff's claims lack facial plausibility.” Warren Gen. Hosp. v.Amgen Inc., 643 F.3d 77, 84 (3d Cir. 2011) (citing Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555-56 (2007)). Although a court must accept the factual allegations in a complaint as true, it is not compelled to accept “unsupported conclusions and unwarranted inferences, or a legal conclusion couched as a factual allegation.” Morrow v. Balaski, 719 F.3d 160, 165 (3d Cir. 2013) (quoting Baraka v. McGreevey, 481 F.3d 187, 195 (3d Cir. 2007)). Additionally, a court need not assume that a plaintiff can prove facts that the plaintiff has not alleged. AssociatedGen. Contractors of Cal. v. California State Council of Carpenters, 459 U.S. 519, 526 (1983).

In Ashcroft v. Iqbal, the United States Supreme Court held that, when considering a motion to dismiss, a court should “begin by identifying pleadings that, because they are no more than conclusions, are not entitled to the assumption of truth.” 556 U.S. 662, 679 (2009). “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Iqbal, 556 U.S. at 678. “Factual allegations must be enough to raise a right to relief above the speculative level.” Twombly, 550 U.S. at 555. In evaluating a motion to dismiss, a court may consider the facts alleged on the face of the complaint, as well as “documents incorporated into the complaint by reference, and matters of which a court may take judicial notice.” Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322 (2007).

III. Discussion

The University argues for the dismissal of Plaintiff's breach of contract and unjust enrichment claims. (Doc. 13, at 2). From the University's perspective, Plaintiff was never promised the “on-campus” experience he alleges he was deprived of. (Doc. 13, at 2). The University also asserts that its reservation of rights permitted it to move classes online and that Plaintiff ratified and accepted Scranton's modification by continuing to attend the University even after his education moved online. (Doc. 13, at 2). Alternatively, the University contends that Plaintiff's claim for tuition must be dismissed because he received the benefit he paid for. (Doc. 13, at 2). Arguing against dismissal, Plaintiff maintains that he has stated both a breach of an implied contract claim and, in the alternative, an unjust enrichment claim. (Doc. 16, at 2). Plaintiff also refutes the University's contentions regarding its reservation of rights, Plaintiff's ratification, and Plaintiff's receipt of the benefit of his tuition. (Doc. 16, at 2). For the following reasons, the Court agrees with Plaintiff and will DENY the University's motion to dismiss. (Doc. 10).

A. Breach of Implied Contract

“The student-college relationship is essentially contractual in nature.” Mangla v. Brown Univ., 135 F.3d 80, 83 (1st Cir. 1998). Under Pennsylvania law, a valid and binding contract exists if the parties (1) manifest an intention to be bound by the agreement; (2) the terms of the agreement are sufficiently definite; and (3) there is consideration by both parties. ATACS Corp. v. Trans World Commc'ns, Inc., 155 F.3d 659, 666 (3d Cir. 1998). To state a breach of contract claim, Plaintiff must allege “(1) the existence of a contract, including its essential terms, (2) a breach of a duty imposed by the contract, and (3) resultant damages.” Genomind, Inc. v. United Health Grp. Inc., No. CV 21-373, 2021 WL 3929723, at *6 (E.D. Pa. Sept. 1, 2021) (quoting Gorski v. Smith, 812 A.2d 683, 692 (Pa. Super. Ct. 2002)). The essential elements of an implied contract, as at issue here, are the same as an express contract, “except the contract is implied through the parties' conduct, rather than expressly written.” Enslin v. The Coca-Cola Co., 136 F.Supp.3d 654, 675 (E.D. Pa. 2015). In the context of colleges and universities, the Third Circuit has held that ordinary Pennsylvania contract law applies. See Hickey v. Univ. of Pittsburgh, 81 F.4th 301, 311-12 (3d Cir. 2023) (“Pennsylvania has not jettisoned ordinary contract principles permitting implied contracts in cases where, as here, students allege that a university failed to perform a specific undertaking”).

1. The University's Promise of an “On-Campus” Experience

Plaintiff's implied breach contract claim is premised on his allegation that he was deprived of the “on-campus” experience the University promised him. (Doc. 1, ¶¶ 65-73). The University argues that no such promise existed, stating “Plaintiff has failed to plead that [the University] promised an exclusively ‘on-campus experience' in sufficiently definite terms to form a valid and enforceable contract.” (Doc. 13, at 7). Plaintiff responds that the University “promised a robust on-campus educational environment, for which students prepaid substantial tuition and fees, but [the University] failed to live up to its end of the bargain,” and that this constitutes a breach of implied contract. (Doc. 16, at 9).

In making their arguments, both parties rely on the Third Circuit's recent decision in Hickey v. University of Pittsburgh.^[2] 81 F.4th 301 (3d Cir. 2023). In Hickey, the Third Circuit reviewed similar breach of contract claims stemming from plaintiff-students' allegations that they were deprived of the on-campus experiences they had contracted for with their defendant-universities due to the Covid-19 pandemic. 81 F.4th at 307. The Third Circuit found that the plaintiff-students had sufficiently pled their breach of contract claims because “allegations of frequent references to in-person instruction in university publications, the schools' tradition of in-person instruction, and their different marketing and price structure for online programming support a reasonable inference that the parties impliedly contracted for in-person education, and that is sufficient to state a claim for breach of contract.” Hickey, 81 F.4th at 314. It is the University's position that Plaintiff has failed to allege these elements and thus has failed to allege that an implied contract exists. (Doc. 13, at 12-13). To distinguish this case from Hickey, the University argues that while the University's “marketing materials emphasized the benefits of an education at [the University], it made no promises of an inperson education."^[3] (Doc. 13, at 16). Further, the University contends that Plaintiff has failed to allege that he was deprived of on-campus benefits such as career development, counseling services, physical recreation,...