Garcia De Leon v. New York University

Background

Nelcy Mabel Garcia De Leon brought a proposed class action against New York University (NYU) concerning the University’s response to the COVID-19 pandemic during the spring 2020 semester. NYU moved classes online and suspended in-person university-sponsored events and campus operations. Garcia De Leon alleged that students paid tuition and additional fees for in-person instruction, campus facilities, student activities, health services, and other benefits, but did not receive those benefits for part of the semester. She sought pro-rata refunds.

The complaint asserted six claims: tuition-based breach of contract, tuition-based unjust enrichment, fee-based breach of contract, fee-based unjust enrichment, and violations of Sections 349 and 350 of the New York General Business Law. Garcia De Leon also sought to represent proposed tuition and fee classes. NYU moved to dismiss for lack of standing and failure to state a claim.

Standing

The court held that Garcia De Leon had standing to pursue damages. NYU’s argument that she was not an adequate representative for students in other programs or at other campuses concerned her suitability as a class representative, not her constitutional standing to pursue her own damages claims. The court stated that discovery would be needed to assess the scope of the proposed classes, her personal damages, and whether she was an appropriate class representative.

The court dismissed any request for injunctive relief without prejudice. Garcia De Leon had graduated after the spring 2020 semester and alleged no facts showing that she continued to suffer harm or faced a likely future injury from NYU’s conduct.

Rulings on the Claims

The motion to dismiss the tuition breach-of-contract claim, Count I, was granted. The court ruled that Garcia De Leon did not identify a specific NYU promise to provide exclusively in-person instruction. NYU’s past practice and general statements about campus life and New York City were not specific contractual promises. Because NYU continued providing instruction, Garcia De Leon received academic credit, and she graduated, the court concluded that Count I did not plausibly allege that NYU failed to provide the service promised in exchange for tuition.

The motion to dismiss the fee-based breach-of-contract claim, Count III, was denied. The court found it plausible at the pleading stage that NYU promised specific nonacademic services and access to facilities in exchange for additional fees, and that students were deprived of those services when NYU closed its facilities and canceled activities. The claim concerns whether NYU’s partial fee refunds were sufficient. The court rejected NYU’s arguments that the claim required bad-faith conduct or should be dismissed because performance became impossible during the pandemic. It explained that impossibility might excuse performance but could still require repayment of money paid for services that could not be provided.

The motion to dismiss the tuition-based unjust-enrichment claim, Count II, was granted. The court held that deciding whether NYU had unjustly retained tuition would require evaluating the quality and value of the remote education Garcia De Leon received. That inquiry would improperly require the court to review educational decisions under the educational malpractice doctrine.

The motion to dismiss the fee-based unjust-enrichment claim, Count IV, was denied. The court allowed Garcia De Leon to plead unjust enrichment in the alternative to the fee contract claim because the precise terms of any contract for nonacademic services might not be established. The allegations that students paid for access to facilities and activities, received a materially different product, and received only partial refunds were sufficient at this stage to allege that equity and fairness could require additional repayment.

The motion to dismiss the New York General Business Law claims, Counts V and VI, was granted. The court found that the complaint did not allege that NYU knew, when it made its earlier statements, that it would be unable to provide the described services. It also did not allege that NYU never intended to provide those services. The court concluded that the pandemic and government-mandated closures were unexpected events beyond NYU’s control and did not support these consumer-deception claims.

Disposition and Further Proceedings

The court granted in part and denied in part NYU’s motion to dismiss. Counts I, II, V, and VI were dismissed. The motion to dismiss Counts III and IV was denied. The request for injunctive relief was dismissed without prejudice. The court directed the parties to proceed first with expedited discovery concerning class certification and stayed merits discovery while that issue was pending. It also directed Garcia De Leon to file a motion for class certification within the stated deadline.

Judge Colleen McMahon signed the decision and order.