Freeman v. New York University

Background

Jerold Freeman, Karen Kuo, Rajveer Sachdev, Peihu Wang, and Andrew Wolff brought a putative class action on their own behalf and on behalf of similarly situated people against New York University (NYU). They were enrolled in NYU’s Stern School of Business Executive Master of Business Administration Program during the Spring and Summer 2020 semesters.

On March 16, 2020, in response to the COVID-19 pandemic, NYU announced that it would immediately suspend all in-person classes. The plaintiffs alleged that NYU therefore failed to provide educational services, facilities, access, and opportunities that they had contracted and paid for. Although NYU moved instruction online, it continued charging full tuition and fees. The plaintiffs sought a proportional refund for the period remaining after in-person instruction stopped.

The complaint asserted claims for breach of contract, unjust enrichment, and conversion. NYU moved to dismiss under Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). A Rule 12(b)(6) motion tests whether a complaint states enough facts to support a legally plausible claim.

Court’s Analysis

The court concluded that the complaint had the same deficiencies as similar cases involving NYU. It considered additional materials, including university handbooks, websites, declarations, and disclaimer language in the NYU Bulletin, because the complaint referenced or relied on those materials and treated them as part of the allegations.

Breach of contract. The court held that the plaintiffs did not identify a specific promise by NYU to provide exclusively in-person instruction. References to the on-campus experience, buildings, facilities, attendance policies, device policies, and an admission agreement were too vague to show a definite promise. The court also rejected the argument that the higher tuition and fees, compared with online institutions, created a contractual entitlement to continued in-person instruction.

The court emphasized that NYU’s Bulletin expressly reserved the right to modify, eliminate, cancel, relocate, or otherwise change course offerings, schedules, activities, and academic programs. It found that the disclaimer was prominent and readily available to students. The court also noted that the plaintiffs did not clearly identify which fees they had paid, which fees had been refunded, and which additional fees supposedly related exclusively to on-campus experiences. The court noted that NYU had refunded meal and accommodation fees.

Unjust enrichment and conversion. The court dismissed the unjust-enrichment claim because New York law does not allow recovery under that theory when a valid contract governs the same subject matter. It dismissed the conversion claim because that claim rested on the same allegations as the contract claim and, under New York law, conversion cannot be based on merely failing to perform a contract. The court also stated that it was unclear what money the plaintiffs claimed NYU had wrongfully retained.

Disposition

The court granted NYU’s motion to dismiss the complaint in its entirety. The Clerk of Court was directed to close the motions. The opinion does not state whether the dismissal was with or without prejudice.