Gaviria v. Lincoln Educ. Servs. Corp.

• Decision Date: 08 July 2021
• Docket Number: Civ. No. 20-18552 (KM) (JBC)
• Citation: 547 F.Supp.3d 450
• Parties: John GAVIRIA, on behalf of himself and all others similarly situated, Plaintiff, v. LINCOLN EDUCATIONAL SERVICES CORPORATION, Defendant.
• Court: U.S. District Court — District of New Jersey

547 F.Supp.3d 450

John GAVIRIA, on behalf of himself and all others similarly situated, Plaintiff,

v.LINCOLN EDUCATIONAL SERVICES CORPORATION, Defendant.

Civ. No. 20-18552 (KM) (JBC)

United States District Court, D. New Jersey.

Signed July 8, 2021

Benjamin Reed Zakarin, Joseph Lipari, The Sultzer Law Group P.C., New York, NY, for Plaintiff.

Melissa Jennifer Brown, Marks O'Neill O'Brien Doherty & Kelly, P.C., Cherry Hill, NJ, for Defendant

KEVIN MCNULTY, U.S.D.J.:

Lincoln Educational Services Corporation ("Lincoln Tech") operates for-profit vocational education institutions. John Gaviria began as a student at one such institution, but shortly after his enrollment, Lincoln Tech transitioned to online education in response to the COVID-19 pandemic. Gaviria, on behalf of himself and a putative class, sued Lincoln Tech to recover tuition and fee payments under contract, quasi-contract, and tort theories. Lincoln Tech moves to dismiss for failure to state a claim. (DE 12.)¹ For the following reasons, the motion is GRANTED IN PART and DENIED IN PART .

I. BACKGROUND

Lincoln Tech provides vocational and technical education programs at campuses throughout the country. (Am. Compl. ¶¶ 19, 28.) It publicly promotes the hands-on training its courses offer. (Id. ¶¶ 41–48.) Gaviria enrolled in courses at a Lincoln Tech campus in, alas, February 2020. (Id. ¶ 16.) He paid over $19,000 for tuition as well as a $400 "Student Fee," a $96 "Technology Fee," and a $150 "Registration Fee." (Id. )

The next month, in response to government orders related to COVID-19, Lincoln Tech transitioned to providing courses online and closed the campus. (Id. ¶¶ 10, 31, 32, 34.) Such virtual education is "materially different in practically every aspect" from in-person instruction, according to Gaviria. (Id. ¶ 49.) Yet Lincoln Tech has not offered even a partial refund. (Id. ¶ 35.)

To recover his tuition and fee payments, Gaviria sued Lincoln Tech, asserting claims for (1) breach of contract, (2) unjust enrichment, and (3) conversion (Id. ¶¶ 71–116.) He invokes jurisdiction under the Class Action Fairness Act ("CAFA"), Pub. L. No. 109-2, 119 Stat. 4 (2005) (codified in pertinent part at 28 U.S.C. §§ 1332(d), 1441, 1446 ). (Am. Compl. ¶ 21.)² He alleges that a contract formed between him and Lincoln Tech "through the application process, the admission process, the registration process, the payment process, and throughout enrollment." The terms of that contract "are contained in numerous documents, including the acceptance letter, the application, the course catalog, the student handbook, and other documents." (Id. ¶ 40.)

Lincoln Tech has moved to dismiss the complaint. (Mot., DE 12) With its motion, Lincoln Tech provided an "Enrollment Agreement" signed by Gaviria. That Agreement included a few provisions relevant here:

• an acknowledgment that an online "course companion platform and/or courseware may be used throughout all or some of the program" (Agmt. at 5);

• an acknowledgment that the registration fee was non-refundable, and after the third day of classes, "any refund due for student fees and technology fees will be prorated based upon use" (id. at 8);

• a clause stating that Lincoln Tech is released from claims that it did not perform if such non-performance was due to "an Act of God, strike or any other matter or thing beyond [its] control" (id. at 9);

• a clause stating that Lincoln Tech "reserves the right to alter hours of attendance and curriculum content or class starting dates when deemed necessary," and such changes will not alter the refund policy (id. ); and

• an acknowledgment that the Agreement "constitutes the entire contract between the parties and that no representations other than herein contained have been made" (id. ).

II. STANDARD OF REVIEW

Federal Rule of Civil Procedure 8(a) does not require that a pleading contain detailed factual allegations but "more than labels and conclusions." Bell Atl. Corp. v. Twombly , 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). The allegations must raise a claimant's right to relief above a speculative level, so that a claim is "plausible on its face." Id. at 570, 127 S.Ct. 1955. That standard is met when "factual content [ ] allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). Rule 12(b)(6) provides for the dismissal of a complaint if it fails to state a claim. The defendant bears the burden to show that no claim has been stated. Davis v. Wells Fargo , 824 F.3d 333, 349 (3d Cir. 2016). I accept facts in the complaint as true and draw reasonable inferences in the plaintiff's favor. Morrow v. Balaski , 719 F.3d 160, 165 (3d Cir. 2013) (en banc).

III. DISCUSSION

In support of dismissal, Lincoln Tech argues that (A) it is immune from this suit, and (B) Gaviria fails to state a claim.

A. Immunity

Lincoln Tech argues that it is immune from this suit under the New Jersey Emergency Health Powers Act, N.J. Stat. Ann. § 26:13-1 et seq. (Mot. at 7–10.) The Act generally grants the New Jersey Governor and other state officials certain powers to act in an emergency. See Nat'l Ass'n of Theatre Owners v. Murphy , Civ. No. 20-8298, 2020 WL 5627145, at *5–6 (D.N.J. Aug. 18, 2020). As relevant here, it provides as follows:

A person or private entity ... shall not be liable for an injury caused by any act or omission in connection with a public health emergency ... provided that the action of the person or entity is undertaken pursuant to the exercise of the authority provided pursuant to this act, including any order, rule or regulation adopted pursuant thereto.

N.J. Stat. Ann. § 26:13-19(c)(2). There are no reported judicial interpretations of this provision, nor is there any illuminating legislative history. It is no doubt broadly written and could plausibly apply here. Lincoln Tech acted in accordance with government orders issued to address a public health emergency, the COVID-19 pandemic. But Lincoln Tech's statutory defense stumbles over the term "injury."

Under the Act, an entity is exonerated from liability for an "injury," which is defined as "death, injury to a person or damage to or loss of property." N.J. Stat. Ann. § 26:13-19(a). When the Legislature defines a term, I am bound by the plain language of that definition. State v. S.B. , 230 N.J. 62, 165 A.3d 722, 726 (2017). And when the Legislature uses a term that has an established legal meaning, I will interpret the term in light of its common-law meaning, absent any indications to the contrary. State v. Brown , 22 N.J. 405, 126 A.2d 161, 166 (1956) ; In re Commitment of B.L. , 346 N.J.Super. 285, 787 A.2d 928, 937 (N.J. Super. Ct. App. Div. 2002). While the Legislature instructed that the Act be "liberally construed," N.J. Stat. Ann. § 26:13-19(d), I cannot stretch a statute's terms beyond what its ordinary meaning and reasonable interpretations can bear, Lammers v. Bd. of Educ. of Borough of Point Pleasant , 134 N.J. 264, 633 A.2d 526, 530 (1993).

Lincoln Tech says this case is about "loss of property" (part of the definition of "injury"), but "property" is not normally understood to include money or damages (what Gaviria seeks here). "Property" traditionally refers to "land, chattel, or an intangible." Property, Black's Law Dictionary (11th ed. 2019). Money is not land or an intangible, so that leaves chattel. Yet, chattel is "[m]ovable or transferable property," especially "a physical object capable of manual delivery." Chattel, Black's Law Dictionary (11th ed. 2019). As such, "Money is not to be accounted Goods or Chattels." Id. (quoting Thomas Blount, Nomo-Lexicon: A Law-Dictionary (1670)).

New Jersey law comports with this understanding. Consider the tort of conversion, "the intentional exercise of dominion and control over chattel." Meisels v. Fox Rothschild LLP , 240 N.J. 286, 222 A.3d 649, 661 (N.J. 2020). Generally in New Jersey, a plaintiff cannot bring a conversion claim alleging that he or she is owed money. Rather, at most, he or she must point to a specific pot of money, such as a fund, that is wrongfully in a defendant's hands. Dougherty v. Drew Univ. , Civ. No. 21-249, ––– F.Supp.3d ––––, ––––, 2021 WL 1422935, at *10 (D.N.J. Apr. 14, 2021).

Next, consider other New Jersey statutes. The Legislature has created several causes of action to recover "loss of moneys or property." E.g. , N.J. Stat. Ann. §§ 2C:13-8.1(a), 2C:21-17.4(a), 56:8-19. By using "money" in addition to "property," the Legislature suggests that the two are distinct. See State v. Ferguson , 238 N.J. 78, 207 A.3d 1253, 1267 (2019) (when the Legislature uses two different terms, courts assume they have different meanings). The Legislature's employment of this double-barreled terminology elsewhere, but not here, would tend to reinforce a conclusion that the Act refers only to real or personal property. See In re J.S. , 223 N.J. 54, 121 A.3d 322, 334 (2015) ("[The Legislature] is presumed to have been thoroughly conversant with its own prior legislation...." (cleaned up)); State v. Sherman , 367 N.J.Super. 324, 842 A.2d 859, 870–71 (N.J. Super. Ct. App. Div. 2004) ("[W]here the Legislature has carefully employed a term in one place and excluded it in another, it shall not be implied where excluded." (citation omitted)).³

These considerations—second-order ones, to be sure, in the absence of more specific guidance—point to a conclusion that "property" (and therefore Lincoln Tech's immunity) does not extend to money damages.⁴ Damages are what Gaviria sues for here. Gaviria seeks compensation representing the difference in value between the virtual education that was provided and the in-person education that he expected. He does not move to recover a specific, improperly retained pot of money, but rather seeks compensation in a yet-to-be-determined amount. (Am. Compl., Prayer (c).) Such benefit-of-the-bargain damages are the "traditional...