Nguyen v. Stephens Inst.

• Decision Date: 30 March 2021
• Docket Number: Case No. 20-cv-04195-JSW
• Parties: Duy NGUYEN, Plaintiff, v. STEPHENS INSTITUTE, Defendant.
• Court: U.S. District Court — Northern District of California

529 F.Supp.3d 1047

Duy NGUYEN, Plaintiff,

v.STEPHENS INSTITUTE, Defendant.

Case No. 20-cv-04195-JSW

United States District Court, N.D. California.

Signed March 30, 2021

David Ryan Shoop, Pro Hac Vice, Shoop Aplc, Beverly Hills, CA, Jason Paul Sultzer, The Sultzer Law Group, Poughkeepsie, NY, Benjamin Zakarin, Mindy Dolgoff, The Sultzer Law Group P.C, New York, NY, Michael A. Tompkins, Leeds Brown Law, P.C., Carle Place, NY, Thomas Steven Alch, Shoop, A. Professional Law Corporation, Beverly HIlls, CA, for Plaintiff.

Gerald Matthew Ritzert, Pro Hac Vice, Steven Martin Gombos, Pro Hac Vice, Ritzert and Leyton PC, Jacob C. Shorter, Pro Hac Vice, Gombos Leyton PC, Fairfax, VA, Paul David Fife, Fife Law, LLP, San Francisco, CA, for Defendant.

ORDER GRANTING, IN PART, AND DENYING, IN PART DEFENDANT'S MOTION TO DISMISS

Re: Dkt. No. 24

JEFFREY S. WHITE, United States District Judge Now before the Court for consideration is the motion to dismiss filed by Stephens Institute. Having reviewed the parties' papers, relevant legal authority, and record in this case, the Court hereby GRANTS, IN PART, AND DENIES, IN PART, the motion to dismiss.

BACKGROUND

This case is one of many lawsuits across the nation relating to a university's decision to transition in-person class instruction to online and to close on-campus services in response to the COVID-19 pandemic. Stephens Institute is a for-profit corporation doing business as the Academy of Art University ("AAU"), a private university located in San Francisco, CA.

Duy Nguyen ("Nguyen") was enrolled as an undergraduate student at AAU. According to Nguyen, he and AAU entered into a contract where Nguyen agreed to pay tuition and fees in exchange for AAU providing in-person instruction and access to on-campus services. (Compl. ¶ 7, 10.) Nguyen alleges AAU made these promises in its "marketing, advertisements, and other public representations." (Id. ¶ 8.) In Nguyen's Enrollment Agreement with AAU, the parties agreed Nguyen would pay the Student Activity Fee. (Dkt. No. 24, Declaration of Jacob Shorter ("Shorter Decl.") Ex. 10, at 2.) As defined in the Spring 2020 Catalog Addendum, the Student Activity Fee "[c]overs various services provided on-campus. This includes services from the Academic Resource Center, some special events and bus services. Students taking one or more courses on-campus are charged this fee whether or not they avail themselves of the services." (Dkt. No. 24, Declaration of Chris Visslailli ("Visslailli Decl.") Ex. 16, at 28.) This fee is waived for students taking solely online courses. (Shorter Decl. Ex. 10, at 2; Visslailli Decl. Ex. 16, at 28.)

Nguyen enrolled for the Spring 2020 semester and paid tuition and fees to AAU. (Compl. ¶¶ 9, 10.) Over a month into the Spring 2020 Semester, AAU announced that it was transitioning all in-person class instruction to online in response to the COVID-19 pandemic. (Id. ¶ 12.) As a result, Nguyen claims AAU breached the contract when it failed to fulfill its promise to provide in-person instruction and access to on-campus services. (Id. ¶ 15.) Nguyen claims he is entitled to a pro-rata refund of tuition and fees for the in-person instruction and on-campus services he did not receive from AAU. (Id. ¶ 17.)

Nguyen brings this putative class action on behalf of all those who paid tuition and fees for the Spring 2020 semester at the University. He sues AAU for breach of contract, conversion, and unjust enrichment. AAU now moves to dismiss Nguyen's claims for failure to state his claims for relief under Federal Rule of Civil Procedure 12(b)(6).

A. Applicable Legal Standard.

A motion to dismiss is proper under Rule 12(b)(6) where the pleadings fail to state a claim upon which relief can be granted. The Court's "inquiry is limited to the allegations in the complaint, which are accepted as true and construed in the light most favorable to the plaintiff." Lazy Y Ranch Ltd. v. Behrens , 546 F.3d 580, 588 (9th Cir. 2008). Even under the liberal pleading standard of Rule 8(a)(2), Nguyen must provide more than mere labels, conclusions, and formulaic recitations of their claims' requisite elements.

Bell Atl. Corp. v. Twombly , 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). Nguyen must allege "enough facts to state a claim to relief that is plausible on its face." Id. at 570, 127 S.Ct. 1955. "A claim has facial plausibility when the plaintiff pleads factual content that 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) (citing Twombly , 550 U.S. at 556, 127 S.Ct. 1955 ).

If the allegations are insufficient to state a claim, a court should grant leave to amend, unless amendment would be futile. See, e.g., Reddy v. Litton Indus., Inc. , 912 F.2d 291, 296 (9th Cir. 1990) ; Cook, Perkiss & Liehe, Inc. v. N. Cal. Collection Serv., Inc. , 911 F.2d 242, 246-47 (9th Cir. 1990).

B. Request for Judicial Notice.

AAU requests the Court to take judicial notice of two sets of exhibits. Nguyen does not oppose AAU's requests.

Generally, "a district court may not consider any material beyond the pleadings in ruling on a Rule 12(b)(6) motion." Branch v. Tunnell , 14 F.3d 449, 453 (9th Cir. 1994), overruled on other grounds as recognized in Galbraith v. Cty. of Santa Clara , 307 F.3d 1119 (9th Cir. 2002) (internal quotation marks omitted). However, the Court may take judicial notice of a fact that is not subject to reasonable dispute. Fed. R. Evid. 201(b).

In the first set of exhibits, AAU requests the Court to take judicial notice of specific facts contained in various government publications regarding the spread of COVID-19. (Shorter Decl. Exs. 1, 3, 5, 13, 14.) Generally, a court may take judicial notice of government publications. See McDougall v. Cty. of Ventura , Case No.: 2:20-cv-02927-CBM-AS, ––– F. Supp. 3d ––––, ––––, 2020 WL 6532871, at *3 (C.D. Cal. Oct. 21, 2020) ; Hadley v. Kellogg Sales Co. , 243 F. Supp. 3d 1074, 1088 (N.D. Cal. 2017). While these documents are proper subjects for judicial notice, the Court need not consider these facts to resolve the motion to dismiss. See also Saroya v. Univ. of the Pac. , Case No. 5:20-cv-03196-EJD, ––– F. Supp. 3d ––––, ––––, 2020 WL 7013598, at *3 (N.D. Cal. Nov. 27, 2020) (denying defendant's request to take judicial of government publications concerning COVID-19 as unnecessary to the motion to dismiss analysis). Accordingly, the Court DENIES AAU's request to take judicial notice of Exhibits 1, 3, 5, 13, and 14.

In the second set of exhibits, AAU requests the Court to take judicial notice of specific facts contained in various news articles regarding the spread of COVID-19 in the Bay Area and the community's response to the pandemic. (Shorter Decl., Exs. 2, 4, 6, 12.) A court may generally take judicial notice of news articles, but it may only do so to "indicate what was in the public realm at the time, not whether the contents of those articles were in fact true." Von Saher v. Norton Simon Museum of Art at Pasadena , 592 F.3d 954, 960 (9th Cir. 2010) (quoting All. Premier Growth Fund v. All. Capital Mgmt. L.P. , 435 F.3d 396, 400 n. 14 (3d Cir. 2006) ). Again, the Court need not consider the facts contained in these publications to resolve the motion to dismiss. Accordingly, the Court DENIES AAU's request to take judicial notice of Exhibits 2, 4, 6, and 12.

AAU also seeks to incorporate by reference a set of university documents, most of which concern AAU's response to COVID-19 and the Spring 2020 semester. (Shorter Decl., Ex. 10; Visslailli Decl. Exs. 7, 8, 9, 10, 15, 16.) The incorporation-by-reference doctrine allows a court to "treat[ ] certain documents as though they are part of the complaint itself." Khoja v. Orexigen Therapeutics, Inc. , 899 F.3d 988, 1002 (9th Cir. 2018). A "defendant may seek to incorporate a document into the complaint ‘if the plaintiff refers extensively to the document or the document forms the basis of the plaintiff's claim.’ " Id. (quoting United States v. Ritchie , 342 F.3d 903, 908 (9th Cir. 2003) ). When a court incorporates a document by reference, it may assume all contents of the document are true for the purposes of a motion to dismiss under 12(b)(6). Id. at 1003 (citing Marder v. Lopez , 450 F.3d 445, 448 (9th Cir. 2006) ).

Here, Exhibits 7 and 8 are communications sent from AAU's president concerning the university's response to COVID-19 and updates regarding fees. Exhibit 9 is a document outlining important dates for the Spring 2020 semester. Exhibit 10 is Nguyen's Enrollment Agreement with AAU. Exhibit 15 is a press release from AAU regarding its students' use of 3D technology to produce face shields for front-line workers. Exhibit 16 is a copy of AAU's Spring 2020 Catalog Addendum. Because Exhibits 7, 8, 9, 10, and 16 all deal with issues related to Nguyen's underlying claims, the Court GRANTS AAU's request to incorporate these exhibits. The Court DENIES, however, AAU's motion to incorporate Exhibit 15 because it is irrelevant to this case.

C. Failure to State Claims for Relief.

1. Nguyen Sufficiently Alleges Facts to State a Breach of Contract Claim.

The first issue is whether Nguyen sufficiently alleges facts to state a breach of contract claim. To prevail on a breach of contract claim, Nguyen must allege (1) that a contract existed, (2) his performance or excuse for nonperformance, (3) AAU's breach, and (4) damages. Oasis W. Realty, LLC v. Goldman , 51 Cal. 4th 811, 821, 124 Cal.Rptr.3d 256, 250 P.3d 1115 (2011). "[T]he basic legal relationship between a student and a private university is contractual in nature." Kashmiri v. Regents of Univ. of California , 156 Cal. App. 4th 809, 823-24, 67 Cal.Rptr.3d 635 (2007) (citing Zumbrun v. Univ. of S. California , 25 Cal. App. 3d 1, 10, 101 Cal.Rptr. 499 (1972) ). A contract is formed between a student and university when the student matriculates to the university and pays the...