Vandenberg v. Aramark Educ. Servs., Inc.

• Decision Date: 30 September 2011
• Docket Number: 1100560 and 1100561.,1100557
• Citation: 81 So.3d 326,277 Ed. Law Rep. 1195
• Parties: David VANDENBERG and Elizabeth Beene, individually and for a class of similarly situated persons v. ARAMARK EDUCATIONAL SERVICES, INC., et al.Chloe Compton, Morgan Peppers, and Leigh Ellen Black, individually and for a class of similarly situated persons v. Compass Group, USA, Inc., d/b/a/ Chartwells, et al.John Lane and Natalie Smith, individually and for a class of similarly situated persons v. Sodexo, Inc., et al.
• Court: Alabama Supreme Court

277 Ed. Law Rep. 1195

81 So.3d 326

David VANDENBERG and Elizabeth Beene, individually and for a class of similarly situated persons

v.

ARAMARK EDUCATIONAL SERVICES, INC., et al.Chloe Compton, Morgan Peppers, and Leigh Ellen Black, individually and for a class of similarly situated persons

v.

Compass Group, USA, Inc., d/b/a/ Chartwells, et al.John Lane and Natalie Smith, individually and for a class of similarly situated persons

v.Sodexo, Inc., et al.

1100557

1100560 and 1100561.

Supreme Court of Alabama.

Sept. 30, 2011.

G. Daniel Evans and Alexandria Parrish of The Evans Law Firm, P.C., Birmingham; and John F. Whitaker of Whitaker, Mudd, Simms, Luke & Wells, LLC, Birmingham, for appellants.

Michael F. Walker and John E. Goodman of Bradley Arant Boult Cummings LLP, Birmingham; and Thomas O. Barnett, F. Chadwick Morriss, Gregory C. Padgett, and Jesse A. Gurman of Covington & Burling LLP, Washington, D.C., for appellees Aramark Educational Services, Inc., and Aramark Educational Services, LLC.

Norma M. Lemley and Michael I. Spearing, office of counsel, University of Alabama System, Tuscaloosa; and Cary T. Wahleim, office of counsel, University of Alabama System, Birmingham, for appellees the Board of Trustees for the University of Alabama and C. Ray Hayes.Maibeth J. Porter and Bonnie B. Monroe of Maynard, Cooper & Gale, P.C., Birmingham; and William C. Mayberry and Joshua D. Davey of McGuireWoods, LLP, Charlotte, North Carolina, for appellees Compass Group USA, Inc., d/b/a Chartwells, and Thompson Hospitality Services, LLC.David R. Boyd and Dorman Walker of Balch & Bingham LLP, Montgomery; and Lee F. Armstrong, gen. counsel, Auburn University, Auburn, for appellees Auburn University, Sarah B. Newton, and Dr. Donald L. Large.

Michael L. Bell, J. Gorman Houston, Jr., Enrique J. Gimenez, and James W. Gibson of Lightfoot, Franklin & White, LLC, Birmingham; Thomas G. Slater, Jr., of Hunton & Williams LLP, Richmond, Virginia; and Walfrido J. Martinez, Ryan A. Shores, and Hillary E. Maki of Hunton & Williams LLP, Washington D.C., for appellees Sodexo, Inc., and Sodexo Operations LLC.STUART, Justice.

On August 11, 2010, students and former students (hereinafter referred to as “the students”) of the University of Alabama (“UA”), Auburn University (“Auburn”), and the University of Alabama at Birmingham (“UAB”) (hereinafter referred to collectively as “the universities”) filed three separate class-action lawsuits in the Jefferson Circuit Court challenging the legality of so-called “dining-dollars” programs implemented by the universities and pursuant to which all undergraduate students are required to pay a mandatory dining fee each semester, which is then credited back to the students in the form of “dining dollars” that could be spent only at on-campus dining outlets controlled exclusively by the food-service vendors for the universities—Aramark Educational Services, Inc., at UA; Compass Group, USA, Inc., d/b/a/ Chartwells at Auburn; and Sodexo, Inc., at UAB (hereinafter referred to collectively as “the food-service vendors”). On December 29, 2010, the trial court dismissed the three actions, and the students now appeal. We have consolidated the three appeals for the purpose of writing one opinion. We affirm.

I.

In 1992, UA hired the Cornyn Fasano Group (“CFG”), a food-service-management consulting firm, to study the dining services available at UA and to make recommendations on how to better administer those services. CFG submitted its final report to UA in July 1995, and among the recommendations made in that report were the recommendations that UA implement a mandatory dining fee for all full-time undergraduate students and that UA contract with a third-party company to administer all food services on the UA Tuscaloosa campus.

Approximately a month after receiving the CFG report, UA issued a notice requesting proposals from vendors interested in operating its on-campus food services. Aramark submitted a proposal in October 1995 and, in June 1996, entered into a contract with UA to operate all food services on the UA Tuscaloosa campus, including vending machines, traditional dining halls for students living on campus, and other restaurant and café outlets. Pursuant to the terms of the contract, Aramark made an initial payment to UA to help finance the renovation of campus dining facilities and also agreed to pay UA an annual commission on all on-campus food sales with a minimum annual guaranteed return. In turn, UA agreed to provide Aramark use of all on-campus dining facilities and to complete renovations of certain facilities. UA also agreed to impose a mandatory dining fee upon all full-time undergraduate students in the amount of $200 per semester, which would be credited back to the students as dining dollars.¹ Students could then access the dining dollars in their accounts by swiping their student ID cards as payment at the Aramark outlets on campus.² At the conclusion of the academic year, students with unspent dining dollars could request a refund of those remaining funds.

In subsequent years, UAB and Auburn each decided to revamp their on-campus food services in a similar fashion. In June 2005, UAB entered into a contract with Sodexo that was substantially similar to the contract UA had entered into with Aramark—Sodexo provided funds for the renovation and/or construction of on-campus dining facilities and agreed to pay UAB a commission on all food sold by Sodexo while UAB granted Sodexo exclusive control of all food services at UAB. UAB also implemented a dining-dollars program pursuant to which each full-time undergraduate student was charged a mandatory dining fee of $225 each semester, then credited back an equal amount of dining dollars to be used exclusively at Sodexo outlets on campus.

Auburn thereafter implemented its own dining-dollars program beginning with the freshman class entering in the fall semester of 2008.³ In July 2007, Auburn entered into a contract with Chartwells, pursuant to which Chartwells was made the exclusive provider of food services at Auburn in return for paying Auburn a commission on all food-service sales and helping to fund capital improvements to on-campus dining facilities. Auburn agreed to begin imposing a mandatory dining fee of $995 per semester upon all students living on campus and $300 per semester upon those students living off campus. ⁴ An amount equal to that fee was then placed in a dining-dollars account linked to each student's ID card, and the student could then spend those funds at Chartwells food outlets on campus. Unlike students at UA, students at Auburn and UAB cannot apply for a refund of the unused dining dollars in their accounts at the end of the academic year, and the programs at Auburn and UAB have not been expanded to include any off-campus dining establishments.

On August 11, 2010, groups of students and former students at UA, UAB, and Auburn who had paid the mandatory dining fee at their respective universities filed three separate actions in the Jefferson Circuit Court. The students named as defendants in those actions the boards of trustees governing the universities and certain university administrators, as well as the food-service vendors (hereinafter referred to collectively as “the defendants”).⁵ The students specifically alleged that the universities' exclusive contracts with their respective food-service vendors violated § 6–5–60, Ala.Code 1975, inasmuch as those contracts created “an unlawful trust, combine, or monopoly” and that those contracts were unconstitutional in that they violated the prohibition in Ala. Const.1901, Art. IV, § 93, against the State's “be[ing] interested in any private or corporate enterprise.” The students suing UA and Auburn—but not the students suing UAB—also alleged that UA and Auburn had violated § 16–1–32(d), Ala.Code 1975, because the student ID cards at those universities were effectively acting as university-issued debit cards and the transaction fees associated with their use were accordingly prohibited by law from exceeding five percent, yet, when the commissions due under the food-services contracts were included, those fees were more than three times that statutory limit. Finally, the students also alleged that the universities and food-service vendors had unlawfully converted their funds and transformed them from lawful currency into dining dollars. The students sought class certification for their claims, a judgment declaring the universities' contracts with the food-service vendors to be illegal, and both injunctive relief and money damages.⁶

Along with the complaints, the students also served interrogatories, requests for production, and requests for admissions upon the defendants. The defendants thereafter moved to stay discovery and for an extension of time in which to file motions to dismiss, and, on September 24, 2010, the trial court granted those motions, ordering that all motions to dismiss be filed by October 1, 2010. On that date, the defendants filed motions to dismiss the complaints for failure to state a claim upon which relief could be granted, pursuant to Rule 12(b)(6), Ala. R. Civ. P., and, on December 29, 2010, after conducting a consolidated hearing, the trial court granted the defendants' motions and dismissed all pending claims with prejudice. On February 9, 2011, the students filed these appeals.

II.

We explained the standard of review applicable to an appeal of a trial court's judgment dismissing a case pursuant to Rule 12(b)(6) as follows in Crosslin v. Health Care Authority of Huntsville, 5 So.3d 1193, 1195 (Ala.2008):

“In considering whether a complaint is sufficient to withstand a motion to dismiss under Rule 12(b)(6), Ala. R. Civ. P., a court ‘must accept the allegations of the complaint as true.’ Creola Land Dev., Inc. v. Bentbrooke Housing, L.L.C., 828 So.2d 285, 288 (Ala.2002) (emphasis omitted). ‘ “The appropriate standard of review under Rule 12(b)(6)[...