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Squeri v. Mount Ida College

United States District Court, D. Massachusetts

May 24, 2019

TRISTAN SQUERI, MADELINE McCLAIN, and GEORGE O'DEA, individually and on behalf of all others similarly situated
v.
MOUNT IDA COLLEGE, et al.

          MEMORANDUM AND ORDER ON DEFENDANTS' MOTIONS TO DISMISS

          RICHARD G. STEARNS, UNITED STATES DISTRICT JUDGE

         After more than a century of operation, Mount Ida College closed suddenly at the end of the 2018 academic year. Three students, Tristan Squeri, Madeline McClain, and George O'Dea, brought this putative class action against Mount Ida College; its Board of Trustees; the Board's Chairwoman, Carmin Reiss; the President, Barry Brown; the Vice President, Chief Financial Officer, and Treasurer, Jason Potts; the Vice President of Enrollment Management and Dean of Admissions, Jeff Cutting; and the Chief Academic Officer and Provost, Ron Akie.[1] Plaintiffs, on behalf of former and prospective Mount Ida students, [2] allege that defendants failed to inform them of Mount Ida's dire financial straits and shared their academic and financial profiles with the University of Massachusetts (UMass) Dartmouth without their consent. More specifically, the Amended Complaint sets out seven claims: violation of privacy under Mass. Gen. Laws ch. 214, § 1B (Count I), fraud (Count II), negligent misrepresentation (Count III), fraud in the inducement (Count IV), breach of fiduciary duty (Count V), breach of contract (Count VI), and unfair and deceptive practices in violation of Mass. Gen. Laws ch. 93A, § 9 (Count VII). Defendants move to dismiss the Amended Complaint for failure to state a claim.[3] For the reasons to be explained, defendants' motions to dismiss will be allowed.

         BACKGROUND

         The facts, viewed in the light most favorable to plaintiffs as the nonmoving party, are as follows. Mount Ida College was a not-for-profit institution with a principal place of business in Foxborough, Massachusetts. Mount Ida closed its doors on May 17, 2018. According to the Amended Complaint, defendants knew that Mount Ida was struggling financially in as early as 2014, but failed to disclose its precarious fiscal state to current and prospective students. Plaintiffs point to the fact that in 2017, defendants reported to the New England Association of Schools and Colleges (NEASC) that, among other things, Mount Ida was financially stable. On February 24, 2018, Mount Ida announced that it had entered merger negotiations with Lasell College, but did not attribute the potential merger to any financial pressure. On March 21, 2018, defendants rejected the terms of the merger and, two days later, informed the Mount Ida community that they had broken off the talks with Lasell. On April 6, 2018, Brown sent a blast email to enrolled students informing them that Mount Ida had agreed to sell its Newton, Massachusetts, campus to UMass Amherst and that all current students would be guaranteed admission to UMass Dartmouth. On November 26, 2018, plaintiffs brought this lawsuit.

         DISCUSSION

         “To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009), quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim is facially plausible if its factual content “allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678. “If the factual allegations in the complaint are too meager, vague, or conclusory to remove the possibility of relief from the realm of mere conjecture, the complaint is open to dismissal.” Rodríguez-Reyes v. Molina-Rodríguez, 711 F.3d 49, 53 (1st Cir. 2013), quoting SEC v. Tambone, 597 F.3d 436, 442 (1st Cir. 2010) (en banc).

         Violation of Privacy

         Plaintiffs allege that defendants violated their privacy rights under Mass. Gen. Laws ch. 214, § 1B, by disclosing their “sensitive and private student academic data” to UMass Dartmouth without their consent.[4] Am. Compl. ¶ 57. “To sustain a claim for invasion of privacy, the invasion must be both unreasonable and substantial or serious.” Nelson v. Salem State Coll., 446 Mass. 525, 536 (2006). “Generally, whether an intrusion qualifies as unreasonable, as well as either substantial or serious, presents a question of fact.” Polay v. McMahon, 468 Mass. 379, 383 (2014). However, “legitimate countervailing business interests . . . may render the disclosure of personal information reasonable and not actionable under the statute.” Bratt v. Int'l Bus. Machines Corp., 392 Mass. 508, 520 (1984).

         Here, plaintiffs' allegations fail to establish that the disclosure of their records to UMass Dartmouth was unreasonable as a matter of law. To the contrary, Mount Ida submitted the records to UMass Dartmouth to facilitate plaintiffs' enrollment at the successor institution. The transfer of records, therefore, served a “legitimate purpose, ” Polay, 468 Mass. at 383, and was indisputably conducted in accordance with the Massachusetts Attorney General's May 15, 2018 guidance letter, see College Mem., Ex. F. at 5 (directing the transfer of student records using “an anonymized set of unique student identifiers” and noting that “UMass Amherst has agreed to become the ‘institution of record'”), [5] and Massachusetts regulations, see 610 C.M.R. § 2.07(3)(f)(2) (“If an institution knows that it may close, . . . it shall arrange . . . to safeguard the needs of students by organizing educational transfer opportunities, and ensuring the preservation of student records[.]”). Thus, plaintiffs' privacy claim fails as a matter of law. See Ortiz v. Examworks, Inc., 470 Mass. 784, 793 (2015) (“Because the examination was authorized under [Mass. Gen. Laws ch. 90, ] § 34M, the invasions of privacy associated with its taking place were ‘justified.'”); Schlesinger v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 409 Mass. 514, 518 (1991) (“The statute obviously was not intended to prohibit serious or substantial interferences which are reasonable or justified.”).

         Fraud, Negligent Misrepresentation, Fraud in the Inducement

         Plaintiffs next allege that defendants committed fraud, negligent misrepresentation, and fraud in the inducement by “continu[ing] to hold Mount Ida out as a viable institution” even though they knew, or should have known, that it was failing financially. Am. Compl. ¶¶ 65, 77. “To establish a claim for fraud under Massachusetts law, a plaintiff must prove that ‘the defendant made a false representation of material fact with knowledge of its falsity for the purpose of inducing the plaintiff to act thereon, and that the plaintiff reasonably relied upon the representation as true and acted upon it to his damage.'” Taylor v. Am. Chemistry Council, 576 F.3d 16, 31 (1st Cir. 2009), quoting Russell v. Cooley Dickinson Hosp., Inc., 437 Mass. 443, 458 (2002). To sustain a claim of negligent misrepresentation, a plaintiff need not show that a defendant knew the statement to be false, but must show that the defendant failed “to exercise reasonable care or competence in obtaining or communicating the information.” Nota Constr. Corp. v. Keyes Assocs., Inc., 45 Mass.App.Ct. 15, 20 (1998).

         Defendants argue, and the court agrees, that plaintiffs fail to identify any statement that can be shown to have actually been false. According to the allegations of the Amended Complaint: (1) defendants announced, on February 24, 2018, a potential merger with Lasell College, without referencing Mount Ida's financial distress; and (2) President Brown sent an email to students, on March 23, 2018, stating that merger negotiations had broken off, but that “Mount Ida remained a top 30 school in the region, ” without divulging any information about the school's financial health. Am. Compl. ¶¶ 68, 79, 88. Plaintiffs do not allege that either statement was untrue.

         In response, plaintiffs aver that “Mount Ida's withholding of information regarding its financial distress is the fraud alleged.” Opp'n to College at 15 (emphasis in original); see also Nei v. Boston Survey Consultants, Inc., 388 Mass. 320, 322 (1983) (“[A] partial disclosure or . . . a half truth . . . may be tantamount, under certain conditions, to a falsehood if there is no further expatiation.”). In other words, plaintiffs assert fraud by omission, which “requires both concealment of material information and a duty requiring disclosure.” Sahin v. Sahin, 435 Mass. 396, 402 n.9 (2001). But plaintiffs fail to make out such a claim.

         Mount Ida's audited financial disclosures, which plaintiffs do not allege were inaccurate, were publicly available.[6]See College Mem., Exs. B, C. These disclosures revealed that Mount Ida had been operating at a deficit since 2015. Id. at 5. Although plaintiffs allege that defendants reported to NEASC in 2017 that “Mount Ida was financially stable, ” Am. Compl. ¶ 26, the October 2017 NEASC report reviewed Mount Ida's finances and specifically noted that Mount Ida “has produced deficits which is making it difficult for the College to support its mission, ” id., Ex. D at 29. And while plaintiffs allege that defendants “intentionally omitted their merger talks with Lasell College from their Self-Study report to NEASC, ” Am. Compl. ¶¶ 69, 80, 89, the Self-Study report also includes Mount Ida's financials and states, in particular, that “[t]he financial plan projected several years of operating deficits, ” Brown Mem. (Dkt # 25), Ex. 1 at 60.[7] Even assuming Mount Ida's looming insolvency was material and concealed by defendants, plaintiffs fail to allege an actionable duty to disclose, including, as described below, any breach of a fiduciary duty.[8]See Knapp v. Neptune Towers Assocs., 72 Mass.App.Ct. 502, 507 (2008) (“A duty to disclose exists where ‘(i) there is a fiduciary or other similar relation of trust and confidence, (ii) there ...


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