What obligation does an institution of higher learning have to its students? That is the key question facing a federal judge in Boston after a hearing in April regarding the abrupt closure and sale of Mount Ida College in 2018. KCL represents the former Mount Ida students in a class action lawsuit against the school, its board of trustees, and five Mount Ida administrators alleging the college violated the students’ privacy, committed fraud and engaged in negligent misrepresentation, among other claims. Mount Ida filed a motion in Federal District Court to dismiss the lawsuit.
Last spring, Mount Ida announced its immediate closing without prior warning to students. The college’s closing late in the school year, after most transfer application deadlines had passed or were imminent, left students with the daunting task of locating a new school to continue their studies. Many students were left with degree programs that were discontinued or credits that could not be transferred; and many students lost their scholarships and other forms of financial aid.
The students allege the college knew of its financial distress as early as 2014, yet it continued to offer enrollment to students and deliberately withheld the fact that the school was teetering on the brink of insolvency. Instead, Mount Ida chose to make representations to students omitting information regarding the College’s true financial circumstances in order induce them to enroll and remain enrolled at the college. The lawsuit also alleges that prior to the April 2018 announcement that Mount Ida would close and be sold to UMass Amherst, the college provided UMass Dartmouth with students’ sensitive and private student academic data without prior authorization, in violation of the Massachusetts Right of Privacy Act and the federal Family Educational Rights and Privacy Act. Mount Ida denies these allegations.
The Students’ Position
The students allege that the school voluntarily undertook a duty to them when it advertised to them, encouraged them to choose Mount Ida over other educational opportunities, made false and/or partial disclosures about the college’s viability and accepted their tuition money. The school breached this fiduciary duty by withholding information regarding Mount Ida’s precarious financial condition until it was too late for many of the students to pursue other options. After the hearing, when asked, KCL attorney Michael Tauer stated, “Students paid tuition. That wasn’t a donation to Mount Ida. They were expecting something in return and it is our position they didn’t get it.” Tauer argued that the fact that the school was run as a not-for-profit should hold it to a higher standard.
In its written opposition to the motion to dismiss, KCL stated “This is not a case about the business decisions that led to the closure of Mount Ida. Rather, this case is premised on the school’s disregard for its students.” The firm further argued, this is a case about Mount Ida’s knowledge of vital information about its financial situation and its refusal to disclose the information to its students. It is a case about Mount Ida’s attempts to maintain enrollment by failing to disclose its dire financial condition and by making false statements regarding its future long after it knew the college had no future. It is a case about Mount Ida’s use of the students’ personal information as a bargaining chip in its acquisition negotiations with UMass Dartmouth. In short, this is a case about deception and Mount Ida’s treatment of the students as mere commodities.
Mount Ida’s Position
Mount Ida asserts it had no fiduciary duty to its students except to provide physical security, and no contractual obligation beyond teaching the courses students had already paid for. It also asserts the college was not required to safeguard its students’ private educational and financial information. During the hearing, Mount Ida argued it could not be held liable for what happened and asked that the lawsuit be dismissed.
The question of whether the school owed its students a fiduciary duty now rests with the judge. If Mount Ida’s motion to dismiss is denied, the case will move forward to trial.