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The Indiana Supreme Court has unanimously ruled in favor of Ball State University in case in which a student sued for breach of contract and unjust enrichment when classes switched to only-online instruction during the COVID-19 pandemic.
In spring 2020, Keller Mellowitz was a student at Ball State University who had paid tuition and mandatory fees for student services, university technology, student recreation, student health and student transportation.
About halfway through the semester, COVID-19 was declared a public health emergency in Indiana. Gov. Eric Holcomb issued an executive order that ordered individuals to remain at home with limited exceptions and ordered nonessential businesses to close.
Ball State, like many other higher education intuitions nationwide, was permitted to continue educating students, but only through distance education. All in-person classes were canceled, campus facilities were closed and students were sent home.
When the spring semester ended, Mellowitz filed a lawsuit against Ball State and its board of trustees alleging they breached a contract to provide him in-person instruction, and that even if they hadn’t breached a contract, they were at least unjustly enriched by retaining tuition and fees for services they stopped providing. He requested recovery of tuition and fees and sought to represent a class of similarly situated students.
About a year later, Holcomb signed Indiana Code § 34-12-5-7, which prohibits class actions against covered entities like Ball State for breach of contract or unjust enrichment class for losses arising from COVID-19.
Ball State filed a motion under Indiana Trial Rule 23(D)(4). Mellowitz argued the Marion Superior Court should deny the motion because Section 7 is unconstitutional either because it is a procedural law improperly usurping the judicial power, it takes his property without just compensation or it impairs his contract with Ball State.
The attorney general intervened to defend the constitutionality of the statute, and following a hearing, the trial court granted Ball State’s motion and rejected Mellowitz’s arguments.
The trial court ordered Mellowitz to file an amended complaint removing any allegations related to other class members, and it denied class certification.
On appeal, the Court of Appeals of Indiana reversed the trial court’s order and agreed that Section 7 was a procedural statute conflicting with Trial Rule 23 and, therefore, a nullity.
The high court later granted transfer and held oral argument at the University of Indianapolis.
Mellowitz first argued that Section 7 runs afoul of the constitutional separation of powers because it limits class actions, which he contends is the prerogative of the judiciary.
The justices disagreed and found shielding postsecondary educational institutions from pandemic-related class-action claims is within the General Assembly’s legislative authority.
“Without running afoul of our Indiana Constitution’s separation of powers, our judiciary may accommodate statutes altering judicial processes when the statutes predominantly further public policy objectives rather than judicial administration objectives, so long as the statutes do not undermine the truth‐seeking function of litigation, and they do not otherwise interfere with the judiciary’s ability to fulfill its constitutional obligations,” Justice Derek Molter wrote, citing Church v. State, 189 N.E.3d 580 (Ind. 2022).
The justices further held that Section 7 is a valid legislative enactment and does not encroach on judicial power.
The constitution generally precludes the Legislature from micromanaging court procedures, Molter wrote, but the judiciary may accommodate statutes altering procedures if the statutes predominantly further public policy objectives and do not interfere with the orderly dispatch of judicial business.
The second issue on transfer was whether retroactively applying the statute to Mellowitz’s claim has the effect of taking his property without just compensation in violation of the state and federal constitutions.
The court held that Section 7 is not an unconstitutional taking and that the General Assembly didn’t take away all legal means for Mellowitz’s contract claims.
“Just the opposite, the General Assembly preserved Mellowitz’s right to sue Ball State on his own behalf, which the trial court is permitting him to do,” Molter wrote.
Lastly, Mellowitz argued that the statute impairs his contract with Ball State in violation of the state and federal constitutions.
He argued that precluding him from representing a class deprived him of his only effective remedy to enforce his own individual rights under his alleged contract with Ball State.
“But we must reject that argument for the same reason we rejected it in the takings context — we cannot accept the invitation to simply assume Mellowitz is without an effective contract remedy because Section 7 is presumed constitutional unless Mellowitz demonstrates otherwise, and he has not demonstrated that his suit against Ball State to recover his own tuition and fees is an inadequate means for enforcing his alleged contract rights,” Molter wrote.
All justices concurred in Keller J. Mellowitz v. Ball State University and Board of Trustees of Ball State University, and State of Indiana, 23S‐PL‐60.
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