Opinion
05 Civ. 7174 (KMW).
March 27, 2007
OPINION AND ORDER
This lawsuit by current and former drama students at New School University ("New School") arises from changes to New School's graduate drama program. Beginning in 1994, New School contracted with The Actors Studio, Inc. ("Actors Studio" or "Studio") to jointly offer a master's degree program in dramatic arts, under the name "The Actors Studio Drama School of New School University." The contract expired in 2005, and the degree program was renamed "The New School for Drama." Plaintiffs, who are students in and graduates of the degree program, allege that the name change and other alterations to the program constitute breach of contract and deceptive business practices by New School, the Defendant. Defendant has moved to dismiss, and Plaintiffs have cross-moved for summary judgment. For the reasons stated below, Defendant's motion is granted in part and denied in part, and Plaintiffs' cross-motion is denied.
Plaintiffs have stated that they intend to move for class certification on behalf of a class consisting of all students who entered the degree program between 2002 and 2004. (See Compl. ¶ 20; Pls.' Mem. of Law 1 n. 1.)
The Complaint also claimed false advertising and unjust enrichment, but Plaintiffs now consent to the dismissal of those claims. (See Pls.' Mem. of Law 2 n. 2.) The false advertising and unjust enrichment counts of the Complaint are therefore dismissed.
BACKGROUND
On April 1, 1994, New School signed a ten-year contract with the Actors Studio, whereby New School, in collaboration with the Actors Studio, would offer a master's degree in dramatic arts. (Lupone Aff., Ex. 1, ¶ 1.) The Actors Studio agreed to develop the curriculum for the program, propose faculty members, and recommend students for admission; New School agreed to provide facilities, control academic and admissions requirements, employ faculty and staff, and oversee the program's finances and management. (Id. ¶¶ 5.1, 6.) New School also agreed to prepare all advertising, in consultation with the Actors Studio. (Id. ¶ 6.8.) The contract specified that the parties' agreement would terminate on June 30, 2004. (Id. ¶ 8.)
New School published a catalogue every other year describing and promoting the Actors Studio Drama School of New School University. (See Kapoor Aff., Ex. B [hereinafter "Catalogue"]; see also id., Ex. C.) The catalogue contains a paragraph entitled "Policy on Catalogue Changes," which reads: "Course offerings, semester point evaluations, academic requirements, degree programs, tuition, fees, facilities, and faculty listed in this catalogue are subject to change without notice." (Catalogue 34.)
Because relevant descriptions in the 2000-2002 Catalogue are the same as those in the 2002-2004 Catalogue, citations will be given only to the latter document.
New School and the Actors Studio extended their contract's termination date to May 16, 2005. (Lupone Aff. ¶ 7; id. Ex. 2.) After that date, the relationship between the parties ended. (Def.'s Local Rule 56.1 Response ¶ 5.)
Various changes to the program and its curriculum ensued. The Actors Studio is not mentioned on the diplomas of students who graduated in 2006 and thereafter (Pls.' Local Rule 56.1 Statement ¶ 6), although students graduating in 2005, 2006, and 2007 have continued to receive "working finalist" status in the Studio (Def.'s Local Rule 56.1 Response ¶ 6.) The drama program ceased offering "movement training" classes by the Alvin Ailey American Dance Center. (Pls.' Local Rule 56.1 Statement ¶ 3; Def.'s Local Rule 56.1 Response ¶ 3.) Some faculty members resigned or were terminated, although the parties do not agree on how many. (Pls.' Local Rule 56.1 Statement ¶ 2; Def.'s Local Rule 56.1 Response ¶ 2.) The parties also disagree about whether the program continued to offer instruction in the "Stanislavski Method" of acting. (Pls.' Local Rule 56.1 Statement ¶ 2; Def.'s Local Rule 56.1 Response ¶ 2.)
DISCUSSION I. Conversion of a Motion to Dismiss
The Court may convert a motion to dismiss for failure to state a claim on which relief can be granted to a motion for summary judgment if (1) the moving party presents matters outside the pleading and (2) all parties are given a reasonable opportunity to present pertinent material. Fed.R.Civ.P. 12(b). Here, both Plaintiffs and Defendant have presented affidavits and exhibits in support of their motions, including documents that make reference to matters outside the Complaint. Defendant also understood that the Court might convert its motion to a motion for summary judgment. (See Def.'s Reply Mem. of Law 1, 8.) The Court may thus convert Defendant's motion to dismiss to a motion for summary judgment at this time. See Reliance Ins. Co. v. Polyvision Corp., 474 F.3d 54, 57 (2d Cir. 2007). The Court now does so.
II. Standard of Review for Motions for Summary Judgment
Summary judgment is appropriate only if there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Allstate Ins. Co. v. Hamilton Beach/Proctor Silex, Inc., 473 F.3d 450, 455 (2d Cir. 2007). An issue of material fact is genuine if sufficient evidence exists for a reasonable jury to return a verdict for the nonmoving party, in whose favor all ambiguities must be resolved and all factual inferences drawn. Id. at 455-56.
III. Motions for Summary Judgment on Specific Counts A. Breach of Contract
The first count of the Complaint alleges that Defendant breached its contract with Plaintiffs. In New York, a breach of contract claim has four elements: (1) an agreement, (2) adequate performance by plaintiff, (3) breach by defendant, and (4) damages. Harsco Corp. v. Segui, 91 F.3d 337, 348 (2d Cir. 1996). Defendant argues that it is entitled to summary judgment on this count because no breach occurred: the contract contemplated all the actions that constitute the alleged breach.
The first count also alleges that Plaintiffs were intended third-party beneficiaries of Defendant's contract with the Actors Studio, and that Defendant breached its contract with the Studio. (Compl. ¶ 37-39.) This claim cannot be sustained, for two reasons. First, Defendant has submitted uncontroverted evidence that it did not breach its contract with the Actors Studio, which expired by agreement on May 16, 2005. (Lupone Aff. ¶¶ 6-7, 10-11, 15; id. Ex. 1, ¶ 8; id. Ex. 2.) Second, Plaintiffs were not intended third-party beneficiaries of the New School/Actors Studio contract, which contains a clause entitled "No Third Party Beneficiaries." (Id. Ex. 1, ¶ 13.6.) See Fourth Ocean Putnam Corp. v. Interstate Wrecking Co., 485 N.E.2d 208, 212 (N.Y. 1985) (holding that third party is intended beneficiary only if "no one other than the third party can recover if the promisor breaches the contract" or if "the language of the contract otherwise clearly evidences an intent to permit enforcement by the third party"). Third parties who are merely incidental beneficiaries, as contrasted with intended beneficiaries, may not state claims for breach of contract. Id.
In New York, the relationship between a university and its students is contractual. Sweeney v. Columbia Univ., 704 N.Y.S.2d 617, 618 (App.Div. 2000). The terms of the contract between university and student include the rights and obligations of the parties stated in the university's catalogue and other publications. Downey v. Schneider, 806 N.Y.S.2d 657, 659 (App. Div. 2005); Vought v. Teachers Coll., Columbia Univ., 511 N.Y.S.2d 880, 881 (App.Div. 1987). A "specific disclaimer[]" in the catalogue, however, may excuse the university from a specific promise that would otherwise be a contractual obligation. Prusack v. State, 498 N.Y.S.2d 455, 456 (App.Div. 1986); see also Gally v. Columbia Univ., 22 F. Supp. 2d 199, 206 n. 7 (S.D.N.Y. 1998);Keles v. NYU, No. 91 Civ. 7457 (SWK), 1994 WL 119525, at *6 (S.D.N.Y. Apr. 6, 1994).
The interpretation of a university's catalogue, like the interpretation of any contract, is a matter of law for the Court.Alexander Alexander Servs., Inc. v. These Certain Underwriters at Lloyd's, London, 136 F.3d 82, 86 (2d Cir. 1998). On a motion for summary judgment that turns on the application of contract language, the Court must first determine whether the contract is ambiguous. Id. An ambiguity exists if a contract provision "could suggest more than one meaning when viewed objectively by a reasonably intelligent person who has examined the context of the entire integrated agreement and who is cognizant of the customs, practices, usages and terminology as generally understood in the particular trade or business." Id. (internal quotation marks omitted). If the contract is ambiguous, then the Court should next consider whether there is relevant extrinsic evidence of the parties' actual intent. Id. Where there is extrinsic evidence that could explain an ambiguous contract term, the meaning of the contract presents a genuine issue of material fact, precluding summary judgment. Id. Summary judgment is appropriate only if the contract is unambiguous, if no relevant extrinsic evidence exists, or if the extrinsic evidence is so one-sided that no reasonable jury could decide contrary to the moving party's interpretation. SCS Commc'ns, Inc. v. Herrick Co., 360 F.3d 329, 342 (2d Cir. 2004); Alexander Alexander, 136 F.3d at 86.
Here, the catalogue published by Defendant states rights and obligations of the parties, but it also contains a specific disclaimer. Plaintiffs allege that the catalogue promised, but Defendant failed to provide, eight specific benefits: (1) diplomas bearing the name of the Actors Studio; (2) instruction in the distinctive "Stanislavski Method"; (3) courses taught by faculty members who are lifetime members or associates of the Actors Studio; (4) the Actors Studio's televised craft seminars; (5) videotape copies of craft seminars; (6) Friday workshops with distinguished actors; (7) "movement training" from the Alvin Ailey American Dance Center; and (8) "working finalist" status in the Actors Studio. (Compl. ¶¶ 14-15, 34-35.) Defendant counters that it disclaimed any obligation to provide these benefits by stating in the catalogue Defendant's "Policy on Catalogue Changes," which reads, "Course offerings, semester point evaluations, academic requirements, degree programs, tuition, fees, facilities, and faculty listed in this catalogue are subject to change without notice." (Catalogue 34.) The Court examines each of the alleged breaches of contract in turn.
These benefits are an appropriate basis for a breach of contract claim. New York courts permit students to sue for failure to provide "certain specified services" for which they have contracted. Paladino v. Adelphi Univ., 454 N.Y.S.2d 868, 873 (App.Div. 1982); see also Ansari v. NYU, No. 96 Civ. 5280 (MBM), 1997 WL 257473, at *3 (S.D.N.Y. May 16, 1997). They do not permit claims of "educational malpractice," Donohue v. Copiague Union Free Sch. Dist., 391 N.E.2d 1352, 1354 (N.Y. 1979), or claims that would require judicial review of "purely academic determinations," Susan M. v. N.Y. Law Sch., 556 N.E.2d 1104, 1107 (N.Y. 1990). The Court may entertain Plaintiffs' claim because it will not require the Court to "evaluate the course of instruction" or "review the soundness of the method of teaching that has been adopted by an educational institution." Paladino, 454 N.Y.S.2d at 872.
1. "Actors Studio Drama School" Name
The catalogue unambiguously suggests that the Actors Studio name is a valuable asset from which students will benefit, but the disclaimer paragraph creates an ambiguity about whether this benefit is subject to change without notice.
The catalogue is replete with references to the Actors Studio, which emphasize its prestige and uniqueness. The front cover of the catalogue is labeled "The Actors Studio Drama School of New School University," with the words "The Actors Studio Drama School" printed in bolder and more prominent type. (Catalogue (front cover).) A letter from Dean James Lipton in the catalogue describes the Actors Studio as "one of the most exclusive institutions in the world — not out of snobbery, but by deliberate creative design. That design has produced a roster of Life Members that is unmatched by any theatrical institution." (Id. 1.) The catalogue calls the Studio's membership "a Who's Who of American theatre, film, and television," a statement followed by both the names of 52 famous Studio members, and the assertion that Studio members have collectively won more than 150 Oscar, Tony, and Emmy awards. (Id. 3.) The unambiguous inferences to be drawn from these statements are (1) that students who graduate from the master's program will receive diplomas identifying them as graduates of the "Actors Studio Drama School," and (2) that such diplomas, and association with the Actors Studio generally, are coveted assets that will aid students' theatrical careers.Cf. Alexander Alexander, 136 F.3d at 86 (noting that contract ambiguity can arise "either from the language itself or from inferences that can be drawn from this language").
Although the body of the catalogue promises that students will receive diplomas bearing the Actors Studio name, the Policy on Catalogue Changes states that "degree programs . . . listed in this catalogue are subject to change without notice." (Catalogue 34.) This disclaimer can reasonably sustain more than one meaning. First, it could mean that New School reserves the right to change any aspect of the degree program, including its name and its association with the Actors Studio. This meaning is supported by the straightforward wording of the sentence: the permissible changes are not limited in type or in degree. Second, it could mean that New School reserves the right to change aspects of the degree program but not the program's fundamental identity. Supporting this latter view is the list of attributes subject to change without notice: "degree programs" is one a string of attributes listed, including "course offerings," "semester point evaluations," "academic requirements," "tuition," "fees," "facilities," and "faculty." If New School intended the words "degree programs" to encompass any aspect of the program whatsoever, up to and including its identity as the Actors Studio Drama School, then the enumeration of other, secondary aspects of the program would be surplusage. Such an interpretation is disfavored. See Hartford Fire Ins. Co. v. Orient Overseas Containers Lines (UK) Ltd., 230 F.3d 549, 558 (2d Cir. 2000) ("[A]n interpretation that gives a reasonable and effective meaning to all terms of a contract is preferable to one that leaves a portion of the writing useless or inexplicable."). Moreover, the juxtaposition of "degree programs" with secondary aspects of the program suggests that "degree programs" should be interpreted narrowly, because of the canon of ejusdem generis.
Ejusdem generis is an interpretive canon that provides that "general language in an enumeration of specific illustrations [be] construed in a fashion that limits the general language to the same class of matters as the things illustrated." Can. Life Assurance Co. v. Converium Rückversicherung (Deutschland) AG, 335 F.3d 52, 58 (2d Cir. 2003); see also Kama Rippa Music, Inc. v. Schekeryk, 510 F.2d 837, 841 n. 5 (2d Cir. 1975) (using canon to interpret contract provision).
Because the disclaimer is ambiguous with respect to whether the catalogue promises graduates of the program an Actors Studio diploma, the Court next considers the availability of extrinsic evidence. The parties could present evidence of students' and applicants' expectations about and knowledge of the possibility that New School and the Actors Studio would end their relationship, and of their communications on the subject with program and university officials. For example, Defendant has submitted an affidavit from program director Robert Lupone stating that students were informed of the progress of New School/Actors Studio negotiations and of the possibility that the relationship would not be renewed. (Lupone Aff. ¶¶ 12-13.) Evidence of this sort creates a genuine issue of material fact, rendering summary judgment on this issue inappropriate.
2. Stanislavski Method, Craft Seminars, Friday Workshops, and Movement Training
Four of the specific benefits that Plaintiffs claim they were promised in the catalogue — (1) instruction in the "Stanislavski Method," (2) the Actors Studio's televised craft seminars, (3) Friday workshops with actors, and (4) "movement training" from the Alvin Ailey American Dance Center — are unambiguously disclaimed by the statement that "[c]ourse offerings" are "subject to change without notice." (Catalogue 34.) The craft seminars, Friday workshops, and movement training are all specific course offerings, which are listed in the "Course Descriptions" section of the catalogue. (E.g., Catalogue 16 ("Movement 1"); id. 17 ("Workshop 1" and "The Craft Seminars").) The Stanislayski Method is also a "course offering," which is taught in seven separate courses, as noted in the catalogue. (See id. 8 (listing specific courses in which "[s]tudents are taught the Stanislavski System"); see also id. 15-16, 18-20, 23, 25-26 (describing various Stanislavski courses in "Course Descriptions" section of catalogue).) The Policy on Catalogue Changes entitles New School to change these and other course offerings without breaching its contract with Plaintiffs.
3. Faculty Members
Plaintiffs' allegation that they were promised "core" faculty members who are lifetime members or associates of the Actors Studio does not state a claim for breach of contract, because the Policy on Catalogue Changes unambiguously states that "faculty" are "subject to change without notice." (Catalogue 34.) The word "faculty" can refer both to individual instructors at a school and to the school's body of instructors as a whole.Webster's II New Riverside University Dictionary 460 (1994). The Policy on Catalogue Changes therefore reserves New School's right to change either individual teachers or the entire teaching staff. The disclaimer does not limit or qualify this right, such as by promising to replace faculty members who resign or are dismissed with others of identical qualifications or affiliations. Defendant had no contractual obligation to maintain a faculty composed solely or partially of Actors Studio members or affiliates.
The Complaint appears to misquote the promise in the catalogue, which asserts that "every one of the program's teachers of acting, directing, and playwriting is, by definition and mandate, an experienced and distinguished Life Member of The Actors Studioor closely affiliated colleague." (Catalogue 1 (emphasis added);cf. Compl. ¶ 14(3).)
4. Videotape Sets
The catalogue states that the Actors Studio, not Defendant, will give videotape sets to graduates: "As a gift at graduation, every member of the class receives from the Studio a complete videotape set of all the seminars that have been taped and edited during the student's three years with the program . . . ." (Catalogue 7 (emphasis added).) The Actors Studio is a separate entity that is now unaffiliated with Defendant. The language of the catalogue makes clear that the gift of videotape sets is the Studio's responsibility and is therefore not an element of Defendant's contractual obligations to Plaintiffs.
5. Working Finalist Status
Defendant has submitted uncontroverted evidence that students graduating in 2005 and 2006 have been awarded finalist status with the Actors Studio, and that students graduating in 2007 will also receive finalist status with the Studio. (Lupone Aff. ¶ 16.) Plaintiffs therefore are receiving what was promised in the contract, and they have no breach of contract claim on this basis.
B. Deceptive Business Practices
The second count of the Complaint alleges that Defendant engaged in deceptive business practices, in violation of Section 349 of the New York General Business Law. Section 349 outlaws "[d]eceptive acts or practices in the conduct of any business, trade or commerce or in the furnishing of any service in this state." N.Y. Gen. Bus. Law § 349(a) (McKinney 2007); see also id. § 349(h) (creating private right of action for injured parties). The statute has been held to apply to educational contracts.Alexson v. Hudson Valley Cmty. Coll., 125 F. Supp. 2d 27, 30 (N.D.N.Y. 2000) (citing cases). A Section 349 plaintiff must prove three elements: (1) a consumer-oriented act or practice (2) that was likely to mislead a reasonable consumer in a material way and (3) that caused injury to the plaintiff. Stutman v. Chemical Bank, 731 N.E.2d 608, 611 (N.Y. 2000). Defendant argues that it is entitled to summary judgment because the Policy on Catalogue Changes stated that the benefits promised in the catalogue were subject to change without notice and, therefore, Defendant's actions in promoting the master's degree program were not reasonably misleading.
The Complaint alleges that New School's deceptive acts and practices included misrepresentations about its contract negotiations with the Actors Studio and its intention to renew the Actors Studio contract. (Compl. ¶ 46(a)-(d).) Plaintiffs' brief withdrew these allegations, and clarified that the sole basis for the deceptive practices claim is "New School's failure to deliver on its representations in the Catalogue." (Pls.' Mem. of Law 14.)
Defendant separately argues that, to the extent Plaintiffs seek treble damages on their Section 349 claim, the claim may not be maintained as a class action. Because Plaintiffs have not yet moved for class certification, this argument is premature, and the Court does not consider it now.
Because of the ambiguous wording of the catalogue, the Court may not grant summary judgment to either party with respect to the Section 349 claim. A claim under Section 349 cannot be maintained where the defendant fully disclosed the allegedly deceptive practice. Broder v. MBNA Corp., 722 N.Y.S.2d 524, 526 (App.Div. 2001); accord Fibermark, Inc. v. Brownville Specialty Paper Prods., Inc., 419 F. Supp. 2d 225, 241 (N.D.N.Y. 2005);Scott v. Bell Atl. Corp., 726 N.Y.S.2d 60, 64 (App.Div. 2001). As explained in the preceding section, a question of fact exists about whether the Policy on Catalogue Changes gave New School the right to change the identity of the drama program without notice. Thus, there is also a question of fact about whether the catalogue would be likely to mislead a reasonable consumer or, alternatively, whether it fully disclosed New School's right to change the program's identity. Summary judgment for either party is therefore precluded. See Broder, 722 N.Y.S.2d at 526 (noting question of fact stemming from ambiguous language in disclaimer, precluding summary judgment); see also Alexson, 125 F. Supp. 2d at 30-31 (same, regarding provision in college catalogue).
CONCLUSION
For the reasons stated above, Defendant's motion to dismiss (docket number 9) is GRANTED with respect to the false advertising and unjust enrichment claims, and DENIED with respect to the breach of contract and deceptive business practices claims. Plaintiffs' cross-motion for summary judgment (docket number 28) is DENIED.
Defendant shall file its answer by April 13, 2007. Plaintiffs shall file any motion for class certification and accompanying memorandum of law by April 27, 2007. Defendant shall file any response to the motion by May 11, 2007. Plaintiffs shall file any reply by May 18, 2007.
SO ORDERED.