The legal aftershocks of the COVID-19 pandemic will be surfacing for years to come. But for those waiting for pendent-appellate jurisdiction and Rule 54(b) sightings, a recent Court of Appeal opinion combines appellate catnip with a challenge to student fees charged to university students during the lockdown.
Background Facts
In Lannan v. Bd. of Governors of the Univ. of N.C., 2022-NCCOA-653, one plaintiff is an undergraduate student at the University of North Carolina at Chapel Hill (UNC-CH) while the other is a graduate student at North Carolina State University (NCSU). Defendant UNC System Board of Governors required all students to pay an assortment of student fees to register for the 2020 fall term. These mandatory fees were earmarked for specific services–including student health services, transportation systems, campus recreational activities, and other campus-related services. A full list of activities and services supported or funded by these student fees was forwarded to each student. In addition, students could purchase optional, on-campus parking permits.
But in August 2020, both UNC-CH and NCSU shut down their campuses—evicting students and cancelling in-person classes. Students were advised that student health services were curtailed and to obtain health services elsewhere.
Plaintiffs’ Amended Complaint asserted breach of contract claims or, in the alternative, a Corum claim for improperly retaining both the required student fees and the optional parking fees. (Corum claims are made directly under the North Carolina Constitution’s “Law of the Land” clause when no other relief is available.)
Plaintiffs’ contract claims stemmed from both mandatory and optional student fees. Plaintiffs alleged that defendant offered services to students if mandatory fees were paid and that plaintiffs accepted the offer by paying the fees. Plaintiffs asserted a similar contract claim based on optional parking pass fees.. Plaintiffs’ position was that defendant consented to be sued and waived sovereign immunity by entering into these alleged contracts.
In response, defendant moved for dismissal, arguing that (1) plaintiffs’ claim was barred by sovereign immunity, (2) plaintiffs failed to state claims for relief for breach of contract and for a state constitutional law violation under Rule of Civil Procedure 12(b)(6), and (3) plaintiffs failed to show that defendant’s alleged conduct proximately caused plaintiffs’ alleged damages.
The trial court granted defendant’s motion to dismiss plaintiffs’ Corum claim but denied defendant’s motion to dismiss plaintiffs’ contract claims.
The trial court later entered an amended order that left its original rulings intact but added Rule 54(b) language certifying plaintiffs’ Corum claim for immediate appellate review. Both parties appealed.
Pendent Appellate Jurisdiction and Fixing Rule 54(b) Certification Oversights.
The Court of Appeals first considered its jurisdiction to entertain the appeals. Although the trial court’s order was interlocutory, everyone acknowledged that the portion of the trial court order denying the state’s motion to dismiss on sovereign immunity grounds impacted a substantial right that would be lost absent immediately appellate review. Lannan at ¶ 21.
But what about the Corum claim and the Rule 12(b)(6) issues related to the contract claim? After all, the general rule for interlocutory appeals is that appealability must be established for every issue being challenged on appeal.
That’s where the Rule 54(b) certification comes in. The trial court’s original order didn’t say anything about Rule 54(b) certification. And under Peacock Farms, a Rule 54(b) certification cannot be in a separate piece of paper from the order being appealed. See North Carolina Appellate Practice & Procedure § 3.03[4][e] [Requirement That Certification Be Included in the Judgment]. But as a prior blog post notes, subsequent Court of Appeals opinions have suggested that litigants can overcome Peacock’s “single document” hurdle by convincing the trial judge to enter an amended order with the required Rule 54(b) certification language. See also id. § 3.03[4][f] [Amended Rule 54(b) Orders]. Plaintiffs followed that advice here. And the Court of Appeal, without further comment or analysis, accepted that “the trial court properly certified the dismissal of the Corum claim” for appellate review. Lannan at ¶ 25.
On the other hand, the trial court’s denial of defendant’s Civil Rule 12(b)(6) motion on based on failure to state a contract claim did not impact a substantial right. Nor was it a “final claim” subject to Rule 54(b) certification.
Nevertheless, the undaunted defendant argued that the Rule 12(b)(6) issue was “inextricably intertwined” with the other issues over which the appellate court did have interlocutory jurisdiction.
This is where pendent appellate jurisdiction sneaks in. We say sneak because Judge Dietz appears to be the only North Carolina appellate judge to have ever used the words “pendent appellate jurisdiction” in an opinion. And it was not a ringing endorsement of the pendent-appellate jurisdiction doctrine. See State v. Carver, 2021-NCCOA-141, ¶ 23, 277 N.C. App. 89, 94, writ denied, review denied, 379 N.C. 156, 863 S.E.2d 597 (2021) (“Our jurisdictional doctrine does not recognize pendent appellate jurisdiction.”).
Yet, without pulling out the “pendent appellate jurisdiction” calling card, Chief Judge Stroud danced close to the doctrine in footnote 5. She observes that North Carolina:
has not consistently treated the inextricably intertwined nature of issues on appeal as a reason to grant a PWC as opposed to an additional way to have a right to appeal…. For the purpose of this discussion, we assume without deciding an issue inextricably intertwined with another issue where there is an appeal of right can also be appealed as a matter of right. If two issues are intertwined such that addressing one addresses the other . . . , it makes little sense to require a party to file a PWC rather than just having a right to appeal.
Lannan, ¶ 26 n.5.
Chief Judge Stroud avoids the jurisdictional conundrum by determining that remaining issue was not so “inextricably intertwined that jurisdiction over the sovereign immunity issue or the Corum issue grants us jurisdiction over the Rule 12(b(6) issue.” Id. ¶ 28. But in the end, the Chief cut the Gordian knot by determining that the “links between the issues” were sufficient to convince the Court to allow on judicial efficiency grounds defendant’s alternative petition for writ of certiorari . Id. ¶ 29.
Is there anything behind the appellate courts’ reluctance to say “pendent appellate jurisdiction” phrase? Is North Carolina dancing with a different type of test? Are we destined for this appellate tongue twister: “inextricable intertwined jurisdiction?” Perhaps the appellate courts would prefer to pay tribute to our State’s rural roots by adopting Beth’s rustic name for the concept: “appellate bootstrapping.” Or in a nod to North Carolina’s coastal roots, will Leerberg’s “anchor and hook” nomenclature prevail?
All those up for fun, cast your votes or suggest alternatives in the comments below!
Fee-Fi-Fo-Fum.
With the jurisdictional issues resolved, the Court of Appeals addressed defendant’s claim that it was protected from suit by sovereign immunity. Defendant raised several related arguments, beginning by asserting that plaintiffs failed to allege that an express contract existed. Apparently acknowledging the point, plaintiffs responded that an implied-in-fact contract could effectively waive sovereign immunity.
Most contracts arise under one of three legal theories: express contracts, contracts implied-in-law (e.g., quasi-contracts or quantum meruit), and contracts implied-in-fact. Id. ¶ 36. An express contract can waive sovereign immunity, Kawai America Corp. v. University of North Carolina at Chapel Hill, 152 N.C. App. 163, 567 S.E.2d 215 (2002), but contracts implied-in-law do not, Whitfield v. Gilchrist, 348 N.C. 39, 497 S.E.2d 412 (1998). But what about contracts implied-in-fact? After an extended analysis, the Court of Appeals concluded that sovereign immunity is waivable for implied-in-fact contracts. Id. ¶¶ 39-51.
The Court then considered whether plaintiffs had alleged an implied-in-fact contract. To do so, plaintiffs needed to have pled offer, acceptance, and consideration. Upon review of the pleadings, the Court concluded that these elements had been pled, though whether these allegations were supported by evidence would have to be determined by the trial court. Accordingly, the trial court did not err by denying defendant’s motion to dismiss plaintiffs’ complaint on sovereign immunity grounds.
The Court next addressed defendant’s Rule of Civil Procedure 12(b)(6) argument that plaintiffs did not allege that any of the services covered by the fees stopped when the schools shut down. Since the Court had already determined earlier in the opinion that plaintiffs had alleged a valid contract, it consider only whether plaintiffs adequately had alleged a breach. The Court focused on student health services and plaintiffs’ allegation that they and other students had been advised to seek these services elsewhere during the lockdown. On the optional parking pass fees, plaintiffs alleged that the passes they paid for had been rendered worthless by the lockdown. The Court held that these allegations were sufficient to support a breach claim and affirmed the denial of the Rule 12(b)(6) motion.
Turning to plaintiffs’ cross-appeal, the Court noted that Corum claim arise only if no underlying contract claim exists. Having held that plaintiffs’ contract claims are viable, the Court held that the trial court did not err in dismissing this alternative argument.
Final Thoughts
Absent intervention by the Supreme Court, the case is headed back to the trial court. But we likely will hear more about this case in the coming months. We live in a world where privately owned hotels, airlines, and many other companies impose all manner of “convenience fees” that consumers are stuck with. Most of the challenged student fees were mandatory and students could not attend without paying them. As students have little bargaining power, they are left in a “take-it-or-leave-it” posture with mandatory student fees. Any contract of adhesion issues?
Similarly, are mandatory students fees being used to fund organizations or political activities that the students have no interest in—or maybe even vehemently oppose? In a world where mandatory user-impact fees and union fees are inviting increased judicial scrutiny, when do school-imposed fees implicate constitutional rights?
h/t Matt Sawchak for bringing the pendent appellate jurisdiction issue to our attention!
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