Section 75-1.1 Stars in New Putative Class Action Against UNC

by Ellis & Winters LLP
Contact

Last Thursday, former UNC football player Michael McAdoo filed a putative class action against UNC-Chapel Hill. This federal complaint has already received extensive publicity. The publicity, though, has overlooked the surprising lead claim in the complaint—a claim for unfair and deceptive practices under N.C. Gen. Stat. § 75-1.1.

McAdoo alleges that when UNC sought to attract football recruits like him, the university promised the recruits a high-quality education. His complaint states that UNC “did not provide the promised legitimate education. Instead, [it] systematically funneled its football student-athletes into a ‘shadow curriculum’ of bogus courses which never met and which were designed for the sole purpose of providing enrollees high grades.”

                                   Ken Wainstein presents his October 2014 report on academic issues with UNC student-athletes.  Image by Jerry Wolford, courtesy of the News & Record.

Ken Wainstein presents his October 2014 report on
academic issues with UNC student-athletes.
Image by Jerry Wolford, courtesy of the News & Record.


McAdoo’s Section 75-1.1 Claim

The first count in McAdoo’s complaint alleges violations of section 75-1.1. Specifically, it alleges that UNC “represent[ed] that it would provide a legitimate UNC education to Plaintiff and the Class, when in fact it did not.” McAdoo also alleges a breach of contract, so his 75-1.1 claim seems to involve both an “aggravated breach” theory and a deception theory.

Although McAdoo’s complaint hints at reliance on UNC’s representations, it suggests that the athletes might have problems meeting this requirement. McAdoo alleges that “[a]bsent UNC’s misrepresentation and deceit, Plaintiff and Class members . . . would have been able to pursue opportunities at educational institutions true to their promises of legitimate education” (emphasis added). Notably, the complaint doesn’t allege that these students actually would have attended other colleges.

In any event, the statements of UNC representatives—and the student-athletes’ and their families’ reactions to those statements—are likely to vary widely from one plaintiff to the next. These individualized issues on the 75-1.1 claim are likely to pose grave problems for class certification, if this case gets that far.

Threshold Issues

As significant as the above issues are, McAdoo’s 75-1.1 claim faces an even more fundamental problem: The North Carolina courts have held repeatedly that “the consumer protection and antitrust laws of Chapter 75 of the General Statutes do not create a cause of action against the State, regardless of whether sovereign immunity may exist.”

In Sperry Corp. v. Patterson, the decision that first announced this rule, the North Carolina Court of Appeals wrote that the state and its officials are not “person[s], firm[s] or corporation[s]” that are covered by section 75-16, the remedial statute for section 75-1.1. In later cases, the North Carolina courts have extended Sperry to other officials and to municipalities.

McAdoo is likely to have difficulty overcoming Sperry—especially in a federal court, which is bound to apply state law as the North Carolina Supreme Court would apply it, and which has no option to certify questions of state law to that court.

Indeed, the U.S. District Court for the Middle District of North Carolina—the court where McAdoo is pending—has already come close to extending the Sperry rule to UNC itself. In Board of Governors of the University of North Carolina v. Helpingstine, the university faced a counterclaim under section 75-1.1. The university moved for summary judgment based on two arguments:  (1) that it is not a person, firm, or corporation under section 75-16, and (2) that it has sovereign immunity as an arm of the state. The district court accepted the immunity argument, so it did not reach the 75-16 argument. It granted summary judgment against the 75-1.1 counterclaim.

In short, the section 75-1.1 claim in McAdoo is inventive, but it faces an NFL-level array of defenses.

Law students Kathleen O’Malley, Jamie Lynne Thomas, and Scottie Beth Forbes contributed to this post.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Ellis & Winters LLP | Attorney Advertising

Written by:

Ellis & Winters LLP
Contact
more
less

Ellis & Winters LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.