F. DENNIS SAYLOR, IV, District Judge.
This is a dispute arising out of enrollment in an internet-based education program. Defendant United States Sports Academy, Inc. ("USSA") is a private online educational institution based in Alabama. Plaintiff Kuan Cheng enrolled in a USSA program while living in Alabama. He then moved to Massachusetts. Cheng alleges that when he attempted to complete his degree from Massachusetts, USSA improperly required him to re-enroll, and then informed him that the degree requirements had changed.
The complaint alleges that USSA engaged in unfair and deceptive business practices in violation of Mass. Gen. Laws ch. 93A. Specifically, it alleges that USSA misled Cheng about the requirements for its degree program, and that Cheng relied on those misrepresentations by continuing to pay tuition to USSA. It further alleges that as a result of USSA's actions, Cheng lost, among other things, years of work, his ability to obtain a degree without starting from scratch, tuition, and the loss of income associated with pursuing a degree. The complaint also alleges common-law claims for breach of contract, unjust enrichment, and fraudulent inducement.
Defendant has moved to dismiss the complaint for lack of personal jurisdiction pursuant to Fed. R. Civ. P. 12(b)(2) and for forum non conveniens.
Unless otherwise noted, the following facts are undisputed or presented as stated in the complaint.
The United States Sports Academy, Inc. ("USSA") is a private online educational institution organized and incorporated under the laws of Alabama. (Compl. ¶¶ 2, 4; Rosandich Aff. ¶¶ 1-3). It is regionally accredited by the Southern Association of Colleges and Schools Commission on Colleges to award baccalaureate, master's, and doctoral degrees. (Rosandich Aff. ¶ 1; Pl. Mem. Ex. 1).
USSA offers a "Distance Learning Program" that enables students to complete the entire curriculum for their degrees away from campus. (Rosandich Aff. ¶ 3). Its website touts the advantages of that program: "The Academy's Distance Learning Program offers students the flexibility to take courses and complete degrees without leaving their homes or jobs. Students can complete their courses ANY time, ANY place and at ANY pace." (Pl. Mem. Ex. 2). USSA provides that flexibility to its students by "deliver[ing degrees] online in an asynchronous environment. This means professors and students do not have to be online at the same time for learning to take place or assignments to be completed." (Id.). Students access all online courses through a website that offers them 24-hour access to their coursework. (Id.).
According to USSA, its officers direct, control, and coordinate the school's activities from its corporate headquarters and administrative offices in Daphne, Alabama. (Rosandich Aff. ¶¶ 4, 10).
According to USSA, it does not actively solicit business in Massachusetts. (Rosandich Aff. ¶ 6; cf. Compl. ¶ 2). USSA also asserts that as of January 10, 2019, it had only two Massachusetts-based students, neither of whom is seeking a degree. (Rosandich Aff. ¶ 9).
Kuan Cheng is formerly a resident of Alabama, now living in Massachusetts. (Compl. ¶ 1; Rosandich Aff. ¶ 8). In 2008, while in Alabama, Cheng enrolled in USSA's doctorate program in the field of sports management. (Compl. ¶ 3; Rosandich Aff. ¶¶ 7-8).
Between 2008 and 2010, Cheng completed 42 credits of coursework, most of which while living in Alabama. (Compl. ¶ 10; Rosandich Aff. ¶ 8).
In 2009, USSA changed the degree requirements for Cheng's doctorate program. (Compl. ¶¶ 6-7). Accordingly, he was given the option to change his degree requirement from a comprehensive examination to a portfolio requirement. (Id.).
To satisfy his portfolio requirement, Cheng was required, among other things, to complete an experiential-education component consisting of a "mentorship," essentially an internship, in the field. (Compl. ¶ 11; Rosandich Aff. ¶ 8; see also Pl. Mem. Ex. 1).
Cheng worked on his portfolio over the source of several years. (Compl. ¶¶ 10-12). All of his progress was submitted to and approved by his portfolio advisor, with the exception of a few papers. (Id. ¶ 12).
Some time between 2010 and 2015, Cheng moved to Massachusetts, and took a break from the doctorate program while earning a master's degree in acupuncture there. (Id. ¶¶ 1, 15). He alleges that in 2016, he attempted to resume work on his doctorate degree, because he was aware that he would need to complete his program requirements within ten years of his initial USSA enrollment. (Id. ¶ 16). However, when he tried to log on to USSA's online course management platform he was unable to do so. (Id.). He contends that he immediately contacted USSA about the issue, and was told that he had been removed from enrollment, and that he would need to re-enroll if he was still interested in pursuing his degree. (Id. ¶ 17).
According to Cheng, he submitted an application to re-enroll. (Id.). He received an e-mail from a USSA employee confirming receipt of his re-enrollment application. (Id. ¶ 18). That e-mail stated, among other things, that he would be required to take a comprehensive examination in order to complete his degree requirements. (Id.). He responded to that e-mail explaining the history of his degree requirements. (Id. ¶ 19). The USSA employee agreed to look into the issue and get back to him. (Id.).
On February 17, 2016, Cheng received an acceptance of his re-enrollment application from a USSA admissions counselor, signed by the dean of academic affairs. (Id. ¶ 20). That acceptance referred to USSA's 2008 course catalog. (Id.). The admissions counselor later clarified that Cheng was enrolled in the 2009, not 2008, catalog, with its corresponding portfolio requirement. (Id.).
Cheng alleges that in May 2017, he was again unable to access his USSA online course management account. Upon investigation, he learned that his portfolio had been deleted. (Id. ¶ 21).
According to the complaint, in June 2017, the dean of academic affairs of USSA informed Cheng that he would, in fact, be required to pass a comprehensive exemption in order complete his degree requirements, without exception. (Id. ¶ 22).
Cheng filed the complaint in this action in Suffolk Superior Court on September 18, 2018. The complaint alleges claims for unfair and deceptive business practices in violation of Mass. Gen. Laws ch. 93A, as well as common-law claims for breach of contract, unjust enrichment, and fraudulent inducement.
Defendant timely removed the case to this Court on December 17, 2018.
As to the basis for this Court's jurisdiction over USSA, the complaint alleges only that USSA "exercise[s] sufficient contacts within [sic] Massachusetts and conduct[s] business within the Commonwealth." (Compl. ¶ 2). USSA has moved to dismiss for lack of personal jurisdiction, contending that neither the requirements of the Massachusetts long-arm statute nor the Due Process Clause of the United States Constitution have been satisfied.
The exercise of personal jurisdiction over a defendant must be both authorized by statute and consistent with the due process requirements of the United States Constitution. Nowak v. Tak How Invs., Ltd., 94 F.3d 708, 712 (1st Cir. 1996); Intech, Inc., v. Triple "C" Marine Salvage, Inc., 444 Mass. 122, 125 (2005); Good Hope Indus., Inc. v. Ryder Scott, Co., 378 Mass. 1, 5-6 (1979).
Due process requires that a defendant over whom a Massachusetts court will exercise jurisdiction has maintained "minimum contacts" with the state "such that maintenance of the suit does not offend traditional notions of fair play and substantial justice." International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945). The Supreme Court has defined two categories of personal jurisdiction: general and specific. See Daimler AG v. Bauman, 134 S.Ct. 746, 754 (2014). As applied to corporations, general jurisdiction reaches "causes of action arising from dealings entirely distinct from" a foreign corporation's in-state contacts. International Shoe Co., 326 U.S. at 318.
Specific jurisdiction is limited to claims that "aris[e] out of or [are] related to the defendant's contacts with the forum." Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414 n.8 (1984). Over the years, the Supreme Court "has increasingly trained on the `relationship among the defendant, the forum, and the litigation,' i.e., specific jurisdiction, [and] general jurisdiction has come to occupy a less dominant place in the contemporary scheme." Daimler, 134 S. Ct. at 758 (quoting Shaffer v. Heitner, 433 U.S. 186, 204 (1977)).
The plaintiff bears the burden of establishing that the court has personal jurisdiction over the defendant. Daynard v. Ness, Motley, Loadholt, Richardson & Poole, P.A., 290 F.3d 42, 50 (1st Cir. 2002). In considering a motion to dismiss under Rule 12(b)(2), the court may employ several standards to assess whether plaintiff has carried that burden: the "prima facie" standard; the "preponderance-of-the-evidence" standard; or the "likelihood" standard. See id. at 50-51, 51 n.5; Foster-Miller, Inc. v. Babcock & Wilcox Canada, 46 F.3d 138, 145-46 (1st Cir. 1995). Where, as here, the court is called to make that assessment without first holding an evidentiary hearing, the prima facie standard is applied. See United States v. Swiss Am. Bank, Ltd., 274 F.3d 610, 618 (1st Cir. 2001). Under that standard, the court takes the plaintiff's "properly documented evidentiary proffers as true and construe[s] them in the light most favorable to [plaintiff's] jurisdictional claim." A Corp. v. All Am. Plumbing, Inc., 812 F.3d 54, 58 (1st Cir. 2016) (citing Phillips v. Prairie Eye Ctr., 530 F.3d 22, 26 (1st Cir. 2008)). A plaintiff may not "rely on unsupported allegations in [its] pleadings." A Corp., 812 F.3d at 58 (quoting Platten v. HG Bermuda Exempted Ltd., 437 F.3d 118, 134 (1st Cir. 2006)). "Rather, [the plaintiff] must put forward `evidence of specific facts' to demonstrate that jurisdiction exists." Id. (quoting Foster-Miller, 46 F.3d at 145). Facts offered by the defendant "become part of the mix only to the extent that they are uncontradicted." Astro-Med, Inc. v. Nihon Kohden Am., Inc., 591 F.3d 1, 8 (1st Cir. 2009) (quoting Adelson v. Hananel, 510 F.3d 43, 48 (1st Cir. 2007)).
To establish personal jurisdiction, plaintiff must show that the requirements of the Massachusetts long-arm statute, Mass. Gen. Laws ch. 223A, § 3, are satisfied, and that the exercise of jurisdiction is consistent with constitutional due process. Daynard, 290 F.3d at 52; Intech, Inc., 444 Mass. at 125. Due process requires that a plaintiff alleging specific personal jurisdiction establish the existence of three conditions:
Copia Commc'ns, LLC v. AMResorts, L.P., 812 F.3d 1, 4 (1st Cir. 2016) (quoting Phillips, 530 F.3d at 27 (alterations omitted)).
"The jurisdictional requirements imposed by the Massachusetts long-arm statute are quite similar to, though not completely congruent with, the jurisdictional requirements imposed by the Due Process Clause." Baskin-Robbins Franchising LLC v. Alpenrose Dairy, Inc., 825 F.3d 28, 34 (1st Cir. 2016). Because the "modest differences" between the two are immaterial here, this analysis will begin directly with the constitutional test. Id.
"A court may assert general jurisdiction over foreign [state] corporations to hear any and all claims against them when their affiliations with the State are so `continuous and systematic' as to render them essentially at home in the forum State." Goodyear Dunlop, 564 U.S. at 919. To be "at home" in a foreign state, a corporation must has affiliations with that state so substantial that it is "comparable to a domestic enterprise in that State." Daimler, 134 S. Ct. at 758 n.11. The Supreme Court has indicated that such jurisdiction will exist only in the "exceptional case." See id. at 761 n.19.
It is clear a Massachusetts court may not assert general jurisdiction over USSA. USSA is an online education program that is available to Massachusetts residents who choose to enroll in it. Its corporate headquarters are located in Alabama. It pays no taxes in Massachusetts, has no registered agent in the state, and maintains no Massachusetts address or telephone number. According to USSA, it does not advertise or solicit enrollment in Massachusetts, and currently has only two Massachusetts-based students, neither of whom is seeking a degree through USSA. Presumably, whatever revenue it has earned from Cheng and other Massachusetts-based students is relatively minimal. (See Pl. Mem. at 2) ("[Cheng] paid tuition of $40,000 for an online doctorate course.").
The complaint simply alleges that USSA "exercise[s] sufficient contacts within [sic] Massachusetts and conduct[s] business within the Commonwealth." (Compl. ¶ 2). However, in support of that contention, the complaint alleges only that the USSA has conducted business with a single specific Massachusetts resident (Cheng himself) and that the degrees it grants are recognized in Massachusetts. In his memorandum, Cheng identifies a number of other contacts that USSA has with Massachusetts—some, but not all, of which are supported by the attached exhibits. Those contacts include maintaining a website available to anyone (in any state); contacting local agencies (in Massachusetts and elsewhere) to obtain scholarships and financing; drawing business away from local degree programs in Massachusetts (and elsewhere); and submitting certificates of degree completion that are accepted by Massachusetts licensing authorities (and those of other states). (Pl. Mem. at 2-3). None of those contacts are specific to Massachusetts, however. And, because USSA has only a handful of Massachusetts students, USSA's contacts with the state are likely sporadic, at best.
In short, the activities of USSA in Massachusetts cannot be characterized as so "continuous and systematic" that it must be deemed "at home" in the state. See Kloth v. Southern Christian Univ., 320 F. App'x 113, 117 (3d Cir. 2008) ("Defendants' maintenance of a Web site that posts information about the school and is accessible to potential students in foreign jurisdictions is insufficient to subject a non-resident defendant to general jurisdiction"); Watiti v. Walden Univ., 2008 WL 2280932, at *7 (D.N.J. May 30, 2008) ("An online university's ongoing relationship with only one student, particularly a student who relocated to the forum state subsequent to her application, admission, and enrollment in [the] school's distance learning program, does not constitute the kind of continuous and substantial activity necessary [to] support the exercise of general personal jurisdiction over the school."); see also Gehling v. St. George's Sch. of Med., Ltd., 773 F.2d 539, 542 (3d Cir. 1985) (declining to find higher-education institution "at home" merely because it advertised in, recruited students from, and maintained contacts with alumni in the forum state); Corrales Martin v. Clemson Univ., 2007 WL 4531028, at *5-6 (E.D. Pa. Dec. 20, 2007) (same); Chira v. Columbia Univ. in the City of New York, 2005 WL 8156561, at *6 (C.D. Cal. May 3, 2005) (same); Scherer v. Curators of Univ. of Missouri & Law Sch. Admission Council, 152 F.Supp.2d 1278, 1282-83 (D. Kan. 2001) (same); Gallant v. Trustees of Columbia Univ. in City of New York, 111 F.Supp.2d 638, 641 (E.D. Pa. 2000) (same).
Accordingly, there is no basis for the assertion of general jurisdiction over USSA.
To assess specific jurisdiction, the court must ask (1) whether the claims are "related to" defendant's activities in Massachusetts; (2) whether the defendants have purposefully availed themselves of the laws of Massachusetts; and (3) whether the exercise of jurisdiction would be reasonable. Platten v. HG Bermuda Exempted Ltd., 437 F.3d 118, 135 (1st Cir. 2006). In cases involving interactions through a website that is operated from outside the forum state that residents in that state can access, the focus of this analysis has typically been on the "purposeful availment" requirement. See, e.g., Cossaboon v. Maine Med. Ctr., 600 F.3d 25, 35-36 (1st Cir. 2010); Sportschannel New England Ltd. P'ship v. Fancaster, Inc., 2010 WL 3895177, *5-7 (D. Mass. Oct. 1, 2010); BroadVoice, Inc. v. TP Innovations LLC, 733 F.Supp.2d 219, 224-27 (D. Mass. 2010); Back Bay Farm, LLC v. Collucio, 230 F.Supp.2d 176, 185 n.10 (D. Mass. 2002).
The issue of whether a university's enrollment of an out-of-state student in an online distance-learning program satisfies the purposeful availment requirement with respect to the state of the student's residence has been directly addressed by multiple courts. In Chase v. Gist, 2012 WL 1581682 (D. Mass. May 3, 2012), this court declined to exercise jurisdiction over the defendant university by virtue of the plaintiff's participation in its distance-learning program. Like USSA, the defendant university in that case "neither advertise[d] in Massachusetts nor target[ed] Massachusetts residents as prospective students . . . [and,] [o]ther than plaintiff, few, if any, Massachusetts residents ha[d] enrolled in the school's online program." Id. at *3. Because the program was "not directed at Massachusetts any more than it is at the world at large," this court concluded that "plaintiff's participation in that program [was] not sufficient to meet the minimum requirements for the exercise of jurisdiction, either under the Massachusetts long-arm statute or the Due Process Clause." Id. at *6.
The decision in Chase was based, in large part, on the reasoning in Kloth v. Southern Christian Univ., 320 F. App'x 113 (3d Cir. 2008). In Kloth, the Third Circuit considered the jurisdiction of a district court in Delaware to hear a claim against a university in Alabama arising from the plaintiff's attempt to earn a degree through the school's online distance-learning program. The court held that the fact that the plaintiff had enrolled in the online program from Delaware was not sufficient to confer personal jurisdiction over the university. It explained:
Kloth, 320 F. App'x at 116 (citing World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 295 (1980)). Although the court ostensibly rested its decision on a statutory basis, its reasoning relied on the same principles employed in the constitutional due-process analysis. Id. at 114-18 (citing Burger King Corp. v. Rudzewicz, 471 U.S. 462 (1985); International Shoe, 326 U.S. at 316; Toys "R" Us, Inc. v. Step Two, 318 F.3d 446 (3d Cir. 2003); Zippo Mfg. Co. v. Zippo Dot Com, Inc., 952 F.Supp. 1119 (W.D. Pa. 1997)).
At least two federal courts have resolved the issue the other way, holding a university's enrollment of an out-of-state student in an online distance-learning program satisfies the purposeful availment requirement with respect to the state of the student's residence. See Perrow v. Grand Canyon Educ., Inc., 2010 WL 271298, at *4-5 (S.D. Ohio Jan. 15, 2010); Watiti, 2008 WL 2280932, at *8-9. Those cases, however, are distinguishable. In Perrow, the defendant online university was "in contact with approximately 1,000 Ohio residents, and [] had repeated contacts with [the plaintiff], fully aware that she was located in Ohio." 2010 WL 271298, at *4. The university in Perrow also actively solicited business in Ohio, regularly sending a representative to a career fair located there. Id. at *5. Similarly, in Watiti, the defendant online university "specifically recruited New Jersey residents for enrollment. Indeed, it advertised in the state[ and] engaged in pre-enrollment sessions [there]." 2008 WL 2280932, at *8.
Here, in contrast, USSA has not purposefully directed its activities at Cheng in Massachusetts. He enrolled while a resident of Alabama. USSA has only a handful of Massachusetts-based students. It does not send any representatives to Massachusetts career fairs, hold pre-enrollment information sessions there, or otherwise actively solicit business in the state, other than by maintaining a website that is accessible to Massachusetts residents. While some of its communications and transactions with Cheng—including e-mails concerning his degree requirements and re-enrollment and the act of accepting his tuition payment—occurred while he was a resident of Massachusetts, that was only be virtue of his unilateral act of moving there. See Prep Tours, Inc. v. American Youth Soccer Org., 913 F.3d 11, 20, 24, 27 (1st Cir. 2019) ("[A]ny contacts that cannot be attributed `proximately' to the defendant's own activities constitute [the plaintiff's] `unilateral' activity [and] cannot establish purposeful availment.") (quoting Burger King Corp., 471 U.S. at 474-75).
On balance, the reasoning of the Third Circuit in Kloth is persuasive. Cheng's enrollment in the distance-learning program while in Alabama, followed by a unilateral move to Massachusetts, is not sufficient for this court to establish personal jurisdiction in Massachusetts over USSA. That conclusion also accords with other decisions that have addressed the application of principles of personal jurisdiction in cases where an in-state plaintiff has accessed a website that is operated from outside the Commonwealth and is not specially directed to users within the state. See, e.g., BroadVoice, 733 F.Supp.2d 219, 226 (D. Mass. 2010) (holding that the operation of a website did not establish personal jurisdiction where the website "was aimed at Massachusetts only in the sense that it could be accessed by Massachusetts residents," where its owner did nothing to direct its content to residents of Massachusetts "as opposed to the world at large," and where there was no evidence of any Massachusetts resident other than the defendant having accessed it); Sportschannel, 2010 WL 3895177, at *7 (holding that "a website with the features that are now common, including a registration page, simple trivia, ability to email the website operators, stream-line video, and `fan' or `share' a page or video, cannot be sufficient to enable the site's owners to be haled into court in any forum in which it's accessible").
In sum, USSA has not purposefully availed itself of the privilege of conducting business in Massachusetts. There is not, therefore, a sufficient basis to satisfy the minimum requirements for the exercise of jurisdiction under the Due Process Clause.
USSA has also moved to dismiss the complaint for forum non conveniens. As discussed above, that motion will be treated as a motion, in the alternative, to transfer the case to a district court in Alabama, pursuant to 28 U.S.C. § 1404(a). In any event, because the motion to dismiss for lack of personal jurisdiction will be granted, the Court does not need to reach the issue of transfer.
For the foregoing reasons, defendant's motion to dismiss for lack of personal jurisdiction is GRANTED.
