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Knudsen v. University of Montana

Supreme Court of Montana

July 30, 2019

DANIEL P. KNUDSEN, ROSE E. AYERS, ERIC DENNISON, LANCE FRENCH, ERIK FARNHAM and KAILA JACOBSON, Plaintiffs and Appellees,
v.
THE UNIVERSITY OF MONTANA, a unit of the Montana University System, Defendant and Appellant.

          Submitted on Briefs: May 1, 2019

          APPEAL FROM: District Court of the Fourth Judicial District, In and For the County of Missoula, Cause No. DV 16-977 Honorable James B. Wheelis, Presiding Judge

          Maxon R. Davis, Davis, Hatley, Haffeman & Tighe, P.C., Great Falls, Montana, Lucy T. France, University of Montana Office of Legal Counsel, Missoula, Montana, Christopher D. Abbott, Assistant Attorney General, Agency Legal Services Bureau, Helena, Montana For Appellant

          John L. Amsden, Justin P. Stalpes, Michael G. Black, Beck, Amsden & Stalpes, Bozeman, Montana, Quentin M. Rhoades, Nicole L. Siefert, Rhoades, Siefert & Erickson, Missoula, Montana For Appellees

          OPINION

          BETH BAKER, JUSTICE

         ¶1 The University of Montana (the "University") appeals orders from the Fourth Judicial District Court, Missoula County, certifying three classes to proceed in a lawsuit against the University. The suit alleges that the University breached its fiduciary duty to students by entering into a contract with Higher One, Inc., to process student loan refunds through non-competitive financial accounts and by providing students' personal information to Higher One. On appeal, we review whether the District Court abused its discretion when it certified three classes under M. R. Civ. P. 23(b) to pursue the claims. We reverse in part and affirm in part.

         PROCEDURAL AND FACTUAL BACKGROUND

         ¶2 Prior to 2010, the University processed student loan disbursements by issuing paper checks to each student receiving a reimbursement. That year, the University entered into a service agreement with Higher One to process student loan disbursements to enrolled students. Under the contract, Higher One disbursed the student loan funds. Students receiving student loan reimbursements were given the option to have the funds directly deposited into an account with Higher One or electronically transferred into a third-party bank account of the student's choosing. If a student did not select one of those two options, Higher One issued the student a paper check by default. The contract expired on June 30, 2015, and was not renewed.

         ¶3 The University transferred to Higher One the following personal information regarding more than 38, 000 students: the student's name, address, e-mail address, University ID number, birthdate, gender, telephone number, and the last four digits of the student's social security number. Higher One sent each student a debit card branded with the University's logo, along with information directing the students to a Higher One website to select the method for their loan disbursement. If students selected the "Easy Refund" method, Higher One opened an account-called a OneAccount-for the student with its partner bank and activated the debit card. Students also could select to have the funds electronically transferred to a bank account of their choosing, but a student who selected this option was directed to fill out a separate paper form and send it to Higher One to complete the transfer. Students who did not select an option on the website were sent a paper check to the mailing address on file.

         ¶4 The fee schedule that would be charged to students selecting to open OneAccounts was attached as Exhibit B to the University's contract with Higher One. Fees included a $0.50 fee for each debit card transaction, fees for use of Non-Higher One ATMs, fees for insufficient funds, and abandoned account fees. The fee schedule was available to students through Higher One's website.

         ¶5 Current and former students Daniel P. Knudsen, Rose E. Ayers, Eric Dennison, Lance French, Erik Farnham, and Kaila Jacobson (collectively, "Students") filed this lawsuit against the University in November 2016 as a class action complaint. The Students alleged that the University's agreement with Higher One subjected them to excessive bank fees and that the University disclosed personal information to Higher One without their consent. The Students alleged breach of the University's fiduciary duty, negligent entrustment, statutory and constitutional privacy right violations, and unjust enrichment. The complaint sought compensatory damages, as well as declaratory and injunctive relief. In two orders, the District Court certified three classes to proceed in the lawsuit:

Class 1: Past or present students of Defendant University who paid fees to Higher One Holdings, as a consequence of opening an account with Higher One to receive student loan refunds.
Class 2: Past or present students of Defendant University whose personal information was transmitted to Higher One Holdings.
Class 3: Past or present students of Defendant University whose personal information has been or may be transmitted to a third-party vendor or third-party contractor without prior written consent in circumstances other than where transmission is necessary for completion of a task having a legitimate educational interest.

         The University appeals the Order Granting Motion for Certification of Classes and the Supplemental Order ...


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