Shortly after the conclusion of the 2020 Spring semester, a student filed a potential class-action lawsuit against a State University in Indiana alleging breaches of contract and unjust enrichment, stemming from the University’s decision to retain tuition and fees despite the cancellation of in-person classes and closure of campus facilities due to the COVID-19 pandemic.

Subsequent to the filing of the complaint, the Indiana General Assembly passed Public Law 166-2021, which was retroactive to 1 March 2020. Among its provisions, the law prohibited class actions against covered entities, including State Universities, for breach of contract or unjust enrichment claims related to losses arising from COVID-19. Therefore, the Court directed the plaintiff student to submit an amended complaint, instructing the removal of any references to other class members and rejecting the request for class certification.

The plaintiff filed an appeal, claiming that the newly introduced retroactive statute was unconstitutional because it ran afoul of the constitutional separation of powers. Indeed, the Indiana Constitution designates legislative authority to the General Assembly and judicial power to the state courts, emphasizing the separation of functions between the two branches. Legislative responsibilities include enacting laws for the well-being of the State’s residents, while the judiciary is tasked with managing procedural rules for disputes arising from these laws. In the plaintiff’s view, the challenged statute was de facto a rule governing procedure in trial and therefore was outside of the scope of the legislature’s powers.

With a judgment of 21 November 2023, the Indiana Supreme Court definitively rejected the plaintiff’s claim as to the unconstitutionality of the statute. As a premise, the Court recalled that “generally speaking, laws which establish rights and responsibilities are substantive (the legislative prerogative), and laws which “merely prescribe the manner in which such rights and responsibilities may be exercised and enforced” are procedural (the judicial prerogative)”. That being said, the Court held that when it had issued the challenged statute, the General Assembly was addressing a substantive concern. In particular, the Court held that “everything about [the challenged statute] and the context of its enactment conveys the General Assembly was tweaking a procedural rule to predominantly further a public policy objective — which here, both sides agree is to limit the university’s litigation exposure for pandemic‐related contract claims during a global crisis”. Therefore, the Court concluded that the statute was a constitutional and valid legislative enactment.

Reference: Indiana Supreme Court, Keller J. Mellowitz v. Ball State University and Board of Trustees of Ball State University and State of Indiana, 21 November 2023.

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