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Keywords

fiduciary duty, fraud, fraud in the inducement, misrepresentation, privacy, ethics, strategic analysis

Abstract

Mount Ida College, operating as a private non-profit higher education institution, permanently closed on May 17, 2018 after giving six weeks of notice to its existing and recently accepted students. Mount Ida College had two campuses, a small one in Foxboro, Massachusetts and its main campus in Newton, Massachusetts. The Newton campus was sold to the University of Massachusetts Dartmouth and students in good standing were offered automatic acceptance to UMass Dartmouth. Soon afterwards a class action lawsuit was filed by students against Mount Ida College, the Board of Trustees, and seven college administrators based on seven legal claims: breach of fiduciary duty, violation of privacy, fraud, negligent misrepresentation, fraud in the inducement, breach of contract, and violation of Massachusetts General Laws Ch. 93A (law that protects and defends consumers and prohibits a business or individual from taking part in deceptive, devious, or unfair acts or practices). Contract law and fiduciary duty in the United States arise from what is called common law and is a carryover from old English law. Does a non-profit college or university owe a contractual and/or a fiduciary duty to its students? The case was dismissed at the trial level stating that the students did not have any valid cause of action in this case. The appellate court affirmed the lower court decision. In so affirming, the U.S. Court of Appeals 1st Circuit ruled that students have no contractual claim and that the College and Board of Trustees owes no fiduciary duty to the students. This case raises an interesting question. What duties does an academic institution of higher learning have to its students? The 1st Circuit was clear in affirming the lower court decision to dismiss this case, affirming that students are not owed an actionable fiduciary duty and have no contract or tort claims against the school. In addition, the case also lays out the possible strategic options for Mount Ida College and discusses if selling the campus was the best choice for the institution.

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