As many colleges have learned over the past decade, distance learning has the potential to reach previously inaccessible students, generate greater enrollments, save money, and overcome campus limitations of building and classroom space. But when disputes arise between institutions in one state and learners in another state or country, where will the cases be resolved, and under whose law? Several rulings in recent years suggest that colleges offering interstate online programs may be subjecting themselves to foreign jurisdiction in ways traditional classroom programs never have been.
An example is the case of Johnson v. Walden University. Greg V. Johnson, a Marine, enrolled in an online doctoral program in psychology while stationed in Japan and, after being discharged, completed his degree in Georgia. Although his enrollment materials indicated that his concentration, sports psychology (later changed to health psychology), was a nonclinical degree program, he was assured in writing by faculty members that his degree would qualify him for state licensure as a clinical psychologist upon graduation.
After graduating, he moved to Connecticut and tried to take the state licensure exam but was not allowed to do so because he didn't have a clinical degree. He sued the university, alleging numerous complaints of fraud, breach of contract, and unfair trade practices. He used the doctrine of diversity jurisdiction, which allows citizens of one state to sue those of another in federal court, to assert his rights under Connecticut's Unfair Trade Practices Act. It provides much stronger consumer protections than Florida, Walden's state of incorporation; Maryland, its primary place of business; or the student's previous state residences.
The court accepted the student's argument that the university should be subject to both the application of Connecticut law and a trial in that state. In a similar case, the Federal District Court in New Jersey likewise agreed that Walden could be sued there.
These kinds of rulings make it clear that distance learning has the potential to drag institutions into courtrooms in distant places. Since 1945 the U.S. Supreme Court has recognized a doctrine of "minimum contacts" that subjects any enterprise, even a nonprofit one, to jurisdiction in another state where it regularly and systematically conducts business, even without an actual physical presence in that state. This extension of jurisdiction has been further strengthened by the passage of "long arm" statutes, which allow state courts to exercise jurisdiction over foreign entities conducting business with citizens under their jurisdiction.
Generally those concepts have been of little concern on physical college campuses. Usually, outside of official travel away from campus, any injury or complaint alleged by a student attending a traditional college is resolved in the federal or state court holding local jurisdiction where the institution is located.
Even when it comes to online education, it is difficult to anticipate how jurisdictional matters will develop or be resolved, especially since not every court facing these disputes has accepted jurisdiction in the student's preferred legal forum. It is possible, however, to identify several areas of concern for colleges in interjurisdictional disputes between the institutions and distance learners.
For example, when a college is sued in a nonlocal jurisdiction, it is obliged to hire a local lawyer who must manage the case from that jurisdiction. The costs of such representation and litigation may quickly exceed the value of a student's tuition and fees for a course, or even an entire degree program. Costs would increase even more for cases with international jurisdiction issues. That consideration may make institutions more likely to agree to settlements with the student than they would in their own local jurisdiction, even when the facts of the case might favor them at trial.
Another problem raised by nonlocal jurisdiction is that of the distance-learning program's exposure to liability. While for-profit institutions are subject to the same liability as other businesses engaged in interstate commerce, most states preclude or limit successful actions for damages against state colleges and universities under doctrines such as sovereign immunity and other forms of self-indemnification. Frequently the states will also extend these protections and limitations to private, charitable organizations, including nonprofit private colleges, established within their jurisdiction.
However, such state limits on liability for nonprofit programs do not usually extend beyond their own borders. Therefore, nonprofit and public colleges brought successfully under the jurisdiction of the laws of another state may have no more immunity or protections than their for-profit cohorts. Put more simply, any distance-learning program may find itself at risk of both litigation and liability when sued by its distance learners.
When examining successful assertions of personal jurisdiction it is possible to suggest some preliminary strategies to minimize the likelihood of a college being dragged into a distant courthouse:
- Institutions should avoid affirmative acts establishing an intent to do business in other states, such as registering to do business in these other states.
- Institutions seeking to avoid foreign jurisdiction should resist directly advertising their programs to out-of-state students and making public claims of their degrees' validity in specific states other than their own. A survey of the cases where local jurisdiction was denied to the students shows a pattern that universities attracting nonstate students through passive advertising, where the student seeks out the program, are more likely to evade personal jurisdiction in the student's preferred forum.
- Institutional distance-learning programs should consider applying commercial contract principles to the enrollment of students. Although there are no perfect defenses to foreign jurisdiction, colleges should consider including explicit contract terms specifying a local choice of laws and jurisdiction in the local courts of the institution. They might also consider including contract terms mandating less costly alternative dispute resolution, either arbitration or mediation.
- In some extreme cases, where local laws may too heavily favor local consumers over out-of-state providers, colleges might want to simply exclude the enrollment of distance students from those states and nations.
We are in the early stages of distance-specific litigation, and most rulings, thus far, have been made at the level of basic trial courts. We await precedents from more senior courts, the possibility of Congressional action, interstate compacts, and other unseen developments for more guidance. At the same time, however, it has also become clear that the new frontier of distance learning is also entering the sphere of courts and lawyers. It is not too early for distance programs and their institutions to take note.