Ala. SC squashes college students' suit over dining program

Jessica M. Karmasek Oct. 5, 2011, 3:35pm


MONTGOMERY, Ala. (Legal Newsline) - The Alabama Supreme Court last week dismissed appeals by students from the University of Alabama, Auburn University and the University of Alabama at Birmingham over so-called "dining dollars" programs.

All undergraduate students at the three schools are required to pay a mandatory dining fee each semester, which is then credited back to the students in the form of "dining dollars" that can be spent only at on-campus dining outlets controlled exclusively by the food service vendors for the universities -- Aramark Educational Services Inc. at UA; Compass Group, USA Inc. d/b/a Chartwells at Auburn; and Sodexo Inc. at UAB.

Both students and former students filed three separate class action lawsuits in Jefferson County Circuit Court in August 2010, challenging the legality of the dining programs implemented by the universities.

On December 29, 2010, the trial court dismissed the three actions, and the students appealed.

The state's high court, which consolidated the three appeals, affirmed the lower court's decision in a 42-page ruling filed Friday. Justice Lyn Stuart authored the Court's opinion.

The students argue that the dining dollars programs operated by the universities violated: state antitrust laws; a section of the Alabama Constitution that forbids the State from having an interest in private enterprise; a rule in state code barring universities from charging excessive transaction fees to merchants that accept university-issued debit cards; and the common-law prohibition on conversion.

The Court said because the boards of trustees are entitled to state immunity pursuant to the Alabama Constitution, all claims against them were "properly dismissed."

"The university administrators and food service vendors are entitled to immunity on the asserted antitrust claims as well, albeit state-action immunity as opposed to state immunity; thus, the trial court's dismissal of the antitrust claims was also proper," Stuart wrote.

"Moreover, because the universities are public corporations not subject to § 93, because the students lack standing to pursue a cause of action for a violation of § 16-1-32(d), and because the students have not and cannot allege the necessary elements of a conversion claim, the trial court also properly dismissed the students' other claims."

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