Attorney for class-action lawsuit against WSU says contingency fee should be refunded

Attorney for class-action lawsuit against WSU says contingency fee should be refunded
Ashley Woods
Issue date: 2/20/08 Section: News

The lawyer for a Wayne State student who filed a lawsuit against the university last week said the action stems from the university not returning the contingency fee it levied on students last fall.

"We believe that when the university imposed the contingency fee, it was imposed as safeguard if the state didn't meet its financial obligation," said Gregory Hanley, the attorney representing Jason Moss, the student who filed the lawsuit.

"Since we now know that the state did meet its obligation, the contingency fee should be returned to students."

The $5.3 million lawsuit also claims that if the university did not breach its agreement with students, WSU "falsely labeled the Contingency Fees as 'contingent' and falsely represented the actual tuition increases for the fall 2007 semester."

Moss filed the lawsuit claiming that WSU defrauded students by collecting the contingency fee, along with a nearly 13 percent tuition increase last July. The contingency fee cost undergraduate students $13 per credit hour and $29 for graduate students. It was adopted to guard against further budget cuts by the state of Michigan. The state had delayed payments of about $25 million in August.

The state of Michigan restored the funding to Michigan universities, including WSU, later that year.

If the contingency fees aren't "contingent," then the actual tuition increase for the fall 2007 semester was over 19 percent, "which is substantially in excess of the represented 12.8% increase the University portrays in its marketing materials and in other public statements," according to the lawsuit.

Hanley said that the university has 21 days after the lawsuit was served to respond to the allegations.

He said the court will now decide whether the case can proceed as a class-action lawsuit.

If the case goes to court as a class-action lawsuit, Hanley said it will be filed on behalf of all WSU students who paid the contingency fee during the fall 2007 semester.

Hanley is a complex civil litigation attorney based in Royal Oak. He graduated from WSU in 1986 as an economics major and from the WSU law school in 1989.

"I'm disappointed that my alma mater didn't do the right thing here, by giving the money back to students," he said.

WSU Board of Governors Chairman Eugene Driker said he thinks there is "no basis" to the lawsuit.

"The board passed a resolution that stated, if the state restored the money they took from us, the second installment would be cancelled," he said.

Driker said the second installment of the contingency fee would have applied to Winter 2008 courses. Aside from Driker's responsibility as board chair, he is one of the founders and a senior member of the Detroit law firm Barris, Sott, Denn & Driker P.L.L.C.


"We eliminated the second installment," he said. "The board did exactly what it was committed to do."

Driker said the money is needed because WSU's needs are not being met by the state of Michigan.

"They are simply the funds we need to keep the doors open and the faculty paid and the students in class," he said.

Driker said WSU referred the lawsuit to the Office of the General Counsel.

Other state universities chose to refund students after they received payments.

Ferris State University also issued a contingency fee for the Fall 2007 semester. On Dec. 14, the FSU Board of Trustees announced that it would refund more than $1 million to students.

Instead of issuing a contingency fee, Michigan State University increased tuition midyear.

The State News, the student-run publication at the university, reported that MSU's Board of Trustees decided to refund all students $26 plus a $2.25-per-credit-hour fee for classes taken in the fall semester.

A Feb. 5 editorial in The State News began, "If MSU decided not to refund its students an unnecessary extra per-credit fee, there would be hell to pay."