Private Education Matters
STUDENTS
Contributors:
Grace Chan Partner | San Francisco
Jordan Carman Associate | San Francisco
Hannah Dodge Associate | San Francisco
Christopher Fallon Partner | Los Angeles
Stephanie Lowe Senior Counsel | San Diego
Madison Tanner Associate | San Diego
PARENT COnduct
Court Upholds Private School’s Expulsion Decision After Parent
Repeatedly Violates School’s Directives.
Khaled and Maral Zakharia were parents of two children enrolled at Montessori Radmoor School, a private Montessori institution in Okemos, Michigan. The couple’s relationship with the School deteriorated over time after a series of disputes about school policies and staff decisions.
For example, beginning in 2021, Khaled objected to the inclusion of yoga in the School’s physical education program, claiming it conflicted with his family’s Catholic faith. He also opposed the school’s COVID-19 mask policy, instructing his son not to wear a mask outdoors even after the School made masking optional. When his son continued to wear a mask, Khaled began appearing at recess to ensure compliance with his wishes, sometimes entering the playground and demanding his son hand over his mask. The Head of School, Joseph Wood, warned Khaled that his conduct violated the School’s rules and directed him to speak with his children through the front office rather than directly during school hours.
Khaled later accused another student of belittling his son, including for his son being unfamiliar with NBA legend Michael Jordan. Wood investigated and concluded that both children bore responsibility, as Khaled’s son initiated some of the interactions by calling his classmate “stupid.” Khaled rejected that finding and sent increasingly accusatory messages to the School. In response, Wood emailed Khaled expressing concern about his tone and continued partnership with the School, stating that Khaled’s language “villainized” a nine-year-old and that he would no longer be permitted to observe recess because his presence undermined the safety and trust of the school environment. Khaled replied that the directive was “intimidating” and that any attempt to stop him from observing his children would be met with a lawsuit. The next day, Khaled again came to the
School during recess, in direct violation of the ban. Shortly thereafter, the School expelled the Zakharias’ children, citing Khaled’s disrespect toward staff and repeated violations of policy.
After the expulsion, Tianna Dart, a member of the School’s Board of Trustees, exchanged text messages with two parents who knew the Zakharias and wanted more information about why the family left the School. Dart responded, “I wish I could shed some light but I'm just not at liberty to legally.” She also remarked that “[a]ll I can say is the decision was made with the wellbeing of the students, staff and school as a whole.”
The Zakharias sued the School, Wood, Dart, and other administrators for breach of contract, defamation, intentional infliction of emotional distress (IIED), and threats. The trial court granted summary judgment for the defendants. The family appealed.
Breach of Contract
On the breach of contract claim, the Court of Appeals held that the School acted within its contractual rights under the Parent Handbook, which explicitly permitted dismissal of a student when a parent engaged in serious misconduct such as “trespassing in restricted areas without permission.” Because Khaled had been told in writing not to observe recess and did so anyway, his actions constituted trespass and justified dismissal. The Court rejected Khaled’s argument that the picnic area was not listed as “restricted,” finding that the Head of School’s specific directive rendered it off-limits.
Defamation
The parents alleged that statements made by Wood, other staff, and board member, Tianna Dart, defamed them by portraying Khaled as aggressive and disrespectful. The Court of Appeals disagreed, finding that most statements were either protected opinions, true, or privileged communications made among staff with a shared professional interest in school management. No evidence showed that any defendant acted with actual malice or reckless disregard for
the truth. Dart’s messages to parents stating that the expulsion was “well-documented and supported” were likewise accurate and not defamatory.
Intentional Infliction of Emotional Distress
The Court of Appeals found that expelling the Zakharias’ children, though distressing, did not constitute the kind of extreme and outrageous conduct necessary for an IIED claim. The decision was a lawful disciplinary action consistent with school policy.
Threat Claim
Under Michigan law, unlawful and malicious threats may by reason of their intended results become actionable claims. However, the Court rejected the parents’ argument that Wood’s warning that continued misconduct could result in expulsion constituted an unlawful threat. Because the School had the contractual right to impose such a consequence, the warning was not improper.
Zakharia v. Mich. Montessori Internationale, Inc. (Ct.App. Oct. 27, 2025) 2025 LX 477377.
Note:
This decision reinforces the importance of clear and enforceable parent conduct provisions in school handbooks and enrollment agreements. The court here relied heavily on the handbook’s explicit language permitting dismissal for trespass and disrespectful behavior.
Discrimination
California Department Of Education Rules Public School District Violated Antidiscrimination Laws.
The California Department of Education (CDE) recently issued three rulings finding that a California public school district (District) created a discriminatory environment for Jewish students and staff following incidents in 2023 and 2024 related to the Israel-Hamas conflict. The findings stemmed from appeals filed by a community attorney over three separate matters: the flying of a Palestinian flag at one public high school, an unauthorized teach-in on Palestine led by District teachers, and the repeated publication of maps omitting Israel in materials for Arab American Heritage Month.
In the first case, the CDE found that flying the Palestinian flag on a school flagpole for nearly a month shortly after the October 7, 2023, Hamas attack without an Israeli flag or other balancing context contributed to a perception of bias and a hostile environment for Jewish students. In the second, the CDE concluded that the December 2023 “teach-in,” which presented a one-sided, pro-Palestinian perspective and omitted Israeli or Jewish viewpoints, constituted discrimination, particularly given its timing and the heightened emotions following the outbreak of the war. In the third case, the CDE ruled that the District’s repeated dissemination of maps labeling the entire region “Palestine” and excluding Israel in official Arab American Heritage Month materials showed bias and discrimination toward Jewish persons.
The CDE also faulted the District for systemic procedural failures, including taking over a year to investigate the complaints instead of the required 60 days under state law, and refusing to provide investigative records, finding that the District’s responses “impliedly concluded” no discrimination without sufficient factual basis to support those conclusions. The state ordered multiple corrective actions, including staff training on antisemitism and bias, non-District-led professional development for social studies teachers on teaching about the Middle East, and new training for administrators responsible for communications and curriculum. In response, the District said it would begin mandatory antisemitism and bias training in December and fully implement corrective actions in coordination with the CDE.
Note:
These rulings come amid broader state efforts to address antisemitism in schools, including Assembly Bill 715, which takes effect in January 2026 and will create an Antisemitism Prevention Coordinator and streamline the appeal process for discrimination complaints in public schools. The CDE’s findings in this case underscore the state’s expectation that schools ensure classroom discussions, displays, and instructional materials on controversial issues reflect balanced perspectives and do not create a hostile environment for any protected group. These findings are helpful guidance for private schools navigating similar matters on their campuses.
EMPLOYMENT CONTRACTS
Private School May Be Bound By Procedures It Adopted From Public School Law.
Jeremy VanDerKern, a cinematography teacher at Burr and Burton Academy, an independent school in Vermont, sued the School’s Board of Trustees after it chose not to renew his contract for a second year. VanDerKern was hired for the 2022-23 school year under a one-year agreement that incorporated the School’s collective “Master Agreement” with its teachers and stated that all employment conditions would be governed by that agreement and as required by law.
Under the Master Agreement, teachers in their first three years are considered “transitional teachers.” Those teachers are not eligible for the grievance and arbitration process available to more senior teachers, but the agreement stated that a transitional teacher “may appeal a non-renewal of contract under the provisions of Title 16, V.S.A., Section 1752 b.” Section 1752 is a Vermont statute that applies only to public school teachers and sets out detailed procedures for notice, hearings, and appeals when a public school teacher’s contract is not renewed.
At the end of the school year, Burr and Burton informed VanDerKern that his contract would not be renewed due to a “precipitous decline in interest” in the cinematography program. Believing he was entitled to a hearing under Section 1752, he filed a grievance and requested a hearing, which the School denied. The headmaster explained that the grievance procedure did not apply to transitional teachers and that Section 1752 applied only to public schools. VanDerKern then attempted to pursue arbitration, but the arbitrator ruled that he had no right to arbitrate under the Master Agreement. Afterward, VanDerKern brought suit in state court, alleging that the School violated Section 1752
and breached his contract by failing to follow proper procedures and by lacking just cause for nonrenewal.
On the statutory claim, the Court agreed with the School that the statute itself does not apply to Burr and Burton as a private school. The Vermont nonrenewal statute governs teachers in public schools, not independent schools, and references procedures and roles that exist only in public school districts. However, the Court noted that by including Section 1752 in its Master Agreement, the School may have promised to use those same procedures as a matter of contract. Because a private employer can voluntarily agree to follow a statutory framework even if it is not legally required to do so, the Court found that Mr. VanDerKern’s claim was plausible enough to move forward. It allowed him to amend his complaint to clarify that his right to a hearing arose from the contract’s reference to the statute, not from the statute itself.
The Court also allowed Mr. VanDerKern’s breach of contract claim to proceed. The Master Agreement stated that contracts could not be denied renewal except for “just and sufficient cause,” listing examples such as incompetence, misconduct, failure to perform duties, or reduction in staff. Burr and Burton’s stated reason was declining student interest in the cinematography program, which did not clearly fall under any of those categories. The Court noted that the School quickly advertised and filled the cinematography position after letting Mr. VanDerKern go, and therefore its decision could not reasonably be viewed as a “reduction in staff.” If the reason was unrelated to performance or staffing, a jury could conclude that it did not meet the cause standard required by the contract.
The court invited Mr. VanDerKern to amend his pleadings and proceed to discovery.
VanDerKern v. Bd. of Trs. of Burr & Burton Acad., 2025 Vt. Super. LEXIS 250; 2025 LX 448698.
Note:
This case serves as a cautionary tale that private schools should carefully review the language in their employment agreements and handbooks. By incorporating public school laws or detailed procedural promises, a school can unintentionally create new contractual rights for employees that go beyond what the law requires.
unions
Union Settlement Resolves Claims Of Retaliation Following Dispute Over Israel Boycott Resolution.
A New York federal court case between three attorney members of the Association of Legal Aid Attorneys (ALAA) and their union. The parties recently reached a settlement in the ongoing legal dispute, which arose after the union adopted a resolution in December 2023 that criticized Israel and supported a boycott. The three attorneys opposed the resolution as antisemitic and sought to block the resolution in state court. After doing so, the attorneys alleged that the union retaliated by attempting to expel them from the union, in violation of the Labor-Management Reporting and Disclosure Act (LMRDA), a federal law that regulates labor unions’ internal affairs and the unions’ relationship with employers.
The plaintiffs’ broader discrimination claims under Title VII and New York human rights laws were dismissed earlier in the case, with the court finding that the union’s resolution did not constitute direct discrimination. However, their LMRDA claims, asserting that the union sought to punish them for exercising protected rights, were allowed to proceed until the parties reached settlement.
Under the settlement agreement, the ALAA will pay $315,000 to the plaintiffs’ counsel and implement several non-monetary reforms, including mandatory executive board training on union members’ rights under the LMRDA and a requirement that future internal disciplinary charges be reviewed by union counsel through 2027. The union will also issue a statement reaffirming its commitment to open debate and acknowledging that some prior communications during the 2023 resolution debate were inappropriate.
The case, Kopmar et al. v. Association of Legal Aid Attorneys, Local 2325, UAW (S.D.N.Y., No. 1:24-cv-05158-JPO), was formally dismissed following execution of the settlement.
trainings, click on the icons:
Students Defamation
Court Revives Defamation Claim Against Private School Principal for Making Disparaging Remarks About Student.
R.H., a high school student at Foothills Christian Academy, a private Christian school in Minnesota, brought a defamation claim against the School and its principal, Blair Ecker, after Ecker made disparaging remarks about her at a student meeting.
R.H. was enrolled at Foothills during the 2021-2022 school year, when the School used a passwordprotected grading platform to track assignments and student progress. In Spring 2022, a teacher’s aide discovered that several students had gained unauthorized access to a teacher’s account and altered grades. R.H.’s assignments showed irregularities, and when questioned, she admitted to modifying her grades. Before the School completed its investigation, the principal convened a meeting of students and staff to discuss the cheating allegations. R.H. did not attend because her parents had already withdrawn her from the School, but approximately 17 students and faculty members were present.
At the meeting, Ecker referred to R.H. by name and made several remarks that became the basis of the lawsuit. He characterized her as one of the “ringleaders” of the grade-changing scheme and compared her to “a special ed student” with “a poor IQ.” He told students that R.H. had been expelled for cheating and implied she had damaged the School’s integrity. Ecker later acknowledged making these statements.
R.H. filed suit claiming that the remarks were false, defamatory, and repeated throughout the community, causing serious harm to her reputation and emotional well-being. The School moved for summary judgment, asserting that the statements were protected by qualified privilege, a doctrine that shields certain communications made in good faith and for legitimate purposes, such as addressing school discipline. The trial
court agreed, finding that although Ecker’s words could be defamatory, his position as principal and the context of the disciplinary meeting afforded him privilege.
The Court of Appeals disagreed, holding that there was sufficient evidence for a jury to decide whether the principal acted in good faith. Under Minnesota law, qualified privilege protects statements made “in good faith, on a proper occasion, with a proper motive, and upon reasonable or probable cause.” R.H. presented evidence suggesting that Ecker’s remarks were not made to serve a legitimate disciplinary purpose but rather to deflect attention from his own failure to control widespread cheating at the School. According to R.H., Ecker had known about grading problems for years and targeted her to protect the School’s reputation after her mother raised the issue with the School’s Board. Viewing the evidence in the light most favorable to R.H., the Court found a genuine factual dispute over whether Ecker’s comments were made in good faith or with an improper motive.
The Court of Appeals also found that the issue of malice, whether Ecker acted with ill will or intent to harm, was a factual question that should be decided by a jury. R.H. offered testimony that Ecker’s statements about her intelligence and supposed expulsion were knowingly false and were made in a public setting intended to humiliate her. A former Foothills trustee supported R.H.’s account, describing long-standing grade manipulation at the School and confirming that multiple students had access to teachers’ passwords. The Court concluded that this evidence, if believed, could demonstrate that Ecker acted deliberately for the purpose of injuring R.H., which would eliminate any privilege that might otherwise apply.
Because the record contained disputed evidence about the principal’s motive and good faith, the Court of Appeals reversed the summary judgment for the School and Ecker and remanded the case for trial.
Hamson v. Foothills Christian Acad. Soc'y of Backus (Oct. 20, 2025, No. A25-0502) 2025 Minn. App. Unpub. LEXIS 817.
Note:
This decision underscores that schools must exercise caution when discussing student discipline in public or group settings, especially in California, where students have a constitutional right to privacy.
studentconduct
Slow Investigation Not Enough To Prove Racial Bias In Student’s Removal From Private School.
John and Jane Doe are parents of James, a Black student at The Haverford School, an all-boys private school in Pennsylvania. James attended the School since pre-kindergarten under yearly Enrollment Contracts requiring satisfactory academic progress, timely payment, and appropriate behavior by student and parents, and authorizing the Head of School, in his sole discretion, to require withdrawal if continuing enrollment was not in the best interests of the student or the School. The family also agreed to abide by the behavioral standards in the Lower School Student and Family Handbook.
James had a history of behavioral difficulties, including hitting, kicking, biting, pushing, and disrupting his classmates. At the start of his third-grade year, his behavior worsened, with repeated conflicts involving classmates and multiple incidents of physical aggression.
The School implemented a support plan and interventions (e.g., self-regulation charts, task-based de-escalation, and designated staff check-ins) while also adding classroom observation and a ticketrecognition system to reinforce expectations. Despite these supports, incidents continued. Tensions peaked in November 2022 when James and another student,
referred to as Student #1, began arguing and physically confronting each other. After one such altercation in P.E. class, James told his parents that Student #1 had called him the “n word.”
James’s parents reported the incident to the School’s Lower School Head, Dr. Pam Greenblatt, but they alleged the follow-up was slow and disorganized. Some administrators thought the slur occurred off campus, and the School did not immediately interview the accused student. When Haverford’s diversity director eventually met with Student #1, he denied using the slur, though she discussed why such language was harmful. The School took some steps to separate the boys and monitor their interactions, but James’s behavioral struggles continued and intensified. Over a three-day period at the end of November, he hit and threatened classmates, threw scissors across the room, and disrupted lessons. Haverford concluded it could no longer maintain a safe and effective learning environment and asked James’s parents to withdraw him from the School.
The Does filed suit in federal court, alleging race discrimination and retaliation under 42 U.S.C. Section 1981, along with various state law claims, including breach of contract, negligence, breach of fiduciary duty, and intentional infliction of emotional distress. Haverford sought summary judgment on all claims.
The Court found that while the School’s slow and uncoordinated response to the reported slur was
troubling and sufficient to raise an inference of discrimination for purposes of a prima facie case, the School offered a legitimate, non-discriminatory reason for its decision: James’s escalating behavioral problems. The record showed repeated incidents of hitting, threatening, and disrupting class, culminating in several serious episodes immediately before the withdrawal request. The Court held that the parents presented no evidence suggesting this justification was a pretext for discrimination, noting that the family’s belief that the School used discipline as a cover for racial bias was unsupported by the record.
The Court also dismissed the retaliation claim, finding no causal link between the parents’ report of racial harassment and the withdrawal request. Twenty-two days elapsed between the report and the School’s action, and in that period, James’s conduct had significantly deteriorated. The Court concluded these intervening events broke any possible causal chain.
Having granted summary judgment for Haverford on the federal claims, the Court declined to exercise jurisdiction over the remaining state law claims, which could be refiled in state court.
Doe v. Haverford Sch. (E.D.Pa. Oct. 27, 2025) 2025 LX 447070.
Note:
Schools should ensure that complaints of bias or racial harassment are promptly and thoroughly investigated, and when a student has behavioral challenges, the conduct and any interventions should be well-documented to support the School against potential legal claims.
re-enrollment
Court Finds No Contract Or Promise In Re-Enrollment Discussions Following Student Misconduct.
Sharon and Harry Pollack, parents of an eleventhgrade student at AIM Academy, a private school in Pennsylvania, brought suit after their daughter, A.P., was asked to withdraw or face expulsion following a serious disciplinary incident. The case arose from an April 2021 episode in which A.P. falsely accused another student of racist conduct. She submitted a “hate speech” report alleging that the student had appeared in “blackface” in a deliberately racist act, accompanied by a photo and video she had secretly taken. In reality, the student had been participating in a spa night over FaceTime and was wearing a mud mask. A.P. admitted to making the report as an act of revenge.
Even after meeting with school administrators, A.P. continued to circulate the image, showing it to Black students, including members of the School’s Black
Student Union, and again asserting that it depicted a racist act. On April 28, 2021, AIM met with the Pollacks and provided a letter detailing its concerns about A.P.’s conduct and mental health. The letter stated that A.P.’s “mental health needs supersede her needs in the classroom,” that AIM lacked the resources to support her at that time, and that she could no longer remain at the school. The letter presented two options: A.P. could voluntarily withdraw and seek mental health treatment, after which she could reapply, but “her enrollment [would] not [be] guaranteed,” or the School would move forward with expulsion. The Pollacks replied the same day, writing that they were withdrawing their daughter as per the School’s recommendation and would follow its advice to obtain treatment.
Two months later, AIM withdrew tuition funds from the Pollacks’ bank account for the following school year, apparently through an automated payment system. When the Pollacks notified the School of the error, AIM refunded the full amount with interest. After A.P. completed a treatment program, the family requested her readmission in August 2021. AIM declined, explaining that her prior conduct and the School’s prior
communications made re-enrollment inappropriate. The Pollacks sued, alleging breach of contract, promissory estoppel, and fraud in the inducement. They claimed that AIM’s April 2021 letter and their response email together formed a binding contract that obligated the School to give good faith consideration to A.P.’s reapplication.
The Court found no evidence that the April 2021 letter or the parents’ response created an enforceable contract. The letter was not an “offer” in the legal sense, but rather an ultimatum: A.P. could withdraw voluntarily to pursue treatment or face immediate expulsion. It contained no language of mutual agreement, consideration, or intent to be bound. The statement that A.P. may reapply but that her enrollment is not guaranteed confirmed that AIM retained full discretion over any future decision. The Court also rejected the argument that AIM’s mistaken tuition withdrawal or the family’s compliance with the withdrawal option reflected a contractual relationship, finding that those facts did not alter the letter’s clear meaning.
On the fraudulent inducement claim, the Pollacks argued that AIM had misled them into withdrawing their daughter by falsely suggesting that it would later consider her for re-enrollment. The Court rejected this claim, noting that AIM’s letter accurately described A.P.’s options and that the School could have expelled her outright under its Community Handbook, which listed expulsion as a permissible consequence for harassment, bullying, or misuse of technology. The record contained no evidence that AIM misrepresented its intentions or acted with fraudulent motive.
The Court likewise dismissed the promissory estoppel claim, which required proof that AIM made a clear promise on which the Pollacks reasonably relied to their detriment. The letter’s statement that A.P. could reapply after treatment, with no guarantee of re-enrollment, was not a promise capable of enforcement. The family’s decision to withdraw A.P. did not amount to reliance on any promise, since withdrawal was a disciplinary alternative to expulsion.
The Pennsylvania Superior Court affirmed the trial court’s grant of summary judgment for AIM on all claims.
Pollack v. Acad. in Manayunk D B A Aim Acad. Appeal of Sharon Pollack (Nov. 12, 2025, No. 268 EDA 2025) 2025 LX 591452.
Note:
This decision reinforces the importance that communications with families are clear and consistent.
ai
Federal Court Upholds University’s Disciplinary Process In AI Misconduct Case.
Haishan Yang, an international Ph.D. student at the University of Minnesota, sued several university officials after being expelled for academic dishonesty involving his use of artificial intelligence tools during a doctoral exam.
Yang was enrolled in the Health Services Research, Policy, and Administration program when, in August
2024, he took an eight-hour qualifying exam required for advancement in his program. The exam instructions explicitly prohibited the use of “any sort of Artificial Intelligence tools, such as ChatGPT.” After reviewing Yang’s exam, a faculty grading committee, including his professor, Dr. Hannah Neprash, concluded that his answers appeared inconsistent with his previous writing and contained ideas not covered in class. The committee compared Yang’s responses with ChatGPT outputs and found near-identical examples and phrasing, including several instances where his answers exactly matched AIgenerated text. They also determined that he had likely used ChatGPT to draft practice exam responses.
Finding that the preponderance of the evidence showed unauthorized AI use, the committee referred the matter to the University’s Office for Community Standards (OCS). Yang met with OCS staff, submitted a 35-page written defense, and later participated in a formal hearing before the Campus Committee on Student Behavior—a five-member panel of faculty and students. Represented by an advocate, Yang was allowed to question witnesses, present evidence, and respond to the allegations. When his advocate attempted to generate new ChatGPT outputs during the hearing to challenge the University’s findings, the panel chair, Professor JaneAnne Murray, stopped the demonstration, explaining that the committee “does not create new evidence” during hearings.
At the conclusion of the hearing, the panel unanimously found Yang responsible for scholastic dishonesty. It cited the consistency of the evidence, the expert testimony of faculty members familiar with AI-generated writing, and Yang’s inconsistent explanations. The OCS imposed expulsion, which Yang appealed to Vice Provost Scott Lanyon. Lanyon affirmed the decision, finding it was supported by substantial evidence and concluding that Yang’s conduct undermined the University’s trust in the integrity of its academic process.
Yang’s expulsion caused the termination of his Student and Exchange Visitor Information System (SEVIS) record, resulting in the loss of his international student status and legal ability to remain in the United States. In January 2025, Yang filed a federal civil rights lawsuit under 42 U.S.C. Section 1983, alleging that the disciplinary process violated his constitutional rights to substantive and procedural due process. He sought over $4 million in damages, reinstatement to his Ph.D. program, and expungement of his disciplinary record.
Substantive due process protects individuals from arbitrary or irrational government action that “shocks the conscience.” In the academic context, a student must show that officials acted in bad faith or substantially departed from accepted academic norms. The Court found that Yang failed to make such a showing. Even assuming students have a constitutional right to continued education, the University’s decision was reasoned, evidence-based, and within the scope of professional academic judgment. The Court emphasized that universities are entitled to deference in academic discipline and that judicial intervention is warranted only in “truly egregious and extraordinary” circumstances.
Procedural due process guarantees notice and a fair opportunity to be heard before a person is deprived of a protected interest. Yang claimed the hearing process was biased and unfair, but the Court found that he had received detailed notice of the allegations, representation by an advocate, a full opportunity to present evidence, and appellate review, all of which satisfied due process. The Court also found that Yang’s procedural claims were premature because he had not yet exhausted all available remedies under Minnesota law.
The Court dismissed the case without prejudice.
Haishan Yang v. Neprash (D.Minn. Oct. 31, 2025) 2025 LX 416753.
Note:
While this case involved a public university, it reflects principles similar to California’s “fair procedure” requirement for private schools: students facing serious discipline must receive notice of the charges and a meaningful opportunity to respond.
facilities business &
Enforcing Arbitration Agreements: Court Declines To Enforce SignIn Wrap Arbitration Agreement That Was Visually Overshadowed By Other Elements On Checkout Page.
Leslie Cruz purchased merchandise through the Kate Spade Outlet website, which was operated by Kate Spade LLC and Coach Services, Inc., both subsidiaries of Tapestry, Inc. On February 2, 2024, she placed an online order for in-store pickup for a $79.00 pair of shoes. On March 4, 2024, she placed another order for home delivery of approximately $150.00 of merchandise.
On April 12, 2024, Cruz sued Tapestry, Kate Spade, and Coach in Los Angeles County Superior Court, claiming they engaged in false advertising and unfair competition under California Business and Professions Code sections 17200 et seq. and 17500 et seq. She alleged that the companies advertised “falsely inflated” discounts, displaying markdowns from prices at which the merchandise was never or almost never offered for sale. She alleged that her February 2, 2024 and March 4, 2024 purchases fell under this “false advertising scheme.” Cruz sought restitution and disgorgement of all unjust enrichment.
Tapestry and its affiliates responded by filing a motion to compel arbitration, arguing that Cruz had agreed to arbitrate her claims when she made her online purchases. They relied on an arbitration provision embedded in the website’s Terms of Use. During checkout, there was a large pink button that either said “PLACE MY ORDER” if a customer chose a pickup order, or “FINAL: PLACE ORDER” if they chose delivery. The trial court referred to these collectively as the “action button.” Underneath the action button,
a sentence in smaller gray font read, “BY CLICKING SUBMIT YOUR ORDER, YOU ARE AGREEING TO OUR TERMS OF USE AND PRIVACY POLICY.”
The words “Terms of Use” and “Privacy Policy” were underlined hyperlinks, but they were not a separate color. Customers were not required to click the links or check a box indicating that they had reviewed the Terms of Use or Privacy Policy.
The trial court denied Tapestry’s motion to compel arbitration. The trial court found that Cruz had not assented to the arbitration clause because the notice was too inconspicuous and overshadowed by more prominent elements on the checkout page, such as the large pink action button, advertisements, and payment fields. The trial court concluded that Cruz had no reason to expect that a one-time retail purchase would subject her to an ongoing contractual relationship governed by extensive terms. Tapestry appealed, contending that the trial court erred and that Cruz had implicitly agreed to arbitration by completing her purchases.
On appeal, the Second District Court of Appeal reviewed the order de novo. The appellate court explained that a party seeking to compel arbitration must show that the other party consented to the arbitration agreement. In an online setting, whether a consumer is bound by an arbitration agreement depends on notice. The business must show that its website presented the terms of the agreement in a way that would make a reasonably prudent user aware that they were agreeing to the terms.
The appellate court agreed with the trial court that Tapestry’s checkout process used what is known as a “sign-in wrap” agreement. Sign-in wrap agreements include a textual notice indicating that the user will be bound by terms, but they do not require that the consumer review the terms or expressly manifest their assent by checking a box or clicking an “I agree”
button. Instead, they are purportedly bound by the agreement when they click some other button that is needed to complete the transaction, such as a sign-in button or, in this case, a purchase button.
Because this type of assent is largely passive, the validity of the agreement turned on whether the website gave users reasonably conspicuous notice. The appellate court explained that in the context of online purchases, consumers would not typically expect that they are entering into an ongoing contractual relationship bound by extensive terms and conditions. The appellate court rejected Tapestry’s argument that the high dollar value of the goods should have alerted Cruz to look for contractual terms.
The appellate court conducted a detailed examination of the website’s checkout pages and concluded that Tapestry failed to provide reasonably conspicuous notice that submitting an order would bind a customer to its Terms of Use, which contained the arbitration clause. The checkout pages had a two-column layout with multiple visual elements. The appellate court found that the notice text was small, gray, and difficult to read against an off-white background. The notice text was in the left column and sat beneath a bright pink action button that drew the user’s focus. Meanwhile, the right column contained promotional messages and colorful graphics advertising gift wrap options, shipping details, and customer support. The appellate court concluded that the combination of these design features drew the user’s attention away from the notice text. It noted that Tapestry could easily have required customers to affirmatively acknowledge the Terms of Use, such as by clicking a checkbox, but chose not to do so. The appellate court affirmed the trial court’s denial of the motion to compel arbitration, concluding that Cruz never agreed to arbitrate her claims.
Cruz v. Tapestry, Inc. (2025) 113 Cal.App.5th 943.
Note:
Private schools increasingly use online systems for enrollment, tuition payments, and consent forms. Cruz v. Tapestry reinforces California’s strict approach to requiring mutual assent in online transactions. Arbitration clauses or waivers must be presented clearly and require active agreement. If key terms are buried in small text or passive “terms of use,” they may be unenforceable.
cases we are watching
• The Eighth Circuit Court of Appeals recently vacated a National Labor Relations Board decision finding that Home Depot unlawfully disciplined a Minnesota employee who refused to remove “BLM” lettering from their work apron. The Eighth Circuit held that the Board failed to properly consider Home Depot’s “special circumstances” defense, noting that the store, located near the site of George Floyd’s murder, faced real safety and customerrelations concerns amid civil unrest. The Court found the company’s dress code, which barred political or social messages unrelated to work and was applied consistently to similar displays, was a reasonable business measure. The decision emphasized that, in this context, Home Depot’s actions were justified under the National Labor Relations Act’s narrow exception allowing restrictions on employee expression when legitimate safety or operational interests are at stake. LCW covered this case previously.
• There is a proposed antitrust class action case pending in the Eastern District of Pennsylvania, filed by a law school applicant against the Law School Admission Council (LSAC). The complaint alleges that LSAC and its 197 member law schools unlawfully fixed prices for the Credential Assembly Service (CAS), the centralized platform through which nearly all applicants must apply to ABA-accredited law schools, by collectively setting uniform processing fees of $215 plus $45 per application. The plaintiff argues this constitutes illegal price fixing and monopolization under the Sherman Act, claiming LSAC uses its control of the market to charge supracompetitive fees while excluding competing platforms. The complaint compares LSAC’s fees to the far lower costs of similar systems like the Common Application and asserts that the uniform pricing scheme and member control over LSAC demonstrate concerted action among competing schools. The plaintiff seeks to proceed on behalf of all law school applicants, alleging the conduct has produced inflated prices, reduced competition, and monopoly power in the law school admissions market.
• The Nysmith School in Fairfax County, Virginia, reached a settlement with the Louis D. Brandeis Center for Human Rights Under Law after a Jewish family alleged that the School expelled their three children in retaliation for reporting severe antisemitic bullying. According to the complaint, school officials ignored repeated reports that students called the family’s 11-year-old daughter slurs and said Jews “deserved to die,” later canceling a Holocaust education program and raising a Palestinian flag in the gym, which worsened the harassment. Under the settlement, Nysmith will adopt comprehensive nondiscrimination policies incorporating the International Holocaust Remembrance Alliance’s definition of antisemitism, create a working committee to investigate complaints, and appoint an independent monitor for at least five years to review investigations and report violations to the Virginia Attorney General. The School will also provide mandatory annual education programs for staff and students. Headmaster Ken Nysmith will issue a public statement expressing regret for expelling the students and reaffirming the school’s commitment to respect, inclusion, and safety for all students. The full settlement can be found here
lcw best timeline
NOVEMBER THROUGH JANUARY
Issue Performance Evaluations.
Compensation Committee Review of Compensation before issuing employee contracts.
We recommend that performance evaluations be conducted on at least an annual basis, and that they be completed before the decision to continue employment for the following school year is made. Schools that do not conduct regular performance reviews have difficulty and often incur legal liability terminating problem employees - especially when there is a lack of notice regarding problems.
Review employee health and other benefit packages, and determine whether any changes in benefit plans are needed.
If lease ends at the end of the school year, review lease terms in order to negotiate new terms or have adequate time to locate new space for upcoming school year.
Review tuition rates and fees relative to economic and demographic data for the School’s target market to determine whether to change the rates.
Review student financial aid policies.
Review, revise, and update enrollment/tuition agreements based on changes to the law and best practice recommendations.
File all tax forms in a timely manner:
• Forms 990, 990EZ
Form 990:
Tax-exempt organizations must file a Form 990 if the annual gross receipts are more than $200,000, or the total assets are more than $500,000.
Form 990-EZ
Tax-exempt organizations whose annual gross receipts are less than $200,000, and total assets are less than $500,000 can file either form 990 or 990-EZ.
A School below college level affiliated with a church or operated by a religious order is exempt from filing Form 990 series forms. (See IRS Regulations section 1.6033-2(g)(1)(vii)).
The 990 series forms are due every year by the 15th day of the 5th month after the close of your tax year. For example, if your tax year ended on December 31, the e-Postcard is due May 15 of the following year. If the due date falls on a Saturday, Sunday, or legal holiday, the due date is the next business day.
The School should make its IRS form 990 available in the business office for inspection.
practices
Each Month, LCW presents a monthly timeline of best practices for private and independent schools. The timeline runs from the fall semester through the end of summer break. LCW encourages schools to use the timeline as a guideline throughout the school year.
Other required Tax Forms common to business who have employees include Forms 940, 941, 1099, W-2, 5500
Annual review of finances (if fiscal year ended January 1st)
The School’s financial results should be reviewed annually by person(s) independent of the School’s financial processes (including initiating and recording transactions and physical custody of School assets). For schools not required to have an audit, this can be accomplished by a trustee with the requisite financial skills to conduct such a review.
The School should have within its financial statements a letter from the School’s independent accountants outlining the audit work performed and a summary of results.
Schools should consider following the California Nonprofit Integrity Act when conducting audits, which include formation of an audit committee:
Although the Act expressly exempts educational institutions from the requirement of having an audit committee, inclusion of such a committee reflects a “best practice” that is consistent with the legal trend toward such compliance. The audit committee is responsible for recommending the retention and termination of an independent auditor and may negotiate the independent auditor’s compensation. If an organization chooses to
utilize an audit committee, the committee, which must be appointed by the Board, should not include any members of the staff, including the president or chief executive officer and the treasurer or chief financial officer. If the corporation has a finance committee, it must be separate from the audit committee. Members of the finance committee may serve on the audit committee; however, the chairperson of the audit committee may not be a member of the finance committee and members of the finance committee shall constitute less than one-half of the membership of the audit committee. It is recommended that these restrictions on makeup of the Audit Committee be expressly written into the Bylaws.
JANUARY / FEBRUARY
Review and revise/update annual employment contracts.
Conduct audits of current and vacant positions to determine whether positions are correctly designated as exempt/non-exempt under federal and state laws.
did you know...?
•Despite a new California law prohibiting private universities from considering legacy or donor status in admissions decisions, USC announced it will continue factoring in legacy ties during its applicant review process. The University emphasized that legacy status remains one small component of a holistic review and noted that 14.5% of its incoming first-year class are legacy admits. While the law no longer imposes financial penalties, USC’s name will be published in a state-maintained database of violators and it must report admissions data related to legacy status. University officials defended the policy, citing its alignment with institutional values and arguing the law’s lack of clarity on key terms like “relative” makes compliance difficult.
•A new K-5 school called Riverstone Academy, opened in Pueblo, Colorado this Fall and has drawn attention for describing itself as Colorado’s first public Christian school. The School serves about 30 students and is authorized by Education ReEnvisioned BOCES—a state agency that allows multiple school districts to jointly oversee and fund specialized or alternative schools. Operated by a local nonprofit that also runs private and home-school programs, Riverstone’s opening has prompted questions from state education officials about whether a school with a stated religious mission can receive public funding, an issue that may test the boundaries between public education and religious affiliation.
•An independent arbitrator has ruled that Portland State University violated its collective bargaining agreement with the Portland State University chapter of the American Association of University Professors (PSU-AAUP) when it laid off 10 non-tenure-track faculty members last year as part of efforts to close an $18 million budget deficit. The arbitrator found that PSU failed to follow the proper contractual procedures for layoffs, determining that the University improperly used a faster process intended for program changes rather than the lengthier procedure required during financial downturns. The arbitrator ordered that the affected faculty be reinstated and made whole.
Consortium Call Of The Month
LCW has four private education consortiums across the State! Consortium members enjoy access to quality training throughout the year, discounts on other LCW products and events, and unlimited, complimentary telephone and email consultation with an LCW private education attorney on matters related to employment and education law questions (including business & facilities questions and student issues!) We’ve outlined a recent consortium call and the provided answer below. Client confidentiality is paramount to us; we change and omit details in the Consortium Call of the Month.
Question:
A private school’s human resources administrator reached out to LCW about an employee who is out on medical leave. The administrator asked whether there would be any issue with this employee attending an optional, schoolsponsored holiday party. The administrator asked whether the answer would be different if the leave was due to a work-related injury.
Answer:
The LCW attorney advised that, generally, there is no legal issue with allowing an employee on medical leave to attend a voluntary, school-sponsored holiday party, as long as:
• Attendance is truly optional. The attorney advised that the School make clear the party is not mandatory and that skipping it will not affect employment or benefits.
• Medical restrictions are respected. The attorney advised that it is the employee’s responsibility to ensure that attending does not conflict with any medical restrictions or doctor’s orders, and the School should not request new medical information or clearance just for this purpose.
• Treatment is consistent. The attorney advised that the School should handle this the same way it would for any other employee. The School should avoid singling the person out or excluding them solely because they are on leave.
The attorney also advised that the reason for the leave, whether a work-related injury or another medical condition, does not change the basic analysis. Attendance at a social event is not “returning to work” or “performing work duties” under the law. Therefore, the key is to avoid any perception that the School is retaliating, discriminating, or interfering with protected leave, whether under FMLA, CFRA, FEHA, or workers’ compensation.
Liebert Cassidy Whitmore