[Athen] In the NEWS - Dueling LMS lawsuits

[Laurie Vasquez]

Dueling LMS Lawsuits
October 16, 2014
By
Carl Straumsheim <https://www.insidehighered.com/users/carl-straumsheim>

A learning management system provider is suing one of its clients for
breach of contract, alleging the university let more students use the
system than previously agreed. The university, meanwhile, has responded
with its own lawsuit, saying the company is charging “exorbitant fees” for
a “malfunctioning product.”

The University of the Incarnate Word, a private Catholic institution in San
Antonio, Tex., in December 2004 hired Learning Technology Partners
<http://company.learningtechnologypartners.com/tabid/2466/Default.aspx> to
provide its learning management system, called Izio. The two parties agreed
to a pay-per-student model, where the university paid a flat fee (in 2014,
$24) for each student who accessed the system.

Their partnership expanded in 2009 and 2011. First, the university asked
the company to let students in its adult degree completion program use the
system to download ebooks. That agreement, priced at $2 per student, did
not come with access to Izio. Then, the university introduced blended
programs, and negotiated a price of $12 per student for five to eight weeks
of access to the system.

Yet in 2011, the company began to experience “severe usage and capacity
issues,” and asked its contacts at the university to figure out where the
additional traffic was coming from. According to the complaint
<https://www.insidehighered.com/sites/default/server_files/files/IZIO.pdf>,
which was filed in the San Francisco County Superior Court, the university
“repeatedly denied” that students in the degree completion programs were
the source of the traffic.

While the company spent the next three years diagnosing and upgrading its
system, the university made plans to end the agreement. When the university
announced its intentions in October 2013, “the relationship of the parties
changed,” according to the counterclaim
<https://www.insidehighered.com/sites/default/server_files/files/UIW-response.pdf>
.

The company said it found the source of the congestion: Students who were
only supposed to download their ebooks had access to Izio, and students in
the blended programs were accessing Izio for twice as long a period as they
had paid for. After an audit of the past three academic years, the company
charged the university more than $1 million in fees for “unauthorized
usage.”

In its counterclaim, however, the university says the company conducted a
similar audit in 2013, and although it found irregularities, it “agreed as
part of an accord that no retroactive fees be assessed.”

The company includes quotes from a handful of emails suggesting the
university knew about the additional traffic. In an email to Reda
Athanasios, president of Learning Technology Partners, Cyndi W. Porter, the
university’s vice president for extended academic programs, acknowledged
the “rogue courses,” saying the institution would pay for them.

The complaint also states the university experimented with other learning
management systems, including Blackboard Learn, even though its agreement
with Learning Technology Partners named the company the “sole and exclusive
provider for all distance education” systems.

In the letter announcing that Incarnate Word would terminate the agreement,
Douglas B. Endsley, vice president for business and finance, also said the
institution would replace Izio with “other products that are paid for and
currently in service in the greater part of the university.”

The university’s final one-year extension with the company, which came with
higher fees to support the upgrades, was scheduled to end this December.
Instead, the university ended the agreement before the fall semester, six
months after it notified the company that Izio was “malfunctioning.”
According to the contract, the university was free to do so if Izio was
unavailable for more than 10 percent of any two weeks during a three-week
period.

The university paid the company an early termination fee of $120,144, which
it is now saying should be reimbursed.

In an email, Athanasios declined to elaborate on the complaint, saying, "We
feel very strongly about our case, but because the lawsuit is pending, we
don’t have any further comment at this time." The university did not
respond to a request for comment.

The cases are awaiting action from the U.S. District Court for the Northern
District of California.
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