Jun 17 2020

COVID-19 Closes On-Campus Learning and Prompts Lawsuits from Students Seeking Tuition Reimbursement

When the COVID-19 pandemic hit in March 2020, colleges and universities were forced to make major adjustments in the wake of the public health crisis. Students were required to vacate residence halls, and traditional on-campus learning was replaced with online courses and virtual learning. Most agree that these steps were necessary, but the college “experience” for students across the country was completely transformed from what they expected and paid for.

Now that the dust has settled, numerous lawsuits have been filed by students seeking reimbursement for portions of the tuition and other expenses that they paid for the Spring 2020 semester. Given the number of lawsuits that have already been filed, educational institutions that provide on-campus instruction should be prepared for this type of lawsuit. 1

Nature of Lawsuits: Class Actions

Many of the early cases have been filed as class action lawsuits. A class action is a lawsuit in which one individual challenges a defendant’s allegedly improper conduct in a single lawsuit on behalf of a large group of entities, or a (“class”). The plaintiff, in this case an individual student, sues the defendant (the college or university) on their own behalf and on behalf of other entities or individuals (“class members”) who have experienced a similar loss as the class representative.

In Federal Court, where many of these lawsuits have been brought, class action lawsuits are governed by Rule 23 of the Federal Rules of Civil Procedure. In order for the case to proceed as a class action lawsuit, the number of class members must be sufficiently high to make it impractical to join all of the individual plaintiffs in one lawsuit and the claims of the class members must be fundamentally similar to those of the rest of the class.

A defendant can challenge whether a class action is the appropriate vehicle for the grievance by contesting whether the claims of the individual plaintiffs are sufficiently similar. For example, assume the plaintiffs in the actions filed against colleges or universities allege that the cancellation of on-campus classes negatively impacted their career prospects. This type of claim would be highly individualized and would vary greatly from student to student, making any such claim less appropriate to be asserted in the setting of a class action lawsuit. Still, while there may be some differences with regard to the claims of the members of the proposed class of students in these lawsuits, courts will likely conclude that there is sufficient similarity in the claims for the suits to proceed as class action lawsuits.

A class action can have significant consequences for a defendant because the results of the lawsuit affect so many individuals. If one student sued a college or university to recover tuition or other expenses, the exposure presented by the individual lawsuit would be relatively insubstantial. By comparison, even a relatively small college or university with 5,000 students could face massive exposure; if each student was entitled to a relatively modest reimbursement of $1,000.00, the total exposure, without considering any other factors, would be $5,000,000. 2 Understanding the legal issues presented in these class action lawsuits will be particularly important given the financial exposure presented by these lawsuits.

Theories of Recovery

In the early wave of cases, the plaintiffs have asserted similar theories of recovery. They claim that there was a binding agreement between students and colleges/universities in which students agreed to pay tuition and fees in exchange for in-class instruction, room and board, extracurricular activities, the use of dining facilities, gym access, the use of computer/science labs and various other on-campus facilities. The plaintiffs allege that they were deprived of many of these benefits when students were removed from on-campus housing and learning was converted to online classes. The plaintiffs argue that they should be afforded some sort of refund or reimbursement because they have been deprived of many of these bargained for activities.

The early lawsuits have specifically pled the following claims:

  1. Breach of Contract: The plaintiffs argue that the binding agreement (contract) was breached when students were removed from on-campus housing and their education was converted to online classes because this was not the equivalent of the education they paid to receive. When the request of the plaintiffs for a refund of a portion of their tuition or other fees was declined, they claim that they suffered damages
  2. Unjust Enrichment: Some of the early lawsuits assert claims for “unjust enrichment.” Although most institutions returned room and board fees for the time frame that students were not able to live in on-campus housing, colleges and universities did not provide similar pro-rata refunds for tuition or other services which students did not receive. As a result, the plaintiffs allege that the institutions were “unjustly enriched” when they retained payments which students made for on-campus education and services that were not in fact provided. The plaintiffs are seeking some measure of reimbursement because they were deprived of the in-person education and on-campus services that they expected.
  3. Conversion: The legal tort of conversion occurs when one converts another's property to his/her own use. The plaintiffs claim that the colleges and universities exerted “ownership, dominion and control” over the tuition funds that students paid, and had no right to keep the entire amount of the tuition after students were required to leave campus. They claim that legal conversion took place when the colleges/universities retained the entirety of the tuition that was paid despite the fact the students did not receive all of the benefits that they paid to receive.

Damages Being Sought

The plaintiffs have generally claimed that they are entitled to various types of damages, including the following:

  • Un-refunded tuition;
  • Recreation, health service and other student activity fees;
  • Room & Board;
  • Actual & Compensatory Damages for Breach of Contract and/or Unjust Enrichment;
  • Multiple damages/ punitive damages; and
  • Reasonable Attorney Fees.

Defenses to Plaintiffs' Claims

Breach of Contract/Unjust Enrichment/Conversion

At a preliminary level, schools may challenge the claim that there was in fact a breach of contract. The schools may argue that the fundamental promise that they made with students was that they would provide them with an education which would enable students to gain credits towards a degree. Although the online format was different from the classroom model, the schools nevertheless did provide an education, and the students received credits.

Of course, the plaintiffs will claim that they were not paying for “just” credits toward a degree. Rather, they expected face to face interaction with professors in a classroom setting, access to campus facilities, extra-curricular activities, student governance and student unions, student art and culture, social development opportunities, and hands-on learning and experimentation. 4 Still, even if one accepts the opinion online classes are inferior to in-person classes, schools may argue that students did receive what they contracted for: courses taught by qualified professors that will lead to their degree of choice and enhanced career prospects. The position of schools that there was no breach of contract will be more persuasive where the transformation to off campus, online instruction was compelled by the COVID-19 pandemic and beyond the control of the schools.

To rebut the claim that they did not fulfill their contract, schools may point to the Doctrine of Impossibility, which provides that the failure of a party to perform a contract is excused where there exists “an unanticipated circumstance which made performance of the promise vitally different from what should reasonably have been contemplated by the parties.” Republic Floors of New England v. Weston Racquet Club 520 N.E. 2d. 160 (Mass.) 1988. The COVID-19 pandemic certainly appears to be the type of event that would invoke this doctrine.

Enrollment agreements and other documents like student handbooks should be reviewed for the presence of a “force majeure” clause which may expressly excuse the college from the provision of certain services due to an unforeseeable event, or “act of God.” A force majeure provision in a student agreement could be used to allocate the risk of certain events between the parties and excuse performance of an impacted party for a certain event. These documents should be analyzed for a force majeure provision to determine if its language excuses or terminates a school’s obligation to reimburse tuition based on the COVID-19 pandemic.

However, the plaintiffs might argue that the defendants should have charged the plaintiffs less if they could not provide the services they were supposed to provide when it became impossible to do so because of the pandemic. That is where the “unjust enrichment” claim comes into play; even if the defendants provided the best college education and experience that they could under the circumstances, the plaintiffs will argue that they cannot charge the same amount that they would have charged had students received the college experience that they expected.

To rebut this claim, the defendants may also argue that significant expenses have still been incurred in providing ongoing online instruction. Salaries of professors teaching online courses, IT staff, other administrators, security, building and grounds staff needed to maintain campus facilities even in the absence of students, and so many other expenses continued to accumulate even though students were no longer on campus. All of this information is likely to be raised in response to claims that the defendants have been “unjustly enriched.”

Damages

Defendants will want to review the actual terms set forth in any applicable student enrollment agreements. These materials may contain Liquidated Damages Provisions or Refund Policies which might govern the case. A liquidated damages provision could potentially establish a defined limit on any damages that a plaintiff may recover, while there may also be a refund policy that controls any other recoverable damages.

Since many colleges and universities have already reimbursed students for room and board fees on a pro rata basis for the period of time the students were not on campus, these damages are not available in most of the lawsuits. Moreover, for most schools, the transition from on-campus to online learning occurred roughly midway through the spring semester. As a result, students would not be entitled to a refund for the entire semester of tuition or fees.

Finally, even if we accept the plaintiffs’ claim that online education is less “valuable” than the in-person experience, the plaintiffs certainly received some value from the online learning experience. They would therefore not be entitled to a refund of all tuition for the period of time after they were required to leave campus. If it is believed that the “value” of the online learning experience is 75% of the in-person experience, an appropriate reimbursement would arguably be 25% of the cost of tuition for the period of time after the students were required to leave campus.

Mandatory Arbitration

Student agreements should also be reviewed for the presence of mandatory arbitration provisions. As its name suggests, a mandatory arbitration clause requires the parties to a contract to submit any dispute to arbitration. Depending on the specific language, the plaintiffs may be required to address tuition grievances through individual arbitrations.

A mandatory arbitration clause would present defendant schools with an opportunity to pursue a motion to dismiss a class action lawsuit at the outset of a lawsuit. Given the substantial exposure presented by class action lawsuits, schools would be far better postured to deal with these disputes in individual arbitrations, as many students would likely be less inclined to pursue these claims in the setting of individual arbitrations than the class action lawsuit vehicle in which one plaintiff is asserting claims on behalf of all students.

Conclusion

As tuition reimbursement lawsuits against colleges and universities continue to flood the state and federal court dockets, the impact will be far-reaching. Since so many segments of our country are facing financial uncertainty, lawsuits that may provide some relief from financial struggles will be especially appealing. Beyond the substantial and immediate financial exposure, the long term financial success of a college or university may be impacted by the public’s perception of an institution’s response to these lawsuits.

All colleges and universities face the prospects of these lawsuits. Indeed, private high schools and middle schools which transitioned to online learning could also face these lawsuits. That is why it is critical to be prepared for these lawsuits and to understand the issues that they present.

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At least 100 lawsuits have been filed as of the time of this writing in states spanning the country.

2 The exposure would obviously be exponentially higher for schools that have more students and/or if the reimbursement per student is greater.

3 See Manny Chong, et al. v. Northeastern University, 1:20-cv-10844, Complaint, ¶ 40, alleging that the breach of contract occurred when (Northeastern University) “ceased providing in-person instruction.” See also Julia Dutra, et al. v. Trustees of Boston University, 1:20-cv-10827, Complaint, ¶ 69, alleging that the breach of contract occurred when (Boston University) moved all classes for the Spring 2020 semester “to online distance learning platforms, without reducing or refunding tuition accordingly.”

4 Julia Dutra, et al. v. Trustees of Boston University, 1:20-cv-10827, Complaint, ¶ 17.

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covid-19

Practice Areas

Education Law

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