Mar 16 2021

Surviving the Motion to Dismiss: COVID-19 Tuition Lawsuits Clear First Hurdle

In the months after the arrival of the pandemic, colleges across the country transitioned from in-person to remote learning.  The vast majority of colleges refunded students' housing payments after students were forced to leave, but most schools did not offer any reduction for tuition after the entire educational format had changed.  This led to a number of lawsuits by students seeking a refund for some portion of their tuition payments. 

Various theories of liability were set forth by the plaintiffs who brought these lawsuits, including theories alleging a breach of contract or “unjust enrichment.”  These claims were largely predicated upon the argument that students contracted for the "typical" college learning experience and everything that is involved with in‑person education.  The plaintiffs argued that it was improper for colleges to charge them full tuition when the actual education they received was dramatically different from what they expected and paid for. 

These lawsuits are being defended aggressively by the colleges and universities that have been sued.  In many of the cases, the defendant institutions have filed motions to dismiss at the outset of the case.  Courts across the country have taken varying approaches to these early dispositive motions.  In two recent Massachusetts cases, the Court has denied the early motions to dismiss. [1] These decisions forecast the hurdles that defendants in these types of cases will face in getting cases dismissed at an early stage.  In many of these cases, the plaintiffs may be able to continue to pursue their claims, but it is important to consider the long term implications of these decisions.   

Boston University Litigation

In the case of In Re: Boston University COVID-19 Refund Litigation, the fundamental argument that was made by Boston University in its motion to dismiss was that the contract that students entered into with the school did not guarantee an in-person education.  Rather, Boston University argued that the contract ultimately provided that students would receive an education.  Although the circumstances surrounding that education changed, and the manner in which students were educated was quite different than had been contemplated, Boston University argued that the students still received an education. 

The plaintiffs argued that the classroom environment and everything that is associated with the "typical" college education is fundamental to that education.  As a result, they argued that the plaintiffs necessarily could not have received the education that they contracted for when instruction was transitioned from in‑person to remote learning. 

In denying Boston University's motion to dismiss, the judge concluded that the plaintiffs had set forth a legally valid cause of action and had alleged sufficient facts to support their theory of recovery. 

Stonehill College Litigation

In Paul Moran v. Stonehill College, the plaintiff alleges that Stonehill’s failure to provide tuition and fees reimbursements after the conversion to online learning amounted to a breach of contract, unjust enrichment, and unfair trade practices under Chapter 93A.  In its motion to dismiss, Stonehill argued that the plaintiff’s allegations were more properly classified as an educational malpractice claim, which is not recognized under state law.

Judge Howe of the Essex County Superior Court denied the motion to dismiss with respect to the plaintiff’s claims for breach of contract and unjust enrichment, while dismissing the consumer protection claim.  In reaching this decision, the Court concluded that further factual development of the breach of contract claim would be necessary to resolve the issue on the merits. 

The Motion To Dismiss         

In the BU and Stonehill cases, the defendants sought dismissal of the plaintiffs’ complaint through the procedural vehicle of a motion to dismiss.  The standard to prevail on a motion to dismiss is very challenging.  The judge is required to accept all of the allegations set forth in the plaintiffs’ complaint as true, and the case can only be dismissed if there is no legal right of relief to the plaintiffs based on these allegations.  The standard is very difficult to satisfy because all the plaintiffs need to do to survive a motion to dismiss is to allege facts in the complaint that would be sufficient for the lawsuit to have merit.  The Court’s consideration of a motion to dismiss is also limited to a review of the allegations in the complaint, and the defendant is unable to introduce additional evidence.  Since it is rare to have a situation where the fundamental allegations necessary for a lawsuit to go forward have not been set forth in the complaint, motions to dismiss are rarely granted. 

The fact that the motions to dismiss were denied in these cases does not mean that the judges found the plaintiffs’ claims compelling.  Rather, the denial of the motions represents a finding that the plaintiffs have alleged a viable cause of action.   In sports vernacular, the plaintiffs have not "won," and it cannot even be said that they are likely to win; rather, they have not lost before the game has even begun. 

Further Options Available To The Defendants

The defendant institutions in these cases will have further opportunities to pursue dismissal in the future.  The next opportunity will be through a motion for summary judgment at some future point after the parties had conducted discovery, taken depositions, and otherwise investigated the legal and factual legitimacy of the claims. 

A motion for summary judgment is different than a motion to dismiss.  In a motion for summary judgment, the court does not simply accept as true the plaintiffs’ allegations.  Instead, the court evaluates whether there is actual evidence that supports the claims in the complaint.  It is far easier for a plaintiff to survive a motion to dismiss because the plaintiff merely needs to allege facts that would justify a claim; to survive a motion for summary judgment, a plaintiff must actually point to real evidence in support of the claim. 

Further, at the summary judgment stage, the defendant may introduce affirmative evidence which indicates that the defendant is entitled to judgment in its favor.  In these cases and similar actions involving colleges and universities, defense counsel will likely introduce a number of legal theories in defense of the schools’ actions, including the doctrine of impossibility and the presence of force majeure clauses in the subject enrollment agreements.  Please see this article for more information.  

Of note, in Moran v. Stonehill, the Essex Superior Court addressed the issue of force majeure, holding that this type of clause may excuse performance, but does not allow a non-performing party to a contract to retain funds received for services it did not provide.  It is anticipated that defendant institutions will counter this argument with evidence that it incurred additional and unanticipated, but reasonable, expenses in converting to online learning.

Takeaways From The Court Decisions

So what should be the ultimate takeaway for both sides from the court denying these motions to dismiss?  The plaintiffs should expect that the defendants will start engaging in discovery that will be necessary to posture the case to proceed with the next effort to get the case dismissed, a motion for summary judgment.  In this respect, plaintiffs should expect that defendants will continue to aggressively defend the case.  Still, the denial of the motion to dismiss is obviously a favorable development for the plaintiffs in these two cases.  These results send a clear signal to defendants in many of these lawsuits that cases are not going to be resolved in favor of the defendants at an early stage and without a fight. 

For the defendant colleges, these early results may be disappointing, but it should be recognized as a predictable outcome.  For this reason, defendants should embark on the written discovery and depositions that the defendant will need to perform in order to ultimately move forward with efforts to get the case dismissed at the summary judgment stage. 

The reality is that these cases, and many of the similar lawsuits which have been filed across the country, present legitimate legal disputes.  Unless the parties settle these claims, they are unlikely to be disposed of in the short term and will likely be litigated for some time. 

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[1] In a third case, Manny Chong, Thane Gallo and Others Similarly Situated v. Northeastern University, the United States District Court allowed the defendant’s motion to dismiss as to some of the counts, while denying the motion to dismiss the plaintiffs’ claims related to campus recreation fees (October 2020).  

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covid-19

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Education Law

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