April 22, 2020

Considerations for Colleges and Universities Facing Class Action Refund Lawsuits From Students

COVID-19 has forced colleges and universities to move from traditional in-person classroom instruction to online learning. Just as students, faculty and administrators adjust to their new reality, a spate of lawsuits has been filed against colleges and universities — increasing a trend of student litigation growing since before COVID-19 — resulting from coronavirus-related changes to their programs.

These proposed class actions generally pursue claims like breach-of-contract and unjust enrichment, and demand the return of tuition, room and board, and other fees paid for the 2020 spring semester. While most have been brought on behalf of students, at least one names a parent as a plaintiff because the parent paid all or a portion of the student’s tuition and fees.

While a significant number of colleges and universities have provided pro-rated refunds to students for unused housing or meal plans, institutions have generally declined to return or reduce tuition and other fees because students are still receiving the curriculum and instruction that their tuition paid for, albeit in a different format. Moreover, federal and state education authorities, along with postsecondary accrediting organizations, have encouraged institutions to shift academic programs online for the purposes of academic continuity and have provided significant regulatory flexibilities to achieve that end.

Several of the proposed class actions challenge institutions’ arguments for not refunding tuition by claiming that, although students are receiving academic interaction via distance education modalities, they are being deprived of the benefits of the on-campus learning experience they paid for. These include: access to campus facilities such as computer labs, libraries and laboratories; extracurricular activities, clubs, groups, and intramurals; student art, cultural experiences, and other activities; networking and mentorship opportunities; hands-on learning and experimentation; and social development and independence. Several lawsuits allege that students specifically chose to attend a particular institution, rather than one which regularly provides remote learning, on the promise of these in-person benefits.

The cases generally seek to recover for the class the difference between the value of one-half of a semester of online learning versus the value of one-half of a semester of in-person instruction in a physical classroom, and pro-rated refunds of various student fees.

As colleges and universities brace for similar lawsuits, several steps may improve their position.

Potential Class Action Defenses

If forced to defend against a putative class action, colleges and universities should consider any grounds for dismissal at the pleading stage, including potential arguments based on immunity or failure to state a claim under the causes of actions alleged. While it takes just one plaintiff to mount a putative class action, the named plaintiff(s) must establish typicality, commonality and numerosity to achieve class certification. Institutions may have arguments that class certification is improper. Issues as to lack of commonality and typicality could likely be raised, given the particular factual allegations relating to student-plaintiffs’ enrollment and the actions taken by the college or university in response to the pandemic.

Revisit Contractual Language

While it may be too late for spring term 2020, institutions should review and evaluate published institutional refund policies, enrollment agreements, room and board agreements, and similar documents to ensure that contractual terms and policies reflect the current needs of the institution. Force majeure clauses, in particular, are receiving renewed attention. Such provisions can either release or defer a party’s contractual obligations due to specific circumstances beyond its control. Some force majeure clauses expressly include pandemics and epidemics as qualifying events, while others could include more generic language such as “acts of God,” which may be read to include the COVID-19 pandemic. For more on force majeure clauses, see our alert on the topic.

Determine Whether Performance Is Made Impossible By Government Orders

Even where agreements do not contain a force majeure or similar term, a party may be released from its contractual obligations due to impossibility (or impracticability) of performance. Depending on state law, this may require a party to show the contract’s principal purpose has been substantially frustrated or made impossible by an unanticipated event. For example, performance of in-person teaching could be rendered impossible by “shelter in place” orders or other government orders instituting social distancing requirements.

Conclusion

Finally, as colleges and universities develop and finalize their responses to student requests for tuition refunds, they should carefully consider how their response might affect the relationships among the institution, its student body, alumni and the community. Amidst the growing uncertainty as to the consequences of the COVID-19 pandemic on fall semester 2020, the rash of putative class actions being filed for spring semester refunds is yet another burden for which higher education leaders may need to account and seek legal counsel. 

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