In this two-part series we will explore the issues raised for colleges and universities by COVID-19-related tuition and fee refund class action lawsuits. In Part One we begin by providing a summary of these lawsuits and an overview of the defenses available to colleges and universities. 

Across the United States, students have brought over 100 class action lawsuits against public and private colleges and universities seeking refunds of tuition, fees, and room and board expenses after schools closed their physical facilities, including their classrooms and residence halls, in response to the COVID-19 pandemic.  These lawsuits hit higher education institutions at a time when they are facing unprecedented economic challenges and navigating the uncharted territory of providing the academic and campus experience remotely.  This article identifies key legal issues raised by such lawsuits and potential defenses.

Although most of the allegations in each complaint are specific to each institution’s response to COVID-19, the complaints all allege that the institution has not delivered the services that students contracted and paid for.  The complaints assert breach of contract and unjust enrichment claims, and in some cases constructive eviction claims arising out of institutions’ closure of on-campus housing facilities midway through the spring term.  The fundamental questions presented by these lawsuits are: (1) what did students pay for and on what terms; (2) have they received something quantifiably less than that; and (3) is there any way to answer these questions on a class-wide basis or using a class-wide model?

Liability Defenses

Defense against these claims will require assessment of the scope of the contract, which will define what students were entitled to receive, and potential bases for excusal of performance:

• A narrow definition of the contract could mean no breach resulting from the change in instructional model and availability of services: The majority of the complaints do not identify the basis for the contract or the terms the institution allegedly breached.  State law will determine whether a contract exists between a student and an institution and what its terms are.  This varies greatly by state.  In New York, for example, there is an implied contract when a student pays tuition, but in Missouri, there is no assumed contract between a student and a university.  Once the existence of a contract is established, the terms of that contract must also be established.  Terms must be specific and concrete, and must be more than mere aspirational language.  In some jurisdictions, courts look to the student’s reasonable expectations of what the university would provide.  While a student handbook or course catalog may supply the terms of a contract, a general statement of an institution’s ideals, goals, or mission is generally not enforceable as a contract term.  Moreover, many institutions have clear policies stating that tuition and fees are non-refundable.

• Traditional breach of contract defenses could excuse performance: Institutions may be able to invoke traditional breach of contract defenses, such as impossibility, impracticability, and frustration of purpose.  Some contracts may contain a force majeure clause that would excuse the institution’s provision of certain services or permit the institution’s modification of those services. In addition, public institutions may avoid liability under the sovereign immunity doctrine.

• Courts will defer to academic judgment in determining whether online courses were an adequate substitute for in-person ones:  Courts are generally reluctant to interfere in matters of academic judgment by educators.  In many jurisdictions, the theory of “educational malpractice” is prohibited as a matter of public policy.  Even outside of those jurisdictions, courts hearing the merits of these lawsuits may give unique deference to the institutions’ determinations of what constitutes an adequate substitute for in-person instruction, particularly where universities offer a broad range of courses and programs, no two of which can be evaluated identically.  Courts may find no breach if, in the institution’s academic judgment, it provided what the students paid for. 

Defenses to Alleged Damages Models

The complaints tend to allege two theories of harm: deprivation of benefits/services, and diminished value of the degree.  Under either theory, plaintiffs must prove that they suffered a quantifiable loss to recover compensatory damages. 

• Deprivation of benefits or services: The majority of complaints allege that the students did not receive the type of education they paid for, or that they did not receive an effective or adequate education.  Plaintiffs may face challenges in establishing a measurable value difference between in-person and online courses, in part because of courts’ deference to academic judgment on this issue.  As for other benefits and services the institution’s fees cover, courts may scrutinize the type of fees and whether any value was lost when services were suspended mid-way through the term.  Whether fees were mandatory or optional, and whether they were academic-related (e.g., private study fees, writing center fees, lab fees), on-campus related (e.g., student health services, gym access), or a hybrid (e.g., student life fees), may impact the analysis.  Courts will have to assess whether the students received the benefit of their bargain during the first half of the term, and whether they continued to receive a benefit after the shift to remote learning. 

• Diminished value of the degree: Some complaints allege a depreciated degree value, either because the school switched to pass/fail grading or because the quality of the education received was allegedly reduced in an online format.  In addition to establishing that the institution made an enforceable promise as to the value of its degrees, plaintiffs will need to quantify any difference in degree value to obtain damages.  Plaintiffs may identify comparator schools or programs offered only online or only pass/fail before COVID-19, but it is unclear what metrics could be used to assess the “value” of a degree in the marketplace.  Claims regarding the pass/fail grading transition may be particularly difficult to establish for academic programs in which highly competitive institutions already operate on a pass/fail basis, such as some law schools and dental schools. 

Defenses to Class Certification

Most of the lawsuits define the proposed class broadly as either all students or other persons who paid the institution for tuition, fees, room, or board, or somewhat more narrowly as all students or other persons who paid the institution for services the institution failed to provide, and whose payments have not been refunded.  Some lawsuits propose separate classes for tuition, fees, and room and board. 

The most significant hurdles for class certification in these cases are likely to be typicality—whether the named plaintiffs’ claims are typical of those of the class—and predominance—whether common issues predominate over individual ones.  The following differences, among others, may preclude class certification based on typicality or predominance:

• Differences between and within degree programs:  Many institutions have different tuition and fee models and different policies for their various programs, making the terms of the contract itself potentially variable across class members.  It will likely be difficult to make generalizations about the value of online instruction compared to in-person instruction across courses, and even more so across departments and programs.  An English class, for example, may be very similar when taught over a video conferencing platform, while a chemistry or engineering class may require more creative efforts to approximate the in-person experience.  At the graduate level, dentistry and law, for example, are not comparable in terms of their in-person educational program or what it takes to provide a similar program remotely.  

• Differences at the individual student level: The difference between what each student paid for and what she received may depend on highly individualized factors: her course load, tuition and fee payments, expectations, and utilization of services.  Some students may not have suffered any loss for a number of reasons.  For example, for some students, their expectations and intended course experience and use of university services may not have been different pre- and post-COVID.  Other students, even if they did receive something less than what they paid for or expected, may not have suffered any economic harm because their tuition was covered by a scholarship or tuition remission program.  While some of the class definitions are structured to encompass non-students who paid tuition and fees on behalf of students, the problem of parsing the injured class members from the uninjured ones on its face seems highly individualized. The plaintiffs’ class claims overall may suffer from the Comcast v. Behrend infirmity of an inadequate damages model that cannot determine on a classwide basis who has been injured and who has not, or any method for determining damages for injured class members on a classwide basis consistent with the theory of liability.