College Refund Suits Raise Complex Tuition Questions

By Robert Boone III, Michael Cannon and Jonathan Potts
Law360 is providing free access to its coronavirus coverage to make sure all members of the legal community have accurate information in this time of uncertainty and change. Use the form below to sign up for any of our daily newsletters. Signing up for any of our section newsletters will opt you in to the daily Coronavirus briefing.

Sign up for our Class Action newsletter

You must correct or enter the following before you can sign up:

Select more newsletters to receive for free [+] Show less [-]

Thank You!



Law360 (May 19, 2020, 4:15 PM EDT) --
Robert Boone
Robert Boone
Michael Cannon
Michael Cannon
Jonathan Potts
Jonathan Potts
When COVID-19 arrived in the United States during the spring academic semester, there were approximately 20 million students enrolled in classes at U.S. colleges and universities.[1] The virus spread rapidly. Soon state and local governments began issuing shelter-in-place or stay-at-home orders.

Beginning in March, higher education institutions across the country made the unprecedented decision to close their campuses while classes remained in session. As a matter of public safety, universities instructed millions of students to vacate campus housing and return home. At the same time these colleges hit pause on the "full collegiate experience," their educational mission persisted. Colleges sprinted to switch ongoing classes to online and other remote learning formats for their students to avoid a lost semester, trimester or quarter.

Now that the dust has begun to settle, students have responded by filing a flurry of putative class actions, contending that they no longer receive the benefit of their bargain through remote learning. Thus, a deceivingly simple — and largely overlooked — question about the U.S. educational system has surfaced: What exactly does tuition pay for?

The answer to this question will not only drive the resolution of these cases on the merits, but also determine whether students will be able to obtain class action status to pursue these claims.

There are now dozens of lawsuits involving students' dissatisfaction with the new academic environment. The lawsuits challenge primarily tuition payments as well as a variety of other mandatory fees that an academic institution might assess, such as room and board and fees for meal plans, student activities, student government, facilities, technology (e.g., science labs), student health plans, and parking.

It appears that some colleges have already taken action to address some of the nontuition items, issuing refunds or credit for portions of these fees. We expect the claims regarding miscellaneous "fees" to follow a predictable class action trajectory. That trajectory includes disputes over whether these fees can properly be considered "divisible" on a pro rata basis, or whether certain carrying costs justify a less-than-pro-rata refund.

The more complex issue involves students' position over the bargained-for purpose of tuition. Tuition payments also dwarf the other miscellaneous fees by at least one order of magnitude, making tuition the most prized target for plaintiffs and their attorneys. In a nutshell, student-plaintiffs have adopted the position that the purpose of tuition is not one dimensional, focused solely on the right to attend classes to fulfill degree requirements.

As many of the lawsuits allege, colleges actively market themselves to incoming freshmen and transfer students by touting the full "experience" offered by campus life. Websites, recruiting events and brochures paint a carefully curated portrait of a unique campus lifestyle that attempts to set each institution apart from its peers. As a result, students argue that they consider a variety of factors when selecting, and remaining at, a college.

In deciding which institution to attend (and pay varying levels of tuition), students may consider some or all of the following:

  • The "social" development associated with attending college;
  • Prestige of the institution (brand recognition and value);
  • Social life;
  • Accessibility of, and personal interaction with, professors;
  • General access to campus amenities (e.g., libraries, gyms, green space);
  • Quality-of-life issues (e.g., extracurricular activities, sporting events);
  • Quality and proximity of student housing facilities;
  • Networking with other students; and
  • Career prospects, whether from on-campus recruiting or networking with alumni.

These lawsuits assert that, even before the pandemic, online-only learning was already available as an option for college students. These students, however, made the decision to attend institutions that offered an in-person, on-campus experience, often at a significantly higher tuition cost, instead of working toward a degree online.

These new lawsuits frequently raise legal claims for breach of contract, unjust enrichment and conversion. In essence, the students allege that they have already paid their tuition, expecting to receive some combination, or all, of these aspects of the "college experience," but the college has now retained the full payment without providing students the "full" benefit of the bargain.

To date, the lawsuits generally do not allege tort theories, possibly because of sovereign immunity issues against state institutions, and possibly because it is difficult to argue that the college committed a culpable "bait and switch" in an unforeseen pandemic.

These lawsuits perhaps raise the inconsistent theories of breach of contract and unjust enrichment because it appears unclear whether a cognizable breach of contract claim exists. The student-plaintiffs struggle to identify express contractual language regarding the scope of services or amenities offered by colleges in return for a tuition payment.

Although colleges may require students to adhere to student handbooks and policies, these handbooks and policies do not follow the traditional contractual paradigm of making explicit promises to students as consideration for their tuition payments. While circumstances may vary for individual collegiate institutions, and a very few nonprofit institutions may require students to execute "enrollment agreements" with their students, there is typically no fully integrated contract between the student and the institution as part of the admissions package.

Many colleges and universities require students and guarantors (e.g., parents) to sign financial responsibility agreements acknowledging the obligation to pay tuition, but those agreements typically are silent about the institution's obligations in return. Nevertheless, even in the absence of express contracts, student-plaintiffs may manage to survive motions to dismiss because of liberal pleading standards that could require courts to assume for the sake of argument that such contracts exist.

Another hurdle students may face is standing to sue. Many students don't actually pay their own college tuition. Their parents do. Some students may also receive full or partial financial aid, scholarships or grants.

If the student-plaintiff has not paid anything out of pocket, he or she arguably has not suffered any damage or loss, the institution has not been unjustly enriched at the expense of the plaintiff-student, and the institution has not possibly converted any of the plaintiff-student's property. Parents paying for their child's college might have to be added as named plaintiffs to some of the lawsuits, or included in the class definitions, to cure this problem.

If the breach of contract claims survive, and students can satisfy a court that a contractual relationship exists, the students' claims may still be barred or limited by traditional contract defenses such as force majeure, frustration of performance, or impossibility of performance. Courts may also consider the universities' response to the pandemic, including providing online classes for the remainder of the current academic period, to qualify as substantial performance of the university's obligations. Individual contracts — assuming they exist — may also present unique contractual defenses that may not be readily apparent until later stages of litigation.

In the absence of express contracts, unjust enrichment claims serve as another vehicle for students to pursue their monetary claims against colleges. Unjust enrichment claims, however, are notoriously difficult to certify as class actions. As a result, student-plaintiffs whose claims survive a motion to dismiss can expect far more substantial hurdles at the class certification phase.

At their core, these cases regarding the deprivation of the full "college experience" suffer from one of the basic flaws that dooms many putative class actions: the more multifaceted the analysis, the greater likelihood that individualized issues will overwhelm classwide issues and make class treatment inappropriate. These individualized issues demonstrate that it will not only be difficult for students to demonstrate classwide liability but also difficult, if not impossible, to construct a uniform damages model for the entire class.

Most colleges offer a wide variety of majors and degree programs. The nature and format of classes in one academic major may differ dramatically from the nature and format of classes in another major. For students enrolled in a course involving extensive laboratory work, pricey computer technology, or an acting or dance class, the drawbacks of distance learning are clear: students may lack access to materials, subjects and equipment, or the ability to interact with other students in the manner that forms the typical educational experience.

On the other hand, a large history or mathematics lecture class does not typically involve access to specialized materials or an unusual level of personal interactions with other students. To further complicate the analysis, even students studying the same major may take vastly different elective courses.

Where the differences between in-person and online learning are substantial, the arguable damages may increase, but the likelihood of class certification correspondingly decreases because the students' experiences are so personalized. At the same time, when the differences between in-person and online learning are insubstantial, the likelihood of class certification arguably increases, but any potential damages diminish rapidly.

Simply put, students take a broad range of courses, making it even more difficult to figure out a meaningful liability or uniform damages model across an entire student body. This spectrum of variation may be so wide that, even if a damages model could be applied, the sheer number of subclasses that would have to be created to group together similarly situated class members would make class treatment unmanageable.

Every aspect of the "college experience" appears so personalized that it is difficult to conceive of a method in which every dimension of that experience can be replicated in a uniform fashion across a class action.

One of the chief complaints is reduced access to professors. Many students, however, are enrolled in large lecture-style classes with hundreds of other students and minimal or no interaction with professors. In addition, many students do not take advantage of office hours.[2] As a result, any arguable differences between "normal" learning and remote learning is marginal at best.

Other students enrolled in small seminars, and who visit professors frequently, have a distinctly different experience. Even within the "online" platform, these students may have different experiences, as certain professors may prerecord their lectures while others may host live classes that allow questions, coordinate virtual chat sessions, and organize virtual office hours.

At a minimum, it appears that courts will have to examine every student's coursework throughout the semester across hundreds or thousands of class options, and then cross-reference that coursework with the individual student's learning style, utilization of faculty engagement opportunities, and so forth. This is an inherently individualized, time-consuming and burdensome inquiry.

As another example, students point to their tuition payments as subsidizing access to campus facilities, extracurricular activities and campus programming (e.g., guest speakers and sporting events). Students participate in these activities in varying degrees.

Some students find themselves deeply involved in student government or clubs, while others will never approach these activities in favor of other ways of socializing. Some students will never attend a sporting event; others will attend every home and away game for a favorite sport. Some students may use the library every night. Others may use the library once a semester to study for exams, or never.

At their core, these lawsuits ask for a price tag to be placed on the "college experience," but courts will almost certainly find it difficult — or more likely, impossible — to determine on a classwide basis how each student has been deprived of the benefit of his or her bargain when students inherently do not take advantage of all (or even most) of the benefits made available to them. If a student has never set foot in the library for seven semesters, the college can hardly be "unjustly" enriched when the student never enters the library during the final semester either.

The extent to which a student receives financial aid, scholarship or grant monies also arguably raises individualized issues that impact class treatment. How has a scholarship athlete been damaged at all when he or she does not pay for tuition? For nonathletes, how has a student receiving 50% financial aid been injured, as compared to a student paying full tuition? It is difficult to envision a damages model that accounts for the myriad financial scenarios presented by individual putative class members.

Individual issues also may exist with respect to particular defenses available to the institution. For instance, there are reports that student cheating has become much more common online.[3] Cheating typically is a violation of a university's honor code, punishable by academic probation, suspension or expulsion. It arguably would be considered a breach of any contract alleged by the student-plaintiffs, which might preclude a recovery by the cheating student. Further, under many colleges' financial responsibility agreements or tuition refund policies, a student guilty of cheating would not be entitled to a refund of tuition.

Plaintiffs counsel likely will hire experts to construct one or more surveys to identify the different fundamental elements of the "benefit of the bargain" of an on-campus education, and measure the diminution of value of these various elements,. A key issue will then be if, given the widespread effect of the pandemic, any such survey can be unbiased. One of the other problems with reliance on such survey data will be how that data compares with student satisfaction surveys conducted before the pandemic.

Further, disaggregating the student experience into its component parts will likely show that students value different aspects of the college experience differently. For students who place high value on social relationships, it is unclear how experts will account for the value of those relationships online, and the durability of those relationships, including when students have reestablished those relationships (or established new ones) in the pandemic.

Whether or not COVID-19 continues through the fall semester, one can expect colleges to begin taking precautionary measures. Universities likely will present incoming students with a fully integrated contract setting forth clear expectations for the services associated with tuition.

The contractual consideration offered by colleges in exchange for tuition may or may not agree with the student-plaintiffs' own conception of what they are paying for. The contracts may promise only that the college will make available the class options necessary for students to fulfill their degree requirements, without making any further promises about the classroom or campus "experience."

These contracts may carve out various "intangibles" about campus life, so that students cannot bring future claims against institutions under this breach of contract theory. In addition, the existence of these written contracts may bar the availability of unjust enrichment claims in certain jurisdictions in which unjust enrichment claims cannot be pursued in light of an express, fully integrated contract.

Colleges may also begin tweaking their marketing materials, whether online or in paper form. Although it seems unlikely that colleges will cease touting the benefits of campus life, there may be a slight shift in focus or at least terminology. Although some websites currently contain disclaimers, colleges may also begin including more fulsome disclaimers in their marketing materials to ward off misrepresentation claims.

Throughout this process, colleges would be well-advised to be careful about the documents they create as they make these decisions, whether in terms of email traffic or internal, nonprivileged memoranda. These documents, if obtained in discovery, may serve as fodder for students and their attorneys as they continue to pursue this litigation



Robert Boone III is a partner, Michael Cannon is of counsel and Jonathan Potts is an associate at Bryan Cave Leighton Paisner LLP.

The opinions expressed are those of the author(s) and do not necessarily reflect the views of the firm, its clients, or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.


[1] See National Center for Education Statistics, Fast Facts, https://nces.ed.gov/fastfacts/display.asp?id=372.

[2] Griffin, W., et al., Starting the Conversation: An Exploratory Study of Factors That Influence Student Office Hour Use, College Teaching 62(3):94-99 (July 2014). Mineo, L., Office hours: 6 realities, The Harvard Gazette, https://news.harvard.edu/gazette/story/2017/12/professors-examine-the-realities-of-office-hours/ (Dec. 4, 2017).

[3] See, e.g., Harrison, D., Online Education and Authentic Assessment, Inside Higher Ed (Apr. 29, 2020); Appiah, K. A., If My Classmates Are Going to Cheat on an Online Exam, Why Can't I? New York Times (Apr. 7, 2020); Is Cheating Easier in Online College?, www.thebestschools.org (Mar. 23, 2020); Newton, D., Teachers Say Cheating Is More Common In Online Classes, www.forbes.com (Oct. 30, 2019). See also Watson, G. & Sottile, J, Cheating in the Digital Age:  Do Students Cheat More in Online Courses?, Online Journal of Distance Learning Administration (Vol. XIII, No. 1, Spring 2010), Univ. of West Georgia, Distance Education Center (www.westga.edu). 

For a reprint of this article, please contact reprints@law360.com.

View comments

Hello! I'm Law360's automated support bot.

How can I help you today?

For example, you can type:
  • I forgot my password
  • I took a free trial but didn't get a verification email
  • How do I sign up for a newsletter?
Beta
Ask a question!