Defending Against COVID-19 Tuition Refund Class Actions

By Perrie Weiner, Aaron Goodman and Kirby Hsu
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Law360 (June 8, 2020, 5:05 PM EDT) --
Perrie Weiner
Aaron Goodman
Kirby Hsu
The COVID-19 pandemic has forced many to grapple with learning to work via Zoom or another videoconferencing platform, and colleges are no different. Because of concern for the health of their students, faculty and staff, and as required by government-mandated closures, colleges have had to quickly empty their campuses and shift instruction and group activity online.

While the transition to remote learning was a necessary step, many students are dissatisfied with the quality of the online experience. In an unscientific online poll of 14,000 college and graduate students, two-thirds said that online classes were not as effective as in-person classes.[1] Nonetheless, virtual instruction allows students to continue their coursework and degree programs and progress with minimal interruption. And colleges can keep doing what they do best, educating and preparing their students for lives of civic engagement, public service, and professional contribution.

Plaintiffs lawyers have been racing to file class action complaints against colleges that are simply continuing their educational mission in these unusual times. These firms are blanketing the country in search of student and parent class representatives for any and every institute of higher education.

We have reviewed many of these complaints, filed in courts all over the country, and found that they largely assert the same claims based on the same premise — that students are entitled to at least a partial refund of tuition, room and board, and other fees because colleges have replaced in-person instruction with virtual instruction. Many of these complaints also share common potentially dispositive weaknesses, which colleges should consider raising in motions to dismiss, motions for summary judgment, or oppositions to class certification motions.

Dispositive Motions

Breach of Contract Claims

The primary claim asserted in virtually all tuition-refund complaints is breach of contract. This is unsurprising, as under many states' laws, the relationship between a college and a student is contractual in nature. In some cases, there is an express written contract with students. Other times, the relationships are governed by an implied contract, with terms supplied by publications such as university catalogs, student manuals and handbooks, school policies and procedures, etc. Just exactly which documents are part of the implied contract depends on state law and may depend on a reasonable-expectation standard.

Regardless of the type of contract, many complaints fail to identify a breach of any contractual provision. True, classes have moved online, and students have temporarily lost access to laboratories, lecture halls and studios, but few contracts would actually require providing instruction on campus, much less in specific facilities. Even if a contract does, there may be available a number of contract-based defenses.

Government-mandated closures, social-distancing measures and the dangers presented by COVID-19 rendered performance impossible or may trigger an applicable force majeure clause suspending certain contractual obligations until in-person classes can resume safely. Moreover, the notion that students are owed refunds may be expressly contradicted by contractual provisions stating that refunds in any situation are entirely at the college's discretion.

To avoid the issue, complaints often include allegations that by providing instruction through Zoom exclusively, colleges are now little different from the much-maligned for-profit online schools. But whether online instruction is less valuable than on-campus instruction is not for courts or juries to decide.

Generally, case law prohibits contract claims attacking the quality of education. Courts recognize that institutions of higher learning must be afforded discretion and flexibility in exercising their responsibilities to students' education and well-being. Though the medium has changed, professors are still teaching, and students still have access to learning materials and opportunities to engage in meaningful discussions with one another, not to mention continuing to earn credits toward their degrees.

More to the point, there is no accepted legal standard to measure any purported difference in educational quality between online and in-person instruction. And certainly, the standard cannot even be objective because at least for some, the online experience will be superior than the in-person one.

Additional Claims Based on the Alleged Breach of Contract

Using the same allegations for the breach-of-contract claim, plaintiffs lawyers often throw into a complaint additional claims such as unjust enrichment and conversion. These claims, however, are similarly weak. Unjust-enrichment claims and quasi-contract claims are usually subject to dismissal when they overlap with a contract governing the same matter.

The same applies to conversion claims, as well as other weaknesses such as the fact that money paid for tuition is fungible and cannot be the subject of a conversion claim. Putting that aside, students or their parents or guardians willingly pay tuition, so there can be no interference with their property interests.

Statutory Consumer Protection Claims

State statutes vary, of course, but may have general consumer protection laws that plaintiffs' lawyers are attempting to apply to the tuition-refund area. California's Unfair Competition Law, which has given rise to countless consumer class actions over the years, is a good example. There are three prongs under which plaintiffs can bring a UCL claim, but the usual tuition-refund cases commonly show potentially dispositive weaknesses for each:

  • Fraudulent Prong: For a representation to be actionable in fraud, it must have been false when made. Yet these claims often point to statements in promotional materials published well before any college, or any other person or entity for that matter, could have had any idea that a pandemic would drastically change life as we know it. Also, claims under the fraudulent prong must be plead with particularity, which is typically lacking in tuition-refund complaints.

  • Unlawful Prong: This prong requires pleading an underlying violation of law. Tuition-refund complaints often just point to the alleged breach of contract, which is clearly insufficient under settled law.

  • Unfair Prong: A business practice is unfair only if either (1) it is tethered to a specific constitutional, statutory or regulatory provision, or (2) its harm to consumers outweighs its utility. We have not seen any complaint that attempts to plead the former. On the latter, it is hard to imagine that online instruction, which allows students to continue their education safely, is more harmful than the alternatives, such as providing no instruction and halting students' progress to obtaining their degrees.

Procedural Failings

An early dispositive motion may also be used to attack or be premised upon the plaintiff's procedural failings. For example, in certain states, plaintiffs bringing cases against public institutions must first exhaust administrative remedies or satisfy notice-of-claim and other similar statutes. Failure to satisfy these statutory notice requirements may be sufficient, standing alone, for dismissal of the complaint.

Further, the alleged injuries flow from an unprecedented pandemic and the unilateral responses from local, state and federal government agencies. Insofar as a plaintiff contends there was any harm caused by government-mandated closures, dismissal may be premised on the failure to add these necessary and indispensable parties. In addition, although asserting an injury, certain putative class representatives may not actually own the claim, raising questions that could be asserted in an early motion as to whether the case should be dismissed because the plaintiff is not a proper class representative.

Oppositions To Class Certification

Class certification is a pivotal event in any class action as it can be determinative of settlement value. In tuition-refund cases, the diverse situations of a college's student population may present significant hurdles to a plaintiff's ability to establish the Rule 23 or state-law certification requirements.

The many differences include, for example, whether students are in an undergraduate, graduate, professional or doctoral program; what courses they were taking or what internship or lab work replaced classes; which school within the college their classes were in; whether they live on or off campus; and the extent to which their major is well or poorly suited for online instruction. For large introductory classes comprising hundreds of students, the differences between in-person and online instruction may even be negligible.

Detailed consideration of these issues could defeat a plaintiff's ability to show commonality (that there are questions of law or fact that are common to the entire proposed class), typicality (that the plaintiff's claims are typical of the proposed class's), and predominance (that the proposed class is sufficiently cohesive to warrant adjudication by representation).

Reliance, such as for a fraudulent-prong UCL claim, can be particularly challenging for these certification requirements, since unique facts necessarily surround reliance and it often cannot be presumed.

Plaintiffs may have to establish that they and the class at large relied on the same specific, discrete representations about the on-campus experience. But students may have reviewed and signed different forms and documents depending on the particular school at the college that they attend. Many students will be indifferent to or have varying subjective evaluations regarding the importance of the on-campus experience and whatever representations were made in promotional materials.

For similar reasons, plaintiffs will have difficulty establishing that damages are amenable to common proof. Instead, individualized determinations will be required to demonstrate for each class member the decline — if any — in the educational value of online classes.

Minimizing Risk and Limiting Exposure

The flood of tuition-refund cases will likely continue to rise because of the similar adjustments to instruction that many colleges have had to make due to COVID-19. But there are opportunities to make potentially dispositive challenges to these putative class actions, such as with a motion to dismiss, motion for summary judgment or opposition to class certification.

Universities and colleges would be well-advised not to wait until they are sued, but to take steps now to prepare and minimize exposure to such litigation and make it more difficult, even if a case were to survive an early motion, to certify a class. At the very least, with the assistance of experienced counsel, colleges should review their student agreements, or documents that may provide terms for implied agreements, force majeure provisions, and reexamine their tuition and fee practices following campus closure to evaluate litigation risk and potential defenses.

Perrie Weiner is a partner, Aaron Goodman is of counsel and Kirby Hsu is an associate at Baker McKenzie.

Baker McKenzie counsel Ben Turner contributed to this article.

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.


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