Appeals Court Revives COVID Lawsuits

Two separate lawsuits against American University and George Washington University have new life after an appeals court revived cases that allege both institutions violated contractual obligations to students when they shifted to online instruction in early 2020 at the onset of the coronavirus pandemic.

At the core of the issue is the refusal of both universities to refund students’ tuition and fees. The plaintiffs allege that both universities had a contractual commitment to provide in-person education and should have offered at least partial tuition and fee refunds for students forced into online classes. Plaintiffs in both cases are seeking class action status for their lawsuits.

The lawsuits against American University and GWU are just two among dozens of similar suits filed by students and families since 2020, which have had various outcomes in courts across the United States.

Understanding the Outcome

In a partial reversal of the lower court’s decision to dismiss the case, the U.S. Court of Appeals for the D.C. circuit found that while the plaintiffs had not proven that the universities breached specific contractual obligations, the complaints “plausibly allege that the Universities breached implied-in-fact contracts” to provide in-person education and access to certain campus activities. One such example on the latter point was the lack of access to American University’s sports complex during the early days of the pandemic, which the court noted is open to use for any registered student at AU.

“We therefore reverse the District Courts’ dismissals of Plaintiffs’ implied-in-fact contract claims with respect to tuition and some—but not all—of the fees at issue,” Judge Harry T. Edwards wrote. “We note that the Universities will likely have compelling arguments to offer that the pandemic and resulting government shutdown orders discharged their duties to perform these alleged promises. However, because the Universities have not raised any such defense before this court, we leave the issue to the District Courts to resolve in the first instance.”

Judge Ketanji Brown Jackson, a current U.S. Supreme Court nominee, was part of the panel that initially heard the case, but she was not involved in the ruling handed down Tuesday. The case will now return to the lower court for discovery following the 2-to-0 decision in favor of the plaintiffs.

“We are reviewing the ruling and will continue to defend our position,” Matt Bennett, vice president and chief communications officer at American University, wrote in an email to Inside Higher Ed.

George Washington University cited the importance of public health in an emailed statement.

“The university’s top priority is the health and safety of our community. GW heeded the recommendations of public health experts and complied with District of Columbia orders by moving to remote instruction in the Spring 2020 semester in the face of the pandemic,” Crystal Nosal, GWU spokesperson, wrote to Inside Higher Ed. “We are thankful to our faculty, who worked hard to provide our students with a quality academic experience by distance, and to our staff for providing mechanisms for students to meaningfully engage with each other. While we are disappointed with the Court’s decision, we look forward to defending the case on its merits.”

Jeffrey P. Metzler, special counsel at Pillsbury Winthrop Shaw Pittman, noted that “the implications for similar cases playing out across the US are probably limited” given how laws vary by state.  

“As to the implications of the ruling for AU and GWU, it is important to note that the Court has not concluded the students are entitled to refunds; only that the plaintiffs are entitled to an opportunity to seek discovery (documents and testimony) to try to support the allegations in their complaint, which the Court accepted as true for purposes of the motion,” Metzler wrote in an email.

Metzler added that “the Court seemed to go out of its way to express sympathy for the position faced by many schools.”

Audrey Anderson, counsel at the law firm Bass, Berry and Sims and former vice chancellor and general counsel at Vanderbilt University, said courts will look hard at individual circumstances of such cases, which differ according to the language institutions use in outlining their commitments to students.

“Where the plaintiff can show that the college or university may have promised them that they would have an in-person educational experience, the courts are going to let them go ahead and try to prove that in court and prove a breach of contract,” Anderson said. “And that’s what the court here said, that under District of Columbia law, you can have an implied-in-fact contract, one that’s not written but that is implied by the conduct of the parties. And here, the plaintiffs were able to show through materials on the website and through the course of conduct, that there were implied-in-fact contracts that American University and GW would provide an educational experience in person.”

Results of Similar Cases

Hundreds of similar lawsuits have been filed across the U.S. seeking tuition and fee refunds after the coronavirus pandemic forced colleges to abruptly shift to online education en masse. But the results are often as varied as the cases themselves. While many cases have been dismissed, some institutions have ended up on the hook for millions of dollars owed to students.

Columbia University, for example, reached a $12.5 million settlement in November with students who sued for failure to refund fees when Columbia pivoted to online classes in the spring of 2020. Despite the settlement, Columbia denied any allegations of wrongdoing.

For Anderson, the big takeaway for colleges—like businesses—is to be careful what they promise their customers. In other words, colleges shouldn’t have contractual obligations they can’t deliver on. Anderson suspects that colleges will carefully rethink language in their contracts—if they haven’t already—to carve out exceptions for unforeseen circumstances, such as COVID-19.

“I think that most schools have already made changes now to more carefully contract around the possibility that in-person education might not be available for reasons of COVID-19 or other reasons,” Anderson said.