Kameleon007/Getty Images Signature
As fall semester comes to a close, college administrators are hopeful for a year without COVID outbreaks and disruptions. But even if those concerns are a thing of the past, universities across the country can’t seem to put one COVID chapter behind them—the backlash of litigation against pandemic campus shutdowns.
As soon as the dining halls and field houses closed in the spring of 2020, students began filing class action lawsuits against their institutions for mandating online learning without providing concomitant refunds of fees or tuition. Hundreds of these cases already have been filed, and more continue to appear on court dockets, even three years later. Most allege that the university defendant breached a contract with its students—either express or implied—by taking tuition and enforcing payment obligations without upholding its end of the “college-experience” bargain, while some add claims for unjust enrichment and conversion as well.
Unfortunately for these institutions of higher learning, many judges are inclined to give students their day in court—at least at the pleading stage. Nonetheless, there are some encouraging themes emerging from judicial opinions across the nation. For one, class certification has posed some perhaps unexpected challenges for plaintiffs, with the Rule 23 predominance requirement appearing to be the most common stumbling block.
A number of universities have also found success at the summary judgment stage. In some instances, that success was based on a finding that the university’s specific written policies gave the university discretion to make the move to online classes, as was the case for the University of Miami. In several other cases, universities were able to avoid breach of contract claims based on an impossibility defense in light of state closure mandates. And, finally, a number of universities have succeeded in obtaining summary judgment on students’ unjust enrichment claims where the evidence demonstrates financial losses incurred by the university in making the transition to online courses. These promising trends are discussed in more detail below.
Enough to Plead a Case
While many university defendants have attempted to get these cases dismissed at the motion-to-dismiss stage, they are not finding much success, as courts seem largely sympathetic to the idea that the students may have a lawsuit on their hands—they just need to prove it. Most prevalent among student claims is the contention that their college entered into an implied contract to provide in-person classes and services. An implied contract arises where the parties agree and intend to be bound by certain obligations, but their intentions are inferred from actions and surrounding circumstances, rather than written words. In supporting these claims, plaintiffs often point to the college’s course catalogs describing in-person attendance, the marketing materials that describe the many benefits of on-campus facilities and services, and the simple historic practice of on-campus instruction. As the Second Circuit explained in ruling on a case against New York University, “Viewed from the perspective of a pre-COVID world, given NYU’s extensive representations about the nature of student life at NYU, as well as historical experience, we conclude that a reasonable factfinder could find that NYU impliedly agreed to provide students in-person services,” and this is sufficient to withstand a motion to dismiss.
A similar result was reached by the Third Circuit in a consolidated case against the University of Pittsburgh and Temple University. The court emphasized, for example, Temple’s recruiting materials, which touted the benefits of coming to Philadelphia, the university’s “state-of-the-art” facilities and the “hundreds of student organizations [that] thrive on campus.” Also relevant to the court’s decision was the fact that Temple already offered an online education as a separate and distinct offering from its in-person education and at a lower cost.
However, like many other courts ruling at the motion-to-dismiss stage, the Third Circuit noted that its ruling was a narrow one—simply, that “at the pleading stage, the Complaints’ allegations of frequent references to in-person instruction in university publications, the schools’ tradition of in-person instruction and their different marketing and price structure for online programming support a reasonable inference that the parties impliedly contracted for in-person education.”
Class (Action) Is Not in Session
Universities are receiving some better favor in a subsequent phase of litigation—class certification. Federal Rule of Civil Procedure Rule 23 governs plaintiffs’ ability to certify a class, and while the rule provides plaintiffs with a few options for certification, Rule 23(b)(3) is the prevalent option chosen in the cases we are discussing. That rule provides that a class may be certified if “the court finds that the questions of law or fact common to class members predominate over any questions affecting only individual members.” In other words, common issues among the students’ claims must predominate over individual ones.
Notably, courts may not automatically presume that the move to online learning affected all students in a close enough way to justify class certification. And in instances where lower courts were too quick to find predominance, appellate courts have reversed and emphasized the need for a rigorous analysis. As the Seventh Circuit recently explained in reversing class certification against Bradley University, that rigorous analysis must entail identification of the elements of the plaintiffs’ claims and a separate analysis of “the relationship between each claim’s common and individual questions.”
Faced with these exacting requirements, a number of district courts have denied class certification. For example, in Omori v. Brandeis University, the District Court acknowledged that the case presented some common issues, such as whether the implied contracts between Brandeis and its students contained the promises the students claimed. But the court found the question of whether each class member sustained damages “more difficult to resolve on a class-wide basis.” Because plaintiffs were unable to determine an actual classwide value for the online education provided in spring 2020, the court concluded that countless individual questions—e.g., the particular courses in which students enrolled and a comparison of those courses pre- and post-COVID—would predominate over common ones.
While Omori examined the predominance requirement in the context of an implied contract claim, a recent decision from the District of Arizona analyzed predominance in a class action alleging unjust enrichment. A claim for unjust enrichment requires the plaintiff to prove, inter alia, an enrichment on the part of one party and an impoverishment on the part of the other. (Or, as articulated in some states—(1) one party was enriched, (2) at the other party’s expense.) Given these requirements, the court noted the reluctance of many courts to certify a class for unjust enrichment claims. In the particular case at issue, the court described the students’ claim as alleging that they did not receive the benefits they expected when they paid on-campus tuition—a claim that would necessarily turn on the individual facts (and expectations) of each student.
And predominance is not the only hurdle plaintiffs have been unable to clear. In a recent opinion, the District Court of the District of Columbia found that the named plaintiff failed Rule 23(a)’s adequacy requirement—that is, he made an inadequate class representative because (1) he had a potential conflict of interest, as his mother is an employee of the defendant university, and (2) he did not personally pay the tuition and fees he sought to recover but rather received scholarships with no repayment obligation. While this outcome is no doubt fact-intensive and fairly unique, it is a good reminder that Rule 23 imposes several requirements on a plaintiff seeking class certification, and failure to meet any one of them may result in denial of certification.
Winning as a Matter of Law: Summary Judgment
Universities are seeing the greatest success at the summary judgment stage. In some instances that is because of the specific language of their student handbooks or the other materials that gave rise to the contract—implied or express—in the first instance. For example, where university handbooks or other materials were diligently drafted to grant the university specific authority in the event of an emergency, summary judgement for the defendant is a logical outcome. That was the case in Dixon v. University of Miami. There the plaintiff alleged that she had either an express or implied contract with the university for in-person education. Finding it unnecessary to determine whether there was an express or implied contract, the 11th Circuit held that, either way, provisions of Miami’s Student Handbook and Student Code of Conduct “unambiguously” gave Miami the authority to temporarily close its campuses in response to COVID-19.
For other universities, the defense of “impossibility” or “frustration of purpose” is proving meritorious. On the West Coast, Pepperdine University was granted summary judgment on the plaintiffs’ contract claim because, even if an implied contract existed, “no reasonable trier of fact could find that Pepperdine could have continued to hold classes in person” in light of California’s stay-at-home orders. As the court explained, “when performance of a contract is prevented ‘by the operation of law,’ performance is excused.” Oregon State University recently obtained a similar result after the District of Oregon concluded that then governor Kate Brown’s COVID executive orders rendered OSU’s ability to provide in-person instruction impossible.
Plaintiffs’ unjust enrichment claims are, of course, analyzed differently, but universities are finding success at the summary judgment stage here as well. In a number of cases—including those against the University of Miami, Manhattan College and the Rochester Institute of Technology—courts have granted summary judgment on unjust enrichment claims where the evidence supported the conclusion that there was nothing unjust about the institutions retaining fees and tuitions in light of the expenses incurred to transition to remote learning. For example, the 11th Circuit granted summary judgment to the University of Miami where the evidence showed that the university had spent $7.1 million to switch to online courses and ultimately incurred a net financial loss of roughly $50 million from the change. The Southern and Western Districts of New York reached similar conclusions, respectively crediting Manhattan College’s and RIT’s unrefuted evidence of financial loss from the move to online learning.
Of course, for every example of a win, there is at least one exception. While Pepperdine obtained summary judgment on the plaintiffs’ contract claim, the court permitted the equitable quasi-contract claim to proceed based on a finding that there were questions of fact as to whether Pepperdine’s retention of the benefit (tuition) was unfair.
While this essay highlights some of the trends and promising defenses available to colleges, it is important to note that all of these cases are highly fact and state-law dependent. This is also still an evolving area of law. Indeed, a number of the lower court opinions issued within the last year are now subject to appeals filed by the defeated side. University attorneys will need to continue to watch the progress of these cases in their respective jurisdictions. In the meantime, it would be wise for colleges to review their written policies and handbooks and consider what authority and flexibility they have to address future emergencies.