5 Recommendations for Universities Facing Tuition Refund Class Action Suits
April 22, 2020
- If your college or university sees a class action suit as a result of COVID-19, contract terms, including language of any force majeure clauses, will be critical.
- In addition to contract-based defenses, colleges + universities may look to procedural defenses and common law defenses like “impossibility” and “frustration of purpose.”
- Universities will want to think through their refund and future service credit offerings to try to minimize claims and any potential damages.
In the wake of colleges and universities across the country turning to distance learning to minimize the spread of COVID-19, it is no surprise that putative class action complaints are now being filed seeking refunds and discounts on tuition and other fees paid by students.
By now, you likely already know that cases have been filed against Purdue University, the University of Miami, Drexel University, and the Boards of Regents of both the University of Colorado and the University of Arizona. A number of these suits have been brought by the same law firm, which is attempting to attract new cases through its website “CollegeRefund2020.com.”
Some of the suits seek reimbursement of a portion of paid tuition, based on the theory that the students contracted for an on-campus educational experience, which has not been provided. Other suits seek reimbursement of a portion of paid housing, meal plan expenses, and/or other service fees relating to athletic facilities, medical services or other amenities.
For in-house counsel at universities across the country who are pondering whether their institution will be the next target of these lawsuits, we’ve outlined five key questions you should be considering if (and even before) your institution is sued.
What are the contract terms?
The claims being filed are predominantly contract claims, so the specific language of your institution’s contractual relationships with its students will be important. The applicable terms may specifically address refunds, school closures, and emergency circumstances.
Is “force majeure” a defense?
You and your outside counsel should consider whether there are any contractual force majeure provisions that may relieve performance in the event of some unforeseeable circumstance like a nationwide pandemic. Again, the specific language of your force majeure provision is important.
Are there common law defenses?
Even if the contractual language at issue does not contain a force majeure provision, certain common law defenses may be available, depending upon the jurisdiction in which any suit is brought and the applicable law. Common law principles of “impossibility” and “frustration of purpose” can, under some circumstances, provide a defense.
Are there procedural defenses?
In addition to contract-based defenses, procedural defenses may also be available to you. An institution that has been sued will want to consider:
- whether personal jurisdiction exists in the jurisdiction in which the suit has been brought;
- whether the named plaintiff is an appropriate representative of the putative class;
- how the class or classes have been defined; and
- whether the traditional legal requirements for each claim have been met.
Unjust enrichment claims are included in several of the early cases. The law of most states holds that claims for breach of contract and unjust enrichment are mutually exclusive, although many states allow plaintiffs to plead both, subject to later proof and/or choice of remedy.
What can be done to minimize claims and potential damages?
The relevant facts vary from university to university. Some universities have allowed students to remain in student housing and to continue to receive meals pursuant to their meal plan, while other universities have ceased housing and cafeteria operations entirely. Some universities have offered refunds or partial refunds, while others have not.
Ensuring students stay on track to receive course credits toward graduation during periods of necessary distance learning will help to mitigate potential damages. Institutions that think creatively and take steps to introduce new ways of fostering community engagement and mentorship that would otherwise take place in residence halls will also be in a better position to defend tuition claims.
For example, if a student took History 101 during the mandated period of distance learning, allowing him or her the option to re-take the class in-person once school resumes may be a productive way to mitigate potential damages. Similar options may exist for meal, athletic and health services. However, similar options may not exist with respect to housing availability. While closure decisions may already have been made, universities will want to think through their refund and future service credit offerings to try to minimize claims and any potential damages.
No matter the course of action you choose, college and university counsel should be in close communication with their outside counsel partners, in particular those with substantial class action experience. Discussing these and other potential defense strategies can give your institution a head start on any litigation that may be headed your way.
Vinita Mehra is a director and chair of Kegler Brown’s Global Education practice group, and works with college and university clients across the country on their operational and strategic planning issues. She can be reached directly at [email protected] or (614) 255-5518.
Lori Fuhrer and Robert Cohen are directors and experienced trial lawyers in Kegler Brown’s Class + Collective Action practice, where they defend clients in contract and class action litigation of all kinds.
Fuhrer can be reached directly at [email protected] or (614) 462-5474.
Cohen can be reached directly at [email protected] or (614) 462-5492.