5 Recommendations for Universities Facing Tuition Refund Class Action Suits
Smart Summary
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 vmehra@keglerbrown.com 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 lfuhrer@keglerbrown.com or (614) 462-5474.Cohen can be reached
directly at rcohen@keglerbrown.com or (614) 462-5492.
