March saw the spread of the novel coronavirus across the United States. In April, the court system was hit with a rash of class actions against colleges and universities that responded to social-distancing rules by sending students home and moving classes online.

To date, more than 30 cases have been filed in the last month and more are sure to come. While these "refund “cases have been largely reported as uniform claims for the return of money for educational and related services not delivered, a closer look reveals these cases are highly fact-specific and dependent on what actions the school took and what promises it made.

While there is a rich history of students suing schools for breach of contract, dating back to the 1970s, the current wave of claims is unprecedented and could profoundly impact the legal relationship between institutions of higher education, or IHEs, and their students going forward.

Prior Breach of Contract Claims Against Schools

The roots of modern breach of contract claims by students can be traced back to the 1970s, when schools across the United States were the object of lawsuits seeking desegregation and more equitable school funding.

In Peter W. v. San Francisco Unified School District, a high school graduate alleged that the "school district, its agents and employees, negligently and carelessly failed to provide plaintiff with adequate instruction, guidance, counseling and/or supervision in basic academic skills such as reading and writing."[1] Similar complaints followed and evolved to include claims for breach of contract against private schools and IHEs.[2]

Courts uniformly rejected allegations based on the quality of education because "[u]nlike the activity of the highway or the marketplace, classroom methodology affords no readily acceptable standards of care, or cause, or injury. The science of pedagogy itself is fraught with different and conflicting theories of how or what a child should be taught, and any layman might — and commonly does — have his own emphatic views on the subject."[3]

Courts also cited "the inherent uncertainty in determining the cause and nature of any damages, and the extreme burden which would be imposed on the already strained resources of the public school system to say nothing of those of the judiciary."[4] This reasoning was applied to breach of contract claims as well because "the uncertainty of damages, the difficulty in determining legal cause, and the public policy factors preluding negligence claims remains true whether the allegations state breach of contract or tort."[5]

A consensus emerged that whether a school was public or private, "[p]rofessional educators — not judges — are charged with the responsibility for determining the method of learning that should be pursued for their students. When the intended results are not obtained, it is the educational community — and not the judiciary — that must resolve the problem. For, in reality, the soundness of educational methodology is always subject to question and a court ought not in hindsight, substitute its notions as to what would have been a better course of instruction to follow for a particular pupil."[6]

Judicial deference to educators, however, is not without limits. "If in a case such as this, a private school were simply to accept a student's tuition and thereafter provide no educational services, an action for breach of contract might lie. Similarly, if the contract with the school were to provide for certain specified services, such as for example, a designated number of hours of instruction, and the school failed to meet its obligation, then a contract action with appropriate consequential damages might be viable."[7]

Thus, courts have declined to dismiss breach of contract claims based on allegations that a school failed to provide promised tutoring services,[8] a one-month medical rotation,[9] or field work supervision conferences.[10]

Finally, as a general rule courts have held that specific disclaimers "may excuse the university from a specific promise that would otherwise be a contractual obligation."[11] Thus, a statement that a school's bulletin was "subject to change without notice at any time at the sole discretion of the administration," barred claims for breach of contract based on promises in the bulletin.[12] However, similar promises on the school's website were found actionable because the website did not contain a disclaimer.[13]

COVID-19 Cases

The recent breach of contract claims by students relating to the coronavirus fall into two general categories: (1) claims for tuition refunds and (2) claims for the return of specific fees, including housing costs, library or lab fees, etc.

Tuition Refund Claims

Tuition refund claims are the most nuanced. As detailed above, claims based on a general assertion that the quality of education is lacking have been rejected by the courts. Courts are not willing to interject their opinion over that of educational experts, faculty and career higher education administrators to determine that the educational experience delivered is not of a certain quality.

This judicial deference has also previously been exhibited in affirmative action cases, where courts are generally reluctant to quibble with the asserted benefits of diversity on campus as a justification for using racial preferences in admission decisions. Judicial thinking in this area is anchored in principles of academic freedom.

To counter this precedent, the class actions filed to date include two distinct arguments.

First, plaintiffs allege that the benefits of in-person discussion, access to professors and other students, access to campus facilities, student activities and residential campus life itself provide a superior educational experience and deliver a better learning product. According to these plaintiffs, the online experience is simply "subpar in practically every aspect."[14]

Indeed, one complaint cites a study by the Brookings Institution that found "students in online courses perform substantially worse than students in traditional in-person courses and that experiences in these online courses impact performance in future classes and their likelihood of dropping out of college as well."[15] Another complaint alleges that tuition for an undergraduate social work degree is approximately $59,000 for the residential program, compared with $49,000 for the online version.[16]

These arguments by plaintiffs present challenges for schools who will likely want students to return to campus once COVID-19 restrictions are lifted. In arguing that the online courses delivered this semester are as good as in-person, schools may undercut (at least philosophically) the very good reason and cost justification for the long-tenured existence of the American model of residential higher education.

Plaintiffs' second approach has been to identify specific promises, from a website or bulletin, that the school allegedly failed to deliver. Complaints point to marketing materials that promote opportunities outside the classroom, such as close advising relationships, a vibrant student life, or the school's prime location. In sum, these complaints rely on the old saw, "half of what you learn in college is not in the classroom."

Plaintiffs allege that by shutting down the campus, schools breached the contract by depriving students of these out-of-class opportunities. Whether courts will find these statements to be the type of "specific promises" that are generally required for a student's breach of contract claim to be viable will likely vary from case to case, depending on the particular language at issue.

Interestingly, most of the complaints filed so far, expressly acknowledge that the defendant did the right thing by "closing campus" to whatever degree, thus taking these lawsuits away from a claim of malfeasance or misrepresentation. This differentiates the coronavirus cases from the claims against laws schools beginning in 2012 that alleged fraudulent misrepresentation with respect to post-graduation employment opportunities and statistics. Plaintiffs suing in connection with COVID-19 are not alleging that the schools promised something different would happen in the event of a pandemic.

We must then naturally consider the theory of unjust enrichment. Some of the current complaints plead facts about the size of the university's endowment, costs avoided, and the $14 billion distributed to colleges and universities under the CARES Act. These facts are useful for the court of public opinion, but also support theories of unjust enrichment. On the other hand, many schools will be able to point to substantial financial losses as a result of the pandemic and some may even be forced to close for good.

Fee Refunds

As for refunds claimed for COVID-19 dorm room evictions, almost all IHEs have some form of standard housing contract. Accordingly, these claims should come down to straightforward breach of contract claims and involve such typical (although the circumstances are far from typical) defenses as force majeure, impossibility, excuse of performance, etc.

Other student fees, such as for athletic facilities or student activities, typically are not governed by an express, distinct contract.

Nonetheless, claims based on user or access fees will likely be analyzed under general contract law.

Plaintiffs arguments are straightforward: Student A paid for (bargained for) the right, on certain terms, to use the rec center; as of X date (within the time period of use granted), Student A has been denied the right to use said rec center. Damages can be measured by a prorated refund for the time of denied access. Defenses will likely revolve around concepts of offer and acceptance (Meeting of the Minds), mutual consideration, and damages (Contracts 101).

Conclusion

As with COVID-19 itself, it is yet too early to predict where things stand with respect to the recent wave of breach of contract claims by students against their colleges and universities. However, there is a strong possibility that such claims will have a significant and lasting impact on the nature of the legal relationship between IHEs and students, if not on the nature of higher education itself. No doubt, lawyers everywhere are considering how these relationships will be structured going forward.


Barry Burgdorf was special counsel at Pillsbury and previously served as vice chancellor and general counsel of The University of Texas System.

Jeffrey Metzler is special counsel at the firm and previously served as associate general counsel of New York University.

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.

[1] Peter W. v. San Francisco Unified Sch. Dist. , 60 Cal. App. 3d 814, 818 (Ct. App. 1976).

[2] See, e.g. Ross v. Creighton, 957 F.2d 410 (7th Cir. 1992); Hunter v. Bd. of Educ. of Montgomery Cty. , 439 A.2d 582 (1982); Paladino v. Adelphi Univ. , 454 N.Y.S.2d 868 (N.Y. App. Div. 1982); Donohue v. Copiague Union Free School Dist. , 391 N.E.2d 1352 (N.Y. 1979).

[3] Peter W. v. San Francisco Unified Sch. Dist.

[4] Hunter v. Bd. of Educ. of Montgomery Cty., 439 A.2d 582 (1982).

[5] Id. at 586 n.5.

[6] Paladino, 454 N.Y.S.2d at 873.

[7] Id.

[8] Ross, 957 F.2d at 417.

[9] Ryan v. Univ. of N.C. Hospitals, 494 S.E.2d 789 (N.C. 1998).

[10] Clarke v. Columbia Univ. et al. , No. 95–cv–10627–PKL, 1996 WL 609271 (S.D.N.Y. Oct. 23, 1996).

[11] Deen v. New School University, 2007 WL 1032295 (S.D.N.Y. 2007).

[12] Basso v. New York University, 2017 WL 1019505, *3 (S.D.N.Y. 2017).

[13] Id. at *4.

[14] See, e.g., Complaint ¶6, Irizarry v. Long Island University, Case No. 7:20-cv-03160 (S.D.N.Y.).

[15] See Complaint ¶¶34-36, Church v. Purdue, Case No. 4:20-cv-0025 (N.D. Indiana) (citing Betting & Loeb, Promises and Pitfalls of Online Education (June 9, 2017) (available at https://www.brookings.edu/research/promises-and-pitfalls-of-online-education/)

[16] See Complaint ¶¶20-21, Student A v. Board of Trustees of Columbia University in the City of New York, Case No. 20-cv-03208 (S.D.N.Y. Apr. 23, 2020).