The Legal Brief
Higher Education Institutions the Target of Class-Action Lawsuits Amidst COVID-19 Response
June 1, 2020
In March, many higher education institutions made the difficult decision to send students home to combat the spread of the COVID-19 virus and implemented distance learning techniques such as video lectures and online modules to finish the current semester. Forty-one states followed up with orders forcing most non-essential businesses to close or restrict access. Now, after students were sent home for their safety, over fifty universities face class-action lawsuits seeking the reimbursement for tuition and other fees as a result of the closure of the universities. Some universities have been sued multiple times in different forums. Some of the complaints have been filed by the students’ parents. Several of the class-action plaintiffs have retained the same law firm(s) to represent them. Furthermore, the number of lawsuits is trending upward and multiple law firms are jumping on this “class-action bandwagon.”
The complaints are similar and contain claims of breach of contract, unjust enrichment, and, in some instances, conversion. The allegations and potential classes circle around housing, health and wellness, and tuition. In particular, the plaintiffs in these actions essentially allege that they have paid various fees for a number of services in their tuition payments that they are no longer receiving including, housing, dining, access to campus facilities, campus activities, athletics, and wellness offerings. The complaints further allege that plaintiffs have been deprived of the benefit of on-campus learning and face-to-face instruction. The plaintiffs claim the universities have failed to refund tuition to students appropriately to compensate for services that they are no longer receiving.
Many of the lawsuits filed appear as a “knee jerk” reaction by the plaintiffs and did not allow the universities ample time to address certain concerns within the complaints.1 Further, the complaints do not take into consideration the increased costs that universities face due to the pandemic and whether the fees would cover these. Examples of new costs incurred by higher education are increased expenditures on technology support, video collaboration, licensing, security, continued maintenance of facilities, and other costs with running a university.
Nevertheless, these class-action lawsuits are likely to continue to spread within higher education institutions. Therefore, it is important for universities to consider certain defenses and/or defensive strategies should they become a party to one of these class-action lawsuits. A few defenses/strategies to consider include, but are not limited to:
- there is no contract/no breach of contract;
- the claims or defenses are uncommon/atypical of the class;
- force majeure;
- economic loss doctrine; and
No Contract/No Breach of Contract
The easiest defense is that there is no contract. Universities will have to analyze the claims within in the class-action complaint to see whether there is actually a contract as alleged by the Plaintiff(s). Universities should look at anything that could be considered an agreement for each student. This obviously includes any and all information revolving around enrollment, housing, wellness, and tuition.
To the extent that one of the aforementioned documents can be interpreted as a contract/agreement, the next logical step for universities is to analyze these documents to determine whether the allegations within complaint can be interpreted within the document. By doing this, universities are outlining the parameters of the contract(s). If the allegations within the complaint do not fall within the contract, then a defense can be made that even if a contract is implied, there is no breach of the duties within that contract.
The Claims or Defenses are Uncommon/Atypical of the Class
Another strategy to defeat class-action certification is to see whether factual or legal variations exist. For example, institutions should look into whether there are factual variations in performance which is can beat class certification. It goes without saying that each student’s experience (including the use of facilities) at his or her university is different. Freshman students have different needs than junior/seniors. Undergraduate students are different than graduate students. Some students have scholarships while others do not. Fees and tuition are different. In other words, the benefits derived from class members may not be the same. This potentially makes it more difficult to identify a class because rather than label these classes through a vacuum as if all of their needs are the same. This is a difficult argument to make.
Assuming that a contract exists, universities will want to see if the contract contains a force majeure provision. A force majeure provision is an important aspect to a contract that relieves or suspends a party’s duty under that contract in the case of unavoidable catastrophes that interrupt an expected course of events and restrict the party from fulfilling the obligation. Given that we are in a pandemic and the United States has recently reached over one million confirmed cases of COVID-19, this could likely be categorized as a global pandemic. Higher education institutions should proactively review their documents to see whether there are any types of provisions within their contracts. If not, they should further consider adding these provisions moving forward.
In the event that no force majeure provision exists, depending on jurisdiction, the defense of impractibility or frustration of purpose may be available. The Restatement (Second) of Contracts states that a party’s duty to perform under the contract is discharged in cases where an event occurs that make a party’s performance impracticable or frustrates the purpose through no fault of his own and the non-occurrence of the event was a basic assumption of which the contract was made. For the same reasons stated above, higher institutions should review the language of their contracts to see whether the defense of impracticability or frustration of purpose was a possibility.
Economic Loss Doctrine
Some of the class-action lawsuits contain claims of conversion, which is an intentional tort. The Economic Loss Doctrine precludes a cause of action in tort that results solely in economic damages unaccompanied by physical injury or property damage. Depending on the case, institutions should evaluate whether the crux of the plaintiffs’ claims are rooted solely in economic damages. If so, depending on the case and jurisdiction, an argument could possibly be made to dismiss the conversion claim based on the sole request for economic damages.
Lack of Standing
Last but not least, as previously mentioned, parents of students have filed class action lawsuits against various universities. Given that the parents are not students of the university, defenses claiming lack of standing might be available in these matters.
In conclusion, these class-action matters are steadily growing. Institutions should look into their documents to determine whether contracts exist. In addition, institutions should review its contract provisions to see whether they provide additional defenses. If not, they should consider incorporating them in the future. Finally, universities should follow the current class-action lawsuits to see how the courts handle these matters. They will likely set a precedent that universities will need to watch closely.
1 It should be noted that some universities have taken steps to reimburse its students for housing at a prorated amount.