Navigating the Tuition Refund Class Action

April was a cruel month for higher education. After most colleges and universities closed their campuses in mid-March to protect students, faculty, and staff from the coronavirus, some students began requesting partial refunds of tuition, room, board, and other fees. Many schools refunded room and board, but not tuition. It did not take long, however, for lawyers to begin filing class action lawsuits against universities, demanding class-wide awards of prorated tuition refunds.

At first, only two or three firms were behind the lawsuits. Before long, other firms joined the fray. The vast majority of cases have been filed in federal court, basing jurisdiction on the relaxed diversity requirements of the Class Action Fairness Act of 2005. Two of the earliest cases were filed in the plaintiffs’ home districts against universities located in different states, a procedural blunder that will likely elicit challenges to personal jurisdiction regarding the claims of putative, non-resident class members. Most cases, however, have been filed in the universities' home states.

Each lawsuit asserts two or three substantive claims; all assert claims for breach of contract and unjust enrichment, and some add claims for conversion. None of the cases allege that the schools were wrong to close down their campuses as the pandemic spread. Rather, they claim that, while the campus closures were appropriate, the schools should not be allowed to retain class members’ tuition dollars for a full semester after switching to online education formats midstream. (Some include claims for prorated refunds of room and board as well.) Plaintiffs’ principal theory is that an online education is not worth as much as an education received on campus. In support of their theory, they cite materials from the universities’ admissions offices that tout the benefits of the on-campus experience.

The legal and economic theories advanced in the complaints are typical of most class actions in one significant respect – they craft a simple argument from a complex situation. Simplicity works to the plaintiffs’ lawyers’ benefit, because the more complex and individualized a case becomes, the less likely a court will certify it as a class action. The job of defense counsel will be to identify for the court the nuances and individualized circumstances that make it both unwise and inappropriate to treat every student’s claim the same.

Examples of the individualized complexities of the cases appear on the face of some of the complaints. In one case, an engineering student complains that the campus closure prevented him from completing his senior project. The project was to build an airplane, for which he needed to be on campus. Other students who did not have projects that required their on-campus presence will not be able to raise the same concern. The plaintiff in another case is a graduate student in counseling psychology. The complaint cites accrediting guidelines from the American Psychological Association suggesting that doctoral programs in professional psychology should not be taught substantially or completely through distance education because that clinical discipline requires face-to-face interaction. Even assuming that the student’s claim has potential merit, the claims of students in non-clinical disciplines will be very different.

Many examples of individualized issues do not leap off the pages of the complaints but are easily imagined. They include each student’s individual course of study, their relationships with their professors, their in-person attendance records and course attendance requirements, their financial and family circumstances, their access to the internet from off-campus locations, the extent of their engagement with sports and other activities when on campus, the degree of engagement with their online course work, their summer internships or job arrangements, and countless other details. No doubt, experts in the economics and delivery of higher education will be able to identify still more individualized issues that would make it inappropriate to adopt a one-size-fits-all approach.

These are some of the issues that would likely be contested at the all-important class certification stage of the proceedings. Numerous merits issues also would arise, either at the motion to dismiss stage, the summary judgment stage, or both. At the outset, defendants will challenge the breach of contract claims on the grounds that they never guaranteed that instruction would be provided in a specified format, and students received the education they were owed.  Some may also focus on the extraordinary efforts institutions have undertaken to continue delivering high-quality education to their students.

Apart from the many variations in experiences across a student population, the differences in any given student’s experiences going from on-campus to online learning do not necessarily translate to a difference in value in the education they have received. Many schools have swiftly and very ably transitioned to online learning in order to fulfill their commitments to students despite the disruptions that all campus constituencies have endured. Most faculty members quickly received training (or provided training to their faculty colleagues) in online teaching - mastering new technology, developing new skillsets, and reshaping their instruction for an online environment.

Not only were they not compensated for this additional work, but at some institutions they also face the prospect of salary reductions because of their schools’ losses of voluntarily refunded room and board revenue this year and anticipated losses of net tuition revenue next year. A strong case can be made that schools that stepped up to deliver on their promises earned all the tuition revenue they received. At the very least, their retention of tuition was not in breach of contract or “unjust.”

It is, of course, appropriate to sympathize with students who were unable to complete their spring semesters on campus. It is especially heartbreaking to think of the seniors who lost those precious final months with their friends and whose commencement ceremonies were canceled or postponed. Colleges and universities should do everything they reasonably can to ameliorate the students’ understandable disappointment. But we should not lose sight of the heroic efforts of faculty and staff who stepped up to ensure that these students received instruction online that approximated as closely as possible, and in some instances may even have equaled or surpassed, the quality of the instruction they would have received in the classroom.

We also need to recognize that many colleges and universities were struggling financially before the pandemic struck, and some may have to close their doors if the class actions succeed. Many likely will find ways to help their current and prospective students, either through across-the-board financial decisions or through decisions tailored to each student’s individual circumstances. 

But those solutions should come from the institutions themselves, and not be imposed on them through the pressures that are brought to bear when a college or university is faced with potentially devastating legal exposure. Who will benefit, after all, from lawsuits that threaten to make higher education less available to many, and at their core call into question the value of the degrees received by the very people on whose behalf they purportedly have been brought?

For questions about these potential class action litigation matters, or for any litigation question or concern, please contact Melanie Conroy.

Melanie A. Conroy is a member of Pierce Atwood’s class action defense group and writes and speaks on emerging issues in class action litigation. She is a member of the firm’s COVID-19 Response Team and the Boston Bar Association’s Multidistrict Litigation and Class Actions Steering Committee.