COVID-19 Student Refund Lawsuits: Has the Tide Turned in New York?
December 21, 2021
The challenges confronted by higher educational institutions in the face of the COVID-19 pandemic have been unprecedented. Faced by legal mandates that limited gatherings and ultimately required campus closings during the spring 2020 semester, colleges and universities transitioned to instruction by remote means almost overnight. While it was not the semester anyone had planned for, institutions carried out their missions to educate and devoted significant efforts and resources to supporting their students.
Despite these efforts, many colleges and universities found themselves named as defendants in lawsuits brought by students who seek refunds for tuition, student fees and room and board paid toward the spring 2020 semester. Almost all of these lawsuits are brought by representative plaintiffs who seek to represent classes of students. Over 200 of these refund class actions have been filed throughout the country. The plaintiffs allege that the institutions failed to uphold their end of the “bargain” by not offering in-person instruction and certain student activities and services when they closed campuses and transitioned to remote instruction.
The claims asserted in these actions, by and large, are breach of contract and quasi-contract causes of action, such as unjust enrichment and promissory estoppel, as well as tort and deceptive business practice claims.
In New York, institutions faced with these lawsuits have moved to dismiss them, with varying degrees of success. The motions to dismiss have been based on well-settled New York law that has traditionally limited breach of contract claims brought by students against higher educational institutions. A breach of contract claim by a student against a university must allege breach of a specific promise by the university that is contained in the institution’s “bulletins, circulars and regulations.”
The Majority of Claims Seeking Refunds of Tuition Have Not Survived Early Motion Practice
While earlier decisions issued by courts in the Northern District and Western District of New York allowed these claims to proceed against Rensselaer Polytechnic Institute (Ford v. Rensselaer Polytechnic Institute, 1:20-cv-470, 507 F. Supp. 3d 406 (N.D.N.Y. Dec. 16. 2020)) and Rochester Institute of Technology (Bergeron v. Rochester Institute of Technology, 20-cv-6283, 2020 WL 7486682 (W.D.N.Y. Dec. 18, 2020)), more recent decisions have dismissed, either in whole or in part, many of the claims alleged by the student plaintiffs.
In In re Columbia Tuition Refund Class Actions, 20-cv-3208, 523 F. Supp. 3d 414 (S.D.N.Y. 2021), the Southern District of New York dismissed the students’ breach of contract and quasi-contractual claims seeking tuition refunds against Columbia University. The court held that the student plaintiffs failed to plead any specific promise by Columbia to provide exclusively in-person instruction. The plaintiffs relied on three sets of allegations to support their claims: (1) classes began the semester as in-person classes, and syllabi and the University’s registration portal included class locations and attendance requirements; (2) Columbia offered some fully online programs, and the programs in which the plaintiffs were enrolled were not designated as such; and (3) the University’s website and marketing materials highlighted the “on-campus experience.” The court rejected these allegations.
It held that a university’s academic and administrative prerogatives may not be impliedly limited by custom. Accordingly, that Columbia provided in-person instruction before March 2020 did not imply a contractual entitlement to continued instruction in the same location and manner. Further, that some programs were offered “fully online” did not lead to the conclusion that students in other programs were contractually entitled to exclusively in-person instruction. Finally, the court held that references to the on-campus experience were “opinion” or “puffery” and too vague to support a breach of contract claim. The court found that the students had not alleged a specific promise for “in-person instruction” and dismissed the claim. The court allowed the students to proceed on their breach of contract claim relating to student fees.
The Columbia decision has been consistently followed by other courts dismissing tuition refund claims. For example, in Hassan v. Fordham University, 20-cv-3265, 515 F. Supp. 3d 77 (S.D.N.Y. 2021), a student plaintiff similarly alleged that Fordham’s promise of “in-person instruction” was contained in a catalog that identified course offerings, instructors, times and location of courses, including the campus, building and room where each course was scheduled to occur. The plaintiff also relied upon an online search function that allowed Fordham students to filter courses by type, including in-person and online options, and alleged that Fordham “markets the ‘on-campus experience’ as a benefit of enrollment.” The court held that none of the statements alleged by the plaintiff “constitutes a specific promise on Fordham’s part to provide ‘certain specified services,’” required for a viable breach of contract claim by a student against a higher education institution. The court was not persuaded by the plaintiff’s argument that the inclusion of the location of courses contained in Fordham’s catalog was sufficient to create such a promise. Rather, “the course catalog contains informational guidance … But there are no express statements promising that these aspects of a course were not subject to change. Nor has Plaintiff identified any statement in which Fordham ‘relinquished its authority’ to alter the modality of its course instruction.”
With respect to the plaintiff’s allegations concerning statements contained in Fordham’s marketing materials, the court held that such statements were “‘more akin to general statements of policy’ than to ‘specifically designated and discrete promises’ regarding ‘the incidents of the forthcoming education.’” The Fordham court also dispensed with the plaintiff’s argument that his breach of contract claim was adequately pleaded based on a “prior course of conduct” through which Fordham “promised to provide in-person services, because Plaintiff attended classes and was able to access campus facilities before the pandemic.” The Fordham plaintiff’s subsequent attempt to amend the complaint to address the pleading deficiencies were unsuccessful, and the tuition claim did not proceed. Like in Columbia, only the fee claim remained viable, and the plaintiff later voluntarily withdrew that claim, terminating the litigation.
In addition to Fordham, tuition refund breach of contract claims have been dismissed in favor of Cornell University (Faber v. Cornell Univ., No. 20-cv-467, 2021 WL 4950287 (N.D.N.Y. Oct. 25, 2021)), Pace University (Marbury (Tapinekis) v. Pace Univ., No. 20-cv-3210, 2021 WL 5521883 (S.D.N.Y. Nov. 24, 2021)); New York University (Zagoria v. New York Univ., No. 20-cv-3610, 2021 WL 1026511 (S.D.N.Y. Mar. 17, 2021), Morales v. New York Univ., No. 20-cv-4418, 2021 WL 1026165 (S.D.N.Y. Mar. 17, 2021) and Romankow v. New York Univ., No. 20-cv-4616, 2021 WL 1565616, at *4 n.4 (S.D.N.Y. Apr. 21, 2021)); Manhattan College (Beck v. Manhattan Coll., No. 20-cv-3229, 2021 WL 1840864 (S.D.N.Y. May 7, 2021) (but allowing the plaintiff to proceed on his unjust enrichment claim seeking a tuition refund)); the State University of New York (Pinkney v. State of New York, Claim No. 135251 (Ct. Cl. May 4, 2021)); Marist College (Fedele v. Marist Coll., 20-cv-3559, 2021 WL 35404332 (S.D.N.Y. Aug. 10, 2021); Mercy College (Thomas v. Mercy College, 20-cv-3584, 2021 WL 35404332 (S.D.N.Y. Aug. 10, 2021)); Adelphi University (Shak v. Adelphi Univ., No. 20-cv-1951, 2021 WL 3030069 (E.D.N.Y. July 15, 2021)); the Pratt Institute (Hewitt v. Pratt Institute, No. 20-cv-2007, 2021 WL 2779286 (E.D.N.Y. July 2, 2021)); Croce v. St. Joseph’s College New York, Index No. 610886/2020, 73 Mich. 3d 632 (Sup. Ct. Suffolk County Oct. 1, 2021).
Cases that survived early motions to dismiss typically were limited to the facts of those cases. For example, Brittain v. Trs. of Columbia University, 2021 U.S. Dist. LEXIS 151082 (S.D.N.Y. Aug. 11, 2021) and Flatscher v. Manhattan Sch. of Music, 2021 U.S. Dist. LEXIS 135046 (S.D.N.Y. 2021), involved students in performing arts programs where program-specific documents contained statements concerning “in-person” aspects of the programs that the courts held were sufficient to allege a specific promise. The court in Ford v. Rensselaer Polytechnic Institute likewise held that, at the pleading stage, the plaintiffs had pointed to sufficient references to the institute’s “clustered learning, advocacy and support for students” program in the student catalog that satisfied the low pleading standard.
Some institutions are awaiting decisions on pending motions to dismiss. In those cases where tuition claims have already been dismissed, what remains are breach of contract claims relating to student fees, such as student activity fees, health center fees, technology fees and the like. These remaining claims have proceeded through the discovery process in some cases or have been voluntarily withdrawn by the plaintiffs in others.
Columbia University decided to settle the remaining claim in its class action refund case. On November 23, 2021, the parties filed a motion for preliminary approval of a settlement, in which they informed the court that they reached a settlement in the amount of $12.5 million. According to the preliminary motion, Columbia agreed to pay $8.65 million to settle the fee claim and an additional $4 million for the avoidance of litigation risk. If this preliminary motion receives the court’s approval, the parties will proceed through the process of providing notice to the class members of the settlement. The attorneys for the plaintiffs will receive “no less than one-third” of the settlement fund in attorneys’ fees.
There are two cases pending in the Second Circuit that may influence further action in these cases. In Rynasko v. New York University, Case No. 21-1333-cv, the plaintiff is the parent of a former New York University student, who sought to recover tuition and fee refunds. Judge Daniels of the Southern District dismissed the case, finding that the parent of a student lacked standing to sue. The parent had not alleged any facts that supported the existence of a contractual relationship between herself and the University and, not being a student, had not suffered any injury. The appeal of the dismissal of Rynasko has been briefed before the Second Circuit and will be argued in the early months of 2022. The Rynasko case is unique in some respects because it was dismissed on standing grounds and did not discuss the merits of the plaintiff’s pleadings. It is likely that the Second Circuit will limit its decision to the standing grounds. We await to see, however, whether any dicta in the anticipated decision will forecast the Court’s opinions about these types of cases.
In Goldberg v. Pace University, also pending before the Second Circuit, the plaintiff-appellant was enrolled as a graduate student in a performing arts program at Pace University during the Spring 2020 term. He, like the plaintiffs described above, sought to recover damages for breach of contract because Pace transitioned to remote instruction and delayed a portion of his graduate program until such time as it was safe to congregate in person. The district court dismissed Goldberg’s contractual and quasi-contractual claims, finding that he did not allege any enforceable promise from Pace’s catalogs or handbooks that Pace would provide in-person, on-campus instruction, even in the face of a global pandemic and a state-ordered shutdown of Pace’s campus. The court held that Goldberg’s additional allegations that Pace “canceled” certain aspects of his program were not ripe because Pace postponed two components of the program but had not “canceled” them. The court also examined Pace’s emergency closing policy, which reserved Pace’s right to alter course schedules, and held that the provision applied to bar plaintiff’s breach of contract claim with respect to Pace’s postponement of the program’s components.
While Goldberg is not a class action, the Second Circuit’s opinion is likely to impact further litigation in these tuition and fee refund cases because the district court’s decision was, at least in part, “on the merits,” and the Court will have to address whether the plaintiff’s allegations concerning “in-person education” were sufficiently pleaded. Goldberg will not likely be decided until the later part of 2022.
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