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May 7, 2020

For Higher Ed, Class-Action Lawsuits Abound Following COVID-19 Closures

Colleges and universities overwhelmingly moved to an online, distance-learning format as the COVID-19 pandemic swept across the globe. Given the close, shared quarters of dormitories, dining halls, and the many facilities and services offered to college and university students, these institutions had little choice—either expose their students, staff, and faculty to the pandemic, or follow the social-distancing guidance urged by health care experts and government authorities. For most colleges and universities, the move to online learning wasn’t a choice, it was a requirement borne of necessity.

As students are no longer on campus, some colleges and universities have refunded certain costs, such as room and board, since the students are not utilizing these services. While the position on refunding fees is not uniform among institutions, it does appear that refunding tuition will not be implemented lightly. The financial fallout from the various stay-at-home orders implemented across the country hit colleges and universities early, and while they are collectively suffering the consequences of unanticipated COVID-19-related expenses for the current semester, they are also anticipating decreased receipts from tuition and other fees for the next academic year. Some institutions are already planning for an online semester for fall 2020. Others, like MacMurray College in Illinois, will reportedly close their doors permanently at the end of spring semester 2020.

With the turnover to distance learning from an in-person, live teaching format, a swath of class-action lawsuits has been filed in recent weeks. Overwhelmingly, the lawsuits argue these students did not pay for a seemingly inferior “online” education—they argue they paid for an in-person, on-site, fully immersive experience. Many students also argue that online learning is hampering them from completing specific projects that require the use of materials and facilities that are only available at the institution. Common to many of these class-action lawsuits are claims for breach of contract and unjust enrichment.

For those colleges and universities facing putative class-action lawsuits, careful consideration of the merits of the complaints is urged. Tuition agreements and other student contracts should be parsed if breach of contract is alleged to determine what was guaranteed to students, what was actually provided, whether or not there was actually a breach of the agreement, and whether or not the students actually incurred or suffered any damages. Moreover, since each student and student experience is unique, colleges and universities may also consider attacking the class certification for lack of common questions of law and fact between different students. Insurance policies should also be reviewed to determine if coverage is available.

COVID-19 has been a harbinger of uncertainty across the globe—but for colleges and universities, the reality of these lawsuits and the financial fallout from COVID-19 is moving from the realm of possibility to that of the highly probable. With dozens of lawsuits filed in the latter half of April alone, it is evident the trend toward litigating COVID-19 closures and refunds is growing.

Despite the growing prospect of litigation and the possible financial fallout from continued distance learning, colleges and universities should continue contingency planning for summer sessions and fall 2020 and adhere to laws, guidelines, and recommendation of health care experts and authorities and the directives of national, state, and local authorities. These institutions should continue to document their decisions and ensure conformity and compliance with institutional policies, and they should enact emergency or updated policies as needed. Review of contracts for tuition, room and board, and other services as well as marketing materials should be undertaken to determine where changes and updates should be made. If nothing else, it is clear that COVID-19 will prove a learning experience for colleges and universities and will shape the future of higher education.

If you have any questions regarding the content of this alert, please contact Gabrielle Figueroa, associate, at gfigueroa@barclaydamon.com, or a member of the firm’s Higher Education Team.

We also have a specific team of Barclay Damon attorneys who are actively working on assessing regulatory, legislative, and other governmental updates related to COVID-19 and who are prepared to assist clients. You can reach our COVID-19 Response Team at COVID-19ResponseTeam@barclaydamon.com.

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