Overview: Plaintiff seeks a partial refund of the tuition and fees he (along with the members of the classes he would like to represent) paid to the defendant university for the Spring 2020 semester. In March 2020, the university halted in-person classes, switched to all-online instruction, and restricted access to its campus and facilities for the remainder of the semester in response to the COVID-19 pandemic. Finding no meaningful distinctions between this case and Gociman v. Loyola University of Chicago, 41 F.4th 873 (7th Cir. 2022), the Seventh Circuit held that plaintiff has alleged enough to go forward. The court reversed the district court’s dismissal of the case and remanded the case for further proceedings. (Download Appellate Ruling)
Background: The defendant university is a nonprofit higher education institution with campuses in Chicago and Wheaton, Illinois. At the outset of the COVID-19 pandemic in March 2020, like practically every other college and university, the defendant suspended all in-person instruction, moved all classes online, and restricted access to campus facilities. The defendant did not refund tuition or mandatory fees to its students.
Plaintiff, a student who paid tuition and fees for the Spring 2020 semester, filed this lawsuit against the university. He relied on the court’s jurisdiction under the Class Action Fairness Act, because minimal diversity existed, there were more than 100 class members, and the amount in controversy exceeds $5,000,000.
Plaintiff invokes two theories in his quest for damages from the university. First, he alleges that an express or implied contract was formed, under which the university promised to provide in-person instruction, services, and resources, in exchange for the student’s payment of tuition and compulsory fees. He singles out certain of these fees, including Activity Fees, Student Services Fees, Professional Co-Curricular Fees, and Studio Fees. The university, he contends, breached this contract. His complaint also raises an unjust enrichment theory, based on the university’s retention of students’ full tuition and fees.
Plaintiff’s complaint relies on pre-pandemic university materials that are replete with references to in-person, on-campus instruction, as well as to the defendant university’s past practice of providing in-person, on-campus education. For example, the university encouraged prospective students to “picture [themselves] on campus” where they would “live, eat, learn, and play,” and it advertised “hands-on programs” with “face-to-face interaction with professors, mentors, and peers.”
The defendant university argued that these materials and past practices do not amount to an identifiable and enforceable promise, either express or implied, to provide in-person, on-campus instruction. It further contends that plaintiff’s claims are foreclosed by its tuition-refund policy. Finally, the university contends that plaintiff is really asserting a claim of educational malpractice, but Illinois has not recognized any such cause of action.
Initial District Court Ruling: The district court granted the university’s motion to dismiss all counts for failure to state a claim. In so doing, however, it rejected the university’s educational malpractice argument. It found instead that plaintiff failed to identify any promise to provide in-person, on-campus instruction that was specific enough to support an express or implied breach-of-contract claim. The court also held that plaintiff failed to state a claim for unjust enrichment. The court declined to address the class certification issue.
While this appeal was pending, the Seventh Circuit decided Gociman v. Loyola University of Chicago, which involved similar claims brought by Loyola students affected by the pandemic. There the Seventh Circuit held that the plaintiff students adequately stated claims for breach of an implied contract under Illinois law, and that their claims were not educational malpractice complaints in disguise. The Seventh Circuit rejected the argument that there was an express contract between Loyola and the students.
On Appeal: Plaintiff’s complaint is no more specific than the one in Gociman for purposes of alleging an express contract. As in Gociman, however, the picture is different for a contract implied in fact.
Here, plaintiff has sufficiently alleged facts that plausibly suggest the existence of an implied contract for in-person education and access to physical facilities and resources. He alleged that the university has a long-established practice of providing in-person instruction and on-campus resources, and that the university has consistently indicated that the service it is selling is one that involves an in-person, on-campus experience. These representations appear in its website, course catalogue, and other official materials provided to current and prospective students. The Seventh Circuit concluded, just as it did in Gociman, that this suffices for the present to support plaintiff’s claim that an identifiable contractual promise to provide an in-person, on-campus university experience in exchange for tuition and fees can be inferred from “the facts and conduct” of the university.
Plaintiff also pleads in the alternative that the university was unjustly enriched at the students’ expense when it retained the entirety of their tuition and fee payments while it simultaneously (1) saved significant sums of money in operating and staffing costs, and (2) received emergency federal aid. Plaintiff alleges that the university “unjustly retained” the benefit of students’ full tuition and fees while it simultaneously “received significant aid from the federal government” and “saved significant sums of money” by “operat[ing] a remote, on-line campus [rather] than a fully open physical campus.” This is sufficient to state a claim for unjust enrichment.
Result: The Seventh Circuit reversed the district court’s dismissal of the case and remanded the case for further proceedings.
If you have questions about how this development might affect your institution, please contact any of our School & University Liability team members, including Matthew L. Johnson, Edward W. Hearn, Stephen P. Ellenbecker, Kevin G. Owens, David A. Warnick or Catherine Breitweiser-Hurst.