Major operational changes and disruptions occasioned by COVID-19 have created a swell of contract disputes and new litigation in various industries. The area of higher education is no different. Faced with safety concerns and government stay-at-home orders, universities across the nation have had to adjust, often by ceasing in-person instruction, transitioning to remote learning, and suspending on-campus services, including university-furnished student housing. These adjustments have been met with class actions filed by students seeking tuition and fee reimbursements or abatements. We have been monitoring these cases closely as they continue to flood into federal and state courts and have been counseling our clients on what they can expect, possible defenses, and mitigation of liability. We also note that the class actions that have been filed are specific to the Spring 2020 semester. Now that the 2019-2020 school year has wrapped up and universities, colleges, and higher education institutions begin to grapple with what to do in the fall, a closer look at these cases are warranted to potentially avoid another wave of class actions come September.
These suits generally contend that the student-class members have not received the college experience they bargained for, and most assert claims for breach of contract, unjust enrichment, and conversion. Importantly, however, universities hit with these class actions have available to them several potentially applicable defenses. First, to the extent the plaintiff alleges that the university has breached its obligations under an express agreement, quasi-contractual remedies, such as unjust enrichment, are generally not recoverable.[1] Because the theory of unjust enrichment is founded on a contract implied in law, if a valid, express contract governs the parties’ relationship, unjust enrichment is not applicable.[2] Similarly, many courts hold that claims for conversion—a tort premised on wrongful appropriation of tangible property—is not actionable where the suit essentially involves a contract dispute.[3] Because, like unjust enrichment, “a claim of conversion cannot be predicated on a mere breach of contract,”[4] universities defending against class-action complaints asserting both breach of contract and unjust enrichment and/or conversion have colorable defenses that the latter claims fail as a matter of law, permitting potential disposition of these claims at the pleadings stage.
The defense of sovereign immunity may also provide for early disposition of some class actions. Public universities facing suit should consider whether they qualify for sovereign immunity—insulating them from damages awards—under the Eleventh Amendment. If the class action complaint seeks monetary relief and no waiver is applicable, dismissal on sovereign immunity grounds may be appropriate.[5]
The doctrines of impossibility of performance and frustration of purpose may also be available, as the ability to provide traditional instruction has been impeded by an event beyond universities’ control. Impossibility typically discharges, in part, a party’s contractual obligation when an unanticipated condition makes performance “objectively impossible,”[6] and courts have applied the doctrine to the education context.[7] Here, government stay-at-home orders have arguably rendered colleges’ ability to provide in-person instruction and on-campus services truly impossible, potentially excusing the universities’ alleged nonperformance. Under the related doctrine...
