Third Circuit Finds Students May Proceed with Breach of Contract Claims Against Universities Based on Campus Closures During COVID-19 Pandemic
The COVID-19 pandemic brought a host of changes to our way of life, including the inevitable switch to online classes during the height of the pandemic crisis.
08.22.23
Unsurprisingly, multiple lawsuits have been filed across the country seeking the partial return of tuition and other fees paid by students during the periods when universities and colleges were forced to resort to online teaching environments. The Third Circuit Court of Appeals recently issued a decision on one such lawsuit, joining several other courts around the country that have found that students may maintain breach of contract claims against universities based on COVID-19 campus closures.
In the present lawsuit, former students at the University of Pittsburgh and Temple University (the “Universities”) filed class actions against the Universities, arguing that they had bargained and paid for in-person classes and services and had instead received a materially different educational experience consisting of fully remote classes and services. As remedies, the students sought partial refunds of tuition and other fees paid during the Spring 2020 semester.
Initially, district courts hearing the cases dismissed the actions finding that the students had signed Financial Responsibility Agreements (FRAs). The FRAs were fully integrated agreements that governed the relationship between the parties with respect to tuition and fees, and the FRAs did not guarantee in-person learning environments. The courts also found that the students had failed to state a claim for breach of an implied contract because they could not identify any specific and identifiable promise that the Universities had broken.
On August 11, 2023, the Third Circuit reversed in part the district court’s decision after finding that the FRAs functioned as promissory notes that set forth the student’s payment obligations but did not govern the Universities’ obligations to the students. Importantly, the court found that the students had sufficiently pled claims for implied contracts based on:
- The Universities’ publications boast about the benefits of the on-campus experience.
- Their longstanding pre-pandemic tradition of providing in-person education.
- The traditionally lower pricing of online programs versus in-person programs.
Although the court highlighted that not every benefit offered by a university gives rise to a contract, at the pleading stage, the Universities’ frequent references to the benefits of in-person education, the practice of offering in-person classes prior to the pandemic, and their different pricing for online education were sufficient to state claims for breach of contract. Accordingly, the court reversed the district courts and remanded the case for further proceedings to determine whether the students could show that the Universities had breached contracts with the students by charging full tuition and fees during a period when classes were fully online and on-campus services were not provided during the semester.
With this decision, the Third Circuit joins various courts around the country that have allowed similar lawsuits against universities to proceed. Klehr Harrison’s Education Industry Group will continue to monitor the development of these cases and remain available to discuss any potential impact these decisions may have on your institution.
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