Law360 (March 9, 2022, 5:45 PM EST) -- The D.C. Circuit revived portions of lawsuits against American University and George Washington University over fees and tuition charged during COVID-19 shutdowns, saying implied breach of contract claims cannot be easily tossed because the institutions' communications contained "numerous references to the benefits of their on-campus instruction."
The panel's Friday opinion affirmed the dismissal of express breach of contract claims and some of the implied breach claims, but said there is enough of a record to keep some implied breach claims alive because the universities advertised in-person instruction through their materials as well as their histories.
"We easily conclude that plaintiffs fail to plausibly allege the parties had express contracts with such a term, as they point to no language indicating that the provision of in-person education and on-campus services was an explicit term of the parties' agreements," the panel held.
The panel added, "Whether plaintiffs plausibly allege that the parties had implied contracts is a more difficult question. However, as we explain, on the record before us, plaintiffs' complaints are largely sufficient to avoid motions to dismiss for failure to state causes of action on their implied contract claims."
Oral arguments on the cases were heard in January before a panel that included U.S. Circuit Judge Ketanji Brown Jackson, although she has since been nominated to the U.S. Supreme Court by President Joe Biden and did not participate in the drafting of the opinion, which is authored by U.S. Circuit Judge Harry T. Edwards.
The cases came before different trial judges, who tossed them last year after finding, among other things, that the schools never promised students in-person classes.
The American University students argued in their opening brief that their breach of contract and unjust enrichment claims should be revived because they have paid the university tens of thousands of dollars in tuition and fees in exchange for an in-person educational experience for the Spring 2020 semester, which they never received.
The challengers insisted they have plausibly pled the existence of a contract between them and American University for in-person instruction and other educational experiences. The brief pointed to the institution's marketing materials in which the school told current and prospective students that its 90-acre campus gives them "advantages of a traditional college setting combined with unparalleled access to ... our nation's capital" and over 150 student clubs and organizations.
The GWU students argued the school closed its facilities in March 2020 and transitioned to online learning following the outbreak of the pandemic, and some students were ordered to vacate residence halls. The school offered students prorated refunds for housing, dining and parking fees but otherwise declined to refund tuition and other fees, according to court documents.
This denial, the suits alleged, amounted to a breach of express and implied contracts, unjust enrichment, and conversion.
The GWU students renewed their breach of contract and unjust enrichment claims on appeal, while the American University students renewed their breach of contract, unjust enrichment, conversion and Consumer Protection Procedures Act claims. The implied breach claims on tuition were revived by the panel for both suits, as were some implied breach claims for fees, while the panel also revived the students' unjust enrichment claims and the American University students' D.C. Consumer Protection Procedures Act claim.
"Indeed, the universities cite nothing in their historical courses of dealings with their students to suggest that they have retained unfettered rights to shut down on-campus educational activities and use online learning in its place after students have paid tuition for traditional on-campus courses," the panel said about the implied breach claims on tuition. "As discussed, Plaintiffs plausibly allege that in-person education, along with on-campus educational activities, are the norm at both schools."
On the unjust enrichment claims, the panel noted that the American Council on Education and 18 other higher education associations filed amicus briefs in support of the universities and argued that higher education institutions around the country incurred huge financial losses from the elimination of parking, sporting events, concessions and other revenue streams.
The panel said it is "sympathetic" to the argument but that "determining whether the transition to online learning resulted in a net enrichment to GW and American is a fact-intensive question inappropriate for resolution at the motion-to-dismiss stage."
Roy T. Willey of Anastopoulo Law Firm, who represents the American University students, said in a statement that "[o]n behalf of the students we are very pleased that the first US Court of Appeals to weigh in on these issues around the country came down on the side of fairness and the students with a correct interpretation of the law. From the start the students have only asked for a fair, prorated refund for the portion of the spring 2020 semester where they did not get the live in-person education they prepaid for and now they are that much closer to getting it."
Daniel J. Kurowski of Hagens Berman Sobol Shapiro LLP, representing the GWU students, said in a statement that the opinion "supports the claims and work that our firm is currently pursuing on behalf of college students from coast to coast. It confirms our position that the bargain between universities, students, and their families in exchange for tens of thousands of tuition and fee charges each semester is more than just a bargain for credits and nothing more."
American University said it is "reviewing the decision and will continue to defend the university's position."
U.S. Circuit Judges Patricia Millett, Ketanji Brown Jackson and Harry T. Edwards sat on the panel for the D.C. Circuit.
The GWU students are represented by Daniel J. Kurowski and Steve W. Berman of Hagens Berman Sobol Shapiro LLP and Glen L. Abramson and E. Michelle Drake of Berger Montague PC.
The American University students are represented by Roy T. Willey of Anastopoulo Law Firm, Curtis A. Boykin of Douglas & Boykin PLLC and Jason P. Sultzer of Sultzer Law Group PC.
American University and GWU are represented by Alan Schoenfeld of WilmerHale. GWU is additionally represented by Jamie Gorelick, Bruce Berman and Susan Pelletier of WilmerHale.
The cases are Shaffer et al. v. George Washington University, case number 21-7040, and Qureshi et al. v. American University, case number 21-7064, in the U.S. Court of Appeals for the District of Columbia Circuit.