Lawsuit Against College for Part Refund of Fees for COVID-19 Shutdown May Go Forward

“[As to the] university’s ... argument that any breach resulting from the transition to online teaching was de minimis because the student still earned credits toward a diploma: ‘This is kind of like purchasing a Cadillac at full price and receiving an Oldsmobile. Although both are fine vehicles, surely it is no consolation to the Cadillac buyer that the ‘Olds’ can also go from Point A to Point B.’”

From Moran v. Stonehill, decided Feb. 16 by Justice Janice W. Howe (Mass. Super. Ct.), but just posted on Westlaw:

Stonehill is a private college principally located in Easton, Massachusetts. Moran's son is a full-time Stonehill student who resided on campus at the start of the 2019/2020 academic year. Moran made payments to Stonehill on behalf of his son for fees, room and board, and tuition for the 2019/2020 academic year.

The First Amended Complaint alleges that, to entice students to attend, Stonehill touts its in-person, hands-on curriculum. Stonehill's website markets to prospective students the benefits it provides with its "beautiful 384-acre" on-campus experience. Its educational marketing materials also emphasize the benefits of living on campus, saying: "Your residence life experience will give you the opportunity to learn more about yourself as you come to know people from different backgrounds and cultural experiences—all of which will help you learn and grow and prepare you for life after college." Stonehill also promotes its small class size and 12:1 student/faculty ratio as another reason to attend the college. According to the First Amended Complaint, the success of Stonehill's marketing campaign is demonstrated by the fact that eighty-nine percent of its students choose to live on and learn at Stonehill's campus.

Stonehill charged the following amounts for Moran's son for the 2019-2020 academic year: $46,642 as tuition; $16,520 for room and board; a $100 room guarantee fee; $2,702 for student health insurance; a $30 registration fee; a $30 recreational center fee; a $50 technology fee; a $150 resident parking fee; and $150 for his meal plan. Stonehill charged members of the proposed class the same types of fees.

On March 16, 2020, Stonehill ordered all students to leave campus for the remainder of the Spring 2020 semester due to the COVID-19 pandemic. That same day, Stonehill closed the school's facilities and canceled all in-person classes, events, and services. Stonehill informed its students that all classes would resume online.

Following the closure, Stonehill offered only the following partial refunds to Moran and members of the proposed class: a credit of forty-two percent of the semester's room and board charge (totaling $2,160) {[apparently] based on the amount of the Spring 2020 semester that was remaining at the time of the closure of Stonehill's campus on March 16, 2020}; and a refund of all unused dollars on the semester's meal plans. The First Amended Complaint alleges Stonehill's offer to provide a $2,160 "credit" for the Spring 2020 semester room charge is unfair, that Stonehill was not authorized to retain that amount for use for future semesters, and that Stonehill's retention of the credit has caused harm to Moran and members of the proposed class.

Moran also alleges that Stonehill is unfairly profiting from the closure necessitated by the pandemic because it has refused to return funds for services it cannot provide. Besides room and board charges, the closure of on-campus classes and activities prevented Stonehill's students from receiving the benefit of forty-two percent of the fees paid for the Spring 2020 semester. Stonehill's refund plan does not include a pro rata reimbursement for any of the fees paid for services not provided due to the campus closure (e.g., the recreational center, technology, and parking fees).

The First Amended Complaint also seeks compensation for the difference in value between in-person education and online instruction. Moran alleges that Stonehill itself acknowledges the superiority of in-person versus online instruction, as Stonehill's tuition and fees for in-person instruction are higher than its tuition and fees for online instruction. According to the First Amended Complaint, Moran's son and members of the proposed class chose to attend Stonehill for the on-campus experience and in-person instruction.

As a result of the closure, Moran's son has not received the services and access Moran paid for the Spring 2020 semester. Moran's son and members of the proposed class were deprived of the following during the Spring 2020 semester: in-person interaction with professors, mentors, and peers; access to facilities such as computer labs, study rooms, and the library; the opportunity to participate in student governance and extra-curricular activities and groups; and other services and amenities for which they had paid. The First Amended Complaint alleges that the value of online instruction is less than that of in-class instruction, as reflected by the fact that Stonehill charges less for the former. Despite this, Stonehill has failed to refund any portion of Moran's son's and the proposed class members' Spring 2020 semester tuition and fee payments….

The court allowed plaintiff's breach of contact claim to go forward:

Of note are two cases currently pending in the United States District Court for the District of Massachusetts, both of which were recently before the same judge (Stearns, J.) on motions to dismiss similar to the one presently before this court.

In Chong v. Northeastern University, C.A. No. 1:20-10844-RGS (D.Mass. Oct. 1, 2020), the court dismissed, without prejudice, the plaintiff students' breach of contract claim seeking partial reimbursement of tuition to compensate for the inferiority of online instruction, holding that the "plaintiffs fail to state a claim because they have not plausibly established that the parties' agreement included a right to in-person instruction." The court also allowed the motion to dismiss with respect to the plaintiffs' breach of contract claim related to a student activity fee, student center fee, and undergraduate student fee because those fees were imposed to "support" (rather than to gain access to) certain facilities during terms for which students are enrolled in classes, but denied the breach of contract claim related to a campus recreation fee because payment of that fee gave students the option to gain admission to home athletic events and use fitness facilities.

The court reached a different result in In re Boston University COVID-19 Refund Litigation, C.A. No. 1:20-10827-RGS (D.Mass. Jan. 7, 2020), denying Boston University's motion to dismiss the plaintiff students' breach of contract claims premised on the failure to provide in-person instruction and the closure of on-campus facilities and resources. The court rejected the argument that the plaintiffs failed to articulate any legal basis for a contractual right to in-person instruction, pointing to the plaintiffs' allegation that representations in the defendant's course registration materials implied that they would receive traditional, in-person instruction at physical locations on campus.

The court concluded that it could not say, as a matter of law, "that no student could have reasonably expected that paying the tuition charged for the Spring semester of 2020 and registering for on-campus courses would entitle them to in-person instruction," and noted that it "need[ed] the benefit of further factual development of the contractual claims to resolve the issue on the merits." The court reached the same result with respect to the plaintiffs' claims for reimbursement of fees, explaining, "the court cannot say, as a matter of law, that plaintiffs could not have reasonably expected that their payment of mandatory fees would grant them access to at least some of the on-campus facilities and resources shut down by BU on March 22, 2020."

What this court takes from the divergent outcomes in these two cases is the importance of the particular allegations raised by the plaintiffs and the nature of the record before the court.

Here, Moran bases the breach of contract claim as it relates to tuition on Stonehill's website and marketing materials touting its on-campus experience as a central part of what Stonehill has to offer its students, as well as the fact that Stonehill specifically offers the option of in-person, on-campus instruction for one price, and a separate, less expensive online instruction option. The court concludes that these allegations plausibly establish that the parties' agreement included a right to in-person instruction. As in In re Boston University COVID-19 Refund Litigation, this court cannot say, as a matter of law, that Moran could not have reasonably expected that paying the in-person tuition rate charged for the 2020 Spring semester and registering for on-campus courses would entitle his son to in-person instruction.

{The court is not persuaded by Stonehill's argument that Moran "does not dispute that [his son] received full credit for his Spring 2020 courses, which is all that Stonehill agreed to provide in exchange for the tuition and fees that were paid." This appears to be an obvious oversimplification of any agreement between a student and an institute of higher learning. As another court explained in response to a defendant university's similar argument that any breach resulting from the transition to online teaching was de minimis because the student still earned credits toward a diploma: "This is kind of like purchasing a Cadillac at full price and receiving an Oldsmobile. Although both are fine vehicles, surely it is no consolation to the Cadillac buyer that the 'Olds' can also go from Point A to Point B." Rosado v. Barry Univ. C.A. No. 1:20 CV-21813-JEM, 2020 WL 6438684 (S.D.Fla. Oct. 30, 2020).}

Several cases brought by students against colleges and universities seeking reimbursement of tuition and fees after campuses were shuttered and classes moved online due to the pandemic have reached the same result. See Rosado, C.A. No. 1:20 CV-21813-JEM, 2020 WL 6438684, at (S.D.Fla. Oct. 30, 2020) (denying motion to dismiss breach of contract claim based on defendant's closure of campus and transition to online classes due to pandemic where defendant charged more for on-campus instruction than online instruction, and defendant's publications clearly implied in-person instruction and touted its many on-campus resources and facilities); Salerno v. Florida S. College, C.A. No. 8:20-cv-1494-30SPF, 2020 WL 5583522 at (M.D.Fla. Sept. 16, 2020) (denying motion to dismiss breach of contract claim based on defendant's closure of campus and transition to online classes due to pandemic where defendant's publications clearly implied in-person instruction and touted its many on-campus resources and facilities); Milanov v. University of Michigan, C.A. No. 20-000056-MK, 2020 Mich.Ct.Cl. LEXIS 1 (Mich.Ct.Cl. July 27, 2020) (denying motion for summary disposition on plaintiffs' breach of contract claims seeking reimbursement of pro rata portion of amounts paid for in-person instruction, housing, meals, and student activities following closure of campus and transition to allegedly inferior online instruction due to pandemic); Ford, C.A. No. 1:20-CV-470, 2020 WL 7389155, at *7 (denying motion to dismiss breach of contract claim); Zahn, C.A. No. 2020-371JD, 2020 Ohio Misc. LEXIS 230, at *3, 6-7 (ruling that plaintiff stated claim for breach of contract where complaint specifically alleged that tuition and fees for defendant's online classes are significantly less expensive than those for on-campus classes); Smith, No. 2020-321JD, 2020 WL 5694224, at *2 (ruling that plaintiff's allegation that she contracted for in-person classes and received online classes instead stated claim for breach of contract)….

Stonehill also contends that dismissal of the unjust enrichment claim is required because Moran does not adequately allege the essential elements of unjust enrichment. The court disagrees. "Unjustness is 'a quality that turns on the reasonable expectations of the parties.'"Here, Moran alleges that he reasonably expected that his son would receive in-person instruction and access to on-campus facilities and resources in return for payment of tuition and fees and that Stonehill failed to provide these services and access. The court cannot say, as a matter of law, that no reasonable juror taking these allegations as true could find that Stonehill's failure to refund at least a portion of the tuition and fees paid by the plaintiff was unjust under the circumstances. As a result, dismissal of the unjust enrichment claim at this juncture is not warranted….

Stonehill also briefly argues that Moran's claims are barred by a force majeure clause in The Hill Book. A section of The Hill Book entitled "Delivery of Services" includes the following language: "Stonehill College assumes no liability for the delay or failure in providing educational or other services or facilities due to causes beyond its reasonable control." However, the record before the court does not establish as a matter of law the necessary elements for invoking such a clause. Moreover, a force majeure clause (if properly invoked) simply excuses performance; it does not allow a nonperforming party to retain funds for services for which it was paid but did not provide.