Mixed Results for University Defendants in Latest Tuition Refund Suits

Two more university tuition refund cases were recently decided at the pleadings stage, with mixed results for the university defendants. The U.S. District Court for the Southern District of New York ruled in the matter of Marbury v. Pace University and In re Columbia Tuition Refund Action that to the extent students from these universities plausibly alleged violations of “specific contractual promises,” their claims survived. Otherwise, those claims would not be permitted to proceed. This decision is in line with the same district court’s ruling in Hassan v. Fordham University.

The court rejected Columbia students’ claim for tuition reimbursement as a result of the university’s move to online learning but allowed a similar claim to proceed against Pace. In Columbia, the court rejected the plaintiffs’ arguments that the custom and course of dealing of having in-person instruction created a contractual entitlement to in-person classes. Likewise, the fact that Columbia had previously offered online-only courses and programs did not create an express promise that all other classes would be conducted via in-person instruction. The court stated that to the extent Columbia’s advertisements for those previous online courses guaranteed online-only instruction, then students in those programs could claim a contractual entitlement to online classes. But it did not follow that students in other programs would have a contractual entitlement claim to in-person instruction. Reliance on various provisions of Columbia’s publications describing the “campus experience” were deemed insufficient to state a claim and were characterized as “opinion or puffery” that was too vague to establish a contract.

By contrast, the instructional format claim against Pace survived dismissal because the plaintiff was able to state a plausible claim of contractual entitlement. The court found plaintiffs' specific references to sections of Pace’s website stating that on-campus classes would be “taught with only traditional in-person, on-campus meetings,” were sufficient to allege a contractual right to in-person learning that could withstand a motion to dismiss. Pace argued that even if there were a contractual right, its website contained a disclaimer indicating that Pace would not be responsible for “adjustment[s] to class schedules” due to unforeseen circumstances. The court found that while the disclaimer might ultimately help establish that the university had not promised in-person instruction, the language of the disclaimer was, at best, ambiguous as to whether a change in instruction format constituted an “adjustment to class schedules.” Pace also argued that the plaintiff’s claim was tantamount to a claim for educational malpractice insofar as the plaintiff was asking the court to compare the value of in-person versus online instruction. The court recognized that a majority of courts around the country have barred claims based on the education malpractice doctrine but was not persuaded that the plaintiff was making such a claim.

In both Columbia and Pace, the plaintiffs also argued that the universities breached a contract to provide access to certain campus facilities and activities in exchange for mandatory student fees. The district court found that the plaintiffs in Columbia had a stronger claim because they paid a “facilities fee,” which gave them access to on-campus facilities and services. The plaintiff in Pace also alleged a plausible claim regarding on-campus fees, although the court found that claim “verge[d] on conclusory” because the fees described were more general in nature.

The district court dismissed claims of unjust enrichment, conversion, and violations of New York General Business Law in these actions. Plaintiffs’ unjust enrichment and conversion claims were predicated on the same factual allegations as their contract claims. Their claim that the universities violated Sections 349 and 350 of the New York General Business Law failed because they did not allege that the universities’ representations regarding the services that they offered were materially misleading.

These rulings demonstrate that it continues to be the case that if students’ claims rest upon the quality of the education or general promises, they are doomed to fail. However, to the extent students are able to identify specific promises of online instruction and services campus services, their claims fare better.