7th Circuit Reopens COVID-19 Tuition and Fees Lawsuit

August 2, 2022

Students at Loyola University Chicago — like students at many institutions across the country — brought a putative class action suit against Loyola for breach of contract and unjust enrichment after Loyola suspended all in-person instruction and restricted access to campus facilities following the onset of the COVID-19 pandemic. The students alleged that they were entitled to a refund of tuition and fees for the portion of the spring 2020 semester that took place entirely remotely due to COVID-19.

The district court granted Loyola’s motion to dismiss for failure to state a claim. The 7th Circuit overturned that decision, holding that the students pled enough to withstand dismissal because the complaint states a claim for breach of an implied contract under Illinois law, and because the students are entitled to amend their unjust enrichment claim. In doing so, the court stated: “Given the challenges presented by the novel pandemic, universities may have contractual defenses. But those defenses are not before this court today. Nor is the issue of damages.”

The 7th Circuit pointed to Loyola’s course catalog, which indicated that certain classes would take place “in person” or in certain types of classrooms on campus. The court also noted that the online registration portal displayed the classroom and campus where a particular class would take place. The court described the amount Loyola students pay per credit hour for classes traditionally held in person, the amount students pay in student and technology fees, the price students pay for a “CTA U-Pass” (a pass to ride public transportation in Chicago), and several other fees. Students enrolled in traditionally remote learning programs at Loyola paid less per credit hour and in student fees. After closing campus and transitioning to remote instruction in spring 2020, Loyola refunded part of the student fees to full-time students enrolled in in-person courses and provided a partial refund for room and board. Loyola, like many schools, did not refund tuition or other mandatory fees like the technology fee.

The 7th Circuit’s opinion is similar to a recent decision out of the D.C. Circuit. In that case, the D. C. Circuit applied District of Columbia law and held that the students sufficiently pled a breach of an implied contract and, in the alternative, unjust enrichment against two Washington, D.C.-based schools as to tuition and some (but not all) fees alleged to be directly tied to on-campus services. However, like the court in Gociman, the D.C. Circuit noted that the schools “w[ould] likely have compelling arguments to offer that the pandemic and resulting government shutdown orders discharged their duties to perform these alleged promises.” Shaffer v. George Washington Univ., 27 F.4th 754, 760 (D.C. Cir. 2022). Taken together, these appellate court cases signal a willingness to proceed with these class action cases at least past a motion to dismiss.

At this point, schools that received favorable rulings from the district court in COVID-19 class actions — particularly in the 7th and D.C. Circuits — should anticipate that such cases may continue on remand from a federal appellate court. Schools currently defending against COVID-19 class actions should take note of the reasoning used in Gociman and Shaffer. All schools should pay particular attention to the language in their course catalogs, registration portals and other locations.

Please contact the authors of this article for advice on navigating COVID-19 tuition and fees suits, or best practices for auditing course catalog materials.

McGuireWoods has published additional thought leadership analyzing how companies across industries can address crucial business and legal issues related to COVID-19.