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INSIGHT: These Defenses May Help Universities in Covid-19 Lawsuits

Aug. 14, 2020, 8:01 AM

Going from the classroom to the courtroom is nothing to look forward to when you are the general counsel of a university, college, or research institute. Yet, this is exactly the new reality higher education and affiliated research institution administrators around the U.S. (and beyond) are facing.

Because our review of the existing articles on the topic left unanswered questions, we decided to take a closer look to provide insight into what higher education institutions should be thinking about right now and how to plan for what’s on the horizon.

Following the old adage that “the best defense is a good offense,” our aim here is to (with little frippery) outline the allegations plaintiffs are currently asserting, and available arguments to blunt their impact.

Tuition Refund Class Actions

Claims and Defenses

As of July 31, over 150 putative class actions have been filed against higher education institutions alleging breach of contract and unjust enrichment, as well as (in some cases) claims for conversion and breach of state unfair business acts. The suits seek reimbursement for tuition, fees, housing, and other costs following campus closures.

The core allegations focus on the difference in value between in-person learning and the benefits of a campus environment (including facilities, labs, extracurriculars, mentoring opportunities, and residential life) versus online instruction.

The primary defenses to consider are: opposing class certification and moving to dismiss for failure to state a claim:

  • Commonality Hurdle. Plaintiffs purporting to represent a wide range of students will be challenged to argue that their clients are similarly situated, as there are clear factual differences between what and how individuals pay for tuition (think financial aid circumstances; tuition differences across programs; in-state versus out-of-state status; etc.).
  • Defenses. A variety of defenses stand ready to support dismissal on the pleadings, including lack of standing where students have not paid their own tuition, as well as the inability to pinpoint any contract provision actually requiring in-person education. Schools further may be able to persuasively contend that arbitration provisions apply; there are outstanding refund policies in place; performance was excused or impossible due to government orders; force majeure clauses excuse liability; sovereign immunity (for public institutions) bars the cases; and/or these are simply difficult-to-establish educational malpractice claims masquerading as alleged breaches of contract actions.

Future Considerations and Prophylactic Actions

The joys of being back on campus will also bring the uncertainty of payment structures for returning students. Considerate and consistent messaging will be crucial in mitigating agitation, protecting the brand, and avoiding some (though almost certainly not all) litigation.

To the extent universities do not have enrollment contracts tied to tuition, this would be a good time to institute them and clearly outline the risk of pandemics including Covid and structure how that fits into each student’s tuition schedule.

Administrators should consider adjusting activity fees based on availability and room and board fees based on time spent on campus. Costs incurred by institutions as a result of physical distancing, such as assigning rooms meant for multiple students to one student, should also be taken into consideration.

Suits Relating to Covid-19 Risk and Infection

Claims and Defenses

Given the communal nature of higher education, it comes as no surprise that alleged failures to implement pandemic-particular safety guidelines is providing fodder for public nuisance claims. Potential plaintiffs in such suits could include students, faculty, staff, and even visitors. Many such suits have already been filed against businesses such as restaurants, detention facilities, and warehouses, and we can expect higher education institutions to face the same scrutiny.

Reducing the risk of litigation requires institutional vigilance about complying with, and perhaps even going above and beyond, recommended public health guidelines and workplace regulations.

Defending against such claims will require early and cohesive organization. Administrators must have documented adherence to CDC, OSHA, and other local, state and federal guidelines. Recommendations need to result in clear safety protocols and physical distancing guidelines, as well as comprehensive and regularly-updated training for implementers.

Claims may also originate in individual state labor laws, which require employers to provide reasonable and adequate health protection for their workers. Additionally, administrators should review any relevant collective bargaining agreements with students, faculty, staff, or other employees to assess compliance and flag possible issues in relation to government health guidelines.

To the extent a Covid-related injury is considered occupational, state worker’s compensation statutes could limit the filing of additional litigation.

Future Considerations and Prophylactic Actions

When it comes to this pandemic environment, the best offense is always a good (preemptive) defense.

For example, it is never too early to work with local law enforcement and public health regulators to ensure a coordinated re-opening strategy, appropriate waivers, and thinking about institution-led trainings and communications strategies.

Government Funding Claims

Institutions that accept CARES Act funding may be at heightened risk of government investigations concerning fraud, waste, and abuse.

The False Claims Act provides for treble damages and penalties for knowingly presenting (or causing to be presented) to the U.S. a false or fraudulent claim for payment and for knowingly making or using false records or statements. Liability can be based on allegedly false certifications of eligibility, and suits may be initiated by qui tam whistleblowers (relators) or by the government.

Final Thoughts

Higher education officials must consider how campus ecosystems fit into the rapidly evolving landscape of Covid-19-related risk, whether it pertains to tuition value to reflect shifting forms of instruction or public health guidelines for the community.

Internal Covid-19 task forces should focus on the key measures that will not only keep institutions in compliance with the latest regulations to mitigate the risk of litigation, but will also form the basis of a cohesive campus community that works together to tackle the novel problems posed by Covid-19.

This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.

Author Information

Jessica Everett-Garcia is the firmwide chair of Perkins Coie’s commercial litigation practice and represents a wide variety of clients in business litigation disputes in court and arbitration, with emphasis on complex contract claims and business torts.

Keith Miller serves as the managing partner of Perkins Coie’s New York Office and is the former firmwide chair of Perkins Coie’s White Collar & Investigations practice.

T. Markus Funk, a former federal prosecutor and law professor, serves at the firmwide chair of Perkins Coie’s White Collar & Investigations practice and as a founding co-chair of the firm’s Higher Education Industry Group. He is also a member of NACUA and the ALI.

Evelyn Pang is a business litigation associate with Perkins Coie’s New York Office.