There is a major new ruling in Delaware that could impact universities and colleges across the country. A federal judge ruled in favor of allowing students at the University of Delaware to proceed with their claim that the school “unjustly enriched itself” during the COVID-19 pandemic. Judge Stephanos Bibas found the claims (and demand for partial refunds) “plausible.” While not controlling precedent outside of Delaware, the ruling could encourage other such challenges across the country.
The court noted that the case turned on the basic contracts principle that “if someone ‘renders performance under the contract, but the contract is then excused because of a ‘change of circumstances,’ he still “has a claim in restitution … as necessary to prevent unjust enrichment.” The court relied on the Restatement (Third) of Restitution and Unjust Enrichment §34; see also Restatement (Second) of Contracts §272. The court rejected conversion claims.
Judge Bibas offered a strong rejection of the interchangeability of in-person and virtual classes: “Similarly, the students insist, being on campus is a core part of the educational deal: it is “so basic to the bargain” between students and an in-person university. They may be right.”
The students sued UD for “breached contractual obligations” after it closed the campus and moved to online instruction last spring. UD argued that it “expressly reserved” the right to switch to virtual instruction. Notably, Judge Bibas held that it did not matter if UD never made an express promise:
“True, the school never promised them expressly. But promises need not be express to be enforceable. By its statements and history of offering classes in person, the school may have implied a promise to stay in person. So the students deserve a chance to press their contract claims. 3 To be sure, even if there was a promise, the school was probably justified in breaking it. But that would not end the case. Though impossibility might excuse the broken promise, the school should not be unjustly enriched. So it may need to return the money it saved, if any, by going online.”
The school also challenged the standing of parents who paid for their child’s tuition and fees because they were not obligated to handle such costs. The school also argued that parents “were not personally deprived of campus services or forced to take allegedly inferior online courses.” However, Bibas again demurred: “I disagree. If the parents are right, they suffered a simpler injury: The school wrongly took their money. It promised to use the money for one purpose but did not.”
I expect most courts would find that the switch to virtual classes was a responsible and reasonable shift in the pandemic. The students were promised an education and schools worked hard to supply it under highly unusual circumstances, including local and state laws barring large group gatherings. That however does not account for some fees, including dorm rent, that may not have been reimbursed fully by schools. Some of those fees may have paid for services that were not in fact rendered.
Bibas was a respected law professor at the University of Pennsylvania before joining the bench after a nomination by President Trump in 2017. He has a stellar legal background in both academia and practice.
Here is the opinion: Ninivaggi v. University of Delaware