Unjust enrichment claims in tuition refund class actions: No pain, no gain, no claim

The outbreak of COVID-19 tuition refund class actions is as virulent as the pandemic that inspired them. In just one week, the number of tuition refund class actions against colleges and universities nearly doubled from 60 to 105,[1] most bearing an uncanny similarity to those that preceded them. Their main complaint is that the innovative transition from live to online learning necessitated by campus closures in response to the nationwide civil shutdown orders deprived students of the benefit of their bargain: live instruction in a diverse campus community. 

Among the similarities in these lawsuits are claims for unjust enrichment—a theory of equitable restitution dating back to the Roman Empire that is based on fundamental notions of fairness when there is no written contract between the parties. The law of unjust enrichment is fairly consistent from state to state. Ohio describes it this way:

“As ordinarily defined, the concept of unjust enrichment includes not only loss on one side but gain on the other, with a tie of causation between them.” To recover for unjust enrichment, a plaintiff must demonstrate: (1) that it conferred a benefit upon the defendant; (2) that the defendant knew of the benefit; and (3) that, under the circumstances, it would be unjust to allow the defendant to retain the benefit without payment.[2]

Critically, the purpose of the claim “is not to compensate the plaintiff for any loss or damage . . . but to compensate him for the benefit he conferred on the defendant.”[3]  In other words, where my loss is your gain, I may be entitled to recover but only to the extent of your actual gain. 

The assumption underlying each tuition class action is that by substituting remote instruction for live teaching, retention of tuition payments for the full spring semester confers an unjust “gain” on colleges and universities. Most of the plaintiffs allege that this “gain” is exactly equal to 100 percent of the cancelled portion of the spring semester. 

But is that really true? Who really “benefits” under the plaintiffs’ scenario? What, exactly, has any school “gained” when it continues to provide core educational services with the same fixed costs that existed before the civil orders mandating closure? And, most important, the first question that the plaintiffs will have to answer to prevail in their claim for unjust enrichment is this: What, exactly, have the students lost?  

They allege the loss of the intangibles that may enrich the college experience—intangibles that differentiate one student from another and, by their individualized nature, are ill-suited to class-wide resolution. Yet any attempt to eliminate these “intangibles” to create class commonality simply substitutes one set of problems for another. Here’s why. 

To the degree that class plaintiffs try to shift their focus from the intangibles of a campus experience to an objective measure of the relative merits of online versus live teaching, they risk defeating the first element of their claim: There is no “loss” under that paradigm if they receive the same credit, for the same courses, taught by the same professors, that count the same way toward graduation—where it cost nothing more than what they have already paid. 

Class action plaintiffs will have a very difficult time establishing their loss and even more difficulty establishing a college’s gain, which is the sole measure of their damages. 

There is much more to say about the defenses available to colleges and universities in these class actions. The absence of “loss” and “gain” is simply the starting point.