Appeals Court to decide whether UNC System students can seek refunds from COVID semester

Judge Allegra Collins, Chief Judge Donna Stroud, and Judge Jeff Carpenter consider oral arguments before the N.C. Court of Appeals. (Image from N.C. Court of Appeals YouTube channel)

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  • Five students and a parent are suing for partial refunds of tuition and fees paid during the spring semester of 2020, when University of North Carolina System campuses shut down because of COVID-19.
  • Lawyers for UNC argue that the university is protected from the suit. Among the protections is a state law approved in June 2020.

The University of North Carolina System could be forced to refund portions of fees charged to students across the state in spring 2020, depending on the outcome of a case heard Tuesday morning at the N.C. Court of Appeals.

Five students and a parent sued the UNC System in May 2020. They argue that the university breached a contract to provide in-person instruction.

The plaintiffs are seeking partial refunds of tuition and fees charged for the semester that university campuses shut down because of COVID-19. Superior Court Judge Edwin Wilson dismissed their case in June 2021. The plaintiffs hope the Appeals Court will reverse that decision and allow the case to move forward.

“We have appellants that have completely performed under the contract,” said Blake Abbott, the attorney representing the students and parent. “They prepaid their tuition. They prepaid their fees. They know what they’re going to get, and that’s an on-campus education. But halfway through the semester, the university actually stops performing.”

Blake Abbott at N.C. Court of Appeals
Attorney Blake Abbott argues at the N.C. Court of Appeals. (Image from N.C. Court of Appeals YouTube channel)

“Instead of refunding appropriate amounts of tuition and fees and prepaid funds for meals, the university just elects to retain the money,” Abbott added.

The trial judge had multiple valid reasons for tossing the case last year, argued Jim Phillips, a private attorney representing the UNC System.

First, a state law approved in June 2020 (Senate Bill 208, Session Law 2020-70) specifically protected universities from the type of lawsuit the plaintiffs filed. Second, sovereign immunity blocks legal action against the university. Third, the plaintiffs failed to identify a contract that could have been breached.

“North Carolina law is clear that in the education context it is not enough to point to and rely on statements in websites, in handbooks, in bulletins, in marketing materials, and the like for the terms of a contract,” Phillips said.

Jim Phillips at N.C. Court of Appeals
Attorney Jim Phillips argues at the N.C. Court of Appeals. (Image from N.C. Court of Appeals YouTube channel)

Judge Allegra Collins asked Phillips whether students ever could sue UNC over a shutdown of in-person instruction. “You have a student who pays and enters UNC, and pays the tuition, pays the fees, pays the room and board, and one day UNC says, ‘We’re not doing this anymore — period,’” Collins said. “Is there a cause of action? Any cause of action? If so, what is the remedy in that situation?”

Phillips offered no answer.

“I think, quite frankly, that the university did a magnificent job here — transitioning to online and providing that semester’s education to these students,” Phillips said.  “I think the General Assembly recognized it when it passed the immunity statute. This was a hard job, and the university pulled it off. None of us got exactly what we were used to paying for during COVID, but we got what I would consider to be — if there was a contract — substantial performance.”

Chief Judge Donna Stroud returned to Collins’ question, pointing to a hypothetical scenario in which the university shuts down without warning. “You only have two days of classes, and then they just stop,” Stroud said. “No valid reason. No hurricane. No anything. Hopefully, that would never happen. … But what would that claim be?”

 “I think you would go to the North Carolina General Assembly and ask for them to make an appropriation to refund the money,” Phillips responded. “I don’t know if there’s some kind of claim. I am confident under North Carolina law it is not a contract claim.”

The suit titled Dieckhaus v. Board of Governors of the University of North Carolina could end up affecting students across the university system.

“Plaintiffs allege in their [complaint] that they and similarly [situated] students enrolled in an on-campus course of study at UNC, and prepaid tuition and various fees in exchange for Defendant’s promise to provide the unique benefits of an in-person, on-campus educational experience, including face-to-face academic instruction and a host of other services, extracurricular activities, and access to campus buildings and spaces,” according to a brief in the case.

“Plaintiffs also allege that they and similarly situated students paid significant sums for room and board. But when Defendant canceled in-person instruction and closed down campus in response to the COVID-19 crisis in March 2020, it refused to refund the tuition, fees, and room and board paid as consideration for this on-campus experience, breaching its agreement
with Plaintiffs and similarly situated students and unjustly enriching itself at the expense of its students.”

Lawyers representing the UNC System disagree in their Appeals Court filings.

“Plaintiffs do not identify any contract between themselves and the UNC System or any of the System’s constituent institutions,” according to a UNC brief. “Plaintiffs’ Amended Complaint acknowledges that a written contract does not exist, asserting that the terms of the purported contract ‘are as implied’ or as set forth in vague categories of documents like the University’s ‘website, academic catalogs, student handbooks, marketing materials and other circulars, bulletins, and publications.’ Plaintiffs identify no specific contractual provisions supporting their claims.”

“Plaintiffs’ Amended Complaint is at best a veiled educational malpractice claim — a legal claim roundly rejected in North Carolina,” UNC lawyers argued. “The crux of Plaintiffs’ claims is their contention that they were ‘deprived of the in-person, on-campus experience’ they allegedly paid for, and that the online classes and experiences provided in the final weeks of the Spring 2020 semester were less valuable than in-person classes. Plaintiffs are asking this Court to evaluate, assess, and weigh the University’s delivery of instruction, which it cannot do given the bar on educational malpractice claims in North Carolina.”

There’s no timetable for Stroud, Collins, and Judge Jeff Carpenter to issue a decision in the case.