UNC students urge NC Supreme Court to take COVID refund case

(CJ photo by Maya Reagan)

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  • University of North Carolina System students seeking partial refunds related to COVID campus shutdowns in spring 2020 hope the N.C. Supreme Court will take their case.
  • A unanimous N.C. Court of Appeals panel ruled against the students in January.
  • A separate lawsuit challenges fees charged at UNC Chapel Hill and N.C. State University in fall 2020, the first semester after the COVID-19 pandemic hit North Carolina.

Students seeking partial refunds for tuition and fees paid to University of North Carolina campuses in spring 2020 hope the N.C. Supreme Court will take their case. The students argue that their universities owe refunds because of COVID-related shutdowns.

In a petition filed Tuesday, the students ask the state’s highest court to overrule a unanimous January decision from the N.C. Court of Appeals.

“Plaintiffs’ education was changed from in-person, hands-on learning to online instruction midway through the Spring 2020 semester,” wrote attorney Blake Abbott, who represents the student and parent plaintiffs. “When this happened, Plaintiffs were forced from campus and deprived of the benefit of the bargain for which they had paid, and in exchange for which Defendant had accepted, tuition as set forth more fully above.”

“In addition to tuition, Defendant charges certain mandatory student fees,” Abbott added. “Plaintiffs were required to and did pay the applicable fees at their respective constituent institutions for the Spring 2020 semester. However, as a result of being moved off campus, Plaintiffs and members of the Fees Class no longer have the benefit of the services for which these fees have been paid. For example, Plaintiffs were unable to participate in recreational and intramural programs; no longer had access to campus fitness centers or gymnasiums; no longer benefited from campus technology infrastructure or security measures; and no longer had the benefit of enjoying Spring intercollegiate competitions.”

“On top of the mandatory fees charged to all students, Defendant charges other access or program-based fees, such as fees for laboratory-based courses, parking permits, graduation fees for graduating seniors, etc.,” Abbott wrote. Three plaintiffs paid fees for on-campus housing and meal plans.

The suit challenges a state law, N.C. General Statute § 116-311, that legislators amended in 2020. “N.C.G.S. § 116-311 seeks to protect Universities from all repercussions related to their Spring 2020 decisions to close campuses,” Abbott wrote.

“This Statute, as applied here is unconstitutional first because it violates the Contracts Clause,” the petition claimed. “Even if it is constitutional, a reading of the Statute demonstrates that Defendant has violated it by unreasonably withholding a refund. In whole, the Statute itself as applied, permits Plaintiffs to recover their funds from Defendant.”

A unanimous three-judge state Appeals Court panel disagreed. Appellate judges issued a Jan. 17 ruling favoring the UNC System. The decision upheld a trial court ruling in the case Dieckhaus v. Board of Governors of UNC.

“Because sovereign immunity bars the unjust enrichment claims and because statutory immunity bars both the unjust enrichment and contract claims, we affirm the trial court’s order dismissing all claims,” wrote Chief Judge Donna Stroud.

The decision arrived three months after the Appeals Court ruled in a separate case, Lannan v. Board of Governors of UNC, that students at the state’s two flagship public universities — UNC-Chapel Hill and N.C. State University — could proceed with breach-of-contract suits. The Lannan case involves student fees paid in fall 2020, the first full semester after COVID hit North Carolina.

University lawyers have asked the state Supreme Court to reverse that ruling, citing potential “massive liability” from allowing that case to proceed. The state’s highest court issued an October order temporarily blocking the Lannan suit from moving forward.

In the Dieckhaus case, five students and a parent sued the UNC System in May 2020. They argued that the university breached a contract to provide in-person instruction.

The plaintiffs sought 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.

“We have appellants that have completely performed under the contract,” Abbott said during oral arguments in May 2022. “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.”

“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.

“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.”