UNC System asks top NC court to hear two COVID refund cases together

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  • The University of North Carolina System is asking the state Supreme Court to hear two cases dealing with COVID-related refunds at the same time.
  • In one case, students seek partial refunds related to the systemwide shutdown of in-person instruction during the spring 2020 semester. In the second case, students from UNC Chapel Hill and NC State University seek refunds related to the flagship campuses remaining closed to most students in fall 2020.
  • The state's high court will resume oral arguments on Sept. 17. The court's website lists a series of three-day argument sessions in September and October.

The University of North Carolina System is asking the state Supreme Court to hear two cases related to COVID shutdowns at the same time. In both cases, students seek refunds related to the university’s decision to substitute remote learning for in-person classes.

Neither case has been scheduled yet for oral arguments. The state Supreme Court’s website suggests justices will hear cases again in a series of three-day sessions starting Sept. 17.

In Dieckhaus v. Board of Governors of UNC, student and parent plaintiffs from multiple public university campuses seek refunds related to the spring 2020 semester. Every UNC campus shut down in-person instruction during that semester, which coincided with the onset of the COVID-19 pandemic. Each campus ended the semester with remote instruction.

One UNC court filing estimated potential damages from the lawsuit at $260 million.

In Lannan v. Board of Governors of UNC, students from UNC Chapel Hill and NC State University seek refunds related to those two flagship campuses remaining closed to most in-person instruction in fall 2020. Other public university campuses reopened to students at that time.

Lawyers for the UNC System filed a motion Friday asking the state’s high court to hold oral arguments in the two cases “on the same day or in the same sitting.”

“The Lannan appeal is currently pending and fully briefed before the Court,” according to the motion. “Both Lannan and this [Dieckhaus] appeal involve legal questions concerning the rights of students to collect monetary damages from the University because of the University having transitioned to remote education in response to the COVID-19 pandemic.”

“Although the two cases are not identical, both cases include the underlying legal questions of (1) whether the plaintiffs and the University formed implied-in-fact contracts that entitled plaintiffs to specific services from the University and (2), even assuming such contracts were created, whether the State implicitly waives its sovereign immunity when an instrumentality of the State enters into an implied-in-fact contract,” UNC lawyers continued.

“If the Court answers either of those common questions with a ‘no,’ it will resolve both this [Dieckhaus] case and Lannan,” the court filing continued.

The plaintiffs in the two cases take different stances on UNC’s request, according to the court filing. Dieckhaus plaintiffs oppose the request, while Lannan plaintiffs “do not oppose” the idea.

The state Supreme Court agreed in December 2023 to take the Dieckhaus case. Justices could decide whether a 2020 state law designed to shield UNC from lawsuits linked to spring 2020 shutdowns violated students’ state and federal constitutional rights.

Student and parent plaintiffs from various UNC System schools seek partial refunds of tuition and fees paid in spring 2020.

In June 2020, the General Assembly approved Senate Bill 208 by votes of 118-1 in the state House and 49-0 in the Senate. Gov. Roy Cooper signed the bill into law on July 1, 2020.

Now known as NC Gen. Stat. § 116-311, the law says “an institution of higher education shall have immunity from claims” related to “tuition or fees paid to the institution of higher education for the spring academic semester of 2020,” if the “claim alleges losses or damages arising from an act or omission by the institution of higher education during or in response to COVID-19, the COVID-19 emergency declaration, or the COVID-19 essential business executive order.”

In an order late last year, the state Supreme Court agreed to address “whether N.C.G.S. § 116-311 violates the Contracts Clause of the United States Constitution; (2) … whether N.C.G.S. § 116-311 violates the Takings Clause of the United States Constitution; (3) … whether the legislature’s enactment of N.C.G.S. § 116-311 violated the due process clauses of both the United States and North Carolina Constitutions;  [and] (4) … whether defendants’ breach was ‘reasonably related to protecting the public health, safety, and welfare.’”

Justice Tamara Barringer recused herself from considering the Dieckhaus case.

The state Court of Appeals ruled against the students and parents in January 2023.

North Carolina’s public universities moved from in-person to online classes on March 23, 2020, four days before Cooper issued a stay-at-home executive order tied to COVID-19. “Notably, while the universities transitioned to online instruction for the final weeks of the semester, students continued at all times to receive instruction, remain enrolled in school, and receive full course credit for the entire semester,” UNC lawyers wrote in 2023 when asking the state Supreme Court to reject the Dieckhaus csse.

Student and parent plaintiffs in Dieckhaus filed suit in May 2020 for partial refunds of tuition, fees, and other expenses linked to the weeks of exclusively online instruction. SB 208 followed the filing of the Dieckhaus suit.

“In enacting the statute, the General Assembly declared that: ‘[i]t is a matter of vital State
concern affecting the public health, safety, and welfare that institutions of higher education continue to be able to fulfill their educational missions during the COVID-19 pandemic without civil liability for any acts or omissions for which immunity is provided,’” UNC lawyers wrote. “Moreover, the Immunity Statute applies only where the university ‘offered remote learning options … that allowed students to complete the semester coursework.’”

Plaintiffs offered their argument to the state Supreme Court in April 2023.

“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.”

“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.”

Nine months before accepting the Dieckhaus case, the state’s high court agreed in March 2023 to take the Lannan case.

An October 2022 ruling from the state Court of Appeals would have allowed the lawsuit to move forward. The state Supreme Court issued an order weeks later blocking the Appeals Court’s decision.

NC State grad student Joseph Lannan and UNC Chapel Hill undergrad Landry Kuehn seek refunds of fees paid in fall 2020, when their campuses were closed for most students. That was the first full semester after the COVID-19 pandemic hit North Carolina.

Lannan and Kuehn argue that their schools breached “implied-in-fact” contracts with students at the two flagship campuses. The state law challenged in the Dieckhaus case does not apply to the fall 2020 semester.

The UNC System could face a “massive liability” of “tens of millions of dollars” if the two students win their suit, according to a Supreme Court brief UNC lawyers filed in May 2023.

The state Supreme Court has no cases scheduled now for oral argument. The court’s website sets out the following dates for additional arguments this year: Sept, 17-19, Sept. 24-26, Oct. 22-24, and Oct. 29-31.