Three More COVID-Related Tuition Refund Cases Advance Through Court System

CATEGORY: Private Education Matters
CLIENT TYPE: Private Education
DATE: Apr 28, 2023

New York University (NYU), like other colleges and universities around the country, transitioned to remote online courses in place of in-person classes, closed residence halls, and eliminated a host of in-person facilities and services during the Spring 2020 semester in light of the COVID-19 pandemic. Christina Rynasko brought a class action lawsuit against NYU seeking a partial refund of her tuition for the Spring 2020 semester on behalf of her adult daughter, Emily, then an undergraduate musical theater student at NYU’s Tisch School of the Arts. Rynasko argued that NYU did not deliver the educational services, facilities, access, and opportunities for which Rynasko paid, and therefore was entitled to a pro-rated refund.

Another student, Casey Hall-Landers, was enrolled at the Tisch School as a dance major during the Spring 2020 semester. Hall-Landers had to relocate back to her parent’s home on the West Coast and take classes during off hours or record the classes. She was deprived of access to NYU’s dance studio and no longer had access to the physical therapy services related to dance instruction. Nonetheless, like Emily, Hall-Landers paid all required tuition and fees for the Spring 2020 semester.

Rynasko sued NYU in April 2020 on behalf of herself and a putative class, alleging breach of contract, breach of implied contract, unjust enrichment, money had and received, and conversion. Rynasko acknowledges that the closure of campus due to COVID-19 was justified, but alleges that the campus closures and cancellations caused her significant loss and was seeking compensation.

NYU moved to dismiss the claim, arguing that Rynasko lacked standing to bring her claims because she had not suffered an injury due to the denial of in-person courses, activities, and services to Emily. While the motion was pending, Rynasko filed a motion to add Hall-Landers as an additional named plaintiff and class representative.

The trial court determined that Rynasko did not have standing to assert her claims and declined to allow Rynasko to amend her complaint to add Hall-Landers as an additional plaintiff. The trial court concluded that there was no plausible breach of contract claim because NYU never promised to provide exclusively in-person instruction. Rynasko appealed.

The Court of Appeals determined that Rynasko was not a party to the contract between Emily and NYU, nor an intended third-party beneficiary of the contract, nor an assignee of Emily’s claims. The Court of Appeals stated that Rynasko’s payment of Emily’s tuition does not create an interest in the contract between Emily and NYU. Rather, Rynasko was no different from a hypothetical bank who loaned Emily the money to fund her education or a generous unrelated benefactor who gifted Emily the funds. Therefore, Rynasko lacked standing to sue for breach of contract.

However, the Court of Appeals disagreed with the trial court that an amendment to add Hall-Landers as a plaintiff would be futile. The Court of Appeals concluded that a reasonable factfinder could find that NYU had an implied contract with Hall-Landers that included a general obligation to provide in-person courses, activities, services, and facilities, given NYU’s extensive representations about the nature of student life at NYU. Although there was disclaimer language in a course catalog bulletin that NYU has broad discretion with respect to its courses and activity offerings, this was not enough to override all of NYU’s other representations.  Notably, the Court of Appeals stated that NYU’s disclaimer language was not a force majeure clause because the disclaimer did not contemplate emergencies or allocate the financial risk of those events to students.

The Court of Appeals, in reaching their conclusion, emphasized that they join several sister circuits that have reached similar conclusions in analogous cases. The Court of Appeals affirmed the trial court’s dismissal of the amended complaint but vacated the trial court’s denial to add Hall-Landers as an additional named plaintiff.

Rynasko v. New York University (2d Cir. 2023) 63 F.4th 186.

Note: This past month, students at NYU and two other universities (Illinois Institute of Technology, and Loyola University Chicago) have prevailed in advancing their COVID-related tuition refund cases through the court systems. In the NYU case, it is compelling that the Court noted they may have ruled differently if there was a force majeure clause present in a contract between students and the university. Last week, the University of Colorado settled its COVID tuition refund case for $5.5 million. That payout is the third-largest settlement of more than a dozen that have been made in similar shutdown cases. LCW will continue to follow these cases for relevant updates.

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