KY universities shut during COVID. Should they refund $729 million to students?

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In March 2020, Kentucky’s public universities shut down their campuses to prevent the spread of COVID-19 and switched their 121,000 students to online classes for the rest of the spring semester.

Now, in eight pending lawsuits, 27 college students say the state universities owe those affected a cumulative refund of $729 million in tuition and mandatory fees.

The students say they paid large sums in tuition for a real-life college experience, not to sit at a laptop in their bedroom while faculty scrambled to create “virtual” courses. And they were required to pay fees for services like student activity centers, gyms and student health programs that disappeared once the campuses closed.

Similar COVID-19 refund lawsuits have been filed against universities around the country, with few resolutions so far. Earlier this month, Barry University, a private college in Miami, Fla., agreed to pay $2.4 million to settle such a claim.

If any other business failed to deliver the product they sold you, then you would expect to get your money back, said Lexington attorney Andre Regard, who represents the Kentucky students in all eight suits filed in Franklin Circuit Court.

“These universities shouldn’t be any different. And I don’t think we should have any sympathy for them,” Regard said in an interview on Tuesday. “They paid themselves. They had no problem in paying themselves and putting the entire economic burden on the students.”

The lead suit is against the University of Kentucky, claiming breach of contract and unjust enrichment. The lead plaintiff in the case is Regard’s son, a computer science major at UK.

Regard has asked for class-action status so his suits could cover all affected students, not just the 27 currently signed on as plaintiffs, but that question has not yet been decided.

All of the universities are fighting the refund claims.

In the UK case, school officials say they provided the best possible experience for students while trying to keep them safe from the COVID-19 pandemic.

UK made classes available online and awarded credits at the end of the semester, said UK spokesman Jay Blanton. While not every fee-paid campus program could be offered virtually once buildings closed, some were, like mental health counseling, Blanton said.

“I would also add that online education has been a part of the institution’s portfolio and course offerings for a number of years, along with mixed modality approaches, such as hybrid learning,” Blanton said.

“That’s no different from other institutions as well,” he said. “We’ve all recognized the growing importance and use of technology to assist learning among students, who are digital natives.”

Separate from the mandatory fees, UK agreed to refund $14.5 million in housing and dining fees to students who were living in dorms and who had dining hall meal plans, to compensate them for lost services for the rest of the semester, Blanton added.

Deal or no deal?

In legal filings, each of the schools argues that it should be protected from the lawsuits by sovereign immunity — a liability shield that generally covers the state and its related entities, including state universities.

However, in Kentucky, sovereign immunity doesn’t cover what’s known as “breach of contract” — when the state allegedly violates the terms of a business deal with someone — and Regard says that’s exactly what the universities did after pocketing the tuition and mandatory fees from students.

To enroll for the spring 2020 semester, the students had to sign a university contract requiring them to pay tuition and fees to the universities, and that contract and other university materials made clear the “in-person” educational experience they expected to get, Regard said.

What the universities provided instead, in response to COVID, was a shabby replacement, Regard said. Students who paid for personal interaction with professors and hands-on laboratory research were sent to websites for the rest of the academic year, he said.

“Universities were wholly incapable of pivoting,” he said. “Not that I think the pivot would have excluded liability for them, but they were wholly unqualified and unprepared to make that pivot. They did not provide adequate instruction when they did it.”

If these Kentucky students wanted to attend an online college, there were plenty of existing options on the Web, most of them much cheaper than UK, Regard said.

In their legal responses, the universities say their students did not have a “written contract” guaranteeing them an on-campus, in-person educational experience in exchange for their money. What the plaintiffs are calling a contract is only a collection of documents, such as students’ statement of financial obligations, university bulletins and class syllabi, that offer certain descriptions but aren’t the same as a signed business deal, the schools say.

Get what you pay for

To the dismay of the universities, Franklin Circuit Judge Phillip Shepherd has agreed with Regard on a key point: He ruled last December that a payment-for-services contract did exist between the students and the schools, poking a hole in their sovereign immunity shield.

However, ruling in the lead suit against UK, Shepherd split on whether a refund case credibly could be made.

Shepherd granted UK’s motion to dismiss the refund claim for $160 million in tuition, writing that the students did receive classes and credits. But he denied UK’s motion to dismiss the refund claim for $20 million in mandatory fees, writing that UK did not provide many of the on-campus services the fees were supposed to provide.

“Whether plaintiffs will ultimately prevail on their breach of contract claim is yet to be seen,” the judge wrote. “But, in reviewing the present factual allegations in a light most favorable to plaintiffs, as is required when evaluating a motion to dismiss, plaintiffs have presented a sufficient claim as to their mandatory fees.”

UK appealed Shepherd’s ruling to the Kentucky Court of Appeals, which is in the process of scheduling arguments in the case.

At a hearing on Monday, Shepherd said he’s essentially putting the claims against the other state universities on hold until the appellate courts can decide the sovereign immunity issue for UK. The other cases were filed in May.

The other defendants are the University of Louisville, Eastern Kentucky University, Western Kentucky University, Northern Kentucky University, Kentucky State University, Morehead State University and Murray State University.

This litigation likely will end up before the state Supreme Court and take up to two years to resolve, Regard said. But it’s an important subject, he added. Students and their parents pay tens of thousands of dollars to universities in exchange for an education, and as consumers, they have contract rights that should be protected, he said.

“I think people have realized that the sophisticated legal departments at these universities have done everything they can do to avoid any contracts but still have entered them because, at the end of the day, you’re still going to send a document to somebody and have them sign it so that you get your end of the benefit,” Regard said.

“That’s what it comes down to,” he said. “I mean, the idea that these students did not have an agreement to receive in-person services on a campus when they agreed to pay tuition and fees to a university is absurd. Of course, that’s what they were signing up for.”

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