On 23 August 2022, the Court of Appeals for the Fifth Circuit partly reversed a District Court ruling and restored the lawsuit filed by a student at Baylor University seeking reimbursement of tuition and fees paid for the Spring 2020 semester.

On account of the outbreak of the COVID-19 pandemic, the university moved all on-campus classes online and either significantly limited or suspended all in-campus activities. Like many other students in the US, plaintiff alleged that Baylor University – which refused to issue any refunds with respect to both tuition and fees – breached its contractual obligations. Plaintiff alternatively sought unjust enrichment and requested refunds of student fees and prorated tuition reimbursement based on the difference between the fair market value of on-campus education and the online educational product.

While the District Court dismissed all of plaintiff’s claims, the appellate judge took a partly different view. The lower court had determined that Baylor’s promise – resulting from the Financial Responsibility Agreement ("FRA") signed by the parties – to provide "educational services" was reasonably certain and definite. But the parties radically disagreed in relation to the correct interpretation of the meaning of the contractual term "educational services": in the plaintiff’s view, it referred to an in-person experience, while in the university’s view, it referred to both online and in-person education. That being so, the Fifth Circuit Court held that the lower court had failed to adequately consider whether the term was ambiguous. Accordingly, it remanded the case asking the District Court to consider whether the university’s or the plaintiff’s interpretation of "educational services" prevails and, if the term is latently ambiguous, to take on further proceedings to explore its meaning.

However, the appellate judge held that the lower court did not err by dismissing plaintiff’s implied contract claim. This finding differs from that contained in decisions from other jurisdictions in similar cases involving students seeking tuition refunds from universities in the wake of COVID-19 shutdowns which found implied contracts between students and universities (in this respect, see the news post published on 17 March 2022). In the Court’s view, such cases could not be relied on by the plaintiff since, here, plaintiff’s and defendant’s relationship with respect to educational services were regulated by the FRA, which is an express contract. If a valid express contract covering the subject matter exists, there can be no recovery upon a contract implied by law, the Court said.

Reference: King v. Baylor University, Fifth Circuit Court of Appeals, case No. 21-50352, 23August 2022

Full text of the decision available at en