A number of students sued Southern Methodist University (“SMU”) for refusing to refund them tuition and fees paid for the Spring 2020 semester after it switched to remote instruction on account of the COVID-19 pandemic.
Like many other students in the USA, they alleged that SMU had promised to provide students on-campus services as unequivocally resulting from the SMU’s website, marketing and orientation materials, admission application, acceptance letter, registration papers and other documents. In the students’ view, these materials conveyed that in person educational opportunities were intrinsic aspects of the “educational services” the university had promised to provide them under the Student Agreement they had signed upon enrolling. The SMU replied that the Student Agreement did not contain an express promise for on-campus education and thus plaintiffs had failed to allege an actionable contract; it also claimed that students’ claims were barred by the Texas’ Pandemic Liability Protection Act ("PLPA"), a statute passed by the Texas Legislature under which “an educational institution is not liable for damages or equitable monetary relief arising from a cancellation or modification of a course, program, or activity of the institution if the cancellation or modification arose during a pandemic emergency and was caused, in whole or in part, by the emergency”. In this latter respect, while plaintiffs acknowledged that the PLPA barred their claims, they argued that it was unconstitutionally retroactive under the Texas Constitution.
The district court upheld the defendant’s exceptions and dismissed Plaintiff’s complaint stating that, on the one hand, they had not alleged a specific contractual promise that SMU violated, on the other hand, the PLPA was constitutional and barred their claims.
However, by judgment of 20 July 2023, the Fifth Circuit Court reversed that decision in light of King v. Baylor University (see the relevant story published on 12 September 2022), which considered that the contractual term “educational services” contained in the Financial Responsibility Agreement ("FRA") signed by the parties of that case was ambiguous and required the district court to consider whether the university’s or the plaintiff’s interpretation of "educational services" prevailed and, if the term continued to be latently ambiguous, to take on further proceedings to explore its meaning. In the Court’s view, the same considerations applied to the term “educational services” contained in the Student Agreement signed by SMU’s students. Furthermore, the Court held that the district court’s judgment had left unsettled the following question of state constitutional law which it decided to certify to the Texas Supreme Court: Does the application of the Pandemic Liability Protection Act to Plaintiff’s breach-of-contract claim violate the retroactivity clause in article I, section 16 of the Texas Constitution?
Reference: Hogan v. S. Methodist Univ., Fifth Circuit Court, 20 July 23.