Thursday, August 11, 2022
It has been a while since we had one of these cases to report on. Lately, it seems, the cases that are still around have some legs, or else we have reported on settlements. The story is not new. Loyola shut down its campus in March 2020 in response to the global COVID (left, in its 2020 variant) pandemic. Students sued, seeking a refund of a portion of their tuition and fees. Last month, reversing the District Court in Gociman v. Loyola University of Chicago, a 2-1 panel of the Seventh Circuit found that plaintiffs had stated a claim under Illinois law for breach of contract, and it allowed them to amend their alternative claim for unjust enrichment.
These cases turn on specific facts. Here, the most relevant facts seem to be that Loyola charged about twice as much in tuition and fees per credit for in-person education as it did for online education. After it closed its campus, Loyola refunded some, but not all, fees, and issued a partial refund for room and board. The Seventh Circuit noted that many courts in the Circuit had dismissed similar cases, but it also cited cases from other Circuits and one from the Seventh Circuit in which the claims had been allowed to proceed.
Moving to the substance, the Court rejected Loyola's argument that plaintiffs were essentially alleging educational malpractice, which is not cognizable under Illinois law. Taken as a whole, the Court found that plaintiffs had alleged an implied-in-fact contract. In exchange for tuition, plaintiffs alleged that Loyola, through its course catalogue, promised to provide in-person instruction in certain courses. The fact that the catalogue contained disclaimers was insufficient to justify dismissal. A trier of fact would have to determine whether the general disclaimer covered the pandemic. In addition, the course catalogue may have given rise to a reasonable inference of a promise to provide in-person education.
The Court also found that plaintiffs had sufficiently alleged breach of contract with respect to student development fees and technology fees. The plaintiffs' unjust enrichment claim was dismissed due to a pleading error. However, now that the breach of contract claim has been reinstated, plaintiffs may address that error in an amended pleading.
Judge St. Eve dissented from the reinstatement of plaintiffs' breach of contract claims. Her analysis hinged on a distinction in Illinois law between two types of implied contracts in the educational context. "Specific promise" implied contracts require that the student "identify the specific source of the purported implied contract and the precise promise the institution made." "Fundamental promise" implied contracts are "vanishingly rare," having been recognized only the context of matriculation and graduation. Judge St. Eve faults the majority for conflating the two categories, and she finds that plaintiffs have not adequately alleged either. Although Loyola's catalogue is filled with references to specific classroom or laboratory spaces, such language reflects only the school's "prediction or hope." Such language is unenforceable under Illinois law.
Judge St. Eve provides a compelling argument under Illinois law. The majority dismisses her distinction between specific and fundamental promises in a footnote, suggesting that the distinction was not intended to be a doctrinal instrument for sorting cases. This would be an interesting subject for a student note, and I have no idea whether the majority or dissenting opinions get Illinois law right. I can only note that, Judge St. Eve treats both categories of promises as implied promises, but her description of "specific promise" implied contracts strongly suggests that such promises must be express. Judge St. Eve might well be right about what Illinois law says, but if it says that implied promises that universities make to students must be express in order to be enforceable, the law of Illinois on this subject is an . . .