Gociman v. Loyola Univ. of Chi.

• Decision Date: 25 July 2022
• Docket Number: 21-1304
• Citation: 41 F.4th 873
• Parties: Andreea GOCIMAN, et al., Plaintiffs-Appellants, v. LOYOLA UNIVERSITY OF CHICAGO, Defendant-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

41 F.4th 873

Andreea GOCIMAN, et al., Plaintiffs-Appellants,

v.LOYOLA UNIVERSITY OF CHICAGO, Defendant-Appellee.

No. 21-1304

United States Court of Appeals, Seventh Circuit.

Argued December 7, 2021

Decided July 25, 2022

Ellen Noteware, Attorney, Berger Montague PC, Philadelphia, PA, Elizabeth Anne Fegan, Attorney, Fegan Scott LLC, Chicago, IL, for Plaintiffs-Appellants.

Monica H. Khetarpal, Kirsten A. Milton, Julia Wolf, Attorneys, Jackson Lewis P.C., Chicago, IL, for Defendant-Appellee.

Before Rovner, St. Eve, and Jackson-Akiwumi, Circuit Judges.

Jackson-Akiwumi, Circuit Judge.

Simon Pfeifer, Isabel Botello, and Kari Whalen are undergraduate students who paid tuition and fees to attend Loyola University of Chicago's on-campus program during the Spring 2020 semester. After Loyola suspended all in-person instruction, curtailed access to campus facilities, and moved all instruction online in response to the COVID-19 pandemic, the students brought a putative class action suit against Loyola for breach of contract and unjust enrichment. The students alleged that they do not challenge Loyola's wisdom in shutting down its campus, but the decision deprived them of in-person instruction and access to on-campus facilities that Loyola promised them in exchange for tuition and fees. The students sought a refund of tuition and fees for the portion of the semester that took place remotely. The district court granted Loyola's motion to dismiss for failure to state a claim, and the students appealed.

At the outset, we note that the present case is one of many around the country. During the height of the COVID-19 pandemic, several colleges and universities closed their campuses and transitioned to remote education. Many institutions declined to issue refunds after doing so. This prompted some students and parents to turn to the courts for help. Given the challenges presented by the novel pandemic, universities may have contractual defenses. But those defenses are not before this court today. Nor is the issue of damages.

In the present appeal, our task is a narrow one: we look at the students' complaint and ask whether the students pled enough to withstand dismissal for failure to state a claim. Because we conclude that the students' complaint states a claim for breach of an implied contract under Illinois law, and because the plaintiffs are entitled leave to amend to save their alternative claim for unjust enrichment, we vacate in part and remand for further proceedings.¹

I. Background

On an appeal from a ruling on a motion to dismiss, we accept all well-pled facts alleged in the complaint as true and draw all reasonable inferences in the students' favor. Crescent Plaza Hotel Owner, L.P. v. Zurich Am. Ins. Co. , 20 F.4th 303, 307 (7th Cir. 2021) (citation omitted). We also consider any documents attached and integral to the complaint as part of the students' allegations. Phillips v. Prudential Ins. Co. of Am. , 714 F.3d 1017, 1019–20 (7th Cir. 2013) (quoting Geinosky v. City of Chicago , 675 F.3d 743, 745 n.1 (7th Cir. 2012) ).

Loyola University is a private, not-for-profit university in Chicago that offers students the option to enroll in a traditional on-campus educational experience or an online program. Most of Loyola's programs are offered on-campus. Students enrolled in the traditional on-campus program have access to 80 undergraduate majors and over 140 graduate, professional, and graduate-level certificate programs across 11 colleges and schools. Ordinarily, the on-campus program takes place in-person; students have in-person instruction and access to campus facilities, events, and resources.

Loyola's catalog provides its course listings for the academic year. Relevant here, the 2019–2020 catalog indicates that several lectures, labs, or discussions will take place "[i]n person." It also specifies room requirements for each course, with many courses taking place at on-campus sites. For example, some course descriptions represent that a class will be held in the "General Classroom," "Seminar," or "Lab" located on campus.

To enroll in courses, students use an online registration portal. On the registration portal, students choose classes by subject matter, instructor, meeting time and day, campus, location, and mode of instruction. The registration portal indicates whether a course has a service-learning or other in-person requirement. After choosing classes, students must sign a disclaimer indicating that they accept financial responsibility to pay for the courses in which they enrolled.

During the Spring 2020 semester, full-time students who registered for classes in Loyola's on-campus program paid $22,065 in tuition per semester, or between $1,050–$1,838 per credit hour. Students also paid mandatory fees such as a "Student Development Fee" of $419 per semester in exchange for access to multiple on-campus programs, services, and events; a "Technology Fee" of $125 per semester which funds computer labs, software, and technology support; and a "CTA U-Pass Fee" of $155 per semester which affords students unlimited riding on Chicago buses and trains. Students also paid a variety of other mandatory fees.

By contrast, students enrolled in Loyola's online program paid $693 per credit hour for tuition, and students registered for seven or more hours paid $92 for the Student Development Fee and $78 for the Technology Fee. Online students were not required to pay a CTA U-Pass Fee.

Loyola offers only a fraction of its overall academic offerings online. The online program includes seven adult degree completion programs, 21 graduate programs, and 18 certificate programs. According to its website, "[a]n online course at Loyola University Chicago is one that requires no face-to-face meetings on campus; all course activities [are] conducted via the internet."

Loyola's Spring 2020 semester began on January 13, 2020. As usual, students enrolled in the on-campus program received in-person instruction and access to on-campus facilities. However, midway through the semester, on March 9, 2020, Illinois Governor J.B. Pritzker issued a disaster proclamation concerning the rising number of COVID-19 cases in Illinois. Two days later, the World Health Organization declared COVID-19 a global pandemic. In response, Loyola closed its residence halls and campus buildings, canceled on-campus student events, and announced that all "in-person, face-to-face classes" were suspended. By the end of March, Loyola completely closed its physical campuses and in-person resources to students and transitioned to remote instruction. Loyola issued a $183 credit to full-time students who paid the Student Development Fee and canceled this fee for the Fall 2020 semester when remote instruction continued. Loyola also provided a partial refund for room and board. But Loyola did not refund tuition or other mandatory fees such as the Technology Fee.

A putative class action followed. Simon Pfeifer, Isabel Botello, and Kari Whalen are students who paid tuition for Loyola's on-campus program during the Spring 2020 semester. They brought suit on behalf of themselves and others similarly situated against Loyola for breach of contract, or in the alternative, unjust enrichment. In their amended class action complaint,² the students allege that Loyola's transition to remote instruction breached the university's contractual obligation to provide in-person instruction and on-campus services they were promised in exchange for paying tuition and fees. They contend that this contractual promise is set out in Loyola's course catalog, registration portal, and other publications. They also contend that Loyola's online program, which is "worth less" than Loyola's on-campus program, and Loyola's pre-pandemic practice of providing in-person face-to-face instruction and on-campus services, also evince this contractual promise. The students make clear that they do not question Loyola's professional judgment in dealing with COVID-19, but they do not believe they should "bear the entirety of the costs of the pandemic." Noting that they were "dissatisfied with the education and services that they received—or, rather, did not receive," the students sought damages representing the difference in value between in-person classes and access to facilities, and the online education they received.

Loyola moved to dismiss the complaint under Rule 12(b)(6) for failure to state a claim. The district court granted the motion. The district court held that the students' claim for breach of contract failed for two reasons: one, it was barred by the educational malpractice doctrine, and two, the students failed to allege a specific contractual promise for in-person instruction. The district court found that none of the materials the students cited established a contractual obligation to provide an in-person educational experience, and it declined to infer this promise based on the difference in tuition and fees between Loyola's on-campus and online programs. The district court also dismissed the students' unjust enrichment claim because the students incorporated by reference the existence of a contract between the parties. Additionally, the district court reasoned that even if the students had not incorporated the contract allegations, the students' unjust enrichment claim failed because the breach of contract claim failed. Concluding that further amendment would be futile, the district court denied the students leave to amend, and dismissed the case with prejudice. The students timely appealed.

Since then, several district courts within this circuit have dismissed similar lawsuits brought by students at other Illinois universities. See, e.g., Oyoque v. DePaul Univ. , 520 F. Supp. 3d 1058 (N.D. Ill. 2021) ; Miller v. Lewis Univ. , 533 F. Supp. 3d 678 (N.D. Ill. 2021) ; Polley v. Northwestern Univ. , 560 F.Supp.3d 1197 (N.D. Ill. 2021) ; Delisle v. McKendree Univ. , No. 20-CV-1073, 2021 WL 4402474 (S.D. Ill. Sept. 27, 2021...