534 F.Supp.3d 463
E.D. Pa.2021Background
- In March 2020 Penn moved undergraduate instruction online and ordered campus residents to vacate because of COVID-19; many campus facilities were closed.
- Plaintiffs (Smith and Nedley) paid spring 2020 tuition and mandatory fees (General, Technology, Clinical) and received pro‑rated housing/dining credits but no tuition or fee refunds.
- Plaintiffs sued as classes: a Tuition Class (seeking pro‑rated tuition refunds) and a Fees Class (seeking pro‑rated refunds of mandatory fees), asserting breach of contract, unjust enrichment, and conversion.
- Plaintiffs allege Penn’s website, catalogs, handbooks and course listings promised an on‑campus, in‑person educational experience and campus services; Penn relies on the Financial Responsibility Statement, PennBook and emergency/suspension policies.
- Court framed key legal question: whether any express, written contractual promise required Penn to provide in‑person instruction or the specific services funded by fees such that breach and monetary refunds are cognizable under Pennsylvania law.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Breach claim for tuition refunds | Penn promised an on‑campus, in‑person education (via admissions materials, course listings, attendance policies), so tuition must be pro‑rated when instruction moved online | No express written promise to provide in‑person instruction; contract is formed by registration/Financial Responsibility Statement and PennBook which contemplate suspension/modification; promotional materials are not contractual | Dismissed — plaintiffs failed to identify an express, written contractual promise to provide in‑person instruction for tuition refunds |
| Breach claim for mandatory fees | Fees were described as funding specific on‑campus services (recreation, labs, clinics, tech‑enabled spaces); plaintiffs were deprived of those services | Penn says policies don’t mandate refunds and reserved rights to modify operations; but fee descriptions are part of the contract | Allowed to proceed — fee descriptions constituted specific promises and plaintiffs plausibly allege deprivation of those services |
| Unjust enrichment (alternative) | Plaintiffs may plead unjust enrichment if contract fails or as alternative remedy | Parties’ relationship is governed by an express written contract, barring unjust enrichment recovery | Dismissed — unjust enrichment unavailable because an express contract governs the relationship |
| Conversion (retention of funds) | Retaining tuition/fees that paid for undelivered services is conversion independent of breach | Claim is essentially contractual; gist of the action doctrine bars tort recovery arising from contractual duties | Dismissed — conversion barred by gist of the action (contractual nature of dispute) |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (claims must plead factual matter sufficient to state a plausible claim).
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (plausibility pleading standard).
- Swartley v. Hoffner, 734 A.2d 915 (Pa. Super. 1999) (student‑university relationship governed by written materials forming the contract).
- Cavaliere v. Duff’s Bus. Inst., 605 A.2d 397 (Pa. Super. 1992) (breach of contract requires a specific contractual undertaking).
- Gati v. Univ. of Pittsburgh, 91 A.3d 723 (Pa. Super. 2014) (limited recognition of implied contract only for degree conferral).
- Bourke v. Kazaras, 746 A.2d 642 (Pa. Super. 2000) (advertisements/promotional materials generally do not constitute contract offers).
- Bruno v. Erie Ins. Co., 106 A.3d 48 (Pa. 2014) (distinguishing contract claims from tort claims under the gist of the action doctrine).
- Erie Ins. Exch. v. Abbott Furnace Co., 972 A.2d 1232 (Pa. Super. 2009) (explaining gist of the action doctrine).
- eToll, Inc. v. Elias/Savion Adver., 811 A.2d 10 (Pa. Super. 2002) (contractual duties vs. social duties distinction).
- Khawaja v. RE/MAX Cent., 151 A.3d 626 (Pa. Super. 2016) (unjust enrichment unavailable where express contract governs).