USD Settles Class Action Lawsuit for $1.4 Million: Students Get Compensation for Tuition Charges During COVID-19 Shift to Online Learning.
A California federal court recently approved a settlement in a class action lawsuit between the University of San Diego (USD) and students who sued the university for continuing to charge full tuition during the COVID-19 pandemic, even as in-person classes were canceled.
The settlement, totaling $1.4 million, will compensate students for tuition fees paid during the Spring 2020 semester when classes were transitioned to virtual learning. The court also approved over $570,000 in attorney fees and service awards for the class representatives.
The Lawsuit: Alleging Breach of Contract and Unjust Enrichment
The lawsuit arose from students' claims that USD had breached its contract by charging full tuition despite the shift from in-person classes to virtual learning due to the pandemic.
The plaintiffs argued that they were entitled to compensation for the difference in educational value provided when USD canceled in-person instruction. Originally, students filed separate class action complaints, which were consolidated into one on April 28, 2021.
The primary legal claims included breach of contract, unjust enrichment, and violations of California's Consumer Legal Remedies Act (CLRA) and Unfair Competition Law (UCL).
Court Rulings and Legal Proceedings
On March 30, 2022, the court ruled on the defendant's motion to dismiss, allowing the breach of contract claim to continue while dismissing some other claims. Following this, both parties engaged in a series of legal proceedings, including discovery disputes, class certification motions, and settlement discussions.
Ultimately, the parties reached a settlement, and in May 2024, the court granted preliminary approval of the settlement agreement.
Terms of the Settlement: $1.4 Million Settlement Fund
Under the settlement agreement, USD agreed to pay a total of $1.4 million to resolve the claims of students who enrolled in the Spring 2020 semester and paid tuition or fees.
This amount will be distributed to the class members after the deduction of attorney fees, litigation costs, and service awards for the class representatives. The attorneys’ fees are capped at $275,000, with litigation expenses reaching up to $300,000.
The class representatives will receive a $5,000 service award each, totaling $15,000 for all three representatives. The settlement administrator will receive $37,159 for managing the distribution process.
Distribution of Settlement Funds: How Students Will Be Compensated
After deductions, the remaining $766,211.75 will be distributed to the class members. It’s estimated that each student will receive about $93.46 from the settlement.
The class consists of 8,198 individuals who paid tuition or mandatory fees to USD during the Spring 2020 semester, with some exclusions, such as students who were already enrolled in online-only classes or those who withdrew from USD before March 16, 2020.
Impact of the USD Class Action Settlement
The final approval of this class action settlement marks an important victory for students who felt they were overcharged for a reduced education experience during the pandemic.
While the payout may not be substantial for each individual student, the case highlights the broader issue of tuition fairness during unforeseen disruptions like COVID-19.
Universities across the country may now be more cautious about adjusting tuition fees during crises, and other students with similar complaints might view this case as a potential precedent for their own claims.
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