A federal appeals court has ruled that the Council on International Educational Exchange does not have to refund the costs of study abroad programs cut short by the global pandemic.
Court documents show the Portland-based nonprofit sent about 4,000 students home last spring when COVID-19 began to spread around the world. Among them was Annie Zhao, a Harvard College student from Texas who was attending the University of Amsterdam in the Netherlands when CIEE suspended the program.
Only those students who could not finish their classes virtually were considered for refunds, and Zhao challenged that policy when she sued the nonprofit last summer for breach of contract and unjust enrichment. She sought class-action status in the U.S. District Court of Maine to represent other students and interns who were similarly sent home and not refunded any of their costs. A judge dismissed the complaint in September and Zhao took the case to the 1st U.S. Circuit Court of Appeals in Boston. The panel of judges heard oral arguments on the case in April and sided with CIEE this week.
“CIEE did not breach the Participant Contract when it migrated Zhao and other participants’ coursework online but did not issue refunds for undelivered services,” their opinion says.
The lawsuit was one of dozens of legal challenges by college students trying to recoup tuition and other costs since campuses shut down last spring. In this case, the arguments focused on the wording of a contract signed by CIEE students. The lower court read the contract to mean that students are not entitled to refunds if a program is canceled after it starts, and the appeals court agreed.
Sigmund Schutz, who represented Zhao, said Wednesday that he is reviewing the opinion.
“This case was about standing up for the little guy – college students and their parents paying a large corporation for study abroad that was canceled,” he wrote in an email. “I’m grateful to Ms. Zhao for her willingness to represent all CIEE students who suffered financial loss after CIEE canceled student housing and educational programs less than half way through the program. We had hoped to obtain a fair refund for students and their families, but the result of the opinion is that CIEE gets to keep all the money paid for canceled student housing and student activities.”
Schutz also represents the Portland Press Herald in First Amendment matters.
Chad Higgins, who represented CIEE, offered only a brief response from his client.
“CIEE is pleased that the court endorsed its view of the contract and is also pleased with the decision,” Higgins said.
The original complaint said the cost of a study abroad program through CIEE ranges from $15,000 to $25,000 per semester, and about one-quarter of that fee goes toward room and board. CIEE says it sends more than 15,000 Americans to study, intern and teach abroad every year. It also arranges for more than 30,000 international exchange visitors to the United States. The organization operates in 63 sites across 42 countries.
Higgins did not answer a question about the financial impact of the pandemic on operations at CIEE. In March 2020, the nonprofit laid off more than 600 employees, including 248 who worked in the Portland office. The attorney also did not answer questions about how many employees still work for CIEE or staff its headquarters in Maine.
Inside Higher Ed reported in May that lawyers have filed more than 300 lawsuits on behalf of students and parents demanding refunds after COVID-19 forced many colleges and universities to shut down their physical campuses. They found judges have dismissed many of those complaints at an early stage, but some courts have allowed the cases to go to trial. And at least two colleges – Southern New Hampshire University and Barry University in Florida – agreed to settle lawsuits for millions of dollars.
Among the cases still pending is a lawsuit against the University of Maine System. Two students filed a lawsuit for tuition refunds after the system decided to move courses online last spring. That case moved from federal court to state court, and a clerk at the Cumberland County Superior Court said Wednesday that the judge is currently reviewing a motion to dismiss.
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