Introduction

The case of Omar Hernandez, individually and on behalf of all others similarly situated, Plaintiff-Appellant, v. Illinois Institute of Technology (IIT), Defendant-Appellee addresses the critical issue of contractual obligations between students and educational institutions amidst the COVID-19 pandemic. Hernandez sought a partial refund of tuition and fees for the Spring 2020 semester after IIT transitioned to online instruction and restricted campus access. This commentary delves into the court's reasoning, the precedents cited, and the broader implications of the judgment.

Summary of the Judgment

The United States Court of Appeals for the Seventh Circuit reviewed Hernandez's appeal against the dismissal of his lawsuit in the Northern District of Illinois. Hernandez claimed that IIT breached an implied contract by failing to provide the in-person instruction and campus access promised in exchange for tuition and mandatory fees. Additionally, he asserted an unjust enrichment claim, alleging that IIT retained fees without delivering the contracted services while benefiting from federal aid and cost savings.

The appellate court found merit in Hernandez's claims, aligning them with the precedent set in Gociman v. Loyola University of Chicago. The court determined that Hernandez sufficiently alleged both breach of an implied contract and unjust enrichment, leading to the reversal of the district court's dismissal and remanding the case for further proceedings.

Analysis

Precedents Cited

A pivotal precedent in this case is Gociman v. Loyola University of Chicago (41 F.4th 873, 7th Cir. 2022), where the court held that students could plausibly allege an implied contract for in-person instruction based on university materials and practices. Additionally, the court referenced STEINBERG v. CHICAGO MEDICAL SCHOOL (69 Ill.2d 320, 1977) and Bissessur v. Indiana University Board of Trustees (581 F.3d 599, 7th Cir. 2009) to support the notion that the student-university relationship possesses a contractual nature under Illinois law.

These precedents collectively establish that universities may implicitly promise in-person education through their promotional materials and operational practices, thereby creating enforceable obligations even in the absence of explicit contractual language.

Legal Reasoning

The court employed a de novo standard for reviewing the dismissal, meaning it examined the case anew without deference to the district court’s judgment. Under Illinois law, Hernandez needed to demonstrate the existence of a valid contract, substantial performance, breach, and resulting damages for a breach of contract claim, or alternatively, unjust enrichment.

The appellate court found that Hernandez adequately alleged an implied contract based on IIT’s consistent portrayal of in-person education in its catalogs, websites, and fee structures. Unlike the disconnected claims in educational malpractice—which Illinois does not recognize—Hernandez’s allegations centered on the failure to deliver the specific in-person services for which he was financially obligated.

Regarding unjust enrichment, the court noted that Hernandez correctly pled this claim in the alternative to circumvent the issue of contract enforceability. By asserting that IIT retained tuition without delivering promised services while benefiting from federal aid and cost savings, Hernandez met the threshold for alleging unjust enrichment under Illinois law.

Impact

This judgment has significant implications for higher education institutions, especially in the context of disruptions like pandemics. It underscores the potential liability of universities to uphold implied contractual obligations for in-person education, thereby encouraging clearer communication and possibly more flexible refund policies in unforeseen circumstances.

Additionally, the decision reinforces the viability of pursuing unjust enrichment claims alongside contractual claims, providing students with multiple legal avenues to seek redress when educational institutions fail to deliver promised services.

Complex Concepts Simplified

Implied Contract

An implied contract is an agreement inferred from the actions, behavior, or circumstances of the parties involved, rather than from explicit written or spoken terms. In this case, the court inferred an implied contract based on IIT’s consistent promotion of in-person education.

Unjust Enrichment

Unjust enrichment occurs when one party benefits at the expense of another in a manner deemed unjust by law. Hernandez claimed that IIT retained his tuition fees without providing the in-person education promised, thereby unjustly benefiting from his payments.

Class Action Fairness Act

The Class Action Fairness Act (28 U.S.C. § 1332(d)) allows federal courts to hear certain class action lawsuits. Hernandez utilized this statute, arguing that his case met the diversity and class size requirements to be heard in federal court despite both parties being Illinois citizens.