Throughout the COVID-19 pandemic, institutions of higher learning have found themselves facing a host of challenges. Some of them are novel, while others have become more pronounced as a result of the pandemic. In this interview, Phil Stein, the head of Bilzin Sumberg’s Litigation Group, and Brianna Sainte, an attorney in Bilzin Sumberg’s Litigation Group, discuss some of the important issues faced by colleges and universities, including the proliferation of tuition refund cases brought on by the pandemic and the broader issue of data privacy and security in light of the rise of remote learning and the steady increase in hacking attempts and ransomware incidents.
Transcript: SAINTE: Hi everyone, my name is Brianna Sainte, and I'm an attorney in Bilzin Sumberg's Litigation Group. I'm excited to welcome you all to a very timely discussion on the unprecedented changes that we're seeing currently in higher education, mostly brought on by the COVID-19 pandemic, but also by longer term structural trends. I have the pleasure of speaking with Phil Stein, the head of Bilzin Sumberg's Litigation Group, also known as my boss, about some of the important trends and challenges facing this rapidly growing sector of the economy.
Phil has written extensively about developments affecting colleges and universities, focusing on areas in which they may face the greatest legal exposure. Today, we'll start off with a general overview of the current state of higher education from a business and legal perspective and then focus on two of the most salient issues that colleges and universities are now facing. The first being the proliferation of tuition refund cases brought on by the pandemic and the second being the broader issue of data privacy and security, which has taken on an even greater urgency now because of the rise of the remote learning and steady increase in hacking attempts and ransom software crisis.
Phil, thank you so much for joining me. I'll start off with a question that will help orient our viewers: the COVID-19 pandemic affected a multitude of economic industries, as well as the daily lives of several million people. What can you tell the viewers about how the pandemic affected higher education from both the business and legal standpoints?
STEIN: Well, it changed their entire method of instruction, right? I mean, everything really changed from what was traditionally and almost exclusively an in-person method of learning to a much more hybrid kind of instruction, and mostly online. What flowed from that were a number of things that affected them legally.
I think, number one, you've already mentioned the fact that there was a real increase in these tuition refund class action cases. We'll talk a little bit more about those later. Hand in hand with that, colleges and universities, especially those with big time sports programs, had to cancel a lot of major events, not just sports obviously, but all sorts of events on campus, and to some extent they got hit with requests and demands, and even occasionally some threatened lawsuits, with respect to event cancellation refunds for that. Third, there were also a host of enhanced kinds of privacy issues. Again, something we'll be talking about a little more later, but with remote learning, and with company employees and professors being in a remote environment, there were bigger struggles, bigger concerns with respect to maintaining appropriate data privacy and security. The fourth thing is that with a lot of these revenue shortfalls, colleges and universities really had to deal much more extensively than they had previously with revenue shortfalls, and what flows from that is some cutbacks to their budgets, some layoffs and occasionally some legal issues associated with the layoffs- severance issues and the like.
And, as of just yesterday, June 21st, universities and colleges are really going to face a new issue, especially those that have big time sports programs. In a really interesting and unanimous opinion by the United States Supreme Court, the court determined that previously existing NCAA caps on what student athletes could earn in the way of education related perks- the cap was $5,000 in value- were unconstitutional. The Supreme Court is saying, and it's the law of the land, that those caps violate antitrust laws. And that may open the floodgates to later decisions, incremental decisions that make it even clearer that student athletes are going to have a real opportunity, not just to earn enhanced education related perks like study abroad programs or study abroad trips, but also post-graduate internships if they want other kinds of paid opportunities. In addition to that, it may be clearer, as I was saying, that these student athletes are going to be able to get endorsement deals. There's also on a parallel track in the legal system, with a lot of state legislatures and courts saying, yeah, of course student athletes should be able to profit from the use of their names, images, and likenesses, which means they could get endorsement deals.
So, there's a new wrinkle here and I think for universities, one of the things that they're going to have to deal with is a new set of compliance issues. For now, that means trying to make sure that whatever kinds of compensatory perks are being given to student athletes are tied to education in some way, shape or form.
The universities aren't just giving them carte blanche to earn money, whatever way that they want, and I think they're going to have to start thinking about how best to prepare for this other parallel strain that's going on that I mentioned of athletes increasingly being able in many, if not most, states as of July 1st to profit off the use of their name, image and likeness.
And a final thing that universities, just like everybody else, have had to deal with, except maybe more extensively than a lot of other kinds of industries is, at the early stage of the pandemic thinking through and dealing with all sorts of testing protocols that might be in place- maintaining appropriate social distancing protocols for anybody who was on campus. And then as we've moved through the pandemic into more of a vaccination phase, colleges and universities, again, like a lot of other institutions, are having to think through issues associated with whether vaccinations can be mandated for people to be on campus for students to return to campus in the fall.
In short, I guess that's a long way of saying that they've had to deal with a whole lot of issues. And it's been a difficult time for colleges and universities, even though I think most of them have come through it pretty well.
SAINTE: Okay. And so earlier we spoke a little bit about the class action tuition refunds. So what are some of the common legal arguments that you're seeing presented on each side of those class action lawsuits?
STEIN: I think the first thing to mention is that the universities have generally been successful in fending off these kinds of claims. What has been argued in these class actions or threatened class actions is that what the universities did in recruiting students was to promise them, the students say, "unparalleled access" in some cases to great professors, great facilities, classrooms, labs, libraries, the whole nine yards.
And beyond that, [access to] on-campus facilities like stadiums, arenas fields, all sorts of extracurricular activities, and programs. They're saying: we don't have that now, yet you're still charging or trying to charge us essentially the same tuition. And is that really fair? What the universities have said, again mostly successfully, in defense against those claims is number one, in our promotional materials, telling you about these resources and facilities that we have, which by the way, we really do have, we weren't misrepresenting them.
We weren't promising you -- and certainly not in any kind of binding contractual way -- that no matter what happened, you would always have in-person access to those things as opposed to online access to classes, and some of the online resources that a university has- library resources and the like- we are making those things available to you online.
To the extent that one could say there had been some sort of contract formed, which they're denying, and which courts are agreeing you know, is not the case, they're also pointing out- and I think in a very common-sensical way- what do you expect us to do when governors and top public health officials in our states are saying we can't be open? We want to make sure that we don't have college students aggregating and perhaps creating these super-spreader type phenomena that everyone's trying to avoid. So those kinds of arguments have tended to be, as I said, very successful. Just this week, a case brought against Harvard was dismissed by a federal court in Massachusetts. And that really has been the trend so far.
SAINTE: Okay. So I understand it. It makes sense. There's no contractual binding promise that you are guaranteed no matter what to have access to these facilities. But I would think also students might argue there are certain things that you are saving on.
For example, if we're no longer using these facilities, the resources it takes to run them, to have staff come and clean, those are no longer resources that you're expanding on. So what is the response in those kinds of arguments that we're seeing.
STEIN: Though most of these cases have been dismissed and therefore it's not like a whole lot of factual arguments are being made yet, I think the general response by universities is actually number one, we have these revenue shortfalls. Number two, we do actually have some increased costs as we've tried to adapt quickly to a rapidly changing environment. And we've tried to ramp up and enhance our online teaching capabilities.
We've done the things that we felt we needed to do to really enhance the cleaning that's going on and take the health measures and safety measures to ensure that people who are on campus who have to be on campus for one reason or another are safe. So in short, I think the response really is we're not saving as much money as you might think.
SAINTE: Okay. And another thing I also wanted to speak about is you spoke about earlier data privacy and this idea that now with more people being at home and remote, that we see an increase in potentials of dangers of hacking, for example. So what can you tell us a little bit about that that's going on within the higher education system? STEIN: I think universities are really beset with a whole range of privacy issues that they need to be focused on- privacy and security issues really. One has to do just with their kind of general compliance framework and it's not something that's just staying in place. It's something that is rapidly evolving in response to the facts on the ground, so to speak, as circumstances have changed and as health conditions have changed over the last year or so, so universities are having to really think through what their privacy policies should be in this rapidly changing kind of environment and to what extent they should change as we get back to more of the former normal beyond that, again, to the extent you've got a more remote workforce and more and more students attending classes remotely and accessing university resources remotely.
There are just new data security concerns because a university network might be much more secure than a professor's or a student's home network, which could more easily be compromised- that is, the professor or student's network. To the extent that there is sensitive research going on- graduate level research or whatever is going on- you also have new concerns about keeping that safe and secure to the extent professors and students or whomever are communicating remotely about very sensitive things.
They might be working on very innovative things- trade secret type issues come into play, and proprietary research needs to be protected.
You've also got a whole new set of issues on some things that we've always had to deal with, or universities have always had to focus on, related to the privacy of health information, the privacy of other kinds of personal student data.
Arguably, hackers have even more time on their hands now to try to access this kind of personal, private data and make inappropriate uses of it. So, there's a lot more that could be said, but those are just some of the big categories of things that universities are having to focus on in this new environment.
SAINTE: And that actually brings me to another point. I would have to assume liability is a huge issue too. You think about, for example, colleges that might've had written exams, and then all of a sudden they're having to outsource, like for example, to other companies, to provide platforms for students to take their exams online, what issues do you see occurring or that you might have seen occur in terms of, for example, a student gets hacked because they're on a third-party exam software, that's technically not under the school's umbrella, but it was hired by the school.
STEIN: In this respect, I think universities are facing what a lot of our private business clients have been dealing with for a long time, which is you, as a private business or as a university, can be doing just an A-plus job of maintaining robust security systems and doing everything you can to prevent against hacking and ransomware attempts and things like that. But there's vulnerability to the extent that, as you said, something's outsourced to a third party and the third party doesn't have quite as robust systems or, or has been negligent in some respect. You're absolutely right. A university again, like our private business clients, can conceivably face at least some threatened claim of liability to the extent that somebody else with whom they've been working has dropped the ball with respect to maintaining appropriate security. So, yeah, that too is just another enhanced concern for universities in this time period.
SAINTE: Phil thank you so very much for this eye-opening discussion on colleges and universities that are contending with some complicated issues, and it's been a great moment to have an experienced practitioner like you to help us understand the challenges that they face.
It'll be interesting to see how higher education will continue to adapt to them. To our audience, thank you so much for tuning in. We look forward to bringing you additional informative and timely podcasts on important issues to you, which can be found on the Bilzin Sumberg Lawcast at bilzin.com.