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Grads Can't Sue Law School For Allegedly Inflating Job Data

Tuesday, April 17, 2012
Gomez-Jimenez v. New York Law School, N.Y. Sup. Ct. N.Y. Cnty., No. 652226/11, 3/21/12

 

Key Holding: Law graduates have no viable claims against their school under New York law for allegedly luring them to enroll by giving them misleading job data.

Potential Impact: Bodes ill for the plaintiffs in similar actions against other law schools unless variations in state law make a difference.

By Joan C. Rogers

The New York Supreme Court, New York County, March 21 threw out a putative class action brought by nine graduates of New York Law School who claim the school lured them into enrolling there by providing fraudulent information about their prospects for getting jobs as lawyers (Gomez-Jimenez v. New York Law School, N.Y. Sup. Ct. N.Y. Cnty., No. 652226/11, 3/21/12).

This opinion marks the first dispositive ruling in more than a dozen actions that disappointed law graduates have filed against their schools.

In dismissing the plaintiffs' claims for deceptive trade practices, fraud, and negligent misrepresentation, Justice Melvin L. Schweitzer said the complaint itself established that plenty of information was publicly available about the realities of the legal job market. Thus, he found, the plaintiffs could not reasonably have been fooled by the school's allegedly misleading job data.

Rosy Scenario
The nine graduates suing New York Law School claimed that the school has been able to attract a large number of applicants and charge expensive tuition because it has disseminated misleading information about graduates' employment profiles.

The plaintiffs said the school's statistics make it appear that the jobs reported are all full-time permanent law positions, without making clear that many of the schools' graduates working in the legal sector hold part-time or temporary employment that pays barely enough to service the debt incurred to finance their law school education.

According to the plaintiffs, this misinformation has caused prospective students to misjudge post-graduate employment prospects and commit to earning a degree from NYLS that has less marketplace value than they reasonably expected.

The plaintiffs claimed that the misleading information was disseminated for the entering classes of 2005 through 2010. The complaint sought $200 million in damages as the difference between the alleged inflated tuition they paid and what they characterized as the true value of an NYLS degree.

Ruling on the school's motion to dismiss, Schweitzer concluded that the complaint failed to state any viable cause of action.

Not Misleading
As one cause of action, the plaintiffs invoked New York's primary consumer protection law, N.Y. Gen. Bus. Law §349, or GBL 349. To state a claim under that law, a plaintiff must allege that the defendant's conduct was consumer-oriented, that it was deceptive or misleading in a material way, and that the plaintiff suffered injury as a result.

GBL 349 provides a complete defense if the challenged practices comply with the rules and regulations of any U.S. agency, as interpreted by that agency. NYLS argued that it is entitled to that defense because it complied with federal standards for disclosing graduates' employment data.

Disagreeing, Schweitzer pointed out that although the underlying disclosure regulations were adopted by the U.S. Department of Education, that agency selected the ABA to ensure that consumer information is disclosed as required by the regulations. Because the ABA interprets the regulations and the ABA is not an official U.S. agency, the defense claimed by NYLS is not available, he ruled.

Schweitzer decided, however, that the plaintiffs did not plead, as required by New York case law interpreting GBL 349, that the school's practices are deceptive or misleading in material way “to a reasonable consumer.” He explained:

The court does not view these post-graduate employment statistics to be misleading in a material way for a reasonable consumer acting reasonably. By anyone's definition, reasonable consumers--college graduates--seriously considering law schools are a sophisticated subset of education consumers, capable of sifting through data and weighing alternatives before making a decision regarding their post-college options, such as applying for professional school. These reasonable consumers have available to them any number of sources of information to review when making their decisions.

 

Schweitzer emphasized that the plaintiffs' own complaint cited numerous sources describing the legal job market, such as reports from the National Association for Law Placement, news articles, and U.S. News & World Report rankings that provide information about the job prospects of law graduates.



“NYLS applicants … would have to be wearing blinders not to be aware of these well-established facts of life in the world of legal employment.”

Justice Melvin L. Schweitzer

It should come as no surprise to these law school consumers, Schweitzer said, that the most lucrative law jobs are associated with having attended a high-ranking law school. “It is also difficult for the court to conceive that somehow lost on these plaintiffs is the fact that a goodly number of law school graduates toil (perhaps part-time) in drudgery or have less than hugely successful careers,” he said.

“NYLS applicants, as reasonable consumers of a legal education, would have to be wearing blinders not to be aware of these well-established facts of life in the world of legal employment,” he declared.

The plaintiffs also asserted that the school's salary data were misleading because they came from a carefully chosen small sample of graduates. On that point, Schweitzer noted that the relatively small percentage of responding students was disclosed whenever the salary data included the average salary statistic. There can be no GBL 349 claim when the allegedly deceptive practice was fully disclosed, he said.

No Reasonable Reliance
Schweitzer also ruled that the plaintiffs could not have reasonably relied on NYLS's claimed misrepresentations because they had ample information from additional sources and thus had the opportunity to discover the actual job prospects for law graduates through the exercise of reasonable due diligence.

In addition, Schweitzer ruled that the plaintiffs' theory of damages was too speculative to qualify as a remedy under the law. It would be pure guesswork, he found, to try to calculate the difference between what the plaintiffs paid for their law degree and its allegedly lower intrinsic worth.

This case exemplifies the adage, Schweitzer said, that not every ailment afflicting society may be redressed by a lawsuit. But in dismissing the complaint, he lamented the dearth of opportunity for law graduates and said the legal profession owes students “the most transparent data of the state of our profession that we can possibly assemble” so that they can make informed decisions about their livelihoods.

The ABA approved a resolution in August 2011 urging law schools to provide potential students with information that accurately reflects the employment and financial realities that they will face upon graduation. See 27 Law. Man. Prof. Conduct 524.

Attorneys for the plaintiffs were Jesse Strauss, Strauss Law PLLC, New York; David Anziska, Law Offices of David Anziska, New York; and Frank Raimond, Law Offices of Frank Raimond, New York.

Michael Volpe of Venable LLP, New York, represented New York Law School.


Full text at /uploadedFiles/Content/News/Legal_and_Business/Bloomberg_Law/Legal_Reports/652226(1).pdf

The ABA/BNA Lawyers’ Manual on Professional Conduct is a joint publication of the American Bar Association Center for Professional Responsibility and Bloomberg BNA.

Copyright 2012, the American Bar Association

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