Paul L. Caron

Friday, December 21, 2012

Appellate Court Affirms Dismissal of Placement Data Lawsuit Against New York Law School

NYLS LogoA New York appellate court yesterday affirmed the trial court's dismissal of a proposed class action brought against New York Law School by nine alumni who claimed that the school misrepresented its placement data. Gomez-Jimenez v. New York Law School, 2012 NY Slip Op 08819 (A.D. Dec. 20, 2012):

This appeal involves the propriety of the disclosures of post-graduate employment and salary data by defendant New York Law School to prospective students during the period August 11, 2005 to the present. Plaintiffs allege that the disclosures cause them to enroll in school to obtain, at a very high price, a law degree that proved less valuable in the market-place than they were led to expect. We hold that defendant's disclosures, though unquestionably incomplete, were not false or misleading. We thus affirm the dismissal of the complaint. ...

Here, the challenged practice was consumer-oriented insofar as it was part and parcel of defendant's efforts to sell its services as a law school to prospective students. Nevertheless, although there is no question that the type of employment information published by defendant (and other law schools) during the relevant period likely left some consumers with an incomplete, if not false, impression of the schools' job placement success, [the] Supreme Court correctly held that this statistical gamesmanship, which the ABA has since repudiated in its revised disclosure guidelines, does not give rise to a cognizable claim under GBL 349. First, with respect to the employment data, defendant made no express representations as to whether the work was full-time or part-time. Second, with respect to the salary data, defendant disclosed that the representations were based on small samples of self-reporting graduates. While we are troubled by the unquestionably less than candid and incomplete nature of defendant's disclosures, a party does not violate GBL 349 by simply publishing truthful information and allowing consumers to make their own assumptions about the nature of the information. Accordingly, we find that defendant's disclosures were not materially deceptive or misleading. ... 

We are not unsympathetic to plaintiffs' concerns. We recognize that students may be susceptible to misrepresentations by law school. As such, "[t]his Court does not necessarily agree [with Supreme Court] that [all] college graduates are particularly sophisticated in making career or business decisions" (MacDonald, 2012 WL 2994107, at *10). As a result, they sometimes make decisions to yoke themselves and their spouses and/or their children to a crushing burden because the schools have made misleading representations that give the impression that a full time job is easily obtainable when in fact it is not.

Given this reality, it is important to remember that the practice of law is a noble profession that takes pride in its high ethical standards. Indeed, in order to join and continue to enjoy the privilege of being an active member of the legal profession, every prospective and active member of the profession is called upon to demonstrate candor and honesty. This requirement is not a trivial one. For the profession to continue to ensure that its members remain candid and honest public servants, all segments of the profession must work in concert to instill the importance of those values. "In the last analysis, the law is what the lawyers are. And the law and the lawyers are what the law schools make them." Defendant and its peers owe prospective students more than just barebones compliance with their legal obligations. Defendant and its peers are educational not-for-profit institutions. They should be dedicated to advancing the public welfare. In that vein, defendant and its peers have at least an ethical obligation of absolute candor to their prospective students.

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The appellate court is drawing a fine line there: the law schools were deceptive enough to warrant a public scolding for their lack of candor, but were not deceptive within the meaning of the statute.

Posted by: John Steele | Dec 22, 2012 7:59:05 AM

"defendant and its peers have at least an ethical obligation of absolute candor to their prospective students."

This sounds like the Court is pointing the plaintiffs toward an alternative cause of action - violation of professional responsibility regulations.

Was this cause of action in the original pleadings? My guess is that it was not.

Something for plaintiffs (and scum-sucking defendants) to think about.

Here's some more - there are *many* alternative causes of action (beyond the various species of fraud) that could at least theoretically be brought against the schools (and their shabby, shabby behavior).

Here are some bare bones alternative causes of action off the top of my head (without getting into required elements, specific likelihood of prevailing, etc.).

I wonder how many of these have actually been attempted yet, in the various cases:

1) Common law fraud

2) Federal wire/mail fraud

3) Honest services fraud on the part of a governmental entity (public law schools) (law still viable?)

4) Qui tam actions for fraud against federal/state governments (guaranteed student loans)

5) Negligent misrepresentation (hello, ABA and USN&WR)

6) Breach of fiduciary duty (remember all that financial info you had to disclose to your price discriminating law school?)

7) Statutory violation of tax laws concerning "nonprofit" status of schools and endowments

8) Writ of mandamus executed against public law schools to perform complete and accurate disclosure of *all* relevant placement information in their possession.

9) Quo warranto writ executed against public law schools for unlawful execution of powers (public purpose of misleading applicants?)

10) Violation of various Professional Responsibility obligations

11) Federal and State Deceptive Trade Practices

12) Securities law violations (false/incomplete representations when packaging student loans into securities for public sale).

Now, litigation is a long and tortured road - even fleshing out the required elements for each of the above causes of action (and there are multiple ones for every potentially affected party) will take time and care.

But an open source project to do so can focus the rage and betrayal of tens of thousands of deceived and highly motivated (read, terminally pissed off)law grads.

And in doing so, can make a lot of the necessary legal groundwork *freely* available to potential litigants and their small, outgunned plaintiff firms.

Posted by: cas127 | Dec 22, 2012 12:21:02 PM

Have a group of exclusively minority graduates bring same lawsuit and watch different outcome.It wouldn't even get to court. New York Law School would settle out of court and give a thousand apologies.

Posted by: zefal | Dec 22, 2012 2:09:24 PM