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THE BLAME GAME: LAW STUDENTS SUE THEIR LAW SCHOOLS FOR DECEPTIVE EMPLOYMENT

REPORTING PRACTICES

Ogechi Achuko∗

ABSTRACT

Since the Great Recession, the legal job market has markedly declined leaving many recent law school graduates without employment and frustrated. In response, a number of graduates are blaming their law schools for providing misleading employment statistics that they claim to have detrimentally relied upon in their decision to attend law school. This Note focuses on the recent wave of class action lawsuits against several American law schools for their alleged use of deceptive employment reporting practices based on legal theories such as fraud, negligent misrepresentation, and state consumer protection law violations. This Note analyzes the viability of these legal claims and the various defenses raised by the law school defendants. In conclusion, the Note discusses how these class action lawsuits along with pressure from the media and the government have increased law school transparency and accountability.

CONTENTS

Abstract ................................................................................................. 517 I. Introduction ....................................................................................... 518 II. Law Schools’ Deceptive Employment Reporting Practices: Why and How? ................................................................................ 522

A. Battle for Rankings: A Slippery Slope ......................................... 522 B. Missing Pieces in the Puzzle: Law Schools’ Employment Reporting Practices ...................................................................... 524

III. Plaintiffs’ Legal Theories ................................................................ 528 A. Fraud-Based Legal Theories ........................................................ 528

1. Fraudulent Misrepresentation ................................................... 529 2. Fraudulent Concealment and Omission .................................... 531

B. Did the Law Schools Commit Fraud? .......................................... 536 1. Materiality ................................................................................ 536 2. Intent ......................................................................................... 537 3. Reliance .................................................................................... 538 4. Causation .................................................................................. 544

∗ J.D. Candidate, 2013, University of Virginia School of Law. I would like to express my sincere gratitude to my research advisor, Professor Alex Johnson, for his invaluable feedback and guidance. Thank you to my parents, Olisa Menakaya, and my siblings for your unwavering support during the writing process. To the members of Virginia’s Law and Public Service Program and Professor Jim Ryan, thank you for your constructive critiques. Thanks to the staff of the Virginia Journal of Social Policy and the Law for your editing assistance and encouragement.

518 Virginia Journal of Social Policy & the Law [Vol. 20:3

C. Negligent Misrepresentation ........................................................ 545 D. State Consumer Protection Law Claims ...................................... 546

IV. Law School Defenses ...................................................................... 549 A. Proceed with Caution: Law School Disclaimers ......................... 549 B. ABA Compliance Defense ........................................................... 550 C. Speculative Damages ................................................................... 552

V. Losing Case or Winning Argument? ................................................ 554 VI. Moving Forward: A Winning Case for Law School Transparency ................................................................................... 556 VII. Conclusion .................................................................................... 560

I. INTRODUCTION

Across the country, countless law students have found themselves in a tough position—no job and six-figures in debt. Since the “Great Recession,” the legal market has fewer entry-level legal jobs, leaving many law graduates desperately scrambling for a limited number of positions.1 Several unemployed and disappointed law students who thought law school was a secure route to gainful employment have begun to point blame not at themselves but at their law schools. These law school graduates are seeking redress from the courts through class action litigation.2 Not surprisingly, the plaintiffs have chosen to use the law against the schools that taught it to them.

The first class action lawsuit complaint against an American law school for deceptive employment reporting practices was filed on May 26, 2011 by Anna Alaburda against her alma mater, Thomas Jefferson Law School (“TJSL”).3 The case, Alaburda v. TJSL, has sparked a deluge

1 See generally Eli Wald, Foreword: The Great Recession and the Legal Profession, 78 FORDHAM L. REV. 2051 (2010); Adam Ross, Lawyers: The New Dead-End Profession?, THE FISCAL TIMES (June 8, 2011), http://www. thefiscaltimes.com/Articles/2011/06/08/Lawyers-The-New-Dead-End-Profession.aspx#page1 (quoting Professor William Henderson, who estimates that after the financial collapse the number of legal jobs fell by almost 134,000); U.S. BUREAU OF LABOR STATISTICS, THE RECESSION OF 2007–2009 3–9 (Feb. 2012), available at http://www.bls.gov/spotlight/2012/recession/pdf/ recession_bls_spotlight.pdf. 2 Professors, bloggers, and journalists have extensively written about this recent wave of class action litigation against law schools. See, e.g., Vivian Giang, A Bunch of Young Lawyers Are Suing Their Law Schools Because They Don't Have Jobs, BUS. INSIDER (Feb. 16, 2012, 9:14 AM), http://finance.yahoo.com/news/bunch-young-lawyers-suing-law-195616601.html; Karen Sloan, Fresh Round of Litigation Targets 12 Law Schools Over Jobs Data, NAT’L L.J. (Feb. 1, 2012), http://www.law.com/jsp/nlj/PubArticleNLJ.jsp?id=1202540950653&slreturn=1. 3 Complaint at 1–3, Alaburda v. Thomas Jefferson Sch. of Law, No. 37-2011-00091898-CU-FR-CTL, 2011 WL 2109327 (Cal. Super. Ct. May 26, 2011) [hereinafter TJSL Complaint].

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Spring 2013] The Blame Game 519

of class action lawsuits against law schools across the country. Fourteen other similar class action lawsuits have been filed by recent law school graduates against their law schools, and this number is expected to increase.4 The masterminds behind the lawsuits are David Anziska and Jesse Strauss; this lawyer duo has filed the bulk of the suits.5 In the fall of 2011, the beginning of the class action litigation wave, these two attorneys adamantly expressed that these lawsuits were “only the beginning” and boldly deemed 2012 the “year of law school litigation.”6

This wave of class action lawsuits is indeed historic. For the first time, law schools are facing a full-frontal legal attack on their employment reporting practices, which have in large part been unchallenged. The crux of the lawsuits is that the law schools engaged in a variety of manipulative practices that collectively created a misleading picture of their post-graduation employment outcomes. These practices included the presentation of incomplete and distorted data which

4 As of February 1, 2013, the fifteen law schools that have been sued are: New York Law School, Thomas M. Cooley Law School, Albany Law School of Union University, Brooklyn Law School, Maurice A. Deane School of Law at Hofstra, University Florida Coastal Law School, IIT Chicago-Kent College of Law, DePaul University College of Law, The John Marshall Law School, California Western School of Law, Southwestern Law School, Golden Gate University School of Law, University of San Francisco School of Law, and Widener University School of Law. Filed Complaints, LAW OFFICES OF DAVID ANZISKA, http://anziskalaw.com/Filed_Complaints.html (last visited Feb. 2, 2013). Miller Barondess law firm filed a lawsuit against Thomas Jefferson Law School. Don J. DeBenedictis, Judge Lets Suit Against Thomas Jefferson School of Law Proceed, MILLER BARONDESS LLP (Dec. 3, 2012), http://www.millerbarondess.com/2012/12/judge-lets-suit-against-thomas-jefferson-school-of-law-proceed/. The primary lawyers spearheading these suits, Jesse Strauss and David Anziska, have expressed plans to sue another twenty to twenty-five more law schools. Moira Herbst, Twelve Law Schools Sued by Graduates Over Misleading Employment Data, THOMSON REUTERS NEWS & INSIGHT (Feb. 1, 2012), http://next.westlaw.com (follow “News” hyperlink under “All Content” tab; then follow “Reuters” hyperlink under “Browse News” column; then follow “Reuters Legal” hyperlink; then search “Twelve Law Schools Sued by Graduates Over Misleading Employment Data”). 5 Additional attorneys and law firms have been involved in these lawsuits. Staci Zaretsky, Twelve More Law Schools Slapped with Class Action Lawsuits Over Employment Data, ABOVE THE LAW (Feb. 1, 2012, 2:53 PM), http://abovethelaw.com/2012/02/twelve-more-law-schools-slapped-with-class-action-lawsuits-over-employment-data/. 6 Tierney Plumb, 15 Law Schools Threatened With Lawsuits over Employment Data, NAT’L JURIST (Oct. 11, 2011, 11:55 AM), http://www.nationaljurist.com/content/15-law-schools-threatened-lawsuits-over-employment-data; Staci Zaretsky, Calling All Disgruntled Law School Graduates: Will You Ring in the New Year by Suing Your School?, ABOVE THE LAW (Dec. 14, 2011, 4:02 PM), http://abovethelaw.com/2011/12/calling-all-disgruntled-law-school-graduates-will-you-ring-in-the-new-year-by-suing-your-school/.

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permitted law schools to deceptively inflate their employment outcomes. Overall, these distortions have resulted in law schools around the country being accused of painting the unrealistically rosy picture that most of their graduates secured high-paying and permanent legal jobs upon graduation.7

Through a variety of widely used tactics, law schools have been able to portray an image of their employment numbers which one former law school dean described as an “elaborately constructed mirage.”8 For the past several years, even in the down economy when the legal market significantly shrunk, most American law schools, both top- and bottom-ranked schools, posted seemingly “successful” employment rates of over 90% with average salaries often surpassing $100,000.9 In reality, this promising picture painted by many law schools was far from the “actual” truth.

For a majority of these law schools, a significant portion of graduates either obtained no employment or were underemployed. For the plaintiffs and for many other law students, it was not until they enrolled in law school and were faced with the difficulties of finding a job that it became readily apparent that their law schools’ employment statistics were misleading. These plaintiffs and thousands of other law students relied on these promising statistics in their decision to enroll in law school and take on considerable debt with the hopes of getting a return on their investment in the form of a job.10

7 See Paul Campos, Served: How Law Schools Completely Misrepresent Their Job Numbers, New Republic (Apr. 25, 2011, 12:00 AM), http://www.tnr.com/article/87251/lawschool-employment-harvard-yale-georgetown?page=0,0. 8 BRIAN Z. TAMANAHA, FAILING LAW SCHOOL 145 (2012). 9 Id.; David Yellen, Advancing Transparency in Law School Employment Data: The ABA’s New Standard 509, THE BAR EXAM’R 8–9 (Dec. 2012), http://www.ncbex.org/assets/media_files/Bar-Examiner/articles/2012/810412beYellen.pdf. For data on individual schools, see generally, AMERICAN BAR ASSOCIATION SECTION OF LEGAL EDUCATION AND ADMISSIONS TO THE BAR, SECTION OF LEGAL EDUCATION EMPLOYMENT SUMMARY REPORT (2012), available at http://employmentsummary.abaquestionnaire.org/. 10 In 2011, the average education debt for law graduates at private schools was around $125,000 and $75,000 for graduates at public law schools. Debra C. Weiss, Average Debt of Private Law School Grads Is $125K; It’s Highest at These Five Schools, A.B.A. J. (Mar. 28, 2012), http://www.abajournal.com/news/article/average_debt_load_of_private_law_grads_is_125k_these_five_schools_lead_to_m/; LEXISNEXIS, STATE OF THE LEGAL INDUSTRY SURVEY 7 (2009), available at http://www.lexisnexis.com/document/State_of_the_Legal_Industry_Survey_ Findings.pdf (“One fifth (21%) of [law] students say they regret attending law school.”).

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These class action lawsuits are in essence a demand by recent law school graduates that they did not receive the “benefit of the bargain.” To be clear, these plaintiffs are not alleging that they did not receive an adequate education, a claim that may be the basis for an educational malpractice suit.11 Instead, the plaintiffs criticize not the intrinsic value of a legal education, but its economic value, primarily measured by employment prospects. These plaintiffs contend that the economic value of their law degree was deceptively inflated due to their law schools’ employment collection and reporting practices.12

As of April 2013, many of the class action lawsuits are still in the beginning phases of litigation with at least six of the cases summarily decided in favor of law schools.13 Although the plaintiffs’ quests to obtain class certification present unique challenges, the technicalities of certification will not be discussed in detail in this paper.14 This Note will

11 DAN B. DOBBS ET AL., THE LAW OF TORTS § 333 (2d ed. 2012) (explaining that educational malpractice is not recognized as a cause of action by most courts). 12 See Amended Complaint at 25–27, Gomez-Jimenez v. N.Y. Law Sch., 943 N.Y.S.2d 834 (Sup. Ct. 2012) (No. 6522262011), 2011 WL 10539114 [hereinafter NYLS Complaint]; Amended Class Action Complaint at 4, MacDonald v. Thomas M. Cooley Law Sch., 880 F. Supp. 2d 785 (W.D. Mich. 2012) (No. 11-cv-00831), 2011 WL 5857662 [hereinafter Cooley Complaint]. 13 As of April 1, 2013, judges have granted dismissals in cases against New York Law School, DePaul Law School, John Marshall Law School, Thomas M. Cooley Law School, Chicago-Kent College of Law, and Albany Law School. Other lawsuits have passed initial motions to dismiss in cases against Golden Gate University School of Law, California Western School of Law, Southwestern Law School, University of San Francisco School of Law, Widener University School of Law, and Thomas Jefferson School of Law. See Casey Sullivan, Illinois Judge Tosses Lawsuits Against DePaul University, THOMSON REUTERS NEWS & INSIGHT (Sept. 13, 2012), http://next.westlaw.com (follow “News” hyperlink under “All Content” tab; then follow “Reuters” hyperlink under “Browse News” column; then follow “Reuters Legal” hyperlink; then search “Illinois Judge Tosses Lawsuits Against DePaul University”); First Amended Class Action Complaint, Arring v. Golden Gate Univ., No. 12-517836 (Cal. Super. Ct., S.F. County July 19, 2012); Complaint, Hallock v. Univ. of S.F. Sch. of Law, No. 12-517861, (Cal. Super. Ct., S.F. County July 19, 2012); Complaint, Alaburda v. Thomas Jefferson School of Law, No. 37-2011-00091898-CU-FR-CTL (Cal. Diego Super. Ct., San Diego May 26, 2011); Joe Palazzolo, Judge Bounces Consumer-Fraud Lawsuits against Law Schools, WALL ST. J. L. BLOG (Nov. 12, 2012, 2:59 PM), http://blogs.wsj.com/law/2012/11/12/judge-bounces-two-more-consumer-fraud-lawsuits-against-law-schools/. In the New York Law School suit, the appeals court affirmed the lower court’s dismissal. Gomez-Jimenez v. N.Y. Law Sch., 956 N.Y.S.2d 54, 60 (N.Y. App. Div. 2012). 14 The four requirements for class certification in federal court are 1) numerosity, 2) commonality, 3) typicality, and 4) fair and adequate protection of the interests of the class. FED. R. CIV. P. 23. The commonality and typicality


take a prospective approach on analyzing the various legal theories and defenses raised by each of the parties. Although the lawsuits are against different laws schools, the plaintiffs have raised similar claims based on a variety of common law tort theories and state consumer protection laws grounded in fraud, misrepresentation, and unfair business practices. Part II of this Note will provide background information on the context and nature of law schools’ challenged employment-reporting practices. Part III will assess the strengths and weaknesses of the legal tort theories raised by the plaintiffs as well as their various state consumer protection law claims. Part IV will identify the defendant law schools’ defenses and potential objections to the plaintiffs’ lawsuits. Part V will evaluate the viability of these class action lawsuits. Part VI will address the policy and ethical implications of these lawsuits with a focus on the role that the legal education community, the government, the American Bar Association (“ABA”), and other non-profit organizations should play in increasing law school transparency and accountability.

II. LAW SCHOOLS’ DECEPTIVE EMPLOYMENT REPORTING PRACTICES: WHY AND HOW?

For many decades, law schools have engaged in systematic employment data collecting and reporting practices which have been criticized as being deceptive, unfair, incomplete, and possibly illegal.15 This paper will explore the combination of forces, both external and internal, that have contributed to these institution-wide practices. In addition, this paper will identify these various tactics and explain how they collectively created a misleading picture of post-graduation employment outcomes.

A. BATTLE FOR RANKINGS: A SLIPPERY SLOPE

Law schools’ alleged deceptive employment reporting practices have been primarily driven by rankings and profits—two factors that are highly interconnected.16 Within the legal education community, it is

requirements will likely present the greatest legal hurdles for the plaintiffs because the harms suffered will likely be considered too individualized and speculative. See Elizabeth Ewing, Thomas Jefferson Graduate’s Lawsuit Over Employment Stats, NAT’L JURIST (June 09, 2011, 2:45 PM), http://www.nationaljurist.com/content/thomas-jefferson-graduate%E2%80%99s-lawsuit-over-employment-stats-faces-long-odds; Brian Leiter, More on the Class Actions Against Law Schools, BRIAN LEITER’S L. SCH. REP. (Feb. 21, 2012, 6:41 AM), http://leiterlawschool.typepad.com/leiter/2012/02/more-on-the-class-actions-against-law-schools.html (predicting that class certification will be difficult in these cases because of the individualized nature of reliance). 15 See generally TAMANAHA, supra note 8, at 146-57. 16 See, e.g., William D. Henderson & Andrew P. Morriss, How the Rankings Arms Race Has Undercut Morality, NAT’L JURIST 8, Mar. 2011, available at http://www.nxtbook.com/nxtbooks/cypress/nationaljurist0311/#/8.

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commonly accepted that rankings are the most influential factor used by prospective law students to decide which law school to attend.17 For many law schools, legal employers, and the public, national school rankings have historically served as a litmus test of prestige and quality.18 Since there is a positive financial correlation between rankings and a law school’s ability to attract tuition-paying students, many law schools internalize an intense pressure to do whatever necessary to increase their rankings to avoid falling behind.19

In addition to the ABA requirement that all ABA-approved law schools annually report their employment data, the National Association of Law Placement (“NALP”) and the U.S. News & World Report (“U.S. News”) also collect and publish law schools’ employment information.20 Among the various law school rankings published each year by different organizations, the most recognized and relied-upon are published by U.S. News.21 Each year, law schools report a variety of statistical data to U.S. News, such as employment and acceptance rates. U.S. News then uses a special formula to determine rankings.22 A law school’s employment placement rate is a prominent factor in the U.S. News

17 Thirty-two percent of prospective law students in a poll indicated that a law school’s ranking is the most critical factor in their law school decision. Russell Schaffer & Carina Wong, Kaplan Test Prep Survey: Despite an Uncertain Employment Landscape, Law School Applicants Still Consider School Rankings Far More Important than Job Placement Rates When Deciding Where to Apply, KAPLAN (June 19, 2012), http://press.kaptest.com/press-releases/kaplan-test-prep-survey-despite-an-uncertainemployment-landscape-law-school-applicants-still-consider-school-rankings-far-moreimportant-than-job-placement-rates-when-deciding-where-to-apply. 18 See Russell Korobkin, In Praise of Law School Rankings: Solutions to Coordination and Collective Action Problems, 77 TEX. L. REV. 403, 410 (1998-1999) (“rankings exist to create a prestige hierarchy”). 19 Henderson & Morriss, supra note 16. 20 Prior to 2011 ABA changes to law school reporting, law schools reported their placement data for their graduates only to NALP, and then NALP created reports on the individual schools to then be submitted as part of the ABA Annual Questionnaire. AMERICAN BAR ASSOCIATION SECTION OF LEGAL EDUCATION AND ADMISSIONS TO THE BAR, STATEMENT REGARDING COUNCIL ACTION ON THE COLLECTION AND PUBLICATION OF LAW SCHOOL GRADUATE PLACEMENT DATA (Dec. 3, 2011), available at www.americanbar.org/content/ dam/aba/administrative/legal_education_and_admissions_to_the_bar/council_reports_and_resolutions/2011_council_action_re_placement_data.authcheckdam.pdf. 21 Id. 22 See generally Kyle P. McEntee & Derek M. Tokaz, Take This Job and Count It, 2 J. OF L. 309 (2012).


ranking formula, accounting for almost one-fifth of each school's overall score.23

Since employment rates are a prominent factor in rankings and are at the forefront of many prospective law students’ decision-making, law schools have every incentive to improve their employment numbers. Due to these pressures, law schools gradually have adjusted their reporting practices in order to boost their post-graduate employment numbers despite the fact that these tactics have the tendency to mislead and deceive prospective students.24

B. MISSING PIECES IN THE PUZZLE: LAW SCHOOLS’ EMPLOYMENT REPORTING PRACTICES

The two major distortions that the plaintiffs allege that the law schools’ employment data created were that 1) most of their graduates were employed in permanent legal positions and 2) most of their graduates were able to secure high-paying jobs. When many of the plaintiffs were prospective law students, a majority of the law schools they chose to attend advertised employment rates of 90% or higher, matched with high salary averages.25 These statistics led many prospective law students to harbor the belief that the legal market was relatively stable, possibly even “recession-proof,” and that the pursuit of a law degree was a worthwhile financial endeavor.

Many of the law schools’ gleaming job reports, however, were not the result of a booming legal job market but rather deliberate employment-reporting tactics. Many of the plaintiffs do not blame their law school for outright falsification of the data. Instead, their contention is that their law schools’ distorted and inflated employment data was a by-product of their schools’ actions and inactions. These distortions stemmed from a variety of practices particularly the omission of critical data, small sample sizes, and inclusion of law-school-funded jobs.26

One of the biggest flaws of many law schools’ employment data was that their data was not disaggregated into meaningful categories that

23 Under the U.S. News Rankings formula for law schools, employment rate at graduation is weighted at 4% and at 14% for employment rate nine months after graduation. Robert Morse & Sam Flanigan, Methodology: Law School Rankings, U.S. NEWS (Mar. 12, 2012), http://www.usnews.com/education/best-graduate-schools/top-law-schools/articles/2012/03/12/methodology-law-school-rankings. 24 See generally TAMANAHA, supra note 8, at 71-84. 25 Zaretsky, supra note 6. 26 David Segal, Is Law School a Losing Game?, N.Y. TIMES, Jan. 8, 2011, http://www.nytimes.com/2011/01/09/business /09law.html?pagewanted=all&_r=0.

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provided a complete and detailed account of the types of jobs obtained by graduates.27 This information gap was often filled by a misperception by prospective law students that the jobs reported were legal-related jobs. A major source of controversy over law schools’ employment reporting is that any type of job counted as employment. Prior to the 2011 and 2012 changes made to the ABA reporting requirements, a law school’s employment placement rate included part-time, temporary, and non-legal jobs without making such relevant distinctions.28 Even among schools that did make job category distinctions, some of their categorizations of jobs were deceptive. For example, if a graduate obtained a restaurant server or grocery clerk position, a school might classify the job under the “business or industry” category.29

The main argument underpinning the plaintiffs’ challenges to reported employment rates is that they were unaware that the law schools included part-time, temporary, and non-professional jobs and that these types of jobs constituted a considerable percentage of the law schools’ overall rates. Presumably, many of the plaintiffs believed that most, if not all, the law schools’ reported job placements were for professional or legal-related jobs. At a number of law schools, including those sued, a significant percentage of the jobs reported were not permanent and did not require a law degree.30 For example, it was reported that 88.2% of the Class of 2009 law school graduates were “employed” within nine months of graduation, but that number plummeted to 62.9% when part-time and non-legal jobs were excluded.31

Additionally, many law schools across the country inflated their employment numbers by creating temporary jobs for their unemployed

27 In July 2011, the ABA adopted changes to its Annual Questionnaire requiring ABA approved law schools to disaggregate employment placements into categories such as whether jobs require a law degree, professional or nonprofessional jobs, short-term or long-term positions, and school funded positions. AMERICAN BAR ASSOCIATION, ABA SECTION OF LEGAL EDUCATION AND ADMISSIONS TO THE BAR WILL COLLECT ADDITIONAL EMPLOYMENT INFORMATION FROM LAW SCHOOLS IN ITS ANNUAL QUESTIONNAIRE (July 27, 2011), available at http://www.abanow.org/wordpress/wp-content/ files_flutter/1311794682lawschool_employent_info_072711.pdf. 28 Id.; Campos, supra note 7. 29 TAMANAHA, supra note 8, at 71. 30 For the Class of 2011, NALP reported that only 60% of graduates whose employment status were known were working full-time in a job requiring bar admission. See Paul Campos, Two Out of Three 2011 Law School Graduates Did Not Get Real Legal Jobs, INSIDE L. SCH. SCAM (June 8, 2012, 4:56 AM), http://insidethelawschoolscam.blogspot.com/2012/06/two-out-of-three-2011-law-school.html. 31 NATIONAL ASSOCIATION OF LEGAL PRACTITIONERS (NALP), CLASS OF 2009 NATIONAL SUMMARY REPORT (June 2010), available at http://www.nalp.org/uploads/NatlSummaryChartClassof09.pdf.

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graduates and then counted those jobs as employment.32 Two popular ways that law schools increased their numbers were by hiring graduates to work at the law school, often in administrative or research positions, and funding legal jobs with outside employers often referred to as fellowships or bridge programs.33 Most of these employment arrangements were low paying and temporary, lasting only a few months to a year. Not surprisingly, many of these positions began around the time when employment numbers needed to be reported to U.S. News and NALP.34

Although these programs may be beneficial for students who are unable to obtain permanent employment, they provided law schools considerable leeway to artificially inflate their employment numbers by hiring those graduates who were unemployed.35 At least 68% of law schools reported that they had hired some of their graduates from the Class of 2010.36 One example of a law school that took full advantage of this tactic was Duke Law School, which boasted a 100% employment rates for the Class of 2008 and 2009 with the help of its “Bridge to Practice” Program.37 The program, like many others, financially sponsored fellowships for the graduates that were unemployed.38 These programs have been criticized as being a “thinly veiled attempt to manipulate statistics.”39 Because many law schools did not specify that they had counted jobs that they funded in their reported employment statistics, many of the plaintiffs had no reason to think that law schools regularly hired their own graduates and then counted them as “employed.”

32 See Paul Campos, ABA Releases Employment Data for Class of 2010, INSIDE L. SCH. SCAM (Apr. 18, 2012, 6:06 AM), http://insidethelawschoolscam.blogspot.com/2012/04/aba-releases-employment-data-for-class.html (listing law schools that had over ten graduates in the Class of 2010 who obtained law school funded positions); Jason M. Dolin, Deciphering Law Schools' Post-Graduate Employment Data, OHIO ST. BAR ASSN., (NOV. 2010), https://www.ohiobar.org/NewsAndPublications/ News/OSBANews/Pages/OSBANews-1385.aspx. 33 Id. 34 Morgan Cloud & George Shepherd, Law Deans in Jail 39–41 (Emory Legal Studies Research, Paper No. 12199, 2012), available at http://papers.ssrn.com/ sol3/papers.cfm?abstract_id=1990746. 35 Id. 36 Karen Sloan, Data Trove Reveals Scope of Law Schools' Hiring of Their Own Graduates, NAT’L L. J. (Apr. 16, 2012), http://www.law.com/jsp/nlj/PubArticleNLJ.jsp?id=1202549157393&Data_trove_reveals_scope_of_law_schools_hiring_of_ their_own_graduates_. 37 100% Employment: Meeting a Lofty Goal, DUKE LAW NEWS (Apr. 14, 2010), http://law.duke.edu/news/4826/. 38 Id. 39 Sara Randazzo, Law School Sued Over Employment Data: Complaint Appears To Be the First To Target Educators Over Misrepresented Data, DAILY J. (May 27, 2011), http://www.millerbarondess.com/pdf2/ BAPDJLAW.pdf.

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Another shortcoming of law schools’ employment data is that it is often based on unaudited, self-reported surveys of their students, with low response rates often ranging from 5-35%.40 Particularly, the relatively small sample sizes of many law schools’ surveys inevitably result in a presentation of employment outcomes that is not reflective of actual average graduate outcomes.41 Prior to the U.S. News’s reporting policy change in 2009, U.S. News would automatically count 25% of a law school’s student graduate population whose employment status was “unknown” as employed. Under this regime, some law schools—especially those with high unemployment rates—had an incentive to not be aggressive at increasing survey responses.42

To exacerbate this problem, there is an underlying selection bias that upwardly skews such data, especially with respect to salaries and job types. There is a tendency for “successful” law school graduates who have secured high-salary employment to complete these surveys at a higher rate than those who are unemployed or underemployed. 43 This bias is one central explanation for how a majority of law schools have been able to report average salaries upwards of six figures and high law firm job placement. For example, although a law school defendant, New York Law School, was ranked No. 135 out of 200 schools in 2009 by U.S. News, it was able to post a median private-sector salary of $160,000—the same average posted by top law schools like Harvard and Yale.44

In addition, some of the law schools were able to distort average salaries by not including the salaries of those who identified themselves as “self-employed.” For instance, Thomas Cooley Law School, a law school defendant, reported that 86 out of 586 of its employed 2010

40 TAMANAHA, supra note 8, at 146–47. 41 See Amir Efrati, Hard Case: Job Market Wanes for U.S. Lawyers Growth of Legal Sector Lags Broader Economy; Law Schools Proliferate, WALL ST. J., Sept. 24, 2007, http://online.wsj.com/article/ SB119040786780835602.html. 42 Dissecting the Rankings: The U.S. News and World Report, TOP LAW SCHS., http://www.top-law-schools.com/dissecting-the-rankings-news-world-report.html (last visited Apr. 1, 2013). In 2009, U.S. News changed its policy to only allow schools to base their employment rates solely on those graduates who have obtained jobs. See also Morse & Flanigan, supra note 23. 43 Andrew Murphy, Redeeming a Lost Generation: “The Year of Law School Litigation” and the Future of the Law School Transparency Movement, 88 IND. L. J. 773, 779–80 (2013). Another reason law schools’ average salary can be deceptive is because the average salary number does not reflect the traditionally large gaps in lawyer’s salaries particularly between the private and public sector. The salaries of recent graduates in these two main sectors are usually separated by a gap of about $100,000. 44 See David Segal, Law School Economics: Ka-Ching!, N.Y. TIMES, July 16, 2011, http://www.nytimes.com/2011/07/17/business/law-school-economics-job-market-weakens-tuition-rises.html?pagewanted=all&_r=0.


graduates were “self-employed” but the school did not include these graduates’ salaries in its averages.45 Since it is likely that recent graduates who are “self-employed” have no or substantially small incomes to report, not including their incomes presumably artificially distorts salary averages.

With many of the law schools sued reporting six-figure average salaries and exceedingly high employment rates, the plaintiffs assert that their law schools manipulatively created a misleading picture that securing a job, particularly a high-paying one, was the norm for its graduates when in reality it was the exception. These lawsuits criticize the law schools’ use of these tactics, which are now being challenged as deceptive primarily for failing to show a complete picture. Although the law schools could have likely provided more detailed information like salary ranges or percentiles rather than just averages, many chose not to do so. The courts may find that the law schools’ subtle and complex employment hiring and data collection practices deprived the plaintiffs, as prospective law students, of the ability to meaningful contextualize actual employment outcomes. The main issue presented by these suits is whether these practices, individually or collectively, amount to actionable fraud and misrepresentation.

III. PLAINTIFFS’ LEGAL THEORIES

The common law tort legal theories at the center of the plaintiffs’ lawsuits are based on fraud and misrepresentation. Their legal claims stem from the premise that their law schools marketed and disseminated employment information that contained allegedly false, deceptive, and misleading representations and omissions. This section will assess the strengths and weaknesses of these various legal theories and explore how courts have applied these theories in the plaintiffs’ cases. Since many of the elements, such as reliance and causation, are encompassed in the tort causes of action and are applicable to many of the state consumer protection claims, this Note will explore these elements in-depth.

A. FRAUD-BASED LEGAL THEORIES

All of the plaintiffs have alleged some form of intentional fraud committed by their law schools. In order to establish a prima face case for fraud, the plaintiff must prove the following four elements: (1) false representation or concealment of a material fact; (2) reasonably calculated to deceive; (3) made with the intent to deceive; and (4)

45 THOMAS M. COOLEY L. SCH., EMPLOYMENT SUMMARY FOR 2010 GRADUATES (2011), available at http://www.cooley.edu/consumerinformation/_docs/TMCLS%20Placement%20Summary-2010.pdf.


resulting in injury or detrimental reliance.46 Based on the first element of fraud, there are three primary ways in which a defendant can commit actionable fraud: misrepresentations, omissions, and concealments. Each of these variations of fraud has appeared in the plaintiffs’ complaints against the law schools. The viability of the plaintiffs’ fraud claims depends on what legal theory of fraud is alleged, and the evidence adduced to support these claims. Before exploring the elements of fraud in greater detail, this paper assesses the strengths and weakness of the three different fraud-based legal theories adduced by the plaintiffs.

1. Fraudulent Misrepresentation

There is a contestable issue in these cases about whether the law schools have engaged in actionable fraudulent misrepresentation.47 What makes this inquiry nuanced and challenging for the plaintiffs to prove is that many of the plaintiffs have not made allegations that the law schools have blatantly lied in a technical sense. As many of the complaints stand, the plaintiffs have not asserted nor provided concrete evidence that the defendants intentionally lied to them about their employment prospects or fabricated their employment numbers.48

This idea that some schools may have committed outright falsification is not an outrageous proposition in light of recent law school scandals involving fraud in other areas of reporting. In 2011, it was exposed that Villanova Law School and Illinois Law School for several years submitted false and inflated LSAT scores to the ABA and U.S. News.49 These egregious actions of lying by certain law schools may create some suspicion that other law schools have engaged in similar practices with respect to their employment statistics. For those cases that survive summary disposition, evidence of law school fabrication may surface during discovery. For example, in the TJSL lawsuit, during discovery, one of the school’s former employees admitted to officially reporting graduates as “employed” when they technically were not.50

46 See generally, 37 C.J.S. Fraud § 12 (2013). 47 See Mandarin Trading Ltd. v. Wildenstein, 16 N.Y.3d 173, 178 (2011) (defining fraudulent misrepresentation). 48 See Sarah Anjum, Comment, Students as Consumers: Finding and Applying a Workable Standard When Institutions Fail to Give the Benefit of the Bargain, 43 U. TOL. L. REV. 151, 166 (2011). 49 Karen Sloan, Law Schools’ Credibility at Issue, NAT’L L. J. (Sept. 19, 2011), http://www.law.com/jsp/nlj/ PubArticleNLJ.jsp?id=1202514708103&Law_schools_credibility_at_issue_. 50 Former Thomas Jefferson Employee Admits to Reporting Inaccurate Employment Data, NAT’L JURIST (Oct. 26, 2012, 10:46 AM), http://www.nationaljurist.com/content/former-thomas-jefferson-employee-admits-reporting-inaccurate-employment-data. See Murphy, supra note 43, at 781 (suggesting that because law schools do not independently audit their employment statistics it would be difficult to identify falsification).


Additionally, the plaintiffs in the TJSL case have filed a motion for sanctions alleging that the law school has intentionally tampered, concealed, and potentially falsified evidence during the discovery process.51 It will be interesting to observe whether similar evidence of fabrication will be revealed during litigation for cases not summarily dismissed. If law schools are caught red-handed intentionally falsifying employment data, these schools may be susceptible to fines and criminal liabilities, and the plaintiffs will have a significantly stronger legal case for fraud based on misrepresentation.

In the absence of evidence of law school fabrication, the courts that adopt a strict interpretation of fraudulent misrepresentation may be more likely to dismiss the plaintiffs’ lawsuits. For example, in Phillips v. DePaul University, the judge granted the law school’s motion to dismiss primarily on the ground that there was a lack of evidence that the school made false statements.52 The judge construed misrepresentation more narrowly by focusing on the fact that the law school never made any individualized statements to the plaintiffs about their odds of getting full-time and gainful employment and therefore did not engage in actionable misrepresentation.53

In determining whether there is fraudulent misrepresentation, however, courts need not take a narrow approach that requires a finding of outright lying or falsehoods. Fraudulent misrepresentation can also occur when the defendant engages in manipulations of data and words that may be literally true but work together to create misrepresentation.54 Although the law schools may not have “technically” lied about their data, they may still be liable under a theory of fraudulent misrepresentation. An action for fraud does not only exist when there is falsification of data, but also when the defendant makes misleading partial disclosures or discloses half-truths.55 If a court embraces this more inclusive version of fraudulent misrepresentation, the plaintiffs’ claims for fraud rest on a more solid ground. In these suits, the plaintiffs

51 See Plaintiff’s Motion for Sanctions, Alaburda v. Thomas Jefferson Sch. of Law, No. 37-2011-00091898-CU-FR-CTL (Cal. Super. Ct., San Diego Sept. 15, 2011). 52 See Phillips et al. v. DePaul University, No. 12 CH 3523 (Ill. Cir. Ct. Sept. 11, 2012) 53 Id. 54 6 MICHAEL L. ROBERTS, LITIGATING TORT CASES § 68:22 (Roxanne Barton Conlin & Gregory S. Cusimano, eds., 2012) ("a statement of a half-truth is as much a misrepresentation as if the facts were true") (citing Equitable Life Ins. Co. of Iowa v. Halsey, Stuart & Co., 312 U.S. 668 (1941)). 55 See 6 ROBERTS, supra note 54; see, e.g., Metro. Life Ins. Co. v. Ditmore, 729 F.2d 1 (1st Cir. 1984); Gen. Motors Acceptance Corp. v. Cent. Nat. Bank of Mattoon, 773 F.2d 771 (7th Cir. 1985); Tenneco Oil Co. v. Joiner, 696 F.2d 768 (10th Cir. 1982).


contend that their law schools’ use of subtle employment collection and reporting practices collectively amounted to misrepresentation. Since the alleged misrepresentation occurred primarily through the omission of critical data, which one judge suggested made the employment data “so vague and incomplete as to be meaningless,” the plaintiffs have a stronger legal argument based on fraudulent omission and concealment.56

2. Fraudulent Concealment and Omission

The plaintiffs’ legal theories of fraud based on either fraudulent concealment or omissions present unique challenges for the plaintiffs. The key legal issue surrounding these claims is whether the law schools had a duty to provide the plaintiffs with additional or clarifying employment information, which plaintiffs allege was concealed or omitted. As between fraudulent concealment or fraudulent omission, the latter generally imposes a heavier burden on the plaintiffs to show that the defendants engaged in a more active deception.

Fraudulent concealment, also known as “silent fraud,” is actionable when the defendant has a legal duty to disclose information but fails to disclose material facts causing the plaintiff to be misled or have a false impression. 57 In many instances, the legal duty arises when the plaintiff makes a specific inquiry and the defendant refuses to supply the requested information. For example, courts have found fraudulent concealment in real estate cases where the seller actively hid structural damages from the buyer and upon inquiries, falsely told the buyers that there were no significant issues with the property.58 Fraudulent concealment constitutes an active “hiding of the ball” by the alleged wrongdoer rather than unintentional or passive omissions.

In the context of the lawsuits, many of the plaintiffs contend that, as in the homebuyer context, the law schools should have done more to warn prospective students rather than taking a caveat emptor view.59 It is debatable whether law schools actively concealed critical information from prospective law students. Without evidence of scienter, the

56 MacDonald v. Thomas M. Cooley Law Sch., 880 F. Supp. 2d 785, 799 (W.D. Mich. 2012). 57 See M&D, Inc. v. W.B. McConkey, 585 N.W.2d 33, 37 (Mich. Ct. App. 1998); see also Quality Mfg., Inc. v. Mann, 2009 WL 4827068, at *10 (Mich. Ct. App. 2009); 37 AM. JUR. 2D Fraud and Deceit § 246 (2012). 58 See Heider v. Leewards Creative Crafts, Inc., N.E.2d 805, 811 (Ill. App. Ct. 1993); see also Russow v. Bobola, 277 N.E.2d 769, 772 (Ill. App. Ct. 1972). 59 See Paul Campos, Caveat Emptor and Law School Employment Numbers, INSIDE L. SCH. SCAM (Sept. 11, 2011, 10:54 AM), http://insidethelawschoolscam.blogspot.com/2011/09/caveat-emptor-and-law-school-employment.html.


plaintiffs could establish such a claim circumstantially from the fact that the law schools did not reveal some of the shortcomings of their employment data, such as small sample surveys sizes and school-funded jobs, due to self-interested reasons like increased rankings.

The crux of the plaintiffs’ claims will rest upon the assertion that it was the law schools’ smaller concealments that contributed to the larger concealment of the schools’ overall employment outcomes. Although this argument is plausible, it will likely be insufficient to sustain a cause of action for fraudulent concealment. One of the weaknesses of the plaintiffs’ fraud claims is that they did not affirmatively ask their law schools for additional information about the schools’ data and were not subsequently refused access to that data. Courts may embrace the popular aphorism, “if you don’t ask, you don’t receive,” and decide in favor of the law schools. In these cases it is mere speculation as to what the law schools would have done if the plaintiffs demanded more information before attending. Presumably, some law schools would have responded to such requests by providing more detail.

If, as seems likely, law schools did not engage in active concealment, the plaintiffs’ claims of fraud can rest on omissions as well. A defendant can be liable for fraud if his or her omission “tends to make the information provided materially misleading.”60 Also, omission-based claims can be actionable when “the business alone possesses material information that is relevant to the consumer and fails to provide this information.”61 Even if the plaintiffs never asked their law schools for more information, the plaintiffs allege that the law schools failed to provide comprehensive and complete data through a series of omissions with respect to job categories, survey sizes, and law school-funded jobs.

Out of the three legal theories of fraud, fraudulent omission presents the strongest legal theory for the plaintiffs since there is evidence that the law school defendants omitted a significant amount of critical details about their employment statistics which the courts may find to have amounted to material misrepresentation. The problem is that courts seem to be more hesitant to find fraud based on omission as compared to affirmative concealments or misrepresentations. For example, in Spafford v. Cuyahoga Community College, the court rejected a state consumer protection claim based on fraudulent omission where the school did not inform a student that the granting of a competency award did not necessarily qualify her for a state board even though it advertised

60 69 AM. JUR. 2D Securities Regulation—State § 160 (2013); see also 18A MO. PRAC.: REAL EST. L. Transactions & Disputes § 74:4 (3d ed. 2013). 61 Oswego Laborers' Local 214 Pension Fund v. Marine Midland Bank, 647 N.E.2d 741, 745 (N.Y. 1995).


that its program complied with the state board requirements.62 Although the school admitted that its award’s definition fell short of the necessary approval,63 the court ruled against the student, finding that her fraud claim could not be based solely on what the “ [the college] did not tell her.”64 Similarly, courts may give the law schools considerable leeway in what they choose to disclose in their informational material and therefore may be reluctant to find fraudulent omission.

Under both fraudulent concealment and omission, the plaintiff has the burden of showing that the defendant had a duty to disclose such information that forms the basis of the alleged fraud.65 In the context of the law school suits, the plaintiffs will likely have to show that the law schools had a duty to provide them with sufficient, accurate, and complete employment data in a manner that was not misleading. The plaintiffs have posited that the law schools had duty of disclosure and have advanced multiple theories upon which that duty arose.

In general, there are two main theories in which a duty of disclosure can arise. A duty of disclosure can arise when there is a fiduciary or legally recognized confidential relationship between the plaintiff and the defendant. Also, a duty can arise under special circumstances, whereby “the plaintiff placed trust and confidence in the defendant placing defendant in a position of influence and superiority over the plaintiff.”66 Under the first theory, it is unlikely that the plaintiffs will be able to establish that the law schools had a duty to provide more detailed employment information based on a fiduciary, confidential, or contractual relationship. Case law, from various states, strongly supports the conclusion that no fiduciary or contractual relationship existed between the law schools and the plaintiffs when they were law students or prospective applicants. As a general matter, most states do not recognize that a university has a fiduciary duty to its students.67 In the DePaul Law School and New York Law School cases, the judges rejected the plaintiffs’ arguments that a fiduciary relationship existed between the students and the schools.68 The judge in the DePaul Law

62 Spafford v. Cuyahoga Cmty. Coll., No. 84786, 2005 WL 797936 at *6–7 (Ohio Ct. App. Apr. 7, 2005). 63 Id. at *1; see also Anjum, supra note 48, at 166. 64 Spafford, 2005 WL 797936 at *4 (emphasis in original). 65 See id. at *3; see also Connick v. Suzuki Motor Co., 675 N.E.2d 584, 593 (Ill. 1997). 66 Connick, 675 N.E.2d at 593; see also Gonzalzles v. Am. Exp. Credit Corp., 733 N.E.2d 345, 353 (Ill. App. Ct. 2000). 67 See Theodore C. Stamatakos, Note, The Doctrine of In Loco Parentis, Tort Liability and the Student-College Relationship, 65 IND. L.J. 471, 479 (1990). 68 Phillips v. DePaul Univ., No. 12 CH 3523, 2012 WL 4000001, at *4 (Ill. Cir. Ct. Sept. 11, 2012) (stating that “[t]here is no Illinois authority finding that a fiduciary relationship exists between a student and an educational institution”);


School case concluded that merely describing a business relationship, “albeit dishonest, and one-sided . . . does not give rise to a fiduciary responsibility.”69

In addition, courts in these cases will likely find that no duty existed by a contractual relationship between the law schools and the plaintiffs. When the plaintiffs were prospective students looking at their law schools’ employment data, they had no contractual relationship with the school. Also, there are no assertions raised that the law schools made any express guarantees with respect to employment outcomes that could form the basis of an oral contract. Outside of an explicit contract, case law supports that an implied contractual relationship can exist between an educational institution and its students based on the tuition and education exchange.70 Even if a court found that there was an implied contract between the law schools and their students because of this exchange, the contractual relationship may not cover informational and marketing disclosures since such data does not directly relate to the essential functions of education. For instance, in the DePaul Law School case, the court rejected the proposition that the law school had a duty of disclosure based on the rationale that finding such a duty would have to be predicated on a showing “that [the] party is in the business of supplying information for the guidance of others in business transactions . . . .”71 The judge found that the law school was not engaged in a business transaction but rather in the “business of educating students” where employment reporting is only incidental to its educational purpose.72

Another source of duty raised by some plaintiffs is the Rules of Professional Conduct for lawyers, which are promulgated by each state’s bar association.73 Under these professional codes, lawyers are prohibited from engaging in certain types of misleading conduct.74 This alleged

see also Gomez-Jimenez v. N.Y. Law Sch., 956 N.Y.S.2d 54, 60 (App. Div. 2012); Austin v. Albany Law Sch. of Union Univ., 957 N.Y.S.2d 833, 844 (Sup. Ct. 2013); Moy v. Aldephi Inst. Inc., 866 F. Supp. 696, 708 (E.D.N.Y. 1994). 69 Moy, 866 F. Supp. at 708; Phillips, 2012 WL 4000001 at *4 (quoting Feigen v. Advance Capital Mgmt. Corp., 541 N.Y.S.2d 797, 798 (App. Div. 1989)). 70 See Jonathan Flagg Buchter, Note, Contract Law and the Student-University Relationship, 48 IND. L.J. 253, 256-57 (1973). 71 Phillips, 2012 WL 4000001. 72 Id.; see Fox Assocs., Inc. v. Robert Half Int’l, Inc., 777 N.E.2d 603, 607-08 (Ill. App. Ct. 2002); see also Lozosky v. State of Ill., 54 Ill. Ct. Cl. 470, 474-75 (2001) (providing student insurance information does not imply that school is in the business of supplying such information). 73 Phillips, 2012 WL 4000001 (rejecting plaintiff’s argument that the law school’s duty arose from the Illinois Rules of Professional Conduct). 74 Potentially applicable ethics rules include: MODEL RULES OF PROF’L CONDUCT R. 7.1 (2012) (“[a] lawyer shall not make a false or misleading communication about the lawyer or the lawyer's services”); MODEL RULES OF


source of duty will likely be a failing argument for the plaintiffs.75 Presumably, the conduct of the law school administrators responsible for employment reporting are not governed by these rules of ethics since some of the administrators are not lawyers and their actions may not constitute legal services. Most importantly, in many states, the relevant Rules of Professional Conduct do not legally establish any independent duties or causes of action upon which the plaintiffs can sue.76

Likewise, the plaintiffs will likely not be able to prove that a duty existed through any other statute. A statute that may provide a duty of disclosure is the Higher Education Act (“HEA”), which contains provisions requiring educational institutions to provide certain types of employment information. Under the HEA, which most law schools are subject to, institutions are required to provide for the accurate description of “the placement in employment of, and types of employment obtained by, graduates . . . .”77 In addition, the HEA requires that at an

institution that advertises job placement rates as a means of attracting students to enroll in the institution, the institution will make available to prospective students . . . (A) the most recent available data concerning employment statistics, graduation statistics, and any other information necessary to substantiate the truthfulness of the advertisements . . . .78

Despite these provisions being applicable to the law schools, the statute does not create an implied or private cause of action. According to the statutory scheme, the HEA presumably does not create a fiduciary relationship between the law schools and its current or prospective

PROF’L CONDUCT R. 4.1 (2012) (“in the course of representing a client a lawyer shall not knowingly make a false statement of material fact or law to a third person”); MODEL RULES OF PROF’L CONDUCT 8.4 (2012) (“it is professional misconduct for a lawyer to . . . engage in conduct involving dishonesty, fraud, deceit, or misrepresentation.”). 75 See Daniel S. Harawa, Note, A Numbers Game: The Ethicality of Law School Reporting Practices, 24 GEO. J. LEGAL ETHICS 607, 618-19 (2011); see also TAMANAHA, supra note 8, at 154 (noting that it is unlikely that the Model Rules do not apply to law schools or legal educators). 76 See Phillips, 2012 WL 4000001 (citing Nagy v. Beckley, 578 N.E.2d 1134, 1136 (Ill. App. Ct. 1991). 77 20 U.S.C. § 1092(a)(1)(R) (2010 & Supp. IV 2011); The Higher Education Act (HEA), 20 U.S.C. §§ 1001–1161 (2012) (sets forth the framework for student assistance in institutions of higher education). 78 34 C.F.R. 668.14(b)(10)(i) (2011).


students but rather only between the law schools and the federal government.79

The plaintiffs’ attempts to establish a duty under the second theory, special circumstances, also poses a significant challenge. Special circumstances can create a duty of disclosure when there is a significant knowledge or power differential between the two parties with the defendant possessing either special or superior knowledge over the plaintiff.80 Similarly, such a duty to disclose can likewise occur under the “special facts” doctrine whereby one party's superior knowledge of essential facts renders a transaction without disclosure inherently unfair.81 Arguably, the law schools had superior knowledge over the plaintiffs with respect to its employment data, which may form the basis of a duty of disclosure. Depending on how strictly the special circumstances or facts doctrine is applied, a court could find that a significant informational and power asymmetry existed between the plaintiffs and the law schools that would justify additional disclosure by the law schools. Courts may not find, however, that such doctrines are applicable to the plaintiffs if the plaintiffs had access to relevant information that would reduce the information asymmetry between the parties. In Austin v. Albany Law School of Union University, the court explained that the special circumstances doctrine was not applicable to the plaintiffs’ situation since “[the plaintiffs] could have ascertained the true nature of the employment statistics … through the exercise of reasonable diligence.”82 Overall, under any of these theories, the courts will likely be unwilling to find that a duty existed on the part of the law schools if there is no strong support of a legally cognizable duty or a substantial informational asymmetry between the parties that was insurmountable through the use of due diligence by the plaintiffs.

B. DID THE LAW SCHOOLS COMMIT FRAUD?

1. Materiality

Under the first element of fraud, the plaintiff must prove that the defendant’s false representation or concealment was of a material fact.83 This element essentially imposes a materiality requirement for the plaintiffs to prove. With respect to these lawsuits, courts are expected to struggle with the issue about whether the law schools engaged in

79 See generally OH. CONSUMER L. § 22:79 (2012); see also Moy v. Aldephi Inst. Inc., 866 F. Supp. 696, 708 (E.D.N.Y. 1994). 80 See, e.g., 28 N.Y. PRAC. Contract Law § 21:18 (2012). 81 Austin v. Albany Law Sch. of Union Univ., 957 N.Y.S.2d 833, 844 (App. Div. 2013) (citing Jana L. v. W. 129th St. Realty Corp., 802 N.Y.S.2d 132, 134 (App. Div. 2005). 82 Id. 83 37 C.J.S. Fraud § 37 (2013).


conduct that was materially false or misrepresented. Reasonable minds can differ as to whether the individual law schools’ conduct was misleading in a material way.84 Not every omission, fib, and lie potentially committed by the defendants will be found to be actionable. Some of the practices engaged in by the law schools, such as counting part-time and school-funded jobs as “employment,” may arguably be considered not materially misleading depending how the court construes employment. In a suit against DeVry Inc., a for-profit college, the court found that the school’s employment statistics that included externships, students’ previous jobs, and temporary jobs as “employment” were not materially false even though the court suggested that they may be misleading. Similarly, in Gomez-Jimenez v. New York Law School, theappeals court, in affirming the trial court’s dismissal, acknowledged that the law school’s disclosures were “unquestionably incomplete,” but still held that the law school’s conduct was not materially false or misleading.85 Although the law schools’ conduct reflects hints of deception, courts may likewise find that such conduct falls short of actionable fraud.

2. Intent

Under the second and third elements of fraud, the plaintiff is required to show that the defendant’s material misrepresentations were “reasonably calculated to deceive” and were “made with the intent to deceive.”86 In many of these lawsuits, there is no “smoking gun” or direct statements made by law schools that strongly demonstrate that they possessed the intent to deceive, but there is circumstantial evidence to the contrary. Although many of the law school deans vehemently denied that their schools made misrepresentations or harbored any bad intent, their actions suggest that they did not provide a complete picture of their employment rates in order to attract more students with a rosier picture of its employment outcome.87

Although direct evidence of the law school’s intent to deceive would be the most convincing, the plaintiffs can still prove intent through circumstantial evidence. In Moy v. Adelphi Institute, the court found a prima facie case of fraud based on circumstantial evidence regarding the school’s intent to deceive.88 In Moy, the college’s recruiters and

84 37 AM. JUR. 2D Fraud and Deceit § 475 (2012). 85 Gomez-Jimenez v. N.Y. Law Sch., 956 N.Y.S.2d 54, 57 (App. Div. 2012). 86 37 AM. JUR. 2D Fraud and Deceit § 475 (2012). 87 Staci Zaretsky, Trendspotting: Will Law Schools Continue to Defend Questionable Employment Data?, ABOVE THE LAW (Oct. 11, 2011, 6:06 PM), http://abovethelaw.com/2011/10/trendspotting-will-law-schools-continue-to-defend-questionable-employment-data/. 88 Moy v. Aldephi Inst. Inc., 866 F. Supp. 696, 701 (E.D.N.Y. 1994); see also Idrees v. Am. Univ., 546 F. Supp. 1342, 1349 (S.D.N.Y. 1982).


catalogue made misleading and material statements concerning federal funding, educational facilities, and job placement. Relying on circumstantial evidence, the court concluded that the defendant’s conduct “evidence[d] an intent to create a false impression concerning the education offered at its school” which would affect a reasonable person's decision on whether or not to attend.89 In these lawsuits, the courts should take into consideration well-known financial and reputational pressures on law schools to increase rankings and attract students as potential evidence to support a finding that law schools’ omissions of critical employment information were reasonably calculated to deceive.

Some courts will refrain from exploring the potential motivations of law schools to omit information and will narrowly focus on whether the law schools engaged in blatant material misrepresentation. Contrary to Moy, in a related case, Thomas v. National College of Virginia, the court found that since there was no evidence in the record to establish that National College knowingly made false representations with respect to the availability of externship sites and its accreditation, there was insufficient proof of the college’s intent to mislead the students.90 Likewise in the law school cases, without direct and compelling evidence of false representations, courts may easily find that the defendant’s intent to deceive is lacking.

3. Reliance

The fraud claims raised by the plaintiffs require that they prove that their reliance on their law schools’ misleading data was reasonable. Typically, under the reliance inquiry, there is both a subjective and an objective component. The plaintiffs must demonstrate that 1) they actually relied on the fraud or misrepresentation, and 2) that their reliance was objectively reasonable or justifiable under the circumstances.91 The plaintiffs have asserted that they relied on their law schools’ misleading employment data in their decision to attend their law schools, but the major issue being played out by the courts is whether their reliance was objectively reasonable. In determining whether there was objectively reasonable reliance, courts must look at the totality of the circumstances and determine whether an objectively reasonable person in the plaintiff’s position would have been misled by the alleged

89 Moy, 866 F.3d at 701. 90 Thomas v. Nat. Coll. of Va., 1:09CV879, 2012 WL 4506292, at *7–9 (S.D. Ohio Oct. 2, 2012). 91 See Daly v. Kochanowicz, 67 A.D.3d 78, 89 (N.Y. App. Div. Aug. 18, 2009) (citations omitted).


deceptive or fraudulent misrepresentations or omissions.92 This inquiry is not an isolated one, but a holistic factual inquiry. Courts consider factors such as age, educational attainment, and the plaintiffs’ access to information.93

One of the most important factors that judges will likely take into consideration in determining reasonableness is the educational attainment of the plaintiffs at the time they were viewing the law schools’ employment statistics. Since the plaintiffs were college-educated at the time of their reliance, courts may judge their actions from the perspective of a sophisticated and educated consumer and hence be more likely to find that their reliance was unreasonable.

Due to the fact that the plaintiffs were presumably college graduates or soon-to-be graduates at the time of viewing their law schools’ employment data, courts may conclude that their post-secondary educational attainment enabled them to closely scrutinize employment data for any shortcomings or deceptions. In the New York Law School case, Judge Melvin Schweitzer succinctly illustrated this point when he concluded that the plaintiffs were 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.”94 To the same tune, one of the ABA’s past presidents commented that these college graduates were capable of making “an independent decision and free choice” to go to law school and exclaimed, “[w]e’re not talking about kids who are making these decisions.”95

The judge in the Thomas Cooley Law School case, however, along with the appellate court in the New York Law School case, were not convinced by Judge Schweitzer’s conclusion that these plaintiffs should be held to a higher standard of reasonableness based on their presumed

92 See N.Y. GEN. BUS. LAW § 349 (McKinney); Stutman v. Chem. Bank, 95 N.Y.2d 24, 29 (2000); Lincoln Life and Annuity Co. of N.Y. v. Bernstein, No. 08-2641, 24 Misc. 3d 1211(A) (N.Y. Sup. Ct. 2009). 93 Rodi v. S. New England Sch. of Law, 532 F.3d 11, 13 (1st Cir. 2008) (finding unreasonable reliance and therefore no deception in a case involving a student allegedly relying on a letter by the dean who stated that he expected for the school to receive accreditation but the school was later denied status); Gotlin ex rel. Cnty. of Richmond v. Lederman, 483 F. App’x 583, 589 (2d Cir. May 1, 2012) (finding that defendants' marketing of cancer treatment's “success rates” was materially deceptive to a reasonable consumer in violation of state consumer protection laws). 94 Gomez-Jimenez v. N.Y. Law Sch., 943 N.Y.S.2d 834, 843 (Sup. Ct. 2012), aff'd, 956 N.Y.S.2d 54 (App. Div. 2012) (emphasis added). 95 ABA Head Has Little Sympathy for Jobless Lawyers, REUTERS (Jan. 4, 2012), http://www.reuters.com/article/2012/01/05/us-usa-legal-aba-idUSTRE80401M20120105.


status as sophisticated consumers.96 In the Albany Law School case, Judge Platkin took a middle ground by stating that the plaintiffs should be considered “reasonably well-educated (though not necessarily sophisticated) group of consumers.”97 Regardless of whether the plaintiffs were sophisticated or not, many of the law school defendants, and even courts, contend that the plaintiffs, as prospective law students, would have been cautioned about the alleged defects of the schools’ employment data if they used their common sense and outside resources.98

Another critical factor in assessing reasonableness is whether the plaintiffs had access to information that would have alerted them to the alleged fraud and misrepresentation. As in the duty of disclosure inquiry, courts are reluctant to find reasonable reliance when the plaintiff had the “means to discover the true nature of the transaction by the exercise of ordinary intelligence, and fail[ed] to make use of those means.”99 In determining if the plaintiffs had the means to discern the true nature of such employment data, courts will look into whether such omitted information alleged was in the exclusive knowledge of the defendants and whether such information was available to the plaintiffs “through ordinary means.”100

In these lawsuits, this inquiry cuts both ways since some critical information was in the exclusive realm of the law schools while other information was likely accessible through the schools directly or could be inferred from outside sources. If courts assume that the prospective law students could have reasonably asked the law schools for more detailed information about their job statistics and could have found this information directly or circumstantially through accessible external sources, the plaintiffs may lose their fraud claim on this ground.

Some courts have rejected the plaintiffs’ arguments for justifiable reliance on the basis that the plaintiffs, as prospective law students, should have done outside research about the legal market which would have alerted the plaintiffs to the fact that that the law schools’ data was

96 MacDonald v. Thomas M. Cooley Law Sch., 880 F. Supp. 2d 785, 797 (W.D. Mich. 2012); Gomez-Jimenez v. N.Y. Law Sch., 956 N.Y.S.2d 54, 60 (App. Div. 2012). 97 Austin v. Albany Law Sch. of Union Univ., 957 N.Y.S.2d 833, 840 (App. Div. 2012). 98 See TAMANAHA, supra note 8, at 74. 99 Afra v. Zamir, 905 N.Y.S.2d 77, 79 (2010) (citing N.Y.C. Sch. Constr. Auth. v. Koreb–Diresta Constr. Co., 671 N.Y.S.2d 738, 739-40 (1998)); see also Small v. Lorillard Tobacco Co., 679 N.Y.S.2d 593 (1998), aff’d, 720 N.E.2d 892 (1999); Cohen v. Cohen, 773 F. Supp. 2d 373, 385 (S.D.N.Y. 2011). 100 Clarke v. Max Advisors, LLC, 235 F. Supp. 2d 130, 142 (N.D.N.Y. 2002).


potentially skewed and incomplete.101 In the DePaul Law School case, the judge found that the plaintiffs could not ignore “publically available information on employment opportunities for lawyers.”102 Similarly, the trial judge in the New York Law School case highlighted the fact that the plaintiffs’ references to articles and online resources explaining the unemployment problem for many law students suggested that this type of information existed when the plaintiffs were prospective law students.103 The problem with this assertion, however, is that during the time the plaintiffs were prospective law students, much of the exposé material about law schools’ employment reporting practices and the declining legal market was not yet available.

The plaintiffs’ reasonable reliance assertions are undermined also by the fact that many of the plaintiffs attended low-tier schools, which typically have higher unemployment rates. Some courts have commented that a law school’s low ranking should have made the plaintiffs more skeptical about their schools’ reported high employment rates. In the New York Law School case, the trial judge suggested the plaintiffs who attended a bottom-tier school should have known that it would be difficult to secure jobs since “logic dictates that NYLS's true employment rate would be below the statistical mean of the bell curve.”104

In addition to rankings, another important factor that courts will use to adjudge reasonableness is the fluctuations in the economy. Many of the plaintiffs entered law school during or at the cusp of the Great Recession. A reasonable consumer of higher educational services should know that their chances of securing employment after graduation depend on multiple external variables, including the state of the economy. The plaintiffs can be criticized for not acting reasonably if they failed to take heed of the economic realities and warnings from available outside sources about the dismal employment realities for law school graduates. Judge Schweitzer, in dismissing the New York Law School case, notably remarked that “the alleged misstatements in NYLS' marketing materials themselves became obsolete statements as a result of the bleak prospects for legal employment as a result of the Great Recession.”105

The courts that have dismissed these suits appear to impose an assumption of risks on the plaintiffs that would negate a finding of justifiable reliance. The idea is that law students, like other educational

101 See, e.g., Gomez-Jimenez v. N.Y. Law Sch., 943 N.Y.S.2d 834 (Sup. Ct. 2012), aff'd, 956 N.Y.S.2d 54 (App. Div. 2012). 102 Phillips et al. v. DePaul Univ., No. 12 CH 3523 (Ill. Cir. Ct., Sept. 11, 2012), 2012 WL 4000001 at *5. 103 Gomez-Jimenez, 943 N.Y.S.2d at 846. 104 Id. at 844. 105 Id. at 851.


consumers, often assume the risk that they may not secure their desired employment after graduation.106 Under this similar rationale, some critics of the suits have even compared them to the popular tobacco class action litigation of the 1990s.107 In the tobacco suits, the plaintiffs claimed that smoking cigarettes caused them to suffer health problems. The companies responded by blaming the users because they knew or should have known about the harmful risks of tobacco since such consequences were widely known.108 There is a similar merit in finding that the law schools should not be blamed for the plaintiffs’ dissatisfaction with not securing jobs when there was economic instability, and it was a well-known fact that lower-ranked schools had less favorable employment prospects.

Based on the confluence of external sources, logic, rankings, and the economy, some courts have expressed that if the plaintiffs thought the numbers were too good to be true then it was their responsibility to follow up on the schools’ employment data. Failing to do so may be construed as unreasonable. Courts have taken into consideration that it would be reasonable for a prospective law student, who was willing to spend three years pursuing a law degree and pay thousands of dollars, to have exercised due diligence in assessing their law school’s employment data. If courts follow this line of reasoning, then the blame will be put on the law students for their failure to engage in due diligence and any consequences resulting from the failure rest on the law students and not on the law schools.109

Some courts may be more sympathetic to the plaintiffs’ plights. Arguably, many prospective law students were reasonable to take the law schools’ employment numbers at face value. In reality, some of the law schools’ practices were so subtly deceptive and hard to detect such that prospective students had no readily apparent reason to doubt such information. Additionally, the across-the-board schematic data reporting

106 Douglas Drushal, Comment, Consumer Protection and Higher Education—Student Suits Against Schools, 37 OHIO ST. L.J. 608, 625-26 (1976). 107 Mark Gergen, a law professor at the University of California at Berkeley, compared law school litigation to tobacco litigation of the 1990s and argued that “[p]eople had been calling (cigarettes) 'cancer sticks' for years, but tobacco companies were still held responsible for their behavior.” Moira Herbst, Lawsuits Against Law Schools Weak: Legal Ed Experts, THOMSON REUTERS NEWS & INSIGHT (Feb. 26, 2012), http://next.westlaw.com (follow “News” hyperlink under “All Content” tab; then follow “Reuters” hyperlink under “Browse News” column; then follow “Reuters Legal” hyperlink; then search “Lawsuits Against Law Schools Weak: Legal Ed Experts”). 108 Sharon Milberger et al., Tobacco Manufacturers’ Defense Against Plaintiffs’ Claims of Cancer Causation: Throwing Mud at the Wall and Hoping Some of It Will Stick, 15 TOBACCO CONTROL 17 (Supp. 4 Dec 2006), available at http://www. ncbi.nlm.nih.gov/pmc/articles/PMC2563590/pdf/iv17.pdf. 109 TAMANAHA, supra note 8, at 74.


engaged in by most law schools made it even more difficult for plaintiffs to discern that something was wrong with their individual law schools’ data. In Arring v. Golden Gate University, Judge Kahn found that within the context of the law school’s marketing to attract students to attend the law school, it was potentially reasonable for a law student to believe that employment statements pertained to jobs for which a “law school education is a requirement or preference and did not include jobs for which a law school education is irrelevant or of minimal utility.”110

A few of the judges disagree with Judge Kahn’s statement and instead harbor the sentiment that the prospective law students should have been reasonably aware that all the job placements reported were not legal jobs, especially since the law schools did not make such broad representations.111 In the DePaul, Cooley, and Albany Law School cases, judges found that it was unreasonable for the plaintiffs to assume that all positions were full-time and permanent since it is well known that some people attend law school with no desire to practice law and apply their law degrees to other professions.112 Although this may be true, this rationale undermines a piece of reality. Despite a law degree being versatile for different careers, a majority of law students go to law school to practice law and many of the part-time and low-wage jobs included as employment were likely not “alternative” career paths.

Overall, the plaintiffs’ claims for reasonable reliance have merit. Although in hindsight, the plaintiffs’ reliance on presumably incomplete data may be seen as naïve, the reality is that many recent college graduates are so bright-eyed about law school that they ignore the warning signs. Many in the public have sided with the plaintiffs and have directed blame at the law schools for providing such wholly incomplete data that made it impossible for the plaintiffs to make an informed decision. One columnist even opined that the “prospectives are far worse informed about investments than consumers of far less risky investments . . . .”113 Despite these criticisms, the courts seem likely to embrace their long-standing deference to higher education institutions

110 Arring v. Golden Gate Univ. No. CGC-12-517836, at *2 (Cal. Super. Ct., S.F. Cnty. July 19, 2012). 111 The appeals court in the New York Law School case found that there was no state consumer protection law violation, partially due to the fact that the “defendant made no express representations as to whether the work was full-time or part-time.” Gomez-Jimenez v. N.Y. Law Sch., 956 N.Y.S.2d 54, 59 (App. Div. 2012). In the Albany Law School case, the judge found that the law school’s employment rate that encompassed all jobs was not literally false based on the definition of employment in Black’s Law Dictionary. Austin v. Albany Law Sch. of Union Univ., 957 N.Y.S. 833, 840-41 (Sup. Ct. 2013). 112 See, e.g., Albany Law Sch. of Union Univ., 957 N.Y.S. at 842. 113 Kyle P. McEntee & Patrick J. Lynch, A Way Forward: Transparency at American Law Schools, 32 PACE L. REV. 1, 51 (2012).


and find that the plaintiffs’ reliance was unreasonable in light of the warning signs.

4. Causation

In showing that there was fraud, the plaintiffs must prove that their reliance on their law schools’ employment data was the proximate cause for their injuries.114 The plaintiffs’ abilities to successfully prove causation potentially poses a challenge since there are multiple factors that could have influenced their decisions to attend law school, therefore making any causal connection tenuous.115 The decisions to apply to and select a law school involve a highly individualized process that requires a candidate to weigh several factors, not just employment prospects.

In the DePaul Law School case, most of the state common law claims were dismissed on causation grounds. Even assuming that the law school’s employment numbers were deceptive, the judge found that “plaintiffs ha[d] not alleged any facts demonstrating that ‘but for’ DePaul Law School’s alleged misrepresentations, they would not have sustained damages.”116 The court’s rationale alludes to the inherent difficulty in determining the cause of plaintiffs’ claimed injuries.117 Another flaw in plaintiffs’ causation arguments is that many of the plaintiffs have made only conclusory statements of causation and have failed to specify how much weight their law schools’ employment data had on their decision to attend a particular law school.

Despite these shortfalls, some courts may find sufficient causation solely based on the fact that the plaintiffs claimed that they detrimentally relied on the law schools’ deceptive employment data, which in turn lured them into taking on considerable debt. In dismissing TJSL’s motion for summary judgment, Judge Pressman suggested that the law school’s promotion of an allegedly mislabeled product was a “but for” cause of the plaintiffs’ economic injuries.118 Furthermore, Judge Pressman proclaimed that potential students "[were] injured by enrolling in an institution that is not what it purported to be."119 If the plaintiffs convince

114 Phillips v. DePaul Univ., No. 2012-CH-3523, 2012 WL 4000001 (Ill. Cir. Ct. Sept. 11, 2012) (citing Lewis v. Lead Indus., Ass’n, 342 Ill. App. 3d 95, 104 (1st Dist. 2003)); Steitz v. Gifford, 280 N.Y. 15, 20 (1939). 115 Gomez-Jimenez v. N.Y. Law Sch., 943 N.Y.S.2d 834, 843 (Sup. Ct. 2012), aff'd, 956 N.Y.S.2d 54 (App. Div. 2012); Peach Parking Corp. v. 356 W. 40th St., LLC, 835 N.Y.S.2d 172, 173 (2007). 116 Phillips, 2012 WL 4000001 at *7. 117 Id. 118 Minute Order at 9, Alaburda v. Thomas Jefferson Sch. of Law, No. 37-2011-00091898-CU-FR-CTL (Cal. Super. Ct. May 26, 2011), available at http://www.abajournal.com/files/Minute_Order_%282%29.pdf. 119 Id.


the courts that the schools’ reported employment rates were substantial factors in their decision-making process to attend law school, then the courts will be more likely to find that the causation element is met.

C. NEGLIGENT MISREPRESENTATION

In addition to the fraud-based claims, some of the plaintiffs have raised a negligent misrepresentation cause of action. In order to prove negligent misrepresentation, the plaintiff must demonstrate “(1) the existence of a special or privity-like relationship imposing a duty on the defendant to impart correct information to the plaintiff; (2) that the information was incorrect; and (3) reasonable reliance on the information.”120

At first blush, this seems like the most viable common law cause of action, since intent is not required.121 In practice, however, such claims are readily dismissed by courts.122 As applied to educational institutions, many states find that a claim for negligent misrepresentation is not legally cognizable and that a duty does not exist between the school and its students.123 As a matter of policy, negligent misrepresentation, like educational malpractice, has been viewed as unworkable or undesirable in educational settings.124

In the DePaul and New York Law School cases, the trial judges did not find adequate facts or case law to support a finding of negligent misrepresentation.125 In dismissing the negligence claim against New

120 Gomez-Jimenez v. N.Y. Law Sch., 956 N.Y.S.2d 54 (App. Div. 2012) (citing Mandarin Trading Ltd. v. Wildenstein, 16 N.Y.3d 173, 180 (2011)); Fejedelem v. Kasco, 269 Mich. App. 499, 502 (2006) (“A claim for negligent misrepresentation requires plaintiff to prove that a party justifiably relied to his detriment on information prepared without reasonable care by one who owed the relying party a duty of care.”). 121 Anjum, supra note 48, at 164. 122 Drushal, supra note 106, at 619. 123 Id.; see also Vill. Cmty. Sch. v. Adler, 478 N.Y.S.2d 546, 548 (Civ. Ct. 1984) (holding that a claim based on negligent misrepresentation in the educational context is precluded because the duty that was claimed to be violated is owed to the general public, not to students). 124 Anjum, supra note 48, at 164 (explaining that the negligence claim in the educational setting is “an awkward fit” because a student would have to show that an institution “negligently failed to fulfill the student’s expectations.”); John G. Culhane, Reinvigorating Educational Malpractice Claims: A Representational Focus, 67 WASH. L. REV. 349, 353 (1992) (explaining that courts are not willing to apply traditional negligence doctrine to the educational setting because it will result in an “unprincipled growth of claims”). 125 Gomez-Jimenez v. N.Y. Law Sch., 943 N.Y.S.2d 834, 854 (Sup. Ct. 2012), aff'd, 956 N.Y.S.2d 54 (App. Div. 2012); Phillips v. DePaul Univ., No. 2012-CH-3523, 2012 WL 4000001, at *10 (Ill. Cir. Ct. Sept. 11, 2012).


York Law School, the trial court found that the law school did not commit negligent misrepresentation and instead faulted the plaintiffs for not discovering deficiencies in employment data through their own due diligence.126

D. STATE CONSUMER PROTECTION LAW CLAIMS

In addition to the plaintiffs’ common law claims, they have alleged that their law schools have violated state consumer protection laws prohibiting unfair and deceptive business practices, including false advertising.127 Currently, all states have adopted consumer protection laws that prohibit certain types of deceptive business practices and allow plaintiffs the right to sue businesses for such practices.128 Although the specific language of these state statutes varies, most share common requirements and defenses, some of which overlap with the fraud elements discussed above.

An example of one of the state consumer protection laws raised in the lawsuits is New York’s General Business Law §349. In order to establish a violation under this statute, the plaintiffs must prove that the defendant’s conduct was (1) consumer oriented; (2) deceptive or misleading in a material way; and (3) the plaintiff suffered actual injury as a result.129 It is important to note that even though these statutes generally target the same practices, the specific language of each state’s statutes varies. Additionally, some courts apply their state statutes more liberally in favor of consumers. Although much of the analysis of these statutes’ elements is similar to that in the fraud claims, many of these statutes tend to be more favorable overall to plaintiffs as compared to analogous tort claims.130

126 Gomez-Jimenez, 943 N.Y.S.2d at 856–57; c.f. Austin v. Albany Law Sch. of Union Univ., 957 N.Y.S.2d 833, 845 n.3 (Sup. Ct. 2013) (finding that plaintiffs could have discovered “the economic realities facing the legal profession . . . through the exercise of reasonable diligence”). 127 Some of the state consumer protection laws raised by the plaintiffs include the following: N.Y. GEN. BUS. LAW § 349 (McKinney 2013); Illinois Consumer Fraud and Deceptive Business Practices Act, 815 ILL. COMP. STAT. 505 (2007); California Consumers Legal Remedies Act, CAL. CIV. CODE §§ 1750–1784 (West 1970). 128 JONATHAN SHELDON & CAROLYN L. CARTER, UNFAIR AND DECEPTIVE ACTS AND PRACTICES 1, 967–89 (6th ed. 2004); Anjum, supra note 48, at 165 (indicating that most of the state consumer protections laws are based on the Federal Trade Commission Act, 15 U.S.C. §§ 41–58 (2013)). 129 N.Y. GEN. BUS. LAW § 349 (McKinney 1970)). See Gomez-Jimenez, 943 N.Y.S.2d at 840. 130 An additional benefit is that a number of these state statutes permit recovery for attorney’s fees and punitive damages. Anjum, supra note 48, at 165; MICHAEL M. GREENFIELD, CONSUMER LAW: A GUIDE FOR THOSE WHO


Particularly, state consumer fraud statutes’ pleading and standards of proof are generally less rigorous than those for common law torts.131 Under some state statutes, elements such as justifiable reliance, intent, and causation are relaxed or eliminated.132 For example, in the Albany Law School case, the court noted that New York’s consumer protection law did not require the plaintiffs to demonstrate reasonable reliance.133 These benefits may be particularly advantageous for the plaintiffs, since these elements will likely present significant challenges for them to prove under parallel common law torts.134

In the class action suits, questions have been raised as to whether the particular state consumer protection laws apply to higher education institutions such as law schools and cover legal education. In general, these statutes cover a wide range of entities that engage in any “business, trade, or commerce,” which would presumably include law schools.135 There are some statutes that specifically cover higher education institutions, and in many instances, courts have applied general statutes to such institutions.136 In light of recent trends of consumer protection laws targeting higher education, it is likely that a significant number of the law schools will be covered under these statutes.137

REPRESENT SELLERS, LENDERS, AND CONSUMERS 173–76 (1995); SHELDON & CARTER, supra note 128, at 144-56. 131 Anjum, supra note 48, at 165. 132 Id.; Jean Braucher, Deception, Economic Loss, and Mass-Market Customers: Consumer Protection Statutes as Persuasive Authority in the Common Law of Fraud, 48 ARIZ. L. REV. 829, 830 (2006). But see, e.g., Oliveira v. Amoco Oil Co., 201 Ill. 2d 134, 149 (2002). 133 Austin v. Albany Law Sch. of Union Univ., 957 N.Y.S.2d 833, 842 (Sup. Ct. 2013) (finding that while the statute does not impose a reasonable reliance standard, it does impose some qualifications upon a “reasonable student” standard). 134 Hacker v. Nat’l Coll. of Bus. & Tech., 927 N.E.2d 38, 44–45 (Ohio Ct. App. 2010) (finding that the student’s consumer sales act claim was viable since the school’s conduct “need not rise to the level of fraud, negligence, or breach of contract”). 135 See Goshen v. Mut. Life Ins. Co. of N.Y., 98 N.Y.2d 314, 324 (2002) (quoting Karlin v. IVF Am., 93 N.Y.2d 282, 290 (1999)) (finding that New York’s consumer protection laws apply “to virtually all economic activity”). 136 Malone v. Acad. of Ct. Reporting, 582 N.E.2d 54, 56–58 (Ohio Ct. App. 1990) (finding that a consumer fraud statute applied to a paralegal program); Anjum, supra note 48, at 165–67. 137 Anjum, supra note 48, at 165 & n.114 (listing the state statutes that have expanded their consumer protection laws to include “proprietary and some non-profit education institutions”); see, e.g., Order Overruling Demurrer to First Amended Complaint at 3, Arring v. Golden Gate Univ., No. CGC-12-517837 (Cal. Super. Ct. July 19, 2012), available at http://lawschooltransparency.com/lawsuits/Arring_v_GGU-Order-Denying-GGU-Motion-to-Dismiss.pdf (finding


Despite this trend, some of the state consumer protection laws may exclude educational services and institutions. For example, some states limit suits to those related to products for personal, family, or household purposes.138 Depending on how a court construes such language, a law school education may be exempted since it can be classified as a product for “commercial” or “business” purposes.139 In MacDonald v. Thomas M. Cooley Law School, the court held that, because the plaintiffs purchased legal education as an investment “primarily for [a] business or commercial [purpose],” they could not support a claim under the Michigan Consumer Protection Act.140 Although New York’s consumer protection law has similar language to that of Michigan’s law, the appellate court in the New York Law School case found that its state’s consumer protection law applied to law schools.141 The court explained that 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.”142 Similarly, in the three California law school suits, the courts, in dismissing the defendants’ motions for summary judgment, found that a law school education reasonably falls under the definition of “service” as covered by California’s Consumers Legal Remedies Act.143 Due to the variations in the language and courts’ application of these state statutes, the plaintiffs are likely to have varying degrees of success in asserting their state consumer protection claims.

that a law school education falls within the Consumer Legal Remedies Act’s broad category of “services”). 138 See, e.g., Consumers Legal Remedies Act, CAL. CIV. CODE § 1761(d) (West 2013) (defining a "consumer" as "an individual who seeks or acquires by purchase or lease, any goods or services for personal, family, or household purposes”); see also Michigan Consumer Protection Statute, MICH. COMP. LAWS ANN. § 445.903(1)–(2) (West 2010); Braucher, supra note 132, at 831. 139 See MacDonald v. Thomas M. Cooley Law Sch., 880 F. Supp. 2d 785, 791–92 (W.D. Mich. 2012). 140 Id. at 792. 141 Gomez-Jimenez v. N.Y. Law Sch., 956 N.Y.S.2d 54, 58–59 (App. Div. 2012) (finding that the consumer protection statute applied to law schools, but rejecting the claim because statistical “gamesmanship” did not actually give rise to a cognizable claim under § 349). 142 Id. at 58. 143 Minute Order at 3, Alaburda v. Thomas Jefferson Sch. of Law, No. 37-2011-91898-CU-FR-CTL (Cal. Super. Ct., Nov. 29, 2012); Order Overruling Demurrer to First Amended Complaint at 3, Arring v. Golden Gate Univ., No. CGC-12-517837 (Cal. Super. Ct. July 19, 2012) available at http://lawschool transparency.com/lawsuits/Arring_v_GGU-Order-Denying-GGU-Motion-to-Dismiss.pdf; Order Overruling Demurrer to First Amended Complaint at 3, Hallock v. Univ. of S.F., No. CGC-12-517861, (Cal. Super. Ct., July 19, 2012), available at http://lawschooltransparency.com/lawsuits/Hallock_v_USFL-Order-Denying-USFL-Motion-to-Dismiss.pdf.

http://lawschooltransparency.com/lawsuits/


IV. LAW SCHOOL DEFENSES

The defendant law schools have been proactive in opposing these lawsuits. Not surprisingly, the deans of many of these law schools have publicly denied any wrongdoing and have contended that such suits are meritless.144 The first line of defense that the law school defendants have is the factual defense. Many of the law school defendants have asserted that the plaintiffs’ claims of falsification and misrepresentation are not true and not grounded on adequate factual evidence. In general, the law school defendants assert that they provided sufficient consumer information and oppose the plaintiffs’ claims that they had a duty to provide additional information.145

A. PROCEED WITH CAUTION: LAW SCHOOL DISCLAIMERS

Some of the law schools in their motions to dismiss have argued that they provided cautionary disclaimers that should negate a finding of justifiable reliance and intent required for fraud. For example, a few of the law school defendants included in their marketing materials qualifying phrases such as “salaries not typical for most law school graduates,” and that salaries were “based upon salaries reported” likely in order to warn prospective students that such data may not be representative of actual employment outcomes.146 Depending on the quantity and quality of the law school’s warnings and disclaimers, courts will take this into consideration to determine whether the plaintiffs’ reliance was reasonable and whether the law schools’ data was reasonably calculated to deceive.

Essentially, if the law schools alerted the plaintiffs to the shortcomings of their employment statistics, then the law schools should not be liable for detrimental reliance. Some of the courts have sided with the law schools’ arguments. In the New York Law School case, the trial court found that the law school’s disclaimers about its salary data and sample size made its data not materially misleading and not in violation

144 See, e.g., Herbst, supra note 107 (statement of Dean of Thomas Jefferson Law School, Rudolph Hasl) (“The key is, to what extent was the applicant’s decision to attend the law school motivated by [job placement] data? . . . . My sense is it is not a significant motivating or driving force. It is probably dwarfed by so many other factors, including the applicant’s credentials and what choice [of law schools] he or she has.”). 145 See, e.g., Defendant Thomas M. Cooley Law School’s Motion to Dismiss Plaintiff’s Amended Complaint at 36-38, MacDonald v. Thomas M. Cooley Law Sch., No. 11-cv-831, (W.D. Mich. Nov. 22, 2011), available at http://ia700705.us.archive.org/3/items/gov.uscourts.miwd.67454/gov.uscourts.miwd.67454.30.0.pdf. 146 The NYLS marketing material stated the percentage of graduates that salary statistics were based on. See Gomez-Jimenez v. N.Y. Law Sch., 943 N.Y.S.2d 834, 844-45 (Sup. Ct. 2012), aff'd, 956 N.Y.S.2d 54 (App. Div. 2012).


of the state consumer protection law since it posited that there can be no finding of “deceptive business practices . . . when the allegedly deceptive practice was fully disclosed.”147 Additionally, the court found that the law school provided basic and accurate information about its employment data and, therefore, the representations did not amount to actionable fraud.148 In these class action lawsuits, if the courts are convinced that the law schools did not actively “hide the ball” from the plaintiffs and that they provided sufficient disclaimers then law schools may be able to shift the blame onto the law students and defeat liability.

B. ABA COMPLIANCE DEFENSE

All the law school defendants have raised the defense that they were in compliance with the ABA reporting standards and therefore should be shielded against legal liability.149 Since the law school defendants are ABA approved schools, they were required to comply with certain annual disclosure requirements promulgated by the ABA Section on Legal Education, which is the official accrediting agency for law schools.150 Under a number of state consumer protection laws, a defendant’s compliance with state and federal laws can act as a complete or partial defense.151

Although this compliance defense is potentially one of the law schools’ strongest defenses, there are certain weaknesses and uncertainties with the defense’s application. A technical issue that has been raised by these suits, especially with respect to the state consumer protection claims, is whether the ABA should be considered a “government agency” under the state consumer protection laws that allow a defense based on compliance with government law. The uncertainty stems from the fact that the ABA is not technically a “government agency.” The prevailing argument raised by the law schools is that since the ABA has been designated by the Department of

147 Id. 148 Id. at 852. 149 See Herbst, supra note 107. 150 AMERICAN BAR ASSOCIATION, ABA SECTION OF LEGAL EDUCATION & ADMISSIONS TO THE BAR: THE LAW SCHOOL ACCREDITATION PROCESS 3 (Oct. 2010) available at http://www.americanbar.org/content/dam/aba/publications/ misc/legal_education/2012_accreditation_brochure_web.authcheckdam.pdf (“Under Title 34, Chapter VI, § 602 of the Code of Federal Regulations, the Council and the Accreditation Committee of the ABA Section of Legal Education and Admissions to the Bar are recognized by the United States Department of Education (DOE) as the accrediting agency for programs that lead to the J.D. Degree.”). 151 See, e.g., N.Y. GEN. BUS. LAW § 349(d) (McKinney 2013); 815 ILL. COMP. STAT. 505/10b(1) (1995).


Education as the national accrediting agency for law schools, it follows that compliance with ABA standards should be a permissible defense.152

Ultimately, courts’ statutory interpretation of such compliance defenses will depend on how broadly they construe the terms “federal regulatory body” and “government body” covered by the exception. In the New York Law School case, the trial court ruled that the law school’s compliance defense did not apply since it determined that the ABA was not an official government agency but rather a private, self-regulatory organization not expressly covered by the statute.153 On the contrary, in the DePaul Law School case, the judge found that ABA was a government regulatory body under the Illinois Consumer Fraud Act based on its finding that the ABA is a proxy for the Department of Education and is a federally recognized accrediting agency.154 The court concluded that DePaul Law School’s compliance with ABA rules was a proper defense against liability. The way in which courts interpret the statutory provisions that permit such a defense will likely have far-reaching implications for higher education cases involving accrediting agencies.

Another potential weakness of the ABA compliance defense is that, even if the law schools complied with official reporting requirements, a court could still find that the law schools engaged in fraudulent practices if the reporting requirements were so minimal and deficient that they permitted misleading and deceptive practices. In the Thomas Cooley Law School case, Judge Quist acknowledged this problem when it rejected the law school’s compliance defense under ABA and NALP standards by explaining at a hearing for the defendant’s motion to dismiss that these standards constituted “a floor not a ceiling.”155 In response to this type of counterargument, law schools have resorted to

152 The ABA’s data reporting standards are contained in the “Standard 509” and Annual Questionnaire, which are promulgated by the ABA’s Council of the Section of Legal Education and Admissions. See ABA Section of Legal Education and Admissions to the Bar Improves Collection, Publication of Job Placement Data, ABA NOW (Dec. 6, 2011), http://www.abanow.org/2011/12/aba-section-of-legal-education-and-admissions-to-the-bar-improves-collection-publication-of-job-placement-data/. 153 Gomez-Jimenez v. N.Y. Law Sch., 943 N.Y.S.2d 834, 842 (Sup. Ct. 2012), aff'd, 956 N.Y.S.2d 54 (App. Div. 2012). 154 Phillips v. DePaul Univ., No. 2012-CH-3523, 2012 WL 4000001, at *19 (Ill. Cir. Ct. Sept. 11, 2012). The Illinois Consumer Fraud Act exempts conduct “specifically authorized by any regulatory body or office acting under statutory authority of this State or the United States.” 815 ILL. COMP. STAT. 505/10b(1) (2007). 155 See Karen Sloan, Law School Defeats Fraud Suit by Graduates, LAW.COM (July 23, 2012), http://www.law.com/jsp/nlj/PubArticleNLJ.jsp?id=1202564029055&Law_school_defeats_fraud_suit_by_graduates_.


the “blame the ABA defense.”156 The idea is that if the ABA standards were deficient, then liability should not rest solely on the law schools but also on the ABA and NALP. Some law schools like Thomas Cooley Law School have unsuccessfully attempted to argue that the plaintiffs’ claims should be dismissed because they failed to join the ABA and NALP as necessary parties, since the plaintiffs’ challenges to industry-wide systematic reporting flaws directly implicates these agencies.157 Irrespective of whether the law schools complied with ABA reporting standards, the law schools could have provided additional information about their employment statistics beyond what was minimally required of them and therefore could be held solely accountable for their actions.

C. SPECULATIVE DAMAGES

The law school defendants also contend that the damages alleged by the plaintiffs are too speculative. Many of the law schools have expressed doubt to whether the plaintiffs have actually been injured to the extent that monetary recourse is legally available. The plaintiffs in these suits are collectively seeking millions of dollars in monetary damages as well as injunctive relief.158 Most of the monetary damages include partial or full refunds of law school tuition as well as consequential costs such as loan interest and living expenses.159

With respect to demands for tuition refunds, the key debate is whether the plaintiffs should be entitled to refunds for an educational service that they have received. The plaintiffs do not argue that they did not receive a quality education, nor do they claim that their law schools’ employment data directly affected their education. One can reasonably conclude that the plaintiffs received what they paid for—a legal education.

Courts are likely to find that the law students only paid for a service and not any particular guarantee or outcome. In the Albany Law School case, the court stated that the plaintiffs paid “for the opportunity to

156 See, e.g., Staci Zaretsky, Class Action Lawsuit Against Thomas M. Cooley Law School Dismissed, ABOVE THE LAW (July 23 2012, 10:23 AM), http://abovethelaw.com/2012/07/class-action-lawsuit-against-thomas-m-cooley-law-school-dismissed/. 157 Defendant Thomas M. Cooley Law School’s Motion to Dismiss Plaintiff’s Amended Complaint at 6–7, 14-15, 19, MacDonald v. Thomas M. Cooley Law Sch., 880 F. Supp. 2d 785 (W.D. Mich. 2012) (No. 11-CV-831); see also Murphy, supra note 43. 158 See Fourth Amended Complaint at 3, Alaburda v. Thomas Jefferson Sch. of Law, No. 37-2011-91898-CU-FR-CTL, (Cal. Super. Ct., Nov. 29, 2012), available at http://www.thomasjeffersonclassaction.com/pdf/Complaint-Documents.pdf. 159 See Gomez-Jimenez v. N.Y. Law Sch., 943 N.Y.S.2d 834, 847 (Sup. Ct. 2012), aff'd, 956 N.Y.S.2d 54 (2012) (citing Opposition Memorandum at 13).

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acquire a legal education, the successful completion of which is evidenced by a degree.”160 In response to this, the plaintiffs are urging the courts to dig deeper and consider not only the product itself but also the value of the education in relation to employment outcomes. In essence, the plaintiffs contend that they received an over-priced education and that they should be reimbursed for not getting the “true value” of their education, which was distorted by the law schools’ deceptive and inflated employment numbers.

The law school defendants also contend that the plaintiffs’ damage formulas are unworkable and too speculative. In order to be entitled to recovery, the plaintiff generally must lay out a basis for a reasonable estimation of the extent of his harm, measured in financial terms.161 Thus far, a few of the courts have dismissed these cases partly on the grounds that there is no reasonable basis for calculating the relief which the plaintiffs seek.162 Many of the plaintiffs’ calculations are premised on the fact that they did not receive the “benefit of their bargain” because they obtained degrees that were worth less than what they paid for them.163 For example, in the New York Law School suit, the plaintiffs suggested that the correct calculation of damages is the “difference between a degree where a high-paying, full-time, permanent job was highly likely and a degree where full-time permanent legal employment at any salary, let alone a high salary, is scarce.”164 In this case, the court suggested that this type of valuation is inherently speculative and particularly problematic in light of the decline in the economy during the Great Recession when many of the plaintiffs were graduating.165

160 Austin v. Albany Law Sch. of Union Univ., 957 N.Y.S.2d 833, 845 n.2 (Sup. Ct. 2013). 161 1-3 DAMAGES IN TORT ACTIONS § 3.04(3)(b)(i) (Matthew Bender 2013). 162 Compare Phillips v. DePaul Univ., No. 2012-CH-3523, 2012 WL 4000001, at *7 (Ill. Cir. Ct. Sept. 11, 2012), and Gomez-Jimenez, 943 N.Y.S.2d at 847–50, with Mihalakis v. Cabrini Med. Ctr., 542 N.Y.S.2d 988, 989–90 (App. Div. 1989) (finding that a similar damages formula was too speculative in a case involving a student plaintiff who alleged that the medical school misrepresented the benefits of its internship program). 163 Gomez-Jimenez, 943 N.Y.S.2d at 849 (“We believe through expert testimony . . . you can measure the difference between a degree where you have a 40 percent or 30 percent chance of getting a job, and the degree that New York Law School misled . . . our clients in getting which was a degree where you have a 90 percent chance of a job[.]” (quoting plaintiff’s attorney)); see also Albany Law Sch. of Union Univ., 957 N.Y.S.2d at 845 n.2 (finding that “weighing the tuition charged by ALS against the value of the resulting degree . . . impermissibly seeks to inject a “benefit of the bargain” theory of damages into the case”). 164 Gomez-Jimenez, 943 N.Y.S.2d at 847. 165 See id. at 850-51.


In addition to the fluctuations in the economy, these types of calculations may be deemed too speculative because the value of a law school education in terms of employment prospects is highly dependent on individual factors like academic performance and career goals. The fact that plaintiffs’ damage calculations are of a speculative nature does not necessarily mean that a court cannot grant relief.166 There are many contexts in which the courts grant relief based on calculations that are conjectural and hard to valuate, such as consortium.167 Since these cases are consumer-based claims where there is no physical damage or loss of human life, however, courts will likely be less receptive to engaging in the highly speculative calculations advanced by the plaintiffs.168

V. LOSING CASE OR WINNING ARGUMENT?

Although the plaintiffs and the law school defendants both have viable legal arguments in support of their side, on balance, the law school defendants will likely prevail over the plaintiffs as foreboded by the six dismissals of such suits. The plaintiffs will likely face an uphill battle because of certain weaknesses in their claims and for policy reasons, including the prevailing deferential attitude by courts towards higher education institutions.

It is long-standing jurisprudence that courts have been highly deferential to post-secondary institutions.169 This is reflected in courts’ general unwillingness to hold educational institutions liable for certain torts and other consumer protection laws.170 These cases highlight a tension within legal jurisprudence about how courts handle similar consumer protection claims against post-secondary institutions. On one hand, courts may desire to adhere to the general trend of allowing great deference to schools due to their special status as educators. But on the other hand, since post-secondary institutions, including law schools, have gradually incorporated a business model, the courts may want to

166 Minute Order at 2, Alaburda v. Thomas Jefferson Sch. of Law, No. 37-2011-00091898-CU-FR-CTL (Cal. Super. Ct. May 26, 2011), available at http://www.abajournal.com/files/Minute_Order_%282%29.pdf (denying law school’s motion to dismiss, the judge found that issue of damages was “beyond the pleadings requiring analysis of expert evidence”). 167 Drushal, supra note 106, at 615. 168 Id. 169 See generally Hazel Glenn Beh, Student Versus University: The University's Implied Obligations of Good Faith and Fair Dealing, 59 MD. L. REV. 183 (2000). 170 Drushal, supra note 106, at 627-28; see generally RUDOLPH H. WEINGARTNER, THE MORAL DIMENSIONS OF ACADEMIC ADMINISTRATION 1-31 (1999) (explaining competing tensions between the institution's societal obligations and obligations to students); Daniel Noah Moses, Distinguishing a University from a Shopping Mall, 15 THOUGHT & ACTION 85 (1999) (describing increasing consumer orientation between universities and students).


hold them accountable to the same extent as other businesses for unfair and deceptive practices.171 Courts have increasingly begun treating students as business consumers, and “student-as-consumers” lawsuits likewise have become popular in recent years.172 This “student-as-consumer” ideal is reflected in Judge Pressman’s dismissal of TJSL’s motion for summary judgment, in which he emphasized that “[c]onsumers' rights to make informed, educated decisions when determining an education investment depends upon transparency and accurate information.”173

For other public policy reasons, courts may be hesitant to grant the plaintiffs relief because of the potential negative effect that such a ruling could have on higher education. In the face of a down economy with many recent graduates unemployed, courts may want to deter a floodgate of litigation by such graduates who desire to vindicate their frustration at the job market and their unfulfilled expectations by placing the blame on their schools. Similarly, courts may think it wise to refrain from monitoring higher education administration, especially making sensitive judgment calls about whether employment reporting practices are deceptive or not. Within the purview of separation of powers, the courts may embrace the ideal that such issues are best suited for the legislature to resolve.

Within the backdrop of these cases, courts will also likely be sensitive to the fact that rulings against the law schools will probably increase the price of education, which presents an unfavorable position considering widespread complaints about the rising costs of education.174 Also, as members of the legal community, judges may be protectionist about not threatening the fiscal health and reputation of law schools, especially if it threatens their own alma mater like the judge who dismissed the Albany Law School suit.175

All hope is not lost for the plaintiffs. Reasonable jurors and courts could find that the law schools engaged in actionable misrepresentation and violated state consumer protections laws, which are slightly more relaxed. Some of the cases have passed initial summary disposition,

171 Drushal, supra note 106, at 627-28. 172 Anjum, supra note 48, at 155. 173 Minute Order at 9, Alaburda v. Thomas Jefferson Sch. of Law, No. 37-2011-00091898-CU-FR-CTL (Cal. Super. Ct. May 26, 2011), available at http://www.abajournal.com/files/Minute_Order_%282%29.pdf. 174 Maimon Schwarzschild, The Ethics and Economics of American Legal Education Today, 17 J. CONTEMP. LEGAL ISSUES 3, 5 (2008) (explaining that law school tuition for the past century has consistently risen twice as fast as inflation). 175 John Caher, News in Brief, Albany Alumni Suit Against Law School is Dismissed, N.Y. L.J., Jan. 7, 2013, at 1.


suggesting that the plaintiffs’ claims have merit.176 If the plaintiffs are able to survive the initial phase of dispositive motions, the stakes will be raised for the law schools to settle.177 This is a tangible possibility, especially in light of recent settlements by for-profit schools that were sued for deceptive employment reporting practices.178 For example, in 2011, California Culinary Academy reached a landmark settlement of $40 million to settle a class-action lawsuit by former students for similar claims of deceptive marketing.179 Because of the uncertainty and high costs of litigation, law schools may be inclined to settle if a trial is imminent because of fear that the jury would sympathize with the plaintiffs’ plights.

VI. MOVING FORWARD: A WINNING CASE FOR LAW SCHOOL TRANSPARENCY

If the lawsuits reveal one thing, it is that schematic changes need to be made in law school employment reporting practices. These lawsuits put a “real face” to a “real issue” plaguing the legal community. The plaintiffs’ plights represent that of thousands of students who were misled into believing that attending law school was a guarantee of gainful employment based on the “rosy” yet deceptive employment picture painted by law schools across the country.

On a positive note, the class action lawsuits have brought awareness to the issues of high unemployment for recent graduates and law schools’ pervasive practices of “sugarcoating” their employment numbers. As a result of the lawsuits and with the help of the media and advocacy groups, prospective law students are now more aware than ever.180 These lawsuits have spurred a law school transparency movement.181 This movement has inspired a barrage of articles, blogs, and websites dedicated to increasing awareness about law schools’

176 See supra note 13. 177 David Anziska has expressed that the ultimate goal of the law school litigation is forcing “a global settlement through the ABA.” Zaretsky, supra note 5. 178 See Order Granting Final Approval of Class Action Settlement and Granting Plaintiff’s Motion for Attorney’s Fees and Costs at 3, Amador v. California Culinary Acad., No. CGC-07-467710 (Cal. Super. Ct. Apr. 18, 2011). 179 Id. 180 See Matthew Miller, Cooley Law Enrollment Falls Amid Skepticism, LANSING ST. J. (Aug. 19, 2012, 12:59 AM), http://www.lansingstatejournal.com/interactive/article/20120819/NEWS01/308190102/Cooley-Law-enrollment-falls-amid-skepticism?nclick_check=1; Murphy, supra note 43, at 806–08. 181 McEntee & Lynch, supra note 113, at 1 (stating that two former law students have created a non-profit, Law School Transparency, dedicated to providing prospective law students with adequate and transparent consumer information).

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employment reporting practices, exposing some of their tactics and shortfalls.182

This heightened awareness and a lackluster job market has decreased the desirability of a law degree, which has negatively impacted the law schools’ bottom lines. Since the onslaught of suits, there has been a steady and marked decline in LSAT takers and law school applicants.183 With many law schools experiencing a drop in enrollment rates, a significant number of law schools have publicly expressed plans to downsize.184 These statistics suggest that prospective students and the public are more aware than ever about the risks of going to law school and the shortcomings of law schools’ reported employment data.

This “movement,” coupled with negative publicity has prompted law schools around the country, including those that have not been the subject of a lawsuit, to start rethinking their employment numbers and their reputation. Law schools should not continue to insist that a legal education is a good investment and then subsequently fail to provide prospective students with a complete picture. A caveat emptor attitude by the law schools will no longer be acceptable. These lawsuits have caused the public to seriously doubt whether law schools are holding themselves to the high ethical standards they impart on their students.185 Ethics are at the cornerstone of the legal profession and should also be at the center of legal education administration.186 In the New York Law School case, the appellate court emphasized that the legal profession was one that “takes pride in its high ethical standards,” and went so far as to exclaim that the defendant and its peer law schools had “at least an ethical obligation of absolute candor to their prospective students.”187 In order for law schools to begin restoring the trust of the public and thousands of prospective law students, schools should make a good-faith attempt to market their “product” fairly and ethically.

What is promising is that positive changes have been made presumably as a response to these lawsuits. Even if the plaintiffs do not

182 TAMANAHA, supra note 8, at 77. 183 Debra C. Weiss, LSAT Test Takers Decline; Is Law School Tuition Bubble Bursting?, ABA J., (Mar. 20, 2012), http://www.abajournal.com/news/article/lsat_test_takers_decline_is_law_school_tuition_bubble_bursting/. 184 Joe Palazzolo & Chelsea Phipps, With Profession Under Stress, Law Schools Cut Admissions, WALL ST. J., June 11, 2012, http://online.wsj.com/article_email/SB10001424052702303444204577458411514818378-lMyQjAxMTAyMDEwMTExNDEyWj.html. 185 See Joel F. Murray, Professional Dishonesty: Do U.S. Law Schools That Report False or Misleading Employment Statistics Violate Consumer Protection Laws?, 15 J. CONSUMER & COM. L. 97 (2012). 186 Harawa, supra note 75, at 615–16. 187 Gomez-Jimenez v. N.Y. Law Sch., 956 N.Y.S.2d 54, 60–61 (App. Div. 2012).



ultimately succeed in their class action suits, the lawsuits have played a pivotal role in encouraging reform of law school employment reporting practices. The ABA has responded to these demands with its new reporting standards.188 To an extent, the ABA has fulfilled one of the plaintiffs’ goals—forcing the schools to systematically fix flaws in their system.189 Under the new ABA policy, law schools now must provide prospective students with more detailed and accurate information about their employment numbers.190 Widespread knowledge of law schools’ use of deceptive employment reporting practices and the transparency promoted by the new ABA standards may effectively act as a barrier against similar future lawsuits.

Despite steps towards greater accountability and transparency from law schools, more can be done. The solution to this “crisis” is multidimensional and requires the involvement of many key actors including the courts, the ABA, U.S. News, and government agencies who all have a stake in this problem. These actors must play a role in ensuring that prospective and current law students are reasonably informed about employment outcomes and the risks associated with such a high-cost investment. In the midst of growing pressures from law students for transparency, increasing student loan debt, and the decline in the legal market, these actors cannot idly sit back and allow the status quo to remain.

Since law schools are under intense pressure to keep the status quo in order to maintain rankings, third parties may need to step in to force law schools to play fairly. Although the ABA as the accrediting body has implemented policies to increase transparency, such policies can go further. For example, there have been requests made by the public, and even the plaintiffs, for the ABA to require that law schools have independent third-party auditing of their data and provide more detailed employment information especially with respect to salaries, but the ABA has largely ignored such requests.191

188 Murphy, supra note 43, at 781–83. 189 Some of the plaintiffs’ complaints indicate that they sought to remedy “a systemic, ongoing fraud that is ubiquitous in the legal education industry.” Compare Cooley Complaint, supra note 12, at 59-60, 63–64, with TJSL Complaint, supra note 3, at 20-21. 190 TAMANAHA, supra note 8, at 77. 191 See Karen Sloan, ABA Backs Off Making Law Schools Report Graduates’ Salaries, NAT’L L.J. (Mar. 19, 2012), http://www.law.com/jsp/nlj/PubArticleNLJ.jsp?id=1202546229913&slreturn=20120723155; Murphy, supra note 43, at 784; Austin v. Albany Law Sch. of Union Univ., 957 N.Y.S.2d 833, 839 (Sup. Ct. 2013) (citing plaintiffs’ Amended Class Action Complaint’s wherefore clause).


The state and federal government should also be particularly concerned with this issue, especially in light of the increasing loan default rate for law graduates.192 Some analysts have warned that there is a “law school bubble,” similar to the housing bubble, that is ready to burst.193 The problem is that there is an oversupply of lawyers because there are more recent graduates looking for employment than there are legal jobs.194 The federal government plays a large role in funding legal education through federal loans.195 Such federally guaranteed loans provided to law students are financially risky when a majority of students holding loans are not obtaining the types of jobs needed to pay off the loans.196 The government needs to tackle this issue not only for its fiscal sake but also to protect students. One solution is that the government should take a more proactive role in deterring law schools from engaging in deceptive consumer practices. Federal agencies like the Department of Justice and the Department of Education can be more active in enforcing both civil and criminal penalties that would prohibit false and deceptive practices by law schools.197 Lawmakers, including certain members of Congress, have heard the plight of unemployed law school graduates and have taken steps to find a solution.198 For instance, Senator Tom Coburn, Senator Charles Grassley, and Senator Barbara

192 Student Loan Defaults Up for Law School Graduates, TOTAL BANKRUPTCY (Feb. 13, 2012), http://www.totalbankruptcy.com/debtress/student-loan-defaults-up-for-law-school-graduates/ (“Between 2008 and 2010, the default rate on law school loans doubled.”). 193 William D. Henderson & Rachel M. Zahorsky, The Law School Bubble: How Long Will It Last if Law Grads Can’t Pay Bills?, A.B.A. J. (Jan. 1, 2012, 6:20AM), http://www.abajournal.com/magazine/article/the_law_school_bubble_ how_long_will_it_last_if_law_grads_cant_pay_bills/; see also Matt Leichter, The Law School Debt Bubble, LAW SCH. TUITION BUBBLE (Oct. 17, 2011), http://lawschooltuitionbubble.wordpress.com/2011/10/17/the-law-school-debt-bubble-53-billion-in-new-law-school-debt-by-2020/. 194 Catherine Rampell, The Lawyer Surplus, State by State, N.Y. TIMES ECONOMIX BLOG (June 27, 2011, 11:35 AM), http://economix.blogs.nytimes.com/2011/06/27/the-lawyer-surplus-state-by-state/ (reporting that in 2009, there were twice as many people who passed the bar than there were lawyer job openings). 195 Drushal, supra note 106, at 632. 196 See Market Outlook for Legal Profession Jobs in 2012, LAW CROSSING http://www.lawcrossing.com/article/7362Market-Outlook-for-Legal-Profession-Jobs-in-2012/# (last visited Dec. 15, 2012); Rampell, supra note 194. 197 Cloud & Shepherd, supra note 34, at 7–8; Anjum, supra note 48, at 169; 20 U.S.C. § 1094(c)(3) (2009) (Dept. of Education can impose fines of up to $25,000 for noncompliance with Integrity Rules). 198 TAMANAHA, supra note 8, at 74-77.

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Boxer have complained to the ABA about law school reporting practices and have requested that changes be made.199

U.S. News also can help solve this problem since it is the premier source for law school rankings. A number of law schools have placed the blame on U.S. News for perpetuating a culture that pressures law schools into engaging in deceptive practices.200 The editor of the U.S. News Rankings has publicly acknowledged flaws in its law school employment reporting.201 For a long time, U.S. News’s permissive approach to reporting has given law schools the opportunity to “game the system.” With increased pressure from the public, U.S. News, like the ABA, has taken steps to enhance its collecting and reporting practices.202 The editor of the magazine has recently expressed plans to publish more career data so that prospective students can be better informed about the legal employment landscape.203

VII. CONCLUSION

The collective efforts of the ABA, the government, and the media have played a positive role in encouraging law school transparency. The increase of public awareness about the shortcomings of law school employment reporting practice will likely reduce the number of similar lawsuits against law schools in the future. Although law students may not be entitled to a guaranteed job by virtue of attending law school, they should at least be entitled to accurate and complete information about post-graduate employment outcomes. With this information, prospective students can better weigh the risks and benefits of attending law school and make an informed decision. Even if the plaintiffs do not win in the courts, there are promising signs that the plaintiffs are winning the battle in the public forum. This class action law school litigation movement has been a powerful impetus for progressive policies that have not only

199 See Letter from Barbara Boxer, U.S. Senator, to Stephen N. Zack, President of the Am. Bar Ass’n (May 20, 2011), available at http://www.lawschooltransparency.com/Boxer-ABA_Letter_May_2011.pdf; Letter from Tom A. Coburn & Barbara Boxer, U.S. Senators, to Kathleen Tighe, Inspector Gen., U.S. Dep’t of Educ. (Oct. 13, 2011), available at http://www.lawschooltransparency.com/documents/2011-10-13-Coburn-and-Boxer-to-Dept-of-Education-IG.pdf; Letter from Charles E. Grassley, U.S. Senator, to Stephen N. Zack, President, Am. Bar Ass’n (July 11, 2011), available at http://www.lawschooltransparency.com/documents/2011-07-11-Grassley-to-ABA.pdf. 200 TAMANAHA, supra note 8, at 78. 201 Robert Morse, U.S. News Urges Law School Deans to Improve Employment Data, U.S. NEWS (March 9, 2011), http://www.usnews.com/education/blogs/college-rankings-blog/2011/03/09/us-news-urges-law-school-deans-to-improve-employment-data. 202 Id. 203 Id.

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promoted greater consumer awareness, but have also increased accountability and transparency by American law schools.