Friday, October 16, 2015
Federal Court dismisses another suit alleging misleading law school employment statistics (Michael Simkovic)
The Wall Street Journal reports that a Federal District Court recently dismissed a lawsuit alleging that Florida Coastal School of Law defrauded its students through misleading employment statistics. (hat tip Paul Caron) As noted in the Journal, this is the latest in a long string of victories for defendant law schools in these cases.
The legal issues and relevant facts of many of the suits against law schools are substantially similar because of standardized data collection techniques and methods of disclosure. Although courts thus far have either denied class certification or dismissed these fraud suits on the merits, the language of opinions has tended to be somewhat more sympathetic toward plaintiffs when the defendant law school admitted students with lower undergraduate GPAs and standardized test scores. (For example, compare the decision in Brooklyn to the decision in New York Law School (especially the more plaintiff-friendly appellate opinion)).
Given Florida Coastal's admissions standards--described by the Court as among "the lowest . . .of accredited law schools . . . in the nation"--Florida Coastal may have been among plaintiffs' attorneys best chances for success. Failure in this case does not bode well for future lawsuits against law schools based on similar legal theories and fact patterns.
The Florida Court explained that Florida Coastal students were college-educated and therefore sufficiently sophisticated that they were unlikely to be misled, but rather would have reasonably understood the limits of the data disclosures or requested additional clarifying information.
The Court's detailed reasoning follows:
A claim of deceptive trade practice "requires proof that defendant's act would likely 'mislead the [objective] consumer acting reasonably in the circumstances.'" . . . An unfair trade practice requires (1) substantial injury to the consumer; (2) "must not be outweighed by any countervailing benefits to consumers or competition that the practice produces; and (3) must be an injury that consumers themselves could not reasonably have avoided."
The Court notes that Plaintiffs are consumers of a legal education. As such, they are college graduates and "[b]y anyone's definition . . . a sophisticated subset of education consumers, capable of sifting through data and weighing alternatives." Gomez-Jimenez v. New York Law Sch.. 943 N.Y.S.2d 834, 843 (N.Y. Sup. Ct. 2012) affd. 103 A.D.3d 13, 956 N.Y.S.2d 54 (N.Y. App. Div. 2012). Plaintiffs do not allege that Defendant presented objectively false employment and salary data of Defendant's graduates. Rather, Plaintiffs contend that Defendant's presentation was misleading because (1) the employment data presented failed to distinguish between the types of employment Defendant's graduates obtained and (2) the salary data consisted only of those who responded to the school's surveys, which represented only a fraction of Defendant's graduates.
Plaintiffs place much emphasis on the effect the employment rate reported by various news companies and Defendant's website played in misleading reasonable consumers, like Plaintiffs. Yet, Plaintiffs also acknowledge that Defendant had some of the lowest admissions standards of accredited or provisionally accredited law schools in the nation. . . . Despite its low ranking, Plaintiffs allege that Defendant's Employment numbers rivaled "those of much higher ranked, top-tier schools, such as the University of Florida." . . . This would have been a red flag to a reasonable consumer in Plaintiffs' position, and should have caused the reasonable consumer to, at a minimum, seek out more nuanced information to allow for a meaningful comparison of law schools, including the types of employment graduates obtained. Such an inquiry was reasonably expected and could have prevented Plaintiffs' alleged injuries. Therefore, Plaintiffs failed to state a plausible claim that Defendant's publishing of the employment data in the manner alleged would result in probable deception to a reasonable consumer, or that that the substantial injury alleged could not have been reasonably avoided.
On the point of Defendant's salary data presentation, Plaintiffs take issue with the manner in which Defendant reported the salary data of its employed graduates. Specifically, Plaintiffs allege that Defendant's "employment reports published before July 2011 .. . failed to disclose the overall percentage of graduates who reported salary information." . . . Plaintiffs claim this was misleading because those who reported salary information were only a fraction of those that graduated from Florida Coastal and tended to be from high-earning graduates. . . .While the Court agrees with Plaintiffs to the extent that Defendant's alleged salary data presentation was less than candid, it was unreasonable for Plaintiffs to assume that the salary information offered by Defendants was a true and accurate representation of all graduates. Indeed, unless Plaintiffs assumed that Defendant had a full-proof method of tracking each and every one of its graduates, Plaintiffs had reason to suspect that the salary data offered only a limited picture of the salaries actually earned by Florida Coastal graduates and further inquiry would be required. Accordingly, the Court finds that Plaintiffs failed to state a plausible claim that publishing the salary data in the manner alleged would result in probable deception to a reasonable consumer, or that the substantial injury alleged could not have been reasonably avoided.