NY Court Affirms Law School Job Statistics Fraud Case Dismissal

The New York Law School received an early Christmas present yesterday.  New York’s Appellate Division, First Department affirmed the dismissal of the job statistics fraud case brought by 9 graduates.  The case is Gomez-Jimenez v. New York Law School (8110).  The opinion is contained in this document at the very end.

Plaintiffs filed suit under New York’s General Business Law and for common law fraud and negligence.  The trial court dismissed all claims.  The Appellate Division said that the job information posted by the school may have been incomplete, but despite the omission of context it was not false:

Nevertheless, although there is no question that the type of employment information published by defendant (and other law schools) during the relevant period likely left some consumers with an incomplete, if not false, impression of the schools’ job placement success, Supreme Court correctly held that this statistical gamesmanship, which the ABA has since repudiated in its revised disclosure guidelines, does not give rise to a cognizable claim under GBL  349.  First, with respect to the employment data, defendant made no express representations as to whether the work was full-time or part-time.  Second, with respect to the salary data, defendant disclosed that the representations were based on small samples of self-reporting graduates.  While we are troubled by the unquestionably less than candid and incomplete nature of defendant’s disclosures, a party does not violate GBL 349 by simply publishing truthful information and allowing consumers to make their own assumptions about the nature of the information (see Andre Strishak & Assoc. v Hewlett Packard Co. 300 AD2d 608, 609-610 [2  Dept 2002]; St. Patrick’s Home for Aged & Infirm v Laticrete Intl., 264 AD2d 652, 655-656 [1  Dept 1999]; see also Corcino v Filstein, 32 AD3d 201, 202 [1  Dept 2006]).  Accordingly, we find that defendant’s disclosures were not materially deceptive or misleading (id.).  Because plaintiffs have not adequately pleaded that defendant’s practice was misleading, we need not consider whether plaintiffs’ have alleged cognizable injuries.  We also decline to consider defendants’ argument that GBL 349(d) provides a complete defense.  

[footnotes omitted]

The Court built on this analysis for the common law claims.  It found that the lack of a fiduciary relationship between the parties along with the truthfulness of the statistics, albeit with omissions, nonetheless defeated that part of the suit.  The Court expressed a bit of sympathy to the plaintiffs:

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

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

[footnotes omitted]

It seems the Court is making a distinction between an ethical obligation and a legal one.  The former doesn’t make the latter valid.  I think I learned that noble sentiment in contracts class.  It’s on to the New York Court of Appeals, I guess.  [MG]