Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—DNJ: Law School May Be Liable For Misrepresenting Employment Statistics, (Mar 21, 2013)

By Jody Coultas, J.D.

Law school alumni stated New Jersey and Delaware Consumer Fraud Act claims against an American Bar Association (“ABA”) accredited law school for misrepresenting its graduate employment rates, according to the federal district court in Newark (Harnish v. Widener University School of Law, March 2013, Walls, W.).

After having problems obtaining employment, the alumni alleged that the law school posted on its website and disseminated to third-party law school evaluators misleading and incomplete graduate employment rates in violation of consumer protection statutes. Specifically, the alumni claimed that the employment statistics were misleading because the school failed to disclose that its placement rate included full and part time legal, law-related and non-legal positions. Alumni that were not looking for work were not counted.

The alumni stated New Jersey Consumer Fraud Act (NJCFA) claims against the law school, according to the court. The NJCFA allows for claims based on advertisements that are literally, but still misleading to the average consumer. The function of the website was to persuade students to attend the school in order to receive a legal degree. A reasonable viewer of the employment statistics on the school’s website could believe that the employment statistics referred to legal jobs and did not include non law-related or part-time employment. The court differentiated this case from similar cases against other law schools in Michigan and New York that held that reasonable consumers would believe the employment statistic included all employed graduates, not just those who obtained or started full-time legal positions. While the thread of plausibility may be slight, it was still a thread, according to the court.

The claims based on alleged omissions were plausible, according to the court. The alumni alleged that the law school engaged in a pattern and practice of knowingly and intentionally making numerous false representations and omissions of material facts, with the intent to deceive and fraudulently induce reliance. The employment rate was misleading because the law school failed to include notice that the employment rate refers to all types of employment, that it did not specifically refer to law-related employment, and that the rate may have been inflated by selectively disregarding employment data.

The court found that the alumni suffered an ascertainable loss. To demonstrate a loss, a victim must simply supply an estimate of damages, calculated within a reasonable degree of certainty. The injury alleged was the difference between the inflated tuition paid based on the material representations that approximately 90-95 percent of graduates are employed within nine months of graduation and the true value of a degree. The injury was proximately caused by the law school.

The facts supporting the NJCFA also supported claims under the Delaware Consumer Fraud Act.

The case is No. 2:12-cv-00608 (WHW).

Attorneys: David S. Stone (Stone & Magnanini LLP) for John Harnish. James C. Orr (Wilson, Elser, Moskowitz, Edelman & Dicker, LLP) for Widener University School of Law.

Cases: StateUnfairTradePractices NewJerseyNews