Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—Ill. App.: Law school grads’ claims against another law school fail, (Sep 30, 2014)

By Peter Reap, J.D., LL.M.

The Illinois Consumer Fraud and Deceptive Business Practices Act, common law fraud, and negligent misrepresentation claims brought by a group of unhappily under-employed attorneys who graduated from Chicago-Kent College of Law against the law school for providing misleading information in certain promotional materials regarding the likelihood of its graduates finding high-paying, fulltime legal employment upon graduation were without merit, an Illinois appellate court has determined (Evans v. Illinois Institute of Technology, September 26, 2014, Rochford, M.). Thus, a decision by a state trial court dismissing the class action complaint in its entirety was affirmed.

Virtually identical claims brought by different groups of graduates against DePaul University College of Law and John Marshall Law School were also without merit, and were rejected by the appellate court on the same day.

Background. Here, the plaintiffs graduated from Chicago-Kent College of Law (Kent) between 2007 and 2012, but they had difficulty finding full-time, legal employment that pays a high enough salary so as to allow them to pay off their student loans. On June 8, 2012, the plaintiffs filed a first-amended class action complaint against Kent and certain unnamed "Lawyer Defendants" (collectively referred to as defendants) on behalf of themselves and all others similarly situated, alleging that defendants violated the Illinois Consumer Fraud and Deceptive Business Practices Act (Consumer Fraud Act), and committed common-law fraud and negligent misrepresentation by publishing employment and salary statistics that deceptively overstated the percentage of recent Kent graduates who had obtained full-time legal employment with salaries in excess of $60,000.

The plaintiffs alleged they relied on these employment and salary statistics when deciding to enroll and remain enrolled at Kent, and that as a consequence of such reliance, they "paid tens of thousands of dollars for the required tuition, and *** took out tuition loans that will burden them for years, if not forever." Also as a consequence of such reliance, plaintiffs "graduated with a J.D. degree from Kent with near-term and lifetime job prospects that are, statistically, less than they would have been had they obtained a degree from Kent with the employment numbers Kent claimed to have." Plaintiffs sought to recover as damages a percentage of their tuition payments as well as the additional lifetime income they would have earned had they obtained the employment and salaries they expected based on the employment and salary statistics reported by defendants.

Consumer Fraud Act Claim

To state a claim under the Consumer Fraud Act, a complaint must set forth specific facts showing: (1) a deceptive act or practice by the defendant; (2) the defendant's intent that the plaintiff rely on the deception; (3) the deception occurred in the course of trade or commerce; and (4) the consumer fraud proximately caused the plaintiff's injury, the court noted. To bring a civil suit for damages, the Consumer Fraud Act requires that the plaintiff suffer actual damages. The plaintiff's reliance is not an element of statutory consumer fraud.

Deceptive practice. The plaintiffs failed to adequately plead any omission or misrepresentation by Kent constituting a deceptive act or practice, the court held. As to the allegations that Kent committed a deceptive act or practice by failing to inform plaintiffs that the employment information for the 2004, 2005, 2006, 2008, and 2010 classes was based on voluntary surveys as opposed to audited data, the plaintiffs expressly acknowledged in their first-amended class action complaint that they were aware "[t]he Employment Information was based upon surveys sent to then recent Kent graduates." Thus, as the plaintiffs admittedly were aware of the basis for the data contained in the employment information, their claims of deception regarding Kent's failure to inform them of this basis necessarily failed.

As to their allegation that Kent committed a deceptive act or practice by failing to inform them that "only a small percentage" of surveys had been returned, the plaintiffs failed to plead any facts showing the actual percentage of surveys returned. In the absence of any facts pleaded regarding the actual percentage of surveys returned, the plaintiffs' allegation that "only a small percentage" of surveys had been returned was conclusory, could not be accepted as true and was insufficient to withstand a motion to dismiss, according to the court.

As to plaintiffs' allegations that Kent committed a deceptive act or practice by failing to inform them of the percentages of graduates employed in nonlegal and/or part-time positions, causing plaintiffs to believe that the data reported in the employment information for the 2004, 2005, 2006, 2008 and 2010 classes related only to full-time legal employment, the court found no allegations by the plaintiffs that Kent ever expressly indicated that the employment information referred only to full-time, legal employment requiring a J.D. degree.

The plaintiffs also failed to adequately allege deception by Kent in the salary disclosures contained in the employment information for the 2004, 2005, 2006, 2008 and 2010 classes. First, The plaintiffs never alleged they did not realize that the salaries listed in the employment information for the 2004, 2005, 2006, 2008 and 2010 classes were full-time salaries, the court observed. Further, the salaries reported in the employment information for the 2004, 2005, 2006, 2008 and 2010 classes were average and/or median salaries, meaning that some of the graduates earned more than the average or median, while others earned less. The plaintiffs did not allege that any promises were made to them that they would earn at or above the average or median salaries listed in the employment information for the 2004, 2005, 2006, 2008 and 2010 classes.

Proximate cause. The plaintiffs alleged two related injuries: (1) the inability to obtain the job and lifetime income they expected after graduating from Kent; and (2) their contention that their J.D. degrees from Kent were worth less than the tuition paid for the degrees given plaintiffs' perceived lifetime career prospects. Stated either way, the plaintiffs' injuries were based on their postgraduate job and income. The plaintiffs alleged their injuries were proximately caused by their reliance on the allegedly deceptive employment information for the 2004, 2005, 2006, 2008 and 2010 classes, which caused them to enroll and remain enrolled in Kent, pay the inflated tuition, take out loans, and graduate with disappointing job prospects.

The element of proximate cause contains two requirements: the cause-in-fact and the legal cause. The plaintiffs failed to adequately allege cause-in-fact, i.e., that "but for" Kent's allegedly misleading employment information for the 2004, 2005, 2006, 2008 and 2010 classes, causing them to enroll and remain enrolled in Kent as opposed to some other law school, they would have obtained the high-paying legal jobs they now want years later, the court ruled.

Even if plaintiffs had alleged they were accepted to, and would have enrolled in, other law schools with better actual employment and salary statistics if not for the employment information for the 2004, 2005, 2006, 2008 and 2010 classes, these allegations still would not have been sufficient to allege cause-in-fact. Given the myriad factors that go into a successful job search and career earnings, the court could not say that "but for" the employment information for the 2004, 2005, 2006, 2008 and 2010 classes that the plaintiffs would have obtained their desired jobs/salaries even upon graduation from different law schools.

Further, the plaintiffs failed to adequately plead legal causation, as the plaintiffs' failure to secure the jobs/salaries they desired upon graduation could not be said to be a foreseeable consequence of their decisions to enroll and remain enrolled in Kent in reliance on the employment information for the 2004, 2005, 2006, 2008 and 2010 classes. At the time of the plaintiffs' enrollment in Kent, one could not foresee their subsequent academic records while at Kent, the geographic areas in which they would seek employment, the scope of their job searches, their interview and presentation skills, and the economic climate and overall availability of jobs during the period of their job searches - all of which would impact their job searches and salaries, the court reasoned.

Damages. To sufficiently plead a cause of action under the Consumer Fraud Act, plaintiffs must plead actual damages. Damages may not be predicated on mere speculation, hypothesis, conjecture or whim.

Even if the plaintiffs had adequately pleaded misrepresentation by Kent in its employment information, they failed to plead any reliable mechanism for calculating the "true" value of their law degrees because of the alleged misrepresentation, the court held. The employment and salary statistics listed in the employment information consisted of generalized, historical averages for those particular classes and did not constitute any type of promise or projection for the individual plaintiffs here. Thus, even assuming for the sake of argument that the employment information for the 2004, 2005, 2006, 2008 and 2010 classes did not recite Kent's "true" postgraduation employment and salary statistics for those classes, the plaintiffs failed to adequately plead how they were damaged thereby given that these statistics did not apply to the plaintiffs or make any promises or projections regarding their future employment and salary prospects.

The case is No. 1-12-3611.

Attorneys: (The Clinton Law Firm) for Rachelle Evans, Jorie Johnson, and Jonathon Phillips. (Arstein & Lehr LLP) for Illinois Institute of Technology. (Vedder Price) for The John Marshall Law School. (Jones Day) for DePaul University.

Companies: Illinois Institute of Technology; The John Marshall Law School; DePaul University

Cases: StateUnfairTradePractices IllinoisNews