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ALBANY – A federal judge has denied a class action motion by parents who contended they were misled into believing that the $4,000-a-month upstate boarding school where they were sending their troubled teens was accredited and could award high school diplomas. Northern District Senior Judge Thomas J. McAvoy decided that the ruling last month by the U.S. Court of Appeals for the Second Circuit in McLaughlin v. Am. Tobacco Co., 522 F3d 215, should alter the analysis of class certification in the matter brought by parents of students of the Academy at Ivy Ridge. He overruled an April 22 report and recommendation by Magistrate Judge George H. Lowe in Dungan v. Academy at Ivy Ridge, 06-cv-0908, granting class status to parents of Ivy Ridge students between November 2001 and August 2005 who were given diplomas or “credits” for schoolwork. The students themselves were also certified as part of the class by Magistrate Judge Lowe. In McLaughlin, a Second Circuit panel found that certification was not appropriate because reliance on alleged misrepresentations – in that case, tobacco company claims that “light” cigarettes were safer to smoke than regular cigarettes – has to be proven on an individual, not a class, basis ( NYLJ, April 4). Similarly, Judge McAvoy ruled that the issues of reliance and causation, whether reliance on alleged misrepresentations caused plaintiffs to suffer economic loss, are at the heart of the Ivy Ridge case. While some aspects of the plaintiffs’ case meet the certification criteria under Federal Rules of Civil Procedure 23, others do not, and granting class action status would not result in a more orderly and expeditious disposition of the litigation, the judge concluded. “As the Second Circuit said in McLaughlin, ‘certifying, for example, the issue of defendants’ scheme to defraud, would not materially advance the litigation because it would not dispose of larger issues such as reliance, injury and damages,’” Judge McAvoy wrote. “Most, if not all, of the common issues in this case can be resolved just as expeditiously through joinder.” As an example, he noted that affidavits from parents show differing reasons for sending their children to Ivy Ridge, which accommodates more than 400 students between ages 12 and 18. The school is in Ogdensburg, St. Lawrence County, along the U.S.-Canadian border. “These reasons include, but are not limited to, geographic location, cost, available extracurricular activities, educational programming, character development programs, the ability to earn ‘credits,’ the ability to obtain a diploma, etc.,” Judge McAvoy wrote. “It seems that no parents sent their children to Ivy Ridge solely because of its ability to issue credits or a diploma, but because of Ivy Ridge’s claimed ability to deal with troubled or difficult children.” “Individualized proof” will be needed to verify for each plaintiff whether they sent children to Ivy Ridge based on the school’s false claim that students would receive transferable credits or diplomas, the judge held. In addition, with tuition at Ivy Ridge varying between $2,900 and $4,000 a month, alleged damages vary from family to family. That fact weighs against class certification of the parents on the issue of damages, the judge concluded. “Out-of-pocket losses cannot be shown by common evidence because they constitute an inherently individual inquiry,” Judge McAvoy wrote. “Parents would have incurred different losses depending on what they would have opted to do but for defendants’ misrepresentations.” The plaintiffs’ suit alleges a series of causes of action, including negligence, negligent misrepresentation, fraud and RICO violations. Accreditation Sought According to Magistrate Judge Lowe’s report and recommendation, Ivy Ridge sought to become accredited by the Northwest Association of Accredited Schools shortly after opening in 2001. Employees of Ivy Ridge were instructed to tell families that the school was accredited and authorized to issue diplomas, according to the magistrate judge. Though it posted certifications of accreditation on its Web site starting in 2002, the school never sought to become a registered non-public school with New York state. The school dropped its accreditation claims in 2005 under a settlement with then-Attorney General Eliot Spitzer. The school, which purported in promotional materials to have granted 113 diplomas to students since opening in 2001, agreed to stop portraying itself as an accredited institution from which students were graduating. Ivy Ridge operators also agreed to pay $250,000 in fines and to refund up to $1 million to families and students. Magistrate Judge Lowe, sitting in Syracuse, made his report and recommendation two weeks after the Second Circuit’s ruling in McLaughlin. He gave it little weight in his decision, concluding that the panel had denied partial certification because it “would not have promoted judicial economy in that particular case.” Edward G. Melvin, attorney for the defendants, said in an interview yesterday he had tried to emphasize to Magistrate Judge Lowe that McLaughlin had particular relevance to the Ivy Ridge claim. “He did not give it the weight that I think it deserved,” said Mr. Melvin, of Costello, Cooney & Fearon in Syracuse. “When the decision came down, the other lawyers and I assumed it was going to be dispositive of our case.” Potentially, there are some 1,500 to 1,600 individuals who could have been in the class that Judge McAvoy refused to certify, Mr. Melvin said. Hancock & Estabrook in Syracuse represented the plaintiffs. Attorney Eric C. Nordby did not return a call seeking comment yesterday. Joel Stashenko can be reached at [email protected].

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