The fraud class action brought by graduates of Brooklyn Law School against their alma mater appears to be turning into an uphill battle.
Attorneys for both sides spent three hours before Kings County, N.Y., Supreme Court Justice David Schmidt on August 21 debating the law school’s motion to dismiss. Schmidt asked pointed questions both of plaintiffs attorney Frank Raimond and defense attorney Russell Jackson regarding allegations that the school misrepresented graduate employment and salary data to lure students.
But Schmidt seemed deeply skeptical about the claims that the manner in which the law school reported its jobs data constituted fraud — or that the plaintiffs have shown enough evidence of manipulated job numbers to survive the motion to dismiss.
“Where is the basis for a fraud argument?” Schmidt asked Raimond. “You have generalized industry statistics. Where do you see that they have deceived the public?”
A similar complaint could be leveled against any law school in the country, Schmidt said. In fact, the Brooklyn case is one of 14 nearly identical class actions brought against law schools by Raimond and fellow attorneys Jesse Strauss and David Anziska. Lawyers for Albany Law School of Union University filed a fresh pleading on their motion to dismiss similar claims on August 2.
In a Brooklyn, N.Y., state trial courtroom, Skadden, Arps, Slate, Meagher & Flom partner Jackson repeatedly cited New York County, N.Y., Supreme Court Justice Melvin Schweitzer’s earlier dismissal of a similar case against New York Law School.
Most of the hearing centered on Brooklyn Law School’s claim that 91.3 percent of the class of 2009 was employed nine months after graduation. The plaintiffs allege that this figure was deceptive because it included students in any type of job, not just those in legal jobs, plus graduates in temporary or volunteer positions. The school knew how many graduates were in fulltime jobs that require or prefer a J.D., but chose not to report those figures — committing fraud by omission, Raimond said.
Jackson countered that Brooklyn Law School was simply following the reporting standards set forth by the American Bar Association and the National Association for Law Placement. That has been a common defense among the targeted law schools.
In any case, Jackson argued, the employment figures were immaterial because they constituted “future predictions” about what a would-be law student’s employment prospects might be three or four years later. Such predictions are not actionable in fraud or deceptive conduct cases in New York State, he said.
Moreover, prospective law students have access to a number of sources of data about legal employment and would not rely solely on an aggregate employment figure provided by a law school, Jackson said.
Schmidt questioned Jackson repeatedly about his argument. “If they said 91 percent, and it was really 80 percent, would that be fraud?” Schmidt asked. “No matter what they said, it’s not material? Is that what you’re alleging?”
Jackson affirmed that the employment figures provided by the school were irrelevant. What was material, he said, was the legal education the plaintiffs received at Brooklyn Law School, and that was not at issue.
Schmidt observed at one point that a bleaker job picture may dissuade would-be law students from borrowing $150,000 to finance their legal educations. “I may not go to law school if I know that with the 91.3 percent success rate, a lot of graduates are not in legal jobs but are flipping burgers,” he said.
The attorneys spent considerable energy debating the U.S. Court of Appeals for the Second Circuit’s recent decision in Gotlin v. Lederman, which involved deceptive marketing claims against a group of New York cancer doctors who advertised a “success rate” of greater than 90 percent in treating pancreatic cancer. Their definition of success was limited to tumors either shrinking or remaining the same size — not to patients cured. A federal trial judge dismissed the deceptive marketing claim on summary judgment, but the Second Circuit in May told the judge to reconsider.
Raimond argued that the fact pattern in Gotlin mirrored that of the Brooklyn Law School case — although Jackson disagreed and Schmidt called it a “completely different case in my book.”
Schmidt warned Raimond that he had failed to identify any specific instance of fraud. Raimond replied that there was ample evidence — he cited news reports about law schools manipulating jobs data and the fact that under new ABA rules, Brooklyn Law School reported that only 54 percent of 2011 graduates were in jobs that either required or prefered a J.D. More specific evidence would be revealed in discovery, he said.
“You’re really pleading a broad, general statement,” said Schmidt, who on August 1 declined the plaintiffs’ request that he recuse himself because he was a graduate of Brooklyn Law School. Schmidt said at the time that he’d graduated 30 years ago and no longer maintained ties to the school.
The trio of plaintiffs attorneys have also requested that Albany County, N.Y., Supreme Court Justice Richard Platkin recuse himself in Austin v. Albany Law School — again, because their case targets Platkin’s alma mater.
That complaint argues that a typical prospective student would have mistaken Albany Law School’s published employment data as representing the percentage of graduates in full-time, permanent, nonvolunteer jobs. Albany has reported job placement rates of between 91 percent and 97 percent for its graduates.
The law school countered in papers before Platkin, however, that the plaintiffs failed to back up their contention that the placement statistics would lead a prospective student to conclude that “the value of an Albany Law degree is ‘recession proof.’ “
“No reasonable consumer would have been deceived by the statistics in the manner suggested by Plaintiffs,” the law school’s lead attorney, Henry Greenberg of Greenberg Traurig, argued in a reply in support of its motion to dismiss the complaint.
Greenberg said that Albany had warned prospective students in 2008 and 2009 that the recession had altered the economy and eroded the market for new law school graduates.
The law school argued that the plaintiffs failed to show that the school’s jobs claims amounted to deceptive or false business practices as defined under the state General Business Law. “The statistics that were published…cannot be deemed ‘deceptive’ merely because, with the benefit of hindsight, Plaintiffs allege that certain additional information may have been useful to them in deciding whether to attend Albany Law,” it said in its pleading.
The Albany suit was filed on behalf of three recent Albany law graduates who claimed they might not have attended the school had they been given an accurate picture of how many Albany-trained lawyers were able to land high-paying jobs as lawyers upon graduation.
The school countered that the fact all three of the plaintiffs found employment in the legal industry undercut their contention that they had been misled.
Karen Sloan can be contacted at firstname.lastname@example.org. Joel Stashenko of NLJ affiliate New York Law Journal contributed to this story from Albany, N.Y.