A federal appeals court on Tuesday affirmed dismissal of a fraud class action against Thomas M. Cooley Law School, concluding that Michigan’s consumer protection law did not apply to the purchase of a legal education and that Cooley’s job placement claims were not “objectively false.”
Following the ruling by three-judge panel of the U.S. Court of Appeals for the Sixth Circuit, plaintiffs attorney Jesse Strauss said his team would consider whether to seek an en banc hearing.
“We’re disappointed,” Strauss said. “We thought they would reverse. For the court to say [Cooley’s claims] were not misleading because of the fine print, or because this is a business purchase instead of a personal purchase, is a bit of a dodge, we think.”
Cooley president and dean Don LeDuc said the ruling sends a strong message.
“Now that a federal court of appeals has ruled in this matter, no one can credibly say any longer that any accredited law school that followed American Bar Association and National Association for Law Placement guidelines in reporting the basic employment status of its graduates, as Cooley did, was misleading anyone,” he said in a formal statement.
Twelve recent Cooley graduates—many of them either unemployed, working in solo practices or doing contract legal work—initially sued Cooley in 2011 seeking $300 million for themselves and other alumni. They alleged the school misrepresented its job-placement and salary statistics to lure students.
On July 20, 2012, U.S. District Judge Gordon Quist dismissed the suit, ruling that the Michigan Consumer Protection Act did not apply to education, which amounts to a business purpose. The appeals panel comprising appeal judges Boyce Martin Jr. and Deborah Cook and U.S. District Judge James Graham agreed. They said that because the students attended Cooley to improve their circumstances and snag a legal job, that equates to a business purchase for which the consumer-protection law offers no remedy.
“If, for example, the graduates alleged that they attended Cooley to get a legal education with no intention of using it to make money, the district court might have erred in holding that the Act did not apply,” the opinion reads. “But because the graduates admitted in their complaint that they bought their legal education for a business purpose, to make a living, the district court concluded that they failed to state a claim under the Act.”
The second part of the appeal focused on two specific claims made by Cooley in 2010: That 76 percent of its graduates were employed as of nine months after graduation and that graduates earned an average salary of $54,796. The plaintiffs argued that those statistics were fraudulent because the first represented students in all types of jobs—not just full-time legal ones—and the second was based on the 83 percent of graduates who reported their earning to the school rather than the entire class.
A reasonable person would assume that he or she had a high likelihood of getting a fulltime legal job that paid close to $55,000 a year by attending, the plaintiffs argued.
But the trial and appeals judges said the employment figure was not technically false. “The statistic does not say percentage of graduates ‘employed in full-time, permanent positions for which a law degree is required or preferred,’ ” the appeals court wrote. “It only says percentage of graduates ‘employed.’ ”
Similarly, the court agreed that any reliance by the plaintiffs on the average salary statistic was unreasonable because other data in Cooley’s employment report indicated that the figures were based only on graduates who completed the school’s job survey.
The plaintiffs alleged that Cooley’s failure to explicitly state that the average salary figure was based on information from only a portion of the recent graduates and that the employment figure included any type of job constituted a silent fraud. The appeals court rejected that argument, saying that they failed to establish that Cooley had a duty to make that disclosure.
Cooley and New York Law School were the first targets of plaintiffs represented by Strauss and David Anziska. (Thomas Jefferson School of Law was hit with a similar suit filed by a different attorney just weeks before the Cooley and New York suits were filed.) Strauss and his team followed up three months later with nearly identical actions against a dozen law schools across the country.
Suits against schools in Illinois, Michigan and New York have since been dismissed, but those against four law schools in California—California Western School of Law, Golden Gate University School of Law, the University of San Francisco School of Law and Southwestern Law School—each survived initial motions to dismiss and are in discovery.
Similarly, a suit targeting Widener University School of Law is in discovery. A court has yet to weigh in on a pending case against Florida Coastal School of Law.
“Clearly, the courts don’t want to grapple with this issue, but we’re hoping that the [U.S.] Department of Education of the [American Bar Association] steps in to deal with schools like Cooley and Florida Coastal, because they are doing a huge disservice to their students,” Strauss said.
He added that while the attorneys haven’t met their primary goal—which is to secure compensation for the plaintiffs—they are proud that their efforts have helped place a spotlight on the issue of law school transparency.
But LeDuc insisted other motives are at play. “From its start, this case, and others like it, has been nothing more than a misguided crusade, brought by lawyers who had to search for their clients on social media, to shift blame onto law schools for the difficulty of finding jobs in a recessionary economy,” he said. “And yet the legal profession always has been, and remains, one of the most resilient professions with one of the lowest unemployment rates of any profession.”