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Thomas Cooley Law School: Don’t blame us if you believed our lies

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Shorter Sixth Circuit: It’s unreasonable for prospective law students to expect a law school’s representations about its employment statistics to be, you know, true:

Nor can the graduates establish a claim for fraudulent misrepresentation based
on the statistic for “average starting salary for all graduates” because their reliance
on it was unreasonable. The graduates alleged that Cooley committed fraudulent
misrepresentation by including the line in each year’s Employment Report and Salary
Survey stating the “average starting salary for all graduates.”
(my emphasis)

For example, the Employment Report for 2010 states that the “average starting
salary for all graduates” was $54,796. On its face, the phrase “all graduates” means just
that: all Cooley graduates—not just the ones who responded to the survey—made,
on average, $54,796. One could assume that, because there were 934 graduates, the
average starting salary for all 934 graduates was $54,796. The title of the document
containing this statement is “Employment Report and Salary Survey.” Therefore, it
cannot be that the average starting salary of all 2010 graduates was $54,796, because the
document, entitled “Employment Report and Salary Survey” (emphasis added) was not
based on the responses of all of the Cooley graduates in 2010; rather, the document
states that the number of 2010 graduates was 934, but the number of graduates with
employment status known was 780. So, the “[a]verage starting salary for all graduates”
would instead mean the average starting salary of graduates who responded to the survey
and chose to include their salary information—not the average salary of all Cooley
graduates in any given year.

We agree with the district court that this statistic is “objectively untrue,”
MacDonald, 880 F. Supp. 2d at 794, but that the graduates’ reliance upon it was “also
unreasonable,” id. at 796, which dooms their fraudulent misrepresentation claim.

Despite the statement’s untruth, the graduates cannot demonstrate that their
reliance on this statement was reasonable. Unreasonable reliance includes relying on an
alleged misrepresentation that was expressly contradicted in a written contract that a
plaintiff reviewed and signed. Novak, 599 N.W.2d at 553–54; Nieves, 517 N.W.2d at
237–38. A plaintiff unreasonably relies on one of the defendant’s statements if another
of the defendant’s statements contradicts it.

Here, the statement “average starting salary for all graduates” expressly
contradicted other statements in the very same report showing that the report itself was
based not on data for the entire class, but on data from those who completed the surveys.
The Cooley graduates’ reliance on the statement that the “[a]verage starting salary for
all graduates” was “$54,796” was unreasonable in light of both the statement that the
“[n]umber of graduates with employment status known” was less than the total number
of graduates and the very title of the report (a “Salary Survey”). Because their reliance
was unreasonable, their claim for fraudulent misrepresentation failed as a matter of law.
Therefore, the district court properly dismissed the claim.

Note: Per information Cooley posted on its web site while the suit was ongoing but has since taken down, the school had salary information for a total of 6.5% of the 2010 class. That was the school’s basis for its claim regarding the “average starting salary for all graduates.” (Emphasis added. LST posted the stats here before Cooley scrubbed its web site.)

In other words, if a law school publishes not merely misleading statistics but flat-out lies (“objectively untrue” statements), it won’t be liable for doing so as long as a close reading by sufficiently cynical and suspicious reader — for example, a lawyer! — would reveal that those statements are likely to be untrue, because they contradict other statements in the document (how readers are supposed to figure out which of the contradictory statements are actually true isn’t something the Sixth Circuit panel explains). Furthermore, if you tack the word “survey” to the title of a document whose text claims that it’s a comprehensive survey, that means the survey isn’t actually comprehensive, because also.

Even shorter Sixth Circuit: Suckers!

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  • thelogos

    Supplemental shorter: “I got mine, screw the rest of you!”

  • liberalrob

    Even shorter: There are lies, damned lies, and statistics. Case dismissed.

  • liberalrob

    Even shorter even shorter: You can’t believe everything you read. Dismissed.

  • MD Rackham

    I guess the court figures it’s not a great leap from lawyer to law school in the old chestnut “How do you tell a lawyer is lying?”

  • Murc

    This sort of thing is actually pretty common.

    A bit of trivia about contract law I learned a few years back; at least here in New York State, if someone baldfacedly lies to you to get you to sign a contract with them, the contract is still considered to be valid as long as you had access to the truth through a different venue; it’s considered to be YOUR fault for not making use of it.

    • So they’ve eliminated the concept of good faith. How then is access defined and is there any sort of reasonableness standard?

      Just thinking of leases, if a landlord is in the habit of giving tenants leases for a year and then later saying, “Oh, actually that lease is only for half a year,” you could argue the tenant could have questioned other tenants, therefore you had access to the information. But I can’t see that surviving in court.

      • Jon C

        Well, not fulfilling the explicit terms of the contract is different than lying about an underlying premise of it. Presumably the one-year lease says its for a year b

      • Murc

        How then is access defined and is there any sort of reasonableness standard?

        The example I was given when I asked the lawyer telling me about this to explain was this:

        Suppose you want to buy a business, let’s say a hotel, from someone, and they tell you that the occupancy rate over the past five years is X. If you sign a deal based on that and then go into their records after the deal is done and discover they lied, the occupancy rate is Y instead, you don’t have legal recourse, because the data was there in the form of records, you just didn’t go looking for it.

        To be fair, it’s also the case that a competent lawyer will include clauses in the contract itself specifying the terms under which it was agreed and declaring it null if they’re not as stated. But the fact that that has to be done at all seems dodgy to me.

        • Sherm

          This is largely correct. A reasonable person would review the seller’s records before purchasing a business and should ascertain the truth by doing so. If a seller conceals or falsifies documents, then you have a fraudulent inducement case.

        • Just Dropping By

          To be fair, it’s also the case that a competent lawyer will include clauses in the contract itself specifying the terms under which it was agreed and declaring it null if they’re not as stated.

          Right, there should be “reps and warranties” in the sale agreement or other contract regarding the accuracy of any information provided by the seller.

          • Jim48043

            Don’t forget the Seller, too, may have a competent lawyer who will reject such language in the instrument.

            • Just Dropping By

              Yes, but if a seller refuses to give the buyer reps and warranties for the accuracy of information provided by the seller in connection with the sale, the buyer should either (a) refuse to go through with the transaction entirely, (b) demand a lower purchase price, or (c) demand some other protection depending on the circumstances (e.g., an indemnification agreement from the seller or its owners/parent company).

              • Sherm

                No. You ask to review financial records, and if the seller refuses, then you walk away. But any seller’s attorney who warrants the truthfulness if his or her client’s representations is begging for his or her client to be subsequently sued by the buyer. You supply the records and warrant nothing. If the financials were bullshit, the buyer has a fraud claim. If not, the buyer had a full and fair opportunity to determine the fair value of the business and has no lawsuit.

    • guthrie

      Wait, I thought capitalism and free markets depended on truth, justice and the american way?

  • Sam

    Caveat Emptor…Always

  • eukaryote

    In the opinion, the Court knocks the plaintiffs right at the outset, referring to their amendmend complaint as “prolix.” What does the Court expect? These are twelve graduates of Cooley, and the Court admits that the Law School lied about employability of its gradutes. Should they really be surprised by the over-verbosity of a complaint filed by Cooley grads?

    • Hogan

      Dear Legba, I hope they weren’t doing this pro se.

      • Mike Schilling

        It was part of the final exam. Anyone who can’t find at least five ways in which the school defrauded them fails.

  • Cheap Wino

    So the court essentially said to Cooley, “You willfully and deliberately lied in order to scam people out of six digits worth of money. We support and encourage you in the pursuit of the American ideal. Carry on.”

    • Even though the box said Delicious Quality Chocolates but actually contained chocolates filled with strychnine, it is the plaintiff’s fault for failing to subject the chocolates to a chemical analysis before eating them.

      • Davis X. Machina

        What else did you expect to find in a sweet named ‘Crunchy Frog’?

        • Snarki, child of Loki

          At least it wasn’t the “Spring Surprise”

  • Sherm

    I have maintained all along that although all of the law school plaintiffs have stated valid fraud causes of action in my opinion, all of their cases will be dismissed simply because the Judges will be uncomfortable with the allegations and will have no idea how to tailor a proper remedy for the plaintiffs (who have law degrees and decades of work expectancy ahead of them to find a way to make the degrees worthwhile). Its quite easy for judges to tailor the law to fit the conclusion they seek, irrespective of the evidence.

  • Funny Money

    By the same token, I will now always and forever refer to Cooley law as having been adjudged by a federal appellate court to report objectively untrue employment statistics.

    Cooley law, home of objectively untrue statements.

    Boom. No libel here. Truth. Don LeDuc, isn’t it true that Cooley was found by a federal appellate court to make objectively untrue statements about employment outcomes?

    Boom.

  • Hogan
  • Johnny Sack

    Well. Anyone who entered law school after, say, 2010 (especially a place like Cooley) not realizing how fucked they’d probably be at graduation, was willfully blind at best, hopelessly obtuse at worst.

    I would never argue that this absolves Cooley of responsibility. Were I a judge, I would discharge their debt and thank god they weren’t practicing law.

  • Linnaeus

    “You fucked up! You trusted us!”

  • Royko

    Well, if what Paul says is true, and they only had salary information on 6.5% of the class, and the class is 934 graduates, then they only had about 61 salary responses. But the survey said that employment status was known for 780 graduates. I could maybe be persuaded that a reasonable person would believe from reading the document that the average salary for those 780 (instead of all 934) was $54k, but it doesn’t seem reasonable to assume that 92% of participants in the survey didn’t provide salary information, given how it was presented as “all graduates”.

    So from “average salary for all graduates” a reasonable person is supposed to work out that it means “average salary for 8% (who provided salary information) of 82% (whose employment status was known by the survey) of all graduates”!

    • ichininosan

      “But the survey said that employment status was known for 780 graduates. I could maybe be persuaded that a reasonable person would believe from reading the document that the average salary for those 780 (instead of all 934) was $54k”

      I read the survey and that is what I concluded. Try it:

      http://www.scribd.com/doc/100657078/Macdonald-v-Cooley

  • Tony N Oakland

    Query: Can California plaintiffs establish jx over Cooley? IIRC Cal B&P Code 17200 et seq doesn’t require showing of reliance in consumer cases. Only requires showing of tendency to deceive. Disgorgement is available remedy. Don’t practice in that area but just wondering if anyone has thought.

  • Matt

    Perhaps as a compromise Cooley can be required to append a “For entertainment purposes only.” disclaimer on all their marketing materials. :)

  • EH

    Why isn’t this a case of false advertising?

    • Barry

      “Why isn’t this a case of false advertising?”

      Because it’s a law school. In addition, from here and ‘Inside the Law School Scam’, it’s likely that most (if not all) law schools were playing the same game. They’d count any job as ’employed’, but only the full-time permanent JD jobs for salaries.

      And (again, from comments here and on ItLSS), they were not saying this until a couple of years ago, when they started putting disclaimers on the salary stats.

      That means that the majority of law schools were eligible for being sued for fraud, barring judicial actions like this one.
      So this decision is not just for Cooley, but for the majority of law schoools.

  • cpinva

    those graduates should just consider this part of their CLE.

  • KLG

    Nice. There needs to be a “Retraction Watch” for these people (I use the term loosely). Any scientist who pulled this crap and got caught would be forever and always ignored, whatever his motivation or excuse. Probably. I hope.

  • Bloix

    “Why isn’t this a case of false advertising?”

    The court makes a truly egregious move when it holds that the Cooley representations are not subject to the Michigan Consumer Protection Act, which prohibits false advertising in the sale of goods and services.

    Why not? Because the MCPA does not apply to goods and services purchased “primarily for a business purpose,” and people go to law school to get a job, which is, says the court, a “business purpose.”

  • OhioDocReviewer

    Cooley to unemployed/underemployed graduates: “Fuck you, pay me!”

    http://www.youtube.com/watch?v=5ydqjqZ_3oc

    “The guy’s gotta come up with Cooley’s money every month, no matter what. No job? Fuck you, pay me. Oh, your law degree is worthless? Fuck you, pay me. We lied to you, huh? Fuck you, pay me.”

  • Unemployed Northeastern

    Let’s look on the bright side.

    – Pretty much all of these cases have ended with the notion that law school stats are bs and no one should believe them

    – every law school will bleat the $1 mil premium law degree this fall

    – therefore, that study should similarly be considered bs

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  • ccq

    Who was on the panel?

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  • cas127

    Dreaming of the future and the wonder of the law (an almost infinite number of possible causes of action…)

    1)Common law fraud

    2)Federal wire/mail fraud

    3)Honest services fraud (still viable?)

    4)Qui tam actions for fraud against federal/state governments (guaranteed student loans)

    5)Negligent misrepresentation (hello, ABA and USN&WR)

    6) Breach of fiduciary duty (remember all that financial info you had to disclose to your price discriminating law school?)

    7) Statutory violation of tax laws concerning “nonprofit” status of schools and endowments

    8) Writ of mandamus executed against public law schools to perform complete and accurate disclosure of *all* relevant placement information in their possession, going back decades.

    9) Quo warranto writ executed against public law schools for unlawful execution of powers (public purpose of misleading applicants?)

    10) Violation of various Professional Responsibility obligations

    11) Federal and State Deceptive Trade Practices (alas, a loser here).

    12) Securities law violations (false/incomplete representations when executing loans for known packaging into securities for public sale)

    Sure, 1-12 (and beyond) are the spaghetti thrown against the wall of law school corruption…but it strikes me that working through the actual elements of actual liability inducing torts might be a better use of the scamblogs’ current energies.

    The problem has been publicized (and will continue to be – the miracle of easy blogging will see to that).

    But the actual, effective *punishment* of long-standing malefactors?

    Of the kind that will force them to *stop* and to *pay*?

    That is going to require an ongoing dedication to the judicial process.

    Motivated plaintiffs seldom run out of possible (hell, even plausible) arguments – and the schools have betrayed a *lot* of parties (students, governments, student loan guarantors, state bars, etc.)

    The schools have made a lot of different enemies in a lot of different ways – a few adverse rulings don’t change that.

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  • jay

    The outstanding question appears to be: How are federally
    backed student loan funds disbursed when the numbers are
    in question? Are there folks from the VA running the DOE?

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