The Sixth Circuit's ruling in the fraud case by graduates of Cooley Law is here. The appellate court affirms the trial court's dismissal of the claims. As former plaintiffs-side tort business tort lawyer, I am disappointed in the result. The majority of these suits have been rejected; iirc, a couple in California and one in New Jersey survived challenges at the pleading stage. You can read the new decision yourself but it was particularly disappointing to read the passage where the court ruled that Cooley made objectively false statements that it was unreasonable for Cooley applicants to rely upon. To be fair, there is more merit to the decision than my headline might suggest. Read the whole thing. (h/t to Alison Frankel at Reuters) Key excerpts:
The plaintiffs, twelve graduates of the Thomas M. Cooley Law School, sued their alma mater in district court, alleging that the school disseminated false employment statistics which misled them into deciding to attend Cooley. The graduates relied on these statistics as assurances that they would obtain full-time attorney jobs after graduating. But the statistics portrayed their post-graduation employment prospects as far more sanguine than they turned out to be. After graduation, the Cooley graduates did not secure the kind of employment the statistics advertised—or in some cases any employment at all. They claimed that, had they known their true—dismal—employment prospects, they would not have attended Cooley—or would have paid less tuition. Because their Cooley degrees turned out not to be worth what Cooley advertised them to be, they have sought, among other relief, partial reimbursement of tuition, which they have estimated for the class would be $300,000,000. But because the Michigan Consumer Protection Act does not apply to this case’s facts, because the graduates’ complaint shows that one of the statistics on which they relied was objectively true, and because their reliance on the statistics was unreasonable, we AFFIRM the district court’s judgment dismissing their complaint for failure to state any claim upon which it could grant relief .
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The graduates claimed that, to a reasonable consumer, this statistic meant that the jobs reported were full-time, permanent positions for which a law degree was required or preferred. But, the graduates argued, this percentage was false because it included any type of employment, including jobs that had absolutely nothing to do with the legal industry, and which did not require a law degree or which were temporary or part-time. In their words, a graduate “could be working as a barista in Starbucks . . . and would be deemed employed and working in ‘business,’ even though such employment [was] clearly temporary in nature and obviously d[id] not require a JD degree.” The district court concluded that the graduates failed to state a claim for fraud under Michigan law for two reasons. First, because the “percentage of graduates employed” statistic was literally true[,]” MacDonald, 880 F. Supp. 2d at 788, and was “not objectively false.” Id. at 794. Second, the district court held that the graduates’ reliance on the “percentage of graduates employed” statistic as including “only graduates who were employed in full-time legal positions” was unreasonable. Id. Again, we agree with the district court.
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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.
[edited since 1st posting]