Federal Court Permits Consumer Suit Against Widener Law

Senior Federal District Judge William Walls denied Widener Law's FRCP 12(b)(6) motion to dismiss in an action alleging that Widener University School of Law "posted to its website, and disseminated to third-party law school evaluators, misleading and incomplete graduate employment rates in violation of New Jersey and Delaware Consumer Fraud Acts".

The opinion is here.

This is an interesting decision in part because  it could have implications for the many other law schools that recruit in New Jersey.  (I leave it to the Civil Procedure buffs to opine about the extent to which New Jersey law could be used more broadly.)

For Widener  the stakes are indisputably high.  The plaintiffs seek $75 million in damages due to inflated tuition price - $225 million or more, total,  after treble damages.   Using back of the envelope math, it sounds like plaintiffs claim that Widener's method of reporting employment data resulted in annual tuition that was roughly$10K  too high.  

Many matters remain to shake out in this case, including class certification, a difficult case on the merits, and some challenging damages issues.  

But this decision appears somewhat more significant than the (thus far limited) coverage would suggest.  If nothing else, ongoing cases of this potential size could pose challenges for schools seeking to issue new bonds.  And you have to wonder about potential exposure for many other law schools under this reading of New Jersey law.

H/T ABA Journal

Comments

[Not Buying It]

The Judge, relying on the generic allegations of plaintiffs' attorneys, did not seem to have a very good grasp of the facts of the case. For example, the Judge quotes the plaintiff's brief as saying that Widener's U.S. News ranking was inflated by its employment statistics. Opinion page 5. Really? What year has Widener ever been in anything other than Rank Not Published/4th Tier in U.S. News? That is the lowest rank, and they do not distinguish within that lowest rank. It is not possible to be ranked lower. How could a federal judge have missed that rather obvious point?

[concerned for Widener]

I think everyone expects this suit to be a loser eventually. Certainly having the suit drag on is bad news for Widener. Another problem will be the fishing that is done during discovery. Many expect some hay to be made with the discovery results. Widener can ill afford this right now.

[Its Over]

The NY Court of Appeals just denied cert in the NYLS case. Stick a fork in these lawsuits in at least one state.

[Ralph D. Clifford]

To Not Buying It:

The motion decided was a 12(b)(6). The judge is required to accept the allegations in the complaint as true and decide whether they then constitute a cause of action. (See page 7 of the opinion). All the judge was doing (on page 5 of the opinion) is stating what the plaintiffs were alleging. It will be a far different matter of being able to prove that particular allegation, but that is not reached by 12(b)(6).

[Its Over]

Link to article discussing today's NYLS ruling:

http://www.law.com/jsp/nlj/PubArticleNLJ.jsp?id=1202593930135&Alums_bellwether_fraud_suit_against_New_York_Law_School_fails_on_appeal