Law School Grads’ Fraud Suit Dismissal Against Chicago Law School Upheld (Part I of II)

imageSeveral former law students sued their alma mater (DePaul) under consumer fraud and common law fraud theories when their job prospects weren’t as promising and their salaries not as high as they were led to believe.

In Phillips v. DePaul University, 2014 IL App (1st) 122817, the plaintiffs claimed they relied on DePaul’s published job and salary stats by staying enrolled at the school for three years and that they suffered monetary damages by paying thousands of tuition dollars and taking out loans that will fiscally shackle them for decades.

The plaintiffs sought to recover a percentage of their tuition payments plus the additional lifetime income they would have earned had they obtained employment and salaries congruent with the school’s published data.  The trial court granted the school’s motion to dismiss on multiple grounds.

Held: Affirmed.

Reasons: The Court agreed with the trial court that the plaintiffs’ consumer fraud claim failed.  To state a consumer fraud claim, a complaint must set forth specific facts showing: (1) a deceptive act or practice by the defendant; (2) the defendant’s intent that the plaintiff rely on the deception; (3) the deception occurred in the course of trade or commerce; and (4) the consumer fraud proximately caused the plaintiff’s injury.

A consumer fraud claimant must also plead and prove ‘actual damages.’  Unlike common law fraud, reliance is not an element of statutory consumer fraud.

A deceptive act or practice under the Consumer Fraud Act includes the use or employment of any false promise, misrepresentation or concealment of a material fact, with intent that others rely on the deception in the conduct of any trade or commerce. 815 ILCS 505/2.

Here, the plaintiffs failed to pinpoint which specific jobs or salary information disseminated by DePaul was false.  The law alums’ conclusory allegations that DePaul’s jobs data was false were not detailed enough to plead a deceptive act or practice by the school. (¶¶ 32-33).

The Court also cited record evidence that plaintiffs knew the school’s jobs and salary information was based on surveys that DePaul sent to recent graduates and their voluntary survey responses. 

The plaintiffs argued that DePaul deceived them by hiding that “only a small percentage” of the graduate surveys were returned and so the statistics were based on a limited number of completed surveys. 

The Court rejected this argument as the plaintiffs failed to plead facts showing the actual percentage of surveys returned versus the number of surveys the school sent out.  Absent more factual specificity on this point, the Court found the plaintiff’s claims too conclusory under Illinois’ heightened fraud pleading rules.

The Court also rejected plaintiffs’ claims that DePaul committed a deceptive act by failing to inform them of the percentages of graduates employed in nonlegal or part-time legal positions versus full-time law jobs.  The Court found that while DePaul could have been more specific about the types of employment (e.g. law and non-law jobs) it included in its stats, the plaintiffs still failed to identify an affirmative misrepresentation by DePaul concerning those figures.  

Two other bases for the Court’s decision were (1) the absence of any allegations that DePaul promised the plaintiffs they would earn at or above the average salaries listed in the published data coupled with (2) an American Bar Association (ABA) publication that expressed hat “[t]he highest-paying jobs were the exception rather than the rule.” ¶ 47

The Court found that plaintiffs could have easily cross-referenced DePaul’s data with the ABA’s information and noted that one published ABA source specified that recent law graduates obtained “legal, nonlegal, administrative and full-and part-time jobs.”  Because the ABA’s jobs and salary data was equally accessible to the plaintiffs, the Court found that they were on notice that DePaul’s information shouldn’t be taken as gospel. (¶¶ 43-45).

Another reason the Court found the plaintiffs’ consumer fraud claim lacking was because the plaintiffs got what they bargained for: a legal education and a J.D. degree.  Plaintiffs pointed to no promises made to them by DePaul about their post-graduation job prospects or any guaranty of full-time legal employment report or a set salary.

Afterwords: Consumer fraud requires heightened factual specificity – especially in the context of a lawsuit against a higher-education defendant.  A colorable fraud claim requires specific factual allegations that a defendant made an affirmative representation or omitted crucial information he was under a duty to dispense.  Conclusory allegations without factual and (here) numerical back-up will doom a consumer fraud claim that’s premised on flawed salary and job statistics.  In addition, the case shows that a Court won’t imply a promise where an express one doesn’t exist.

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Litigation attorney at Bielski Chapman, Ltd. representing businesses and individuals in business litigation, post-judgment enforcement, collections and real estate litigation.