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Phillips v. DePaul University

Court of Appeals of Illinois, First District, Sixth Division

September 26, 2014

JONATHAN PHILLIPS, BRIAN LOKER, ADAM SMESTAD, XAVIER HAILEY, BRENT DAVIDSON, SHELLYE TAYLOR, ALLISON LEARY, JAIME WALSH, MADISON MULLADY, on Behalf of Themselves and All Others Similarly Situated, Plaintiffs-Appellants,
v.
DEPAUL UNIVERSITY, a/k/a DePaul University College of Law, and DOES 1-20, Defendants-Appellees

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[Copyrighted Material Omitted]

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As Corrected.

Appeal from the Circuit Court of Cook County. No. 12 CH 003523. Honorable Neil Cohen, Judge Presiding.

SYLLABUS

In a class action by graduates of defendant law school who became licensed attorneys but had difficulty obtaining full-time, legal employment with salaries high enough to allow them to service their student loans, the appellate court affirmed the trial court's dismissal of their complaint alleging that defendant violated the Consumer Fraud and Deceptive Business Practices Act and committed common-law fraud and negligent misrepresentation by publishing employment and salary statistics that deceptively overstated the percentages of graduates who obtained full-time legal employment earning more than $70,000 and that plaintiffs relied on that information when deciding to enroll and remain enrolled in defendant school and graduated with juris doctorate degrees with job prospects that were less than what defendant claimed they would be, since plaintiffs did not adequately allege that defendant made any incomplete, false, deceptive, or misleading statements with respect to the employment information it provided regarding its graduates' employment and salaries for the years alleged, and, furthermore, plaintiffs did not adequately allege reasonable reliance, proximate cause, or damages.

Clinton Law Firm, of Chicago (Edward X. Clinton, Jr., Edward X. Clinton, Sr., of counsel), for Appellants.

Jones Day (Lawrence C. DiNardo, Tina M. Tabacchi, of counsel); Varga Berger Ledsky Hayes & Casey (Norman B. Berger, Michael D. Hayes, of counsel), of Chicago, for Appellees.

JUSTICE ROCHFORD delivered the judgment of the court, with opinion. Justices Hall and Mason concurred in the judgment and opinion.

OPINION

ROCHFORD, JUSTICE.

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[¶1] Plaintiffs, Jonathan Phillips, Brian Loker, Adam Smestad, Xavier Hailey, Brent Davidson, Shellye Taylor, Allison Leary, Jaime Walsh, and Madison Mullady, graduated from DePaul University College of Law (DePaul) between 2007 and 2011 and are licensed attorneys, but they have had difficulty finding full-time, legal employment that pays a high enough salary so as to allow them to pay off their student loans. On April 6, 2012, plaintiffs filed a first-amended class action complaint against DePaul on behalf of themselves and all others similarly situated, alleging that DePaul violated the Consumer Fraud and Deceptive Business Practices Act (Consumer Fraud Act) (815 ILCS 505/1 et seq. (West 2012)) and committed common-law fraud and negligent misrepresentation by publishing employment and salary statistics that deceptively overstated the percentages of recent graduates who had obtained full-time legal employment with salaries in excess of $70,000. Plaintiffs alleged they relied upon these employment and salary statistics when deciding to enroll and remain enrolled at DePaul, and that as a consequence of such reliance, they " paid tens of thousands of dollars for the required tuition, and in some cases took out tuition loans that will burden them for years." Also as a consequence of such reliance, they " graduated with a J.D. degree from DePaul with near-term and lifetime job prospects that are, statistically, less than they would have been had they obtained a degree from a DePaul with the employment numbers DePaul claimed to have." Plaintiffs sought to recover as damages a percentage of their tuition payments as well as the additional lifetime income they would have earned had they obtained the employment and salaries they expected based on the employment and salary statistics reported by DePaul. DePaul filed a combined motion to dismiss (735 ILCS 5/2-615, 2-619 (West 2012)), which the circuit court granted with prejudice. Plaintiffs appeal.[1] We affirm.

[¶2] I. Background Facts

[¶3] A. Allegations Regarding the Individual Plaintiffs

[¶4] In their first-amended class action complaint, the following allegations were made regarding the individual plaintiffs:

[¶5] Jonathan Phillips and Xavier Hailey enrolled in DePaul in August 2007, graduated with juris doctorate (J.D.) degrees in May 2010, and were admitted to the Illinois bar on November 4, 2010. Brent Davidson enrolled in DePaul in August 2006, graduated with a J.D. degree in May 2009, and was admitted to the Illinois bar in November 2009. Shellye Taylor enrolled in DePaul in August 2006, graduated with a J.D. degree in May 2010, and was admitted to the Illinois bar on November 4, 2010. Allison Leary enrolled in DePaul in August 2007, graduated with a

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J.D. degree in May 2011, and was admitted to the Illinois bar on November 4, 2011. Adam Smestad enrolled in DePaul in August 2007, graduated with a J.D. degree in December 2009, and was admitted to the Illinois bar on November 4, 2010. Jaime Walsh enrolled in DePaul in September 2003, graduated with a J.D. degree in May 2007, and was admitted to the Illinois bar in November 2007. Madison Mullady enrolled in DePaul in August 2008, graduated with a J.D. degree in May 2011, and was admitted to the Illinois bar in November 2011. Brian Loker enrolled in DePaul in August 2007, graduated with a J.D. degree in December 2009, and was admitted to the California bar in June 2010.

[¶6] Plaintiffs alleged each of them took out student loans ranging from $77,000 to more than $300,000 to pay for the cost of attending DePaul. Upon graduation, none of them have found full-time, legal work that pays a salary sufficient to service their student loan debts. The only salary actually pleaded was for Jaime Walsh, who makes $40,000 per year.

[¶7] B. Allegations Regarding DePaul

[¶8] In their first-amended class action complaint, plaintiffs alleged that DePaul is a law school accredited by the American Bar Association (ABA). Section 509(a) of the ABA's Standards for Approval of Law Schools provides that an accredited law school must " publish basic consumer information" in a " fair and accurate manner reflective of actual practice." Pursuant thereto, DePaul annually publishes " Employment Information" on its website and in other marketing materials ( e.g. in a Viewbook and Student Report ) purporting to set forth the employment and salary history of the previous year's graduates within the first nine months after graduation. The employment information is based on surveys sent to the recent law school graduates.

[¶9] Plaintiffs alleged that in 2006, DePaul published employment information stating that 98% of its graduates in the class of 2005 were employed within nine months of graduation, with 57% working in private practice, 21% working in business, 12% working in government, 4% working in public interest, 3% working as judicial clerks, and 2% working in academia. The mean starting salary was stated to be $82,890 for those in private practice and $72,637 for those in business.

[¶10] Plaintiffs alleged that in 2008, DePaul published employment information stating that 95% of its graduates in the class of 2007 were employed within nine months of graduation, with 62% working in private practice, 19% working in business, 12% working in government, 4% working in the public interest, 1% working as judicial clerks, and 2% working in academia. The mean starting salary was stated to be $82,890.00 for those in private practice and $72,637.00 for those in business.

[¶11] Plaintiffs alleged that in 2010, DePaul published employment information stating that 93% of its graduates in the class of 2009 were employed within nine months of graduation, with 50% working in private practice, 26% working in business, 12% working in government, 4.4% working in the public interest, 1.5% working as judicial clerks, and 4.4% working in academia. The mean starting salary was stated to be $97,056 for those in private practice and $74,267 for those in business.

[¶12] Plaintiffs alleged that DePaul's employment information for the 2005, 2007, and 2009 classes was " incomplete, false and materially misleading" in that the employment rate of its graduates within nine months of graduation was " substantially overstated" because: " the jobs reported included any type of employment, including

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jobs that did not require or even prefer a J.D. degree" ; " the jobs reported included jobs that were part-time or were full-time but temporary short-term positions" ; and " the jobs reported included such as 'research assistant' or 'intern' or other 'make-work' positions-including some which DePaul provided to its own graduates while they were studying for the Bar exams and/or to tide them over until they found 'real jobs' requiring a J.D. degree." (Emphasis in original.)

[¶13] Plaintiffs alleged " [t]he salaries reported were substantially overstated, because DePaul, on [the] one hand, reported as employment numbers the numbers from any kind of employment (including temporary and part-time), but, on the other hand, reported salary information based only on full-time employment. Given that full-time employment generally pays significantly higher salaries than part-time or temporary employment, the published salary numbers were significantly distorted to show higher salaries than statistically warranted and, therefore, were inherently misleading." (Emphases in original.)

[¶14] Plaintiffs alleged " the data reported in the Employment Information implied a much stronger statistical basis than was the fact and failed to show the material distinctions between graduates with full-time permanent positions as lawyers and other graduates."

[¶15] Plaintiffs alleged DePaul reported the employment information for the 2005, 2007, and 2009 classes " in its print and electronic marketing materials and to third parties, such as the ABA, the National Association for Law Placement ('NALP'), and U.S. News & World Report ('U.S. News')." " The cumulative effect of [DePaul's] touting its post-graduate employment placement record--whether in its own publications or in its reports to other organizations-was to imply to prospective students, and to induce prospective students to infer, that DePaul's employment statistics accurately reflected their likelihood of finding a permanent full-time job as a lawyer within nine months after graduation."

[¶16] Plaintiffs alleged they each relied on the employment information for the 2005, 2007, and 2009 classes when choosing to apply to, enroll, and continue to be enrolled in DePaul. Plaintiffs paid between $30,000 and $41,240 per year in tuition, depending on the year, so they could attend DePaul, and incurred substantial debt.

[¶17] Plaintiffs alleged DePaul violated the Consumer Fraud Act and committed common-law fraud and negligent misrepresentation by publishing the employment information for the 2005, 2007, and 2009 classes containing the misleading employment and salary statistics which plaintiffs relied upon when deciding to enroll and remain enrolled at DePaul and when taking out the loans " that will burden them for years." As to damages, plaintiffs alleged:

" DePaul inflated its employment statistics by a percentage to be determined in this litigation. Call it X percent.
Those inflated statistics purported to be a reasonable projection by DePaul of [p]laintiffs' post-graduate employment prospects if he or she enrolled in DePaul rather than elsewhere.
To the extent the statistics were inflated by X percent, the advantage to [p]laintiffs and the value of the tuition and fees they paid to DePaul was reduced by X percent. Accordingly, DePaul charged for X, but the [p]laintiffs did not receive X.
Therefore, [p]laintiffs were damaged at least in the amounts of:

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(a) X percent of the amount they paid to DePaul, and
(b) a statistically determinable amount of the lifetime income they would have been expected to earn after graduating from DePaul if DePaul's post-graduation employment statistics had been those that DePaul had represented in the Employment Information, less the statistically determinable amount of the lifetime income they would now be expected to earn, having graduated from DePaul, based upon DePaul's true post-graduation employment statistics." (Emphasis in original; paragraph numbers omitted.)

[¶18] DePaul filed a combined motion to dismiss plaintiffs' first-amended class action complaint. Pursuant to section 2-615 of the Code of Civil Procedure (Code) (735 ILCS 5/2-615 (West 2012)), DePaul contended that plaintiffs' Consumer Fraud Act claim should be dismissed for failing to adequately plead the required elements of a deceptive act, causation or damages. In particular, DePaul contended that the employment information for the 2005, 2007, and 2009 classes, in conjunction with the annual ABA-LSAC Official Guide to ABA-Approved Law Schools (ABA Guide), which contains yearly employment statistics reported by DePaul, adequately informed plaintiffs that they were not guaranteed full-time legal employment with a high starting salary upon graduation and, thus, were not deceptive. DePaul also contended that plaintiffs' alleged damages were not proximately caused by the employment information for the 2005, 2007, and 2009 classes, and that plaintiffs failed to allege any determinable damages.

[¶19] DePaul also contended that plaintiffs' common-law fraud and negligent misrepresentation causes of action should be dismissed pursuant to section 2-615 of the Code for failing to adequately plead the required elements of ...


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