In short the opinion creates a new common law exception to caveat emptor, which is that, as long as the defendant does not literally lie, it is not liable for representations that are so misleading on their face that they should put a reasonable person on notice that they are misleading, and therefore shouldn't be relied on.
Yet even by this astoundingly lax standard Judge Quist shouldn't have granted the motion, since he misapplies it to what Cooley actually did. Consider his analysis of this portion of Cooley's 2010 employment report:
THOMAS M. COOLEY LAW SCHOOL EMPLOYMENT REPORT AND SALARY SURVEY
Theodore Souris, Augustus B. Woodward, and James Witherell classes
(September 2009, January 2010, and May 2010)
|Number of 2010 graduates||934|
|Number of graduates with employment status known||780|
|Percentage of graduates employed||76%|
|Average starting salary for all graduates||$54,796|
The learned judge then observes:
In the 2010 Employment Report, [*18] Cooley indicates that 76% of its graduates were employed within nine months of graduation. This statistic could, at most, refer only to the 780 graduates who responded to the survey because Cooley could not know the employment status of those who did not respond to the survey. Since 780 of Cooley's graduates responded to the survey, this statistic, standing by itself, says that 593 of Cooley's graduates were employed. 187 were unemployed, and the employment status of 154 of Cooley's graduates was unknown (934 minus 780).But that's not what this table says. The table says, "Percentage of graduates employed: 76%." It does not say "Percentage of graduates employed whose employment status is known: 76%. After all, if 91% of Cooley's graduates with a known employment status were employed, then that would mean 710 graduates (76% of 934) were employed. In fact if I were reading this table and didn't know it had been published by a law school, I would have assumed, oddly enough, that "Percentage of graduates employed" ought to be understood to mean "Percentage of graduates employed."
Clearly, what the plaintiffs Souris, Woodward, and Witherell should have done, if they had been reasonably prudent persons, was to construct a time machine. They could have then used this machine to visit April, 2012, when the ABA first published school-specific employment data. Then, after examining this newly available data and noting that Cooley's "employment" rate for its 2010 graduates was actually 17.5% lower than the school claimed it was in the above table, they could have used the same machine to go back to the middle of the previous decade, when they were actually deciding whether to enroll at Cooley. (Why employment statistics published in 2011 have any relevance to enrollment decisions made at least four years earlier remains a mystery).
Indeed while they were visiting the future, they also could have enlightened themselves via recently published New York Times and Wall Street Journal articles regarding the deceptive reporting practices of law schools, or even perused a scam blog or 50.
Note that Judge Quist claims "the 'percentage of graduates employed' statistic is not objectively false," because the school did not represent that 76% of its graduates got jobs as lawyers. But he's simply wrong about that: Cooley's claim, made in the most straightforward English, that it knew 76% of its 2010 graduates were employed -- in any capacity -- in February of 2011 was as objectively false as a claim can be.
This is just one of several absurdities in Judge Quist's opinion. The judge cites several cases in which plaintiffs relied on inaccurate statements from defendants, but failed to recover because they had information readily available to them which would have informed them that the statements they were relying on were inaccurate:
"[T]here can be no fraud where the means of knowledge regarding the truthfulness of the representation are available to the plaintiff and the degree of their utilization has not been prohibited by the defendant." The court in Schuler held that misrepresentations about the inventory of an automotive dealership were not actionable for the plaintiff who bought the dealership because the true figures and value appeared in schedules that the plaintiff received before making the deal. "Plaintiff either knew or could have readily discovered every material fact that was known by defendants at the time of sale." (emphasis added)So how were the plaintiffs here supposed to "readily discover" that Cooley's representations regarding its employment and salary figures were wildly misleading and featured at least one facially untrue statement? The answer, it seems, is that it "should" have been self-evident to the plaintiffs that Cooley's published statistics were "inherently untrustworthy!"
Without question, the Employment Reports are inconsistent, confusing, and inherently untrustworthy. For example, whether Plaintiffs are referring to the median or mean average, there is an ambiguity in the descriptor of salary because the average salary stated in Cooley's dissemination assumes the existence of a salary in the first place. 8 In other words, a question arises, as it arose in oral argument, does the statistic [*29] consider the "salaries" of those Cooley graduates who were not employed or who were sole practitioners who listed a salary of zero? Plaintiffs argued, as stated above, that to have failed to consider a "zero" salary would be misleading. But maybe not. This is the kind of question that a person serious about considering this statistic would ask. Plaintiffs and prospective students should have approached their decision to enter into law school with extreme caution given the size of the investment. Thus, even though Plaintiffs did not know the truth of how many graduates were used to calculate the average salary, at the very least, it is clear that the Employment Report has competing representations of truth. See id. at 683 (citing Schuler, 197 N.W.2d at 495). With red flags waiving [sic] and cautionary bells ringing, an ordinary prudent person would not have relied on the statistics to decide to spend $100,000 or more.In other words, prospective law students who were imprudent enough to believe Cooley's "obviously" bogus statistics got what they deserved.
And the judge makes clear that what he's saying applies with equal force to anyone who should be reckless enough to ever believe any statistics published by law schools pursuant to ABA "disclosure" requirements. Indeed, the judge goes so far as to quote the plaintiffs' response as evidence for the proposition that everybody knows or should know that law schools lie about their stats, so what's the big deal?
(This of course is yet another example of the Negligent Failure to Employ a Time Machine defense).'[I]t is widely accepted that American law schools, Cooley included, employ all [*32] sorts of legerdemain to boost employment rates in a contracting legal market' (Pls.' Resp. at 5); once again, Plaintiffs state that they had other reasons to not rely upon the Employment Reports.
Judge Quist ends on a note that is sure to fill the members of our learned profession with pride:
The bottom line is that the statistics provided by Cooley and other law schools in a format required by the ABA were so vague and incomplete as to be meaningless and could not reasonably be relied upon. But, as put in the phrase we lawyers learn early in law school—caveat emptor.
I will have more to say about Cooley tomorrow morning.