When most of us imagine a typical false advertising lawsuit, we probably think of products that claim to make our hair shiny, our thighs skinny, our faces young, or our wallets fat. Most of us don’t initially connect the idea of deceptive advertising with the school where we received our law degrees. But that’s exactly what the plaintiffs argued, and recently lost, in a case against New York Law School.
Last August, former students of NYLS sued the school for fraud, negligent misrepresentation, and violations of New York’s deceptive acts and practices law. They argued that NYLS’s marketing materials misclassified graduates with temporary or part-time jobs as “fully” employed, omitted information about graduates who didn’t respond to employment surveys and created post-graduate job programs to hire their own graduates. The students argued that they relied on this allegedly misleading information when making their decision to attend NYLS, overpaid for their degrees, and now face unprecedented amounts of student debt and a grim job market. They sought $225 million in damages from the school.
The school, represented by the team here at Venable (some of whom can also lay claim to significant amounts of student debt) countered with a motion to dismiss. The New York State Supreme Court agreed with NYLS and dismissed each of the students’ claims. Justice Melvin L. Schweitzer wrote that “the issues posed by this case exemplify the adage that not every ailment afflicting society may be redressed by a lawsuit.”
From an advertiser’s perspective, the significance of the decision lies in the Court’s discussion of the reasonable consumer standard. The Court held that NYLS’s statements were not misleading in a material way to reasonable consumers acting reasonably under the totality of the circumstances. The Court looked to the particular set of circumstances that this group of plaintiffs faced when they made their decision whether or not to buy the product. Namely, these consumers were “college graduates — seriously considering law school,” making them “a sophisticated subset of education consumers, capable of sifting through data and weighing alternatives before making a decision regarding their post-college options, such as applying for professional school.”
The Court pointed out that the students had a wealth of other information (made available by the school itself and though other sources) on their realistic employment prospects before, during and after their decision to matriculate in law school. As a result, the sophisticated (and reasonable) consumer would have evaluated such information in deciding whether to incur debt and pay for an expensive graduate education. According to the Court’s reasoning, the applicants’ exclusive reliance on excerpts from the school’s promotional materials was not reasonable; proving once again that in New York, standards of sophistication are really taken seriously.