Supreme Court, New York County Index No.

652226/2011 STATE OF NEW YORK COURT OF APPEALS __________________________________________________________________

ALEXANDRA GOMEZ-JIMENEZ, SCOTT TIEDKE, KATHERINE COOPER, MATTHEW CRAWFORD, GEOFFREY CORISDEO, SOLINE McLAIN, RENEE RIVAS, GERGANA MITEVA, and CHLOE GILGAN, on behalf of themselves and all others similarly situated, Plaintiffs-Appellants-Appellants -againstNEW YORK LAW SCHOOL, and DOES 1-20, Defendants-Respondents-Respondents

MOTION FOR PERMISSION TO APPEAL

David Anziska Law Offices of David Anziska 305 Broadway, 9th Fl. New York, NY 10007 Phone (914) 216-3540 facsimile (212) 822-1407 February 5, 2013

Jesse Strauss Strauss Law PLLC 305 Broadway, 7th Fl. New York, NY 10007 Phone (212) 822-1496 facsimile (212) 822-1407

Frank Raimond Law Offices of Frank Raimond 305 Broadway, 9th Fl. New York, NY 10007 Phone (212) 323-7417 facsimile (212) 822-1407

STATE OF NEW YORK COURT OF APPEALS -----------------------------------------------------------------------X ALEXANDRA GOMEZ-JIMENEZ, SCOTT TIEDKE, KATHERINE COOPER, MATTHEW CRAWFORD, GEOFFREY CORISDEO, SOLINE McLAIN, RENEE RIVAS, GERGANA MITEVA, and CHLOE GILGAN, on behalf of themselves and all others similarly situated, Plaintiffs-Appellants-Appellants -againstNEW YORK LAW SCHOOL, and DOES 1-20, Defendants-Respondents-Respondents -----------------------------------------------------------------------X

N.Y. County Clerks Index No. 652226/2011

NOTICE OF MOTION FOR LEAVE TO APPEAL

PLEASE TAKE NOTICE that, upon the annexed Statement in Support of Motion for Leave to Appeal, the order of the Appellate Division, First Department entered on December 20, 2012 (Exhibit A), and served, with notice of entry by Defendants-Respondents-Respondents on January 7, 2012, and the briefs and record filed in the Appellate Division, First Department on the prior appeal in this action, and upon all the papers and prior proceedings in this action, the PlaintiffsAppellants-Appellants ALEXANDRA GOMEZ-JIMENEZ, SCOTT TIEDKE, KATHERINE COOPER, MATTHEW CRAWFORD, GEOFFREY CORISDEO,
2

SOLINE McLAIN, RENEE RIVAS, GERGANA MITEVA, and CHLOE GILGAN, will move this Court at the courthouse of the Court of Appeals, 20 Eagle Street, Albany, New York on the 19th Day of February, 2013, for an order: a. Pursuant to CPLR 5602(a) and 5516, and Section 500.22 of the Rules of this Court, granting Appellants leave to appeal to the Court of Appeals from the order of the Appellate Division, First Department, entered on December 20, 2012 and served by Defendants-Respondents-Respondents with notice of entry on January 7, 2013; and b. Granting such other and further relief as the Court may deem just and proper. Dated: New York, New York February 5, 2013

-------------------------------Jesse Strauss STRAUSS LAW PLLC 305 Broadway, 9th Floor New York, New York 10007 (212) 822-1496 (tel.) (212) 822-1407 (fax.) jesse@strausslawpllc.com Counsel for Plaintiffs-AppellantsAppellants To: Michael J. Volpe, Esq. VENABLE LLP Rockefeller Center 1270 Avenue of the Americas, 24th Floor New York, NY 10020 (212) 307-5500 (tel.) (212) 307-5598 (fax) Counsel for Defendants-Respondents-Respondent Via Federal Express overnight delivery service
3

STATE OF NEW YORK COURT OF APPEALS -----------------------------------------------------------------------X ALEXANDRA GOMEZ-JIMENEZ, SCOTT TIEDKE, KATHERINE COOPER, MATTHEW CRAWFORD, GEOFFREY CORISDEO, SOLINE McLAIN, RENEE RIVAS, GERGANA MITEVA, and CHLOE GILGAN, on behalf of themselves and all others similarly situated, Plaintiffs-Appellants-Appellants -againstNEW YORK LAW SCHOOL, and DOES 1-20, Defendants-Respondents-Respondents -----------------------------------------------------------------------X PRELIMINARY STATEMENT

N.Y. County Clerks Index No. 652226/2011

STATEMENT IN SUPPORT OF MOTION FOR LEAVE TO APPEAL

This request for leave to appeal arises due to the failure of the trial court and the Appellate Division, First Department, to hold Respondent New York Law School (Respondent) accountable for its deceptive practices that have resulted in thousands of law school students and graduates including the nine named Appellants paying millions of dollars in inflated tuition because of material misrepresentations made by Respondent in its reported post-graduate employment
4

data. The First Department recognized Respondents deceptive marketing and admonished Respondent for (a) unquestionably less than candid and incomplete disclosures; (b) publishing employment and salary statistics for former classes that likely left some consumers with an incomplete, if not false, impression of the schools job placement success, (Exhibit A, p. 6); and (c) making misleading representations that give the impression that a full-time job is easily ascertainable when in fact it is not (Exhibit A, p. 10). After issuing that admonishment, the First Department went on to affirm the dismissal of the Complaint. By so doing, the First Department identified a wrong but stifled the remedy. Appellants nine recently admitted members of this

States bar harmed by Respondents alleged deceptive practices deserve better. Appellants deserve the opportunity to prove their claims. The Complaints allegations are galling: in New York State in 2009, 9,787 applicants were qualified for admission to the bar, although the States market for legal services only provided for the employment of approximately 2,100 new attorneys. (Record on Appeal (ROA) 60-61, 72-73). In 2009, alone, Respondent enrolled 736 students, the vast majority of whom graduated in 2012 into the current job market which had hardly improved since 2009. (ROA 45). For the privilege of participating in this saturated job market, Respondent charged $47,800 per year in tuition, which is in addition many thousands of dollars in living and
5

relocation expenses. (ROA 74).

The Complaint alleges that Respondents

graduates begin their professional careers with, on average, $119,437 in debt. Id. Appellants are nine such graduates and each has incurred substantial debt due to their enrollment in Respondent. (ROA 49-58). The Complaint alleges that several of the Appellants have been unable to find any employment in the legal sector. Id. The Complaint alleges that to entice Appellants to take on this life-altering debt Respondent falsely advertised that between 90% and 92% of Respondents graduates from past years were employed within nine months of graduation. (ROA 62-64). And not only did Respondent report that employment was

abundant, but it was also lucrative: Appellant reported that the average salary for graduates in private practice for the class of 2009 was $120,197. (ROA 79, 118). For graduates of its class of 2007, Respondent reported a median salary of those in private practice of $160,000. (ROA 79, 119). The Complaint further alleges that these statistics were false and misleading, that Respondent was aware of their falsity, but disseminated them anyhow. Respondent was aware, for example, that its reported median salaries were falsely inflated due to the disproportional presence of high earners who were specifically solicited to respond to surveys. (ROA 79). Respondent was also aware that the majority of the employment it reported was temporary and part-time and much of the permanent full time employment found by graduates did not require a law
6

degree (or any degree). (ROA 67). Respondent was also aware that it counted students employed by it in short term fellowships as employed and that a not insignificant percentage of its prior years graduates were employed as waiters, babysitters, baristas and retail workers. However, the Complaint alleges that

despite having this information and knowing that its employment reports were false and misleading, Respondent disseminated them without disclosures in an effort to entice Appellants to enroll and remain enrolled when they otherwise would not have. (ROA 61, 77-79). There can be little doubt that these facts state a GBL 349 and 350 claim, as well as a claim for fraud, fraudulent concealment and negligent misrepresentation. However, despite these allegations, the First

Department immunized Respondent from the discovery process whereby Appellants would have been able to prove their allegations by quashing the Complaint. The First Departments holding is irreparably flawed. As set forth below, the First Department failed to follow this Courts precedent and created divergent, inconsistent and confusing authority regarding the standards for pleading an omission-based fraud and pleading an omission-based General Business Law (GBL) 349 and 350 violation. The trial courts and the First Departments error and overreach requires the granting of this application to appeal.

This application to appeal should also be granted for the independent reason that it presents new and emerging issues of great importance to the legal profession. The proposed appeal allows this court to elucidate its authority to regulate the legal academy through the application of the States consumer protection statutes to Respondants deceptive marketing, which is an inextricable component of this Courts broad authority to regulate the admission of attorneys to practice. See N.Y. Jud. Law 53. Thus, by accepting this appeal this Court will send a clear message to New Yorks 163,798 resident, active attorneys as well as the tens of thousands of prospective attorneys and the nation as a whole that New Yorks Court system will police misleading marketing practices by New Yorks law schools. Also, by accepting this appeal, this Court will have the opportunity to demonstrate that the States broad prophylactic consumer protections apply to the legal academy, just as they apply to every business and institution in the State of New York. Finally, by granting this appeal, this Court will be able to determine whether Respondents encouragement, stewardship, and benefit from the tens of thousands of dollars in government-backed student loans taken by each Appellant creates a fiduciary duty from Respondent to Appellant necessary to support a fraud by concealment claim, as well as a negligent misrepresentation claim, another emerging issue of great public importance due to the one trillion dollars in
8

outstanding student loan debt, some of which was incurred due to the allegedly false and misleading representations made by the institutions such as Respondent who benefited from that debt. Practical considerations also warrant granting this appeal. This action is the first filed of four lawsuits against law schools in this State currently pending in three of the four departments of the Appellate Division. See Austin v Albany Law Sch. of Union Univ., Case No. A00014/2012 (Sup. Ct. Albany County Feb. 1, 2012); Bevelacqua v. Brooklyn Law School, Case No. 500175/2012 (Sup. Ct. Kings County Feb. 1, 2012); Richins v. Hofstra University, Case No. 600138/2012 (Nassau County Feb. 1, 2012). These suits were filed collectively by twenty-one recent laws school graduates requesting to represent their classmates against their alma maters. Thus far, three courts have issued decisions dismissing these lawsuits at the pleading stage rather than allowing plaintiffs to move their cases into discovery to prove their claims. Unfortunately, each court has used different

reasoning to terminate these suits prior to discovery, and the reasoning is inconsistent and unsupported by this Courts precedent. Absent action by this Court, these cases will work their way through the appellate courts for a determination of issues that can be more efficiently determined in this proceeding. Review should also be granted because the reluctance of the courts in New York to allow Appellants to prove their claims places New York courts out of step
9

with courts in the State of California, which have allowed graduates of three law schools to prove their claims for violations of Californias analogue to New Yorks General Business Law 349 and 350. See Arring v. Golden Gate Univ., No. CGC-12-517837 (Ca. Superior Ct. July 19, 2012); Hallock v. University of San Francisco, No. CGC-12-517861 (Ca. Superior Ct. July 19, 2012); Alaburda v. Thomas Jefferson School of Law, No. CU-FR-CTL-00091898 (Ca. Superior Court Nov. 29, 2012). Therefore, to rationalize these conflicting rulings among the Courts in this State, to prevent additional appeals on issues that can be decided in this proceeding, and to prevent inconsistency between California, the State with the largest bar in the nation, and New York, the State with the second largest bar in the nation, this Court should grant leave to appeal. The bar, the bench, and the legal academy require leadership from the States highest court regarding the issues proposed to be presented in this appeal. Appellants filed this case expecting to have the chance to prove their claims and New Yorks court system like Appellants should not shirk from that challenge. PROCEDURAL HISTORY This motion is timely made. The order of the Appellate Division from which leave to appeal is sought was entered on December 20, 2012. The order with notice of entry was served by Court Electronic Filing and U.S. Mail upon

10

Appellants on January 7, 2013. A copy of the order with notice of entry is annexed hereto as Exhibit A. This motion is being made within thirty days of the service of notice of entry of the Appellate Divisions order affirming the trial courts granting of summary judgment, it is, therefore, timely made pursuant to CPLR 5513(b). JURISDICTION This Court has jurisdiction to entertain this appeal pursuant to CPLR 5602(a)(1)(i), which permits the Court to grant leave to appeal in an action originating in the Supreme Court, where the order of the appellate division [is one] which finally determines the action and which is not appealable as of right. This action originated in the Supreme Court of the State of New York, County of New York. ROA 40-103. The order of the Appellate Division is final in that it disposes of all issues in this action. It dismissed the entirety of the complaint in this action. The order of the Appellate Division States: Accordingly, the order of the Supreme Court, New York County (Melvin L. Schweitzer, J.) entered March 21, 2012, which granted defendant New York Law Schools motion to dismiss the complaint, should be affirmed, without costs. (Exhibit A, p. 12). There were no counterclaims. ROA 175. Therefore, the order of the Appellate Division was one that finally determines the action. QUESTION PRESENTED FOR REVIEW
11

(1)

In light of this Courts holding in Oswego Laborers Local 214

Pension Fund v. Marine Midland Bank, N.A., 85 N.Y.2d 20 (1995) was the First Department correct in concluding that the subject misstatements were nonactionable under GBL 349 and 350 and that the Appellants are not entitled to the broad prophylactic protections of the States consumer protection laws because Respondent did not make any express representations that were actually false? This issue was preserved for review by Appellants in their opening brief to the First Department on pages 21- 26 and pages 4 - 9 of Appellants reply brief to the First Department, included with this motion. (2) Should this Court rationalize the decisions of the Appellate Division,

First Department, the Supreme Court, New York County, and Supreme Court, Albany County, which terminated similar actions by recent graduates of law schools prior to discovery on different and inconsistent grounds and should the Court address issues common to all these claims now or allow potentially recurrent appeals in other courts? (3) Should this Court bring New Yorks treatment of these cases into

conformity with California, which has allowed three suits brought by alumni against law schools to proceed into discovery? (4) Was the First Department correct to determine that there is no

fiduciary duty on the part of Respondent toward Appellants to support a fraud by

12

concealment claim or negligent misrepresentation claim where Respondent, an academic institution, encouraged, stewarded, and benefitted from tens of thousands of dollars in Appellants student loans that would not have been taken but for Respondents misrepresentations? This issue was preserved for review by

Appellants in their opening brief to the First Department 53-63and pages 26-27 of Appellants reply brief to the First Department. (5) Did the trial court err in holding, without a record, that Appellants, as

sophisticated consumers could not have reasonably relied on Respondents false statements because they had the opportunity to discover additional information from third parties? This issue was preserved for review by Appellants in their opening brief to the First Department on pages 31-36 and 55-62 and pages 9-11 and 22-25 of Appellants reply brief to the First Department, included with this motion. This issue was not considered by the First Department. (6) Did the trial court err when it required Appellants to plead a reliable

methodology for calculating damages and ignored the availability of statutory damages? This issue was preserved on pages 40-53 in Appellants opening brief to the First Department and on pages 11-19 of Appellants reply brief to the First Department, included with this motion. First Department. This issue was not considered by the

13

(7)

What powers does the Court of Appeals have pursuant to Judiciary

law 53 in coordination with the States consumer protection statutes to regulate deceptive statements and omissions by the States law schools? FACTS ALLEGED IN THE COMPLAINT Nature of Action Enrolling roughly 1,500 students annually, Respondent is one of the largest and most expensive law schools in the country, its class size having risen by 270 students between 2000 and 2009 and its tuition more than doubling to its current price of $47,800. ROA 47, 60. In 2009 alone Respondent increased its first-year class by over 30 percent, enrolling an astounding 736 students by far its largest class ever and the second largest class in the country. Respondents students graduate with, on average, $119,437 in non-dischargeable debt. ROA 60, 74. The Complaint alleges that in order to charge its high tuition, Respondent reported, and continues to report, materially deceptive and misleading statistics that inflate the number of its graduates who obtain full-time, permanent legal employment and the salaires earned by those graduates. ROA 62-66. Specifically, the Complaint alleges that for at least the past six years, Respondent reported with Madoff-like consistency that, depending on the year, between 90 and 92 percent of its graduates secured employment within nine months of graduation. Id. The context of these representations makes it appear to reasonable consumers, such as
14

Appellants, that the jobs reported are full-time, permanent positions for which a law degree is required. Id. However, Respondent, despite knowing the truth,

falsely and misleadingly failed to disclose that these placement rates include any type of employment, including jobs that have absolutely nothing to do with the legal industry, do not require a JD degree, or are temporary, part-time or voluntary. Id. The Complaint alleges that if Respondent had disclosed the number of

graduates who secured full-time, permanent positions for which a JD degree was required or preferred which it knew but failed to disclose the reported numbers would drop dramatically. The Complaint alleges that the actual rate of

employment in full time jobs that require a law degree is lower than 40 percent throughout the Class period. ROA 44-45, 68-70. Second, the Complaint alleges that Respondent inflates its graduates reported mean salaries by calculating them based on a small, deliberately selected subset of graduates who submit their salary information. ROA 44. To that end, Respondent already concedes that a paltry 25 percent of 2007 graduates, 20 percent of 2009 graduates and 22 percent of 2010 graduates disclosed any type of salary information, while failing to break down the percentage of graduates who disclosed salary information in other years. ROA 77-78. However, the small

sample size is not the claimed falsity in the reported salary data. Rather, the Complaint alleges that Respondent inflates its reported median salaries information
15

by omitting salary information provided by graduates in part-time, temporary or non-legal positions and purposefully solicits salries from high earning graduates, thus making those high earning graduates disproportionately overrepresented in the reported salary information and nominally employed or underemployed graduates disproportionately underrepresented. ROA 79. As evidence that Respondents statements were misleading, the Complaint alleges that the American Bar Association (ABA) has recently adopted guidelines that bar the exact practices that Appellants allege Respondent engaged in. ROA 89. Specifically, Respondent is now required to break down its

employment data to indicate whether a position is full-time or part-time, permanent or temporary, funded by the law school or an affiliated university, and whether bar passage or a JD degree is required or preferred. Id. Clearly, such information is material to any applicant when deciding whether to attend law school. Fraudulent statements The Complaint alleges that Respondent published false and misleading employment reports on its website and in marketing materials from at least August of 2005 forward.1 ROA 61. For example, until July 2011 right before the filing

Respondent also supplied employment information to various third-party data clearinghouses and publications, such as the ABA and US News & World Report (US News), which the Complaint alleges is riddled with the same legerdemain, dubious calculations and deliberate omissions as found in the
16

of this lawsuit Respondent posted false and misleading employment data for the Class of 2009 claiming that approximately 90 percent of the class was employed nine months after graduation, including 46 percent allegedly working in private practice, 24 percent in business, eight percent in government, 16 percent in public interest, and three percent both in judicial clerkship and academia. ROA 62. Based on the 20 percent of the entire class who reported salary information, the average salary for graduates in private practice was $120,197, $75,167 for those in business, and $56,054 for those in government. ROA 63. The

Complaint alleges that the salary data was false because it was collected disproportionately from the highest earning graduates. ROA 79. For the Class of 2007, Respondent misleadingly reported that 92 percent of the class was employed, including 48 percent allegedly working in private practice, 22 percent in business, 12.5 percent in government, five percent in public interest, three percent in judicial clerkships and 2.4 percent in academia, while, based on the 25 percent of the class who actually reported salary information, the median salary for graduates in private practice was $160,000 and $85,000 for those in business. ROA 63. The Complaint alleges that 2007 was the first year in

which Respondent disclosed that its salary data was based on a small subset of the

employment information posted and marketed by Respondent on its website and brochures. ROA 66.
17

class. ROA 115-123. The Complaint alleges that the salary data was false because it was collected disproportionately from the highest earning graduates. ROA 79. For the Class of 2006, Respondent misleadingly reported that approximately 92 percent of the class was employed, including 52 percent allegedly working in private practice, 18 percent in business, 11 percent in government, four percent in public interest, five percent in judicial clerkships and two percent in academia, while the median salary for those graduates working in firms with more than 100 attorneys was $128,000 and $74,000 for those in business. ROA 63-64. The Complaint alleges that the salary data was false because it was collected disproportionately from the highest earning graduates. ROA 79. For the Class of 2005, Respondent misleadingly reported that approximately 92 percent of the class was employed, including 51 percent allegedly working in private practice, 17 percent in business, nine percent in government, three percent in public interest, seven percent in judicial clerkships and one percent in academia. ROA 64. However, beginning in July 2011, right before the filing of this lawsuit, Respondent released its employment report for the Class of 2010, which paints a different and more accurate picture as to the employment outcomes for Respondents graduates than the previous reports, demonstrating that it was always possible for Respondent to provide this information, but chose not to. Respondent disclosed, for the first time, that 5.6 percent of its employed graduates were in
18

temporary positions funded by the NYLS Fellowship program, while only 80 percent of graduates were in positions that either required or preferred a JD degree. ROA 62. Respondent also disclosed that, based on the 22 percent of the class who reported salary information, the average salary for graduates in private practice was $107,343, $86,667 for those in business, and $56,910 for those in government. ROA 63. For the first time, Respondent revealed that graduates working in large firms, where they earn significantly more than typical first-year attorneys, were disproportionately overrepresented in the salary survey, while those in small firms were disproportionately underrepresented. ROA 77-78. The Complaint alleges that Respondent had this information for prior years, but misleadingly failed to disclose it. ROA 48. However, Respondents revised

employment rates were also misleading because it included part time and temporary work as employment without disclosing it was doing so. ROA 115. The Complaint cites to numerous articles or publications from 2010 or 2011. This information was only publically available well after most of the Appellants had graduated from Respondent and therefore could not have possibly influenced Appellants reasonable understanding of the employment and salary data reported by Respondent: An article by Professor Paul Campos of the University of Colorado Law School, published on April 25, 2011 in The New Republic, which is based on an exhaustive analysis of NALPs 2009 Employment Report and concludes that the true percentage of law
19

school graduates who have obtained full-time, permanent legal employment could be lower than 40 percent (ROA 16; ROA 69); The 2009 NALP Employment Report, which was published in June 2010, and 2010 NALP Employment Report, which was published in June 2011 (ROA 16; ROA 67); A memo from the ABA subcommittee which regulates the law school industry, dated July 27, 2011, announcing the enactment of new guidelines which would require greater reporting transparency for employment data starting in 2012, and a letter from NALP to the ABA, dated July 28, 2011, urging that the two organizations work together in implementing these reforms (ROA 17; ROA 85-87); A letter from the editor-in-chief of U.S. News to law school deans, published in March 2011, which acidly notes that the entire law school sector is perceived to be less than candid when reporting employment data, and that many schools appear not to treat the ABA reporting rules with the seriousness one would assume (ROA 18; ROA 66); A New York Times article, dated July 16, 2011, which quotes a NYLS professor as acknowledging that [a]t a school like New York Law, which is toward the bottom of the pecking order, its long been difficult for our students to find high-paying jobs (ROA 19; ROA 6061); An op-ed by the President of the California Bar Association, published in February 2011, in which he exhorts law school deans to adopt more rigorous reporting standards by disclosing the type of detailed employment and salary data that would allow students to get a realistic picture of their post-graduate financial situation (ROA 20; ROA 82); A letter from Senator Charles Grassley to the President of the ABA, dated July 11, 2011, in which he demanded that the organization answer 31 detailed questions pertaining to its regulation of law schools (ROA 27; ROA 81); A study by the consulting company, Economics Modeling Specialist, Inc. (EMSI), which was published by the New York Times on June 27, 2011, stating that nationwide there were twice as many people who passed the bar exam in 2009 as there were job openings (ROA 27-28; ROA 72-73); Six letters sent by three United States Senators to the ABA and Department of Education (DOE), dated between March 31, 2011 and October 13, 2011, decrying the systemic lack of transparency in
20

the reporting of employment data by law schools to prospective and current students ( ROA 80-81); Proposed legislation sent by a coalition of 55 law school student body presidents to Congress, published in May 2011, that would, among other things, create new reporting standards for employment data, require law schools to submit annual employment reports to the Department of Education, and empower the DOE to audit these reports (ROA 81); An article in the Wall Street Journal, dated November 14, 2011, reporting that U.S. Senate staff members were in the process of gathering a trove of information about the law school industry, and that the Senate was likely to hold hearings into the law school industrys failure to report accurate post-graduate employment data and air concerns over the amount of debt being racked up by law students (ROA 81); An op-ed by the previous President of the California Bar Association, published in May 2010, in which he pointedly criticized law schools for the way they tabulate and report employment information to prospective students (ROA 82); and A speech given by Richard Matasar, the former dean of NYLS, which was first reported in January 2009 by an obscure website -- well after all of the Appellants had either graduated from or were enrolled in NYLS -- in which he took his fellow law school deans to task for failing to take ownership of their students employment outcomes (ROA 76-77). These publications and documents are a retroactive acknowledgement that

Respondents employment reports and salary data were misleading and fraudulent. The record is silent regarding whether Appellants were informed or had access to any of the above at the time they were enrolling or deciding to enroll in Respondent. Each Appellant alleges that they were misled by Respondents

reported employment and salary data, and was unaware of any third party

21

information demonstrating Respondents misstatements and omissions. ROA 4958. Appellants Appellants are nine Respondent graduates who attended Respondent between 2004 and 2011. Alexandra Gomez-Jimenez attended Respondent between 2004 and 2007, and expressly relied on employment reports posted on Respondents website, asserting that 97 percent of 2002 graduates and 91 percent of 2003 graduates secured employment within nine months of graduation and the reported median salaries, while remaining enrolled at Respondent based on its representations that 90 percent of 2004 graduates and 92 percent of 2005 graduates secured employment within nine months of graduation and the reported median salaries. ROA 8. Chloe Gilgan attended Respondent between 2005 and 2008, and expressly relied on employment reports posted on Respondents website asserting that 91 percent of 2003 graduates and 90 percent of 2004 graduates secured employment within nine months of graduation and the reported median salaries, while remaining enrolled in Respondent based on its representations that 92 percent of 2005 and 2006 graduates secured employment within nine months of graduation and the reported median salaries. ROA 57. Scott Tiedke and Gergana Miteva attended Respondent between 2006 and 2009, and expressly relied on employment reports posted on Respondents website
22

asserting that 92 percent of 2005 graduates secured employment within nine months of graduation and the reported median salaries, while remaining enrolled at Respondent based on its representations that 92 percent of 2006 and 2007 graduates secured employment within nine months of graduation and the reported median salaries. ROA 50,56. Katherine Cooper, Matthew Crawford, Geoffrey Corisdeo and Soline McLain attended Respondent between 2007 and 2010, and expressly relied on employment reports posted on Respondents website asserting that 92 percent of 2005 and 2006 graduates secured employment within nine months of graduation and the reported median salaries, while remaining enrolled at Respondent based on its representations that 92 percent of 2007 and 2008 graduates secured employment within nine months of graduation and the reported median salaries. ROA 51-52. Renee Rivas attended Respondent between 2008 and 2011, and expressly relied on employment reports posted on Respondents website asserting that 92 percent of 2006 and 2007 graduates secured employment within nine months of graduation and the reported median salaries, while remaining enrolled at Respondent based on its representation that 92 percent of 2008 graduates secured employment within nine months of graduation and the reported median salaries. ROA 55-56. Damages

23

In addition to statutory damages allowable pursuant to GBL 349(h), which Appellants are entitled to if they decide to pursue this matter individually, the Complaint requests the following damages on a class wide basis, to be measured by the difference between the value of Respondents degree with the actual employment rates and average salaires, as opposed to the misleading ones reported:

Had [Plaintiff] been aware that NYLSs reported placement rates included temporary and part-time employment and/or employment for which a JD was not required or preferred, she would have elected to either pay less to NYLS or perhaps not attend the school at all. ROA 49-58. The unfair and deceptive trade acts and practices have directly, foreseeable and proximately caused. . .Appellants and other members of the Class . . . to have paid inflated tuition based on the material misrepresentation that approximately 90-92 [%] of Respondents graduates secure gainful employment. ROA 93. For restitution and disgorgement [of an amount] totaling $225 million, which is the difference between the inflated tuition paid by Class member based on the misrepresentations . . . and the true value of an NYLS degree. ROA 101. As set forth below, the trial court ignored Appellants entitlement to

statutory damages and also found Appellants claims could not proceed past the pleading stage because such a measure of damages is too speculative. ROA 38. The First Department did not reach this issue. Procedural History

24

On August 10, 2011, Alexandra Gomez-Jimenez, Scott Tiedke and Katherine Cooper filed a proposed class action complaint against Respondent. On November 21, 2011, six additional Appellants joined the original three named Appellants. ROA 40-103. On March 21, 2012, nine days after holding oral arguments, Justice Melvin Schweitzer issued an order dismissing the Complaint. ROA 4-39. In dismissing Appellants GBL 349 claim, Judge Schweitzer held that Appellants, as college graduates, were sophisticated consumers who should have realized that Respondents post-graduate employment data was false and deceptive. Id. In reaching this conclusion, Judge Schweitzer referenced

documentary evidence cited in the Complaint that supposedly demonstrated the dearth of employment opportunities for recent law school graduates, even though nearly all of the referenced documentary evidence was published in 2011, well after 8 out of 9 Appellants had already graduated from Respondent and one Appellant was on the verge of graduating. Id. Judge Schweitzer further held that Appellants alleged damages were remote and speculative because the complaint does not allege facts from which pecuniary damages can be inferred as a direct result of the alleged wrong. Id. availability of statutory damages. On September 5, 2012, Appellants submitted their appellate papers to the First Department. On December 20, 2012, the First Department unanimously
25

Judge Schweitzer did not address the

affirmed Judge Schweitzers dismissal on the ground that Respondents published employment reports were not materially deceptive, because (a) Respondent never represented that its 90-92 percent placement rates included only full-time, permanent employment for which a JD-degree is required, although it failed to disclose the inclusion of non-perminant, part time and non JD required employment and (b) Respondent disclosed that only a small percentage of graduates actually reported salary information although it failed to disclose that high earners were disproportionately represented in its median salary calculations. See Exhibit A. The First Department refrained from ruling on whether Appellants alleged damages were remote and speculative. Id. The First Department also did not reach the issue of whether Appellants were acting reasonably in believing Respondents misleading and deceptive job placement data despite the purported availability of third party information demonstrating deception and falsity. Id. Despite concluding that Respondents published employment data did not violate the General Business Law or constitute fraud, the First Department nevertheless acknowledged that there is no question that the type of employment information published by defendant (and other law schools) during the relevant period likely left some consumers with an incomplete, if not false, impression of the schools job placement success, and that we are troubled by the unquestionably less than candid and incomplete nature of defendants disclosures.
26

Id.

The First Department even raised the possibility that Respondent

administrators, in publishing such deceptive and misleading data, violated their ethical obligations as attorneys and educators. Id. These findings of fact are not reviewable by this Court. As set forth below, this Court should grant leave to appeal to (1) correct the First Departments erroneous holding that Respondents omissions and misstatements, as a matter of law, are not actionable as a GBL 349 and 350 violation or as common law fraud; (2) to address whether third party disclosures have an impact on Appellants reasonableness in believing Respondents employment reports and whether that issue can be determined at the trial stage; (3) to determine whether a fiduciary duty exists between an academic institution such as Respondent that encourages, stewards and benefits from tens of thousands of dollars in government backed student loans used by Appellants to finance their education and the students who take those loans; (4) to determine whether Appellants were required to present a reliable methodology for calculating damages at the pleading stage, an issue reached by the trial court but not by the First Department; (4) to elucidate this Courts power pursuant to 53 of the Judiciary Law and the States General Business Law to regulate deceptive marketing by members of the legal academy in this State, a novel issue of public importance; and (5) to rationalize the holdings of the First Department, Supreme
27

Court, New York County, and Supreme Court Albany County, which terminated substantially similar Complaints by alumni against law schools on different and inconsistent grounds, to prevent the same issues from being litigated in two other departments of the Appellate Division, and to bring New Yorks treatment of these cases into conformity with Californias. POINT I: RESPONDENTS EMPLOYMENT DATA IS FALSE AND DECEPTIVE AND THEREFORE ACTIONABLE UNDER GBL 349 AND AS FRAUD The First Departments opinion is confusing, contradictory and at odds with established authority from this Court. In affirming Judge Schweitzers dismissal of Appellants claims, the First Department tries to have it both ways. On the one hand, it curtly concludes that Respondents employment reports were not materially deceptive because they were technically true and did not contain objectively false information. Exhibit A, p. 6-7. On the other hand, it concedes that there is no question that the type of employment information published by defendant (and other law schools) during the relevant period likely left some consumers with an incomplete, if not false, impression of the schools job placement success, and that we are troubled by the unquestionably less than candid and incomplete nature of defendants disclosures. Exhibit A, p. 6, 7. First Departments holdings are contradictory and require review by this court. The

28

The First Departments opinion is also at odds with established authority from this Court. The First Department held Respondents statements were not actionable because Respondent never represented that its 90-92 percent placement rates included only full-time, permanent employment for which a JD-degree is required or preferred. Exhibit A, p. 7. However, this reasoning ignores that this Court has consistently recognized that omission-based misstatements are actionable under both GBL 349 and as common law fraud. Oswego, 85 N.Y.2d at 26; Junius Constr. Corp. v. Cohen, 257 N.Y. 393, 400 (1931) (Cardozo, J.) (holding that once a party makes a representation, he could not fairly stop half way, listing those facts he found important only and keeping silent as to others). The Complaint alleges that Respondents failure to disclose that the majority of its graduates were not employed in full-time, permanent positions for which a JD degree is required or preferred is a material omission. ROA 85. Indeed, none less than the ABA agree, as evidenced in its revised guidelines that expressly mandates that law schools are now obligated to break down placement rates into more relevant, disaggregated data so that this information is provided. Id. The

Complaint also alleges that the ABA forbids Respondents past practice of presenting a flat placement rate because it understands that such information is deceptive and provides prospective students with a false impression of their employment prospects. Id.
29

The First Department found that Respondents reported median salaries, as a matter of law, could not deceive a reasonable consumer acting reasonably because for the classes of 2007, 2009 and 2010 Respondent disclosed that only a subset of all graduates roughly 20-25 percent have reported salary information. Exhibit A, p. 7. However, this analysis ignores Appellants allegations that the school inflated its average salary by deliberately omitting salary information provided by nominally employed or underemployed graduates, such as those in part-time, temporary or non-legal positions, and, as such, reported objectively false information. ROA 79. Appellants further allege that Respondent inflated salary

information by specifically directing through a barrage of phone calls and follow-up emails the choice few graduates in high-paying jobs to respond to its job survey, thereby ensuring that graduates working in larger firms making significantly more money were overrepresented in its salary survey. ROA 78-79. Respondents disclosure that its salary information is based on a small sample of self-reporting graduates in no way mitigates its failure to include salary information provided by graduates in part-time, temporary or non-legal positions. That the Appellate Division ignored such a lynchpin allegation underscores its determination to shield law schools from civil liability. The First Departments holding that Respondents advertised placement rates of 90-92 percent and its inflated median salaries are not actionable is a
30

repudiation of this Courts holding in Oswego that omission-based misstatements are actionable under GBL 349. In Oswego case, two large union funds sued a bank under GBL 349 for failing to properly disclose that their deposits had not been placed in interest bearing savings accounts. The plaintiff waited seven years before realizing that no interest was being paid and there was also a factual dispute regarding whether the lack of interest payments was disclosed. 85 N.Y.2d at 23. In reversing the dismissal of the complaint in Oswego, this Court held that defendants omission-based statements were actionable under GBL 349 because, while the statute surely does not require businesses to ascertain consumers individual needs and guarantee that each consumer has all relevant information specific to its situation, the scenario is quite different [] where the business alone possesses material information that is relevant to the consumer and fails to provide this information. Id. at 26. This Court reasoned that because there was a dispute as to whether plaintiff received documentation from the defendant bank informing it of the limitations of interest on its accounts and there was a dispute regarding whether the documentation provided referenced the fact that nonprofit entities like the plaintiff were ineligible for interest-bearing accounts, plaintiff could properly maintain its claim under GBL 349. Id; see also Gaidon v. Guardian Life Ins. Co., 94 N.Y.2d 330, 345-346 (1999) (finding a violation of GBL 349 where depict[ed] vanishing dates were tied to a milestone in the policyholders near
31

future when the Defendant was alleged to have been aware that the premiums were unlikely to vanish as projected because they allegedly knew or should have known that the opposite was true: dividend/interest rates were not sustainable at the illustrated level). Oswegos holding that omission-based misstatements fall within the ambit of GBL 349 has repeatedly been affirmed by this Court. Accordingly, other courts have universally followed this Courts precedent in cases analogous to this. See e.g. Servedio v. State Farm Ins. Co., 814 F. Supp. 2d 214, 219 (E.D.N.Y. 2011); Woods v. Maytag Co., No. 10-CV-0559(ADS)(WDW), 2010 U.S. Dist. LEXIS 116595, at *43 (E.D.N.Y. Nov. 2, 2010); Watts v. Jackson Hewitt Tax Serv., 579 F. Supp. 2d 334, 347-48 (E.D.N.Y. 2008); Bildstein v. MasterCard Intl, Inc., No. 03 Civ. 9826, 2005 U.S. Dist. LEXIS 10763, at *10-11 (S.D.N.Y. June 7, 2005); People v. GE, 302 A.D.2d 314, 315 (1st Dept 2003); Zurakov v. Register.Com, Inc., 304 A.D.2d 176, 182 (1st Dept. 2003). In Gotlin v. Lederman, a recent decision regarding a GBL 349 omission claim, it was alleged that the defendant physicians had misrepresented the efficacy of their cancer treatment. No. 10-3244-cv, 2012 U.S. App. LEXIS 8790 (2d Cir. May 1, 2012). The subject misrepresentation was that the defendants had

published a success rate of greater than 90% for treating pancreatic cancer. Id. at *11-13. These same advertisements at certain points defined success in a very limited manner, circumscribing its definition to cases where the tumor simply
32

stopped growing or shrunk, but still remained but did not dispel the overall impression that the treatment was effective. Id. at *13-14. Much more than

surviving a motion to dismiss, these claims went through trial, only after which the district court granted summary judgment. Id. at *3-4. The Second Circuit held the district court erred in granting summary judgment after trial, because there existed genuine issues of material facts as to whether defendants marketing of [the treatments] success rates was materially deceptive. Id. at *15. The circumstances here are also strikingly similar to Karlin v. IVF Am., Inc., where the complaint alleged that the defendants violated GBL 349 by: disseminating false success rates and misrepresenting health risks associated with IVF. In particular, plaintiffs claim that defendant exaggerated success rates, excluding certain subsets of failed treatment procedures, emphasizing numerically false and misleading overall success rates and conceal[ing] and misrepresent[ing] significant health risks, high miscarriage rates and excessive neonatal deaths and abnormalities of infants even if a birth resulted from the treatment rendered by defendants. 93 N.Y.2d 282, 289 (1999). In Karlin, this Court, after accepting an appeal by permission, reversed the Appellate Divisions granting of a motion to dismiss a GBL 349 and 350 claim, reviving those claims. Appellants, in accordance with Oswego, Karlin, and its progeny, alleged that Respondent omitted certain facts it alone knew but failed to disclose namely, the true percentage of its graduates who have obtained full-time, permanent employment for which a JD degree is required or preferred, and that its salary data
33

was based on a small and unrepresentive subset of graduates. The Complaint clearly alleges Respondent was aware that its employment reports were not representative of the actual experience and salaries of its graduates because: Respondent reported to the National Association of Law Placement (NALP), each year, the number of Respondent graduates employed in jobs that did not require or prefer a law degree or was part-time in nature; Respondent maintains its own internal tracking system, including the original surveys returned by graduates, indicating whether the employment reported was part-time, temporary and whether the graduate was working in a job that required a law degree, but misleadingly failed to disclose this information; Respondent knew that it was employing its own graduates to boost its employment rate; Respondent deliberately miscalculated its raw employment data in direct violation of ABA standards, by tabulating it in a slipshod manner, cynically choosing to omit or ignore critical statistical data that would substantially lower both placement rates and salary information; and Respondent was aware that the salary it collected was disproportionately skewed toward high earners because those graduates were specifically targeted and directed to respond to salary surveys. ROA 65, 67, 70, 77-79. Thus, much like Oswego, Karlin, Servedio, Watts, Bildstein, Zurakov, Gaidon and Gotlin, the case at bar is a textbook example of an omission-based misstatement that is actionable under GBL 349. The Complaint alleges that Respondent made specific representations about its product namely, that 90-92 percent of its graduates secured employment within nine months of graduation
34

while failing to include critically important information, such as that the majority of its graduates fail to obtain full-time, permanent employment for which a JDdegree is required or preferred, and many graduates are in positions that are either part-time, temporary, voluntary, school-funded or non-legal in nature. The ABA, in promulgating new standards expressly mandating that law schools break down their placement rates into disaggregated data, concedes that Respondents practice of publishing flat placement rates is false and misleading. ROA 85. In fact, the First Department concedes this as well, noting that there is no question that the type of employment information published by defendant (and other law schools) during the relevant period likely left some consumers with an incomplete, if not false, impression of the schools job placement success, and that we are troubled by the unquestionably less than candid and incomplete nature of defendants disclosures. Exhibit A, p. 8-7. The cases cited by the First Department in support of its conclusion that the false statements plead in the Complaint are not actionable are inapposite to the present circumstances. See Exhibit A, p. 7. In Corcino v. Filstein, 32 AD 2d 201, 202 (1st Dept. 2006), the defendant did not even make any representations about its product, such as that 90-92 percent of its graduates secure employment within nine months of graduation. Id. (nothing in this advertisement has been shown to be false or misleading, such as a guarantee of results, misleading statistics on
35

success rates or an assertion that there are no risks to the procedure; the advertisement Stated: If the size of your penis torments you, we have the solution . . . Our specialized doctors will widen or make bigger the penis . . . [D]ont feel frustrated or ashamed of intimacy because your problem now has a solution.) (emphasis supplied). St. Patricks Home for the Aged and Infirm v. Laticrete Intl, 264 A.D.2d 652, 655 (1st Dept. 1999) is distinguishable on the ground that the defendant made statements that it believed to be true when made, which is very different than the allegation here that Respondent made statements it knew were false. ROA 65, 67, 70, 77-79; Patricks Home for the Aged and Infirm at 656 (there is no evidence in the record to refute Laticretes assertion that it believed that the epoxy resin coating rendered Duripanel suitable for exterior use.). In Andre Strishak & Assoc. v. Hewlett Packard Co., 300 AD2d 608, 609-10 (2d Dept. 2002) the defendant printer manufacturer made absolutely no representations about the the amount of ink contained in the cartridge, or specific language regarding the size or description of the cartridges on the boxes or in the advertisements. Here, of course, Respondent made specific representations regarding the employment rate and salaries earned by prior graduates, representations that contained material omissions.

36

Relying on the cherry picked and inapposite authority cited above, and ignoring Oswego, Karlin, Servedio, Watts, Bildstein, Zurakov, Gaidon and Gotlin, the First Department incorrectly found that Respondents unquestionably less than candid and incomplete data that gives consumers a false impression is not actionable under the States consumer protection law. Affirming the Appellate Divisions decision will mark a sharp departure from this Courts precedent. In sum, it is manifestly clear that had this case involved an ordinary i.e. non-law school defendant, the First Department would have never dismissed it at the pleading stage. Yet, to shield law schools from civil liability, the First

Department has issued a decision at odds with long established authority regarding omission based GBL 349 and 350 claims that will have potentially calamitous consequences for all New York consumers, not just graduates of New York-based law schools. If the First Departments decision is not reviewed, businesses will be incentivized to publish and market highly misleading consumer data that bears little semblance to reality and omits crucial, material information. Under no

circumstance should this Court endorse the First Departments gutting of GBL 349 and the broad prophylactic protections it provides to every New Yorker. POINT II: THIS COURT SHOULD GRANT REVIEW TO RATIONALIZE THE HOLDINGS OF THE DIFFERENT TRIAL COURTS IN THIS STATE AND PREVENT THE RECURRENCE OF ISSUES THAT CAN BE BETTER ADDRESSED IN THIS APPEAL
37

This is the first filed of four lawsuits alleging violations of the States consumer protection statutes, common law fraud, and negligent misrepresentation. See Austin v Albany Law Sch. of Union Univ., Case No. A00014/2012 (Sup. Ct. Albany County Feb. 1, 2012); Bevelacqua v. Brooklyn Law School, Case No. 500175/2012 (Sup. Ct. Kings County Feb. 1, 2012); Richins v. Hofstra University, Case No. 600138/2012 (Nassau County Feb. 1, 2012). This is the first of the four lawsuits to have reached the States appellate courts. The lawsuits, including this one, are filed in three of the four departments of the Appellate Division. Additional appeals are inevitable. The three decisions dismissing these actions two from trial courts and one from the First Department each ground themselves differently. For example, the First Department found Respondents employment statistics were deceptive but were not actionable because they were not actually false, even it was incomplete. See Exhibit A, p. 7. In contrast, the Supreme Court, New York County, looking at the same set of facts determined that these post-graduate employment statistics [were not] misleading in a material way for a reasonable consumer acting reasonably. ROA 16. Supreme Court, Albany County, also looked at similar

facts, but without a factual record, found that Albany Law Schools published employment data was not actionable because of the elaborate and somewhat subjective nature of plaintiffs definition of employment. Austin v Albany Law
38

Sch. of Union Univ., 2013 N.Y. Misc. LEXIS 3 (Sup. Ct. Albany Ctny. Jan. 3, 2013). All three of these decisions share a common desire to terminate these actions before the plaintiffs had an opportunity to prove their claims through discovery, but little else. However, what these decisions also each have in common is that each overlooked and misconstrued the same law, discussed above, that omissions are actionable under GBL 349 and 350 and the law, discussed below, that the reasonableness of a plaintiffs behavior cannot be determined on a motion to dismiss. These decisions are not supported by this Courts authority and the

current confused state of the law provides little guidance for the two other trial courts in the Second Department, as well as the Third Department of the Appellate Division, which have yet to rule on similar cases. These cases also do not provide the predictability that Appellants, the other plaintiffs in these actions, Respondent, and every other law school in the state require and deserves. Thus, this appeal should be granted to rationalize the holdings of the Supreme Court, New York County, the Supreme Court, Albany County, and the First Department and bring those cases back into line with this Courts prior holdings regarding GBL 349 and 350. Moreover, addressing these issues in this proceeding may prevent recurrent appeals in the Third and Second Departments of the Appellate Division. The
39

parties to substantially similar actions in courts in those departments will likely seek appellate review. POINT III: REVIEW SHOULD BE GRANTED TO BRING NEW YORKS TREATMENT OF THESE CASES INTO CONFORMITY WITH CALIFORNIAS

In California, where two dozen alumni have sued their law schools for violations of that states consumer protection statutes, three cases substantially similar to this are now in discovery. See Arring v. Golden Gate Univ., No. CGC12-517837 (Ca. Superior Ct. July 19, 2012); Hallock v. University of San Francisco, No. CGC-12-517861 (Ca. Superior Ct. July 19, 2012); Alaburda v. Thomas Jefferson School of Law, No. CU-FR-CTL-00091898 (Ca. Superior Court Nov. 29, 2012). The facts alleged in the California cases are substantially similar to those alleged in this case. Students who are enticed to enroll in New York based law schools, such as Respondent, should be provided the full protections of New Yorks consumer protection statutes, which are robust as any in the nation. Indeed, the consumer protection regime in New York is no less robust than that of California, and this Court should grant review to bring New Yorks treatment of these cases into conformity with Californias. POINT IV: REVIEW SHOULD BE GRANTED SO THIS COURT CAN DETERMINE WHETHER A FIDUCIARY DUTY EXISTS BETWEEN EDUCATIONAL INSTITUTIONS WHO
40

ENCOURAGE, STEWARD AND BENEFIT FROM STUDENT LOANS, AND THE STUDENTS WHO TAKE THOSE LOANS The First Department held that there is no fiduciary duty between the Respondents and the Appellants to support Appellants negligent misrepresentation claim and fraud by concealment claims. Exhibit A, p. 9-10. However, in so finding, the First Department ignored Respondents encouragement, stewardship, and benefit from the tens of thousands of dollars in government backed nondischargeable loans that each Appellant incurred to attend Respondents program. Such a relationship is analogous to others where this court has found that a fiduciary duty exists, or at the very least have permitted the plaintiff to establish the existence of such a duty through discovery. See RBE N. Funding, Inc. v. Stone Mtn. Holdings, LLC, 78 A.D.3d 807, 809-810 (2d Dept 2010) (possession of unique or specialized expertise created a duty to impart correct information to support negligent misrepresentation claim); Smith v. Ameriquest Mtge. Co., 60 A.D.3d 1037, 1040 (2d Dept 2009) (triable issue of fact as to whether the nature of the relationship between the parties imposed a duty of care upon the defendants where defendant personally solicited the plaintiff to refinance her mortgage . . . and came to her home twice to provide her with information about the transaction in an effort to convince her that the transaction was in her best interests); see also Caprer v. Nussbaum, 36 A.D.3d 176 (2d Dept. 2006) (finding a fiduciary duty
41

where one handles money or property, which is not his own or for his own benefit, but for the benefit of another person). Courts in this State have already found fiduciary relationships in the educational context. See Blank v. Bd. of

Higher Educ. of the City of New York, 273 N.Y.S2d 796 (Sup. Ct. Kings Cnty. 1966) (holding that administrators and faculty members who advised a student regarding graduation requirements had a fiduciary relationship with the student); Healy v. Larsson, 323 N.Y.S.2d 625 (Sup. Ct. Schenectady Cnty 1971). There is over a trillion dollars of educational debt outstanding. See

http://www.consumerfinance.gov/blog/too-big-to-fail-student-debt-hits-a-trillion/ (last visited January 30, 2013). Educational institutions have encouraged this

borrowing by reporting misleading graduate employment outcomes to applicants and current enrollees. Once the applicant takes out the loans to attend the

institution based on these representations, the institutions steward and benefit from the borrowing. However, because of the purported lack of a fiduciary duty, the institution can attempt to disclaim any liability when borrowers cannot find employment sufficient to service the debt. This court should grant permission to appeal to determine whether such a financial relationship between an educational institution and its students creates a fiduciary duty necessary to support negligent misrepresentation and fraudulent concealment claims. POINT V: REVIEW SHOULD BE GRANTED BECAUSE THE TRIAL COURT WAS INCORRECT TO FIND AS A
42

MATTER OF LAW THAT APPELLANTS WERE NOT ACTING REASONABLY WHEN THEY ENROLLED AND REMAINED ENROLLED BASED ON RESPONDENTS REPORTED EMPLOYMENT RATES AND SALARY DATA The trial court based its dismissal of Appellants GBL 349 and 350 claims, in part, by determining as a matter of law that Appellants were not acting reasonably when they enrolled and remained enrolled at Respondent based on Respondents reported employment rates and salary information. ROA 21. The First Department did not reach these issues but this Court should nevertheless review it because the trial courts holding and the First Departments decision not to address it departs radically from the previously understood pleading standards for GBL 349 and 350 claims. The trial courts finding the Appellants were acting unreasonably in basing their decision to enroll and remain enrolled in Respondent is a factual conclusion that is prohibited at this stage of the litigation. Wiener v. Lazard Freres & Co., 241 A.D.2d 114, 120 (1st Dept 1998) (reversing the granting of a CPLR 3211 motion where there were improper findings of fact). It is axiomatic that a court, in considering a motion to dismiss pursuant to C.P.L.R. 3211(a)(7), must accept the plaintiffs allegations as true and accord them the benefit of every possible favorable inference. See Gaidon, 94 N.Y.2d at 345 (The issue before us is not whether, as a matter of law, reasonable consumers would be misled in a material
43

way, but whether that prospect is enough to create a question of fact ... or to State a claim . . .). This is especially true when assessing the reasonable consumer standard under GBL 349. See e.g. Zurakov, 304 A.D.2d at 181 (A record that is inconclusive as to whether a reasonable consumer might be misled precludes summary dismissal [citations omitted]); Wilner, 893 N.Y.S. 2d at 217 (Under the circumstances of this case, the reasonableness of the plaintiffs belief as to their responsibilities under the contract of insurance is a question of fact, and should be determined by the fact finder). This Court has held that reliance and reasonableness are issues of fact that cannot be determined on a CPLR 3211 motion even where there were express disclaimers regarding the omission of material information. See Gaidon, 94

N.Y.2d 330 (even where there were express disclaimers dismissal was reversed because whether a reasonable consumer would be misled is an issue of fact). Moreover, the trial courts gloss that the plaintiffs were unreasonable because they were a sophisticated subset of education consumers is wholly without precedential support. For GBL 349 purposes, sophisticated parties are ordinarily large entities or businesses, usually represented by counsel, who themselves have specific expertise with the service or product being purchased, thereby giving the parties equal bargaining power. For example, in New York Univ. v. Contl Ins. Co., 87 N.Y.2d 308, 321 (1995), the parties were found to be sophisticated for GBL 349
44

purposes because each side

was

knowledgeable

and

received expert

representation and advice. See also Waverly Props., LLC v. KMG Waverly, No. 09 Civ. 3940 (VM) (FM), 2011 U.S. Dist. LEXIS 106410, at *47 (S.D.N.Y. Aug. 15, 2011) (a successful businessman is hardly the type of inexperienced or unsophisticated consumer whom the statute was designed to protect), citing Teller v. Bill Hayes, Ltd., 630 N.Y.S.2d 769, 774 (2d Dept. 1995); Kramer v. Lockwood Pension, 653 F. Supp. 2d 354, 385 (S.D.N.Y. 2009) (no GBL 349 claims where the parties include sophisticated insurance brokers); Exxonmobil Inter-America v. Advanced Info. Engg Servs., 328 F. Supp. 2d 443, 450 (S.D.N.Y. 2004) (no GBL 349 protection where Exxon and AIES are both sophisticated contracting entities with equal bargaining power); Pfizer, Inc. v. Stryker Corp., No. 02 Civ. 8613 (LAK), 2003 U.S. Dist. LEXIS 11974, at *10-11 (S.D.N.Y. July 15, 2003). Clearly, Plaintiffs in their 20s with college degrees do not satisfy this understanding. Each Appellant alleges they believed Respondents employment data and salary information. The Complaint alleges that there were no warnings that the data was incomplete or otherwise misleading. The reasonableness of Appellants assumptions should not have been determined as a matter of law and the trial courts holding and the First Departments refusal to review it should be reviewed by this Court.
45

POINT VI:

REVIEW SHOULD BE GRANTED BECAUSE THE TRIAL COURT WAS WRONG TO IGNORE THE AVAILABILITY OF STATUTORY DAMAGES AND REQUIRE APPELLANTS TO PLEAD A RELIABLE METHODOLOGY FOR CALCULATING DAMAGES AT THE PLEADING STAGE

The trial court determined that Appellants were required to plead a reliable methodology for damages in the Complaint and, because the damages as plead were deemed to be too remote and speculative, the Complaint was dismissed. ROA 24-25. The First Department did not reach this issue. However, this Court should review because the trial courts holding is a radical departure from the commonly understood pleading standard that Appellants are not required to plead a reliable methodology for calculating damages, only a plausible theory of damages. See Daukas v. Shearson, Hammill & Co., 26 A.D.2d 526 (1st Dept. 1966) (it is immaterial that the complaint fails to disclose the method or the detail of computing the general damages sought by plaintiffs or that the allegations fail to justify a recovery for the sums claimed as damages. There is no requirement that the measure of damages shall be correctly set forth in a complaint, the test being merely whether or not the complaint sets forth allegations from which damages can properly be inferred); Zuckerwise v. Sorceron Inc., 289 A.D.2d 114, 115 (1st Dept. 2001); CAE Indus. v. KPMG Peat Marwick, 193 A.D.2d 470, 47273 (1st Dept. 1993).
46

Appellants request for relief and damages allegations clearly state a plausible theory of damages: the inflated price of Respondents degree due to the misrepresentations Respondent made in its marketing materials. And even if

Appellants price inflation theory fails at a subsequent stage of this litigation (although it cannot fail at the pleading stage, as noted above) both the trial court and First Department failed to address the availability of statutory damages pursuant to GBL 349(h). See Burns v. Volkswagen of America, Inc., 118 Misc. 2d 289, 293 (N.Y. Sup. Ct. 1982) (deferring the issue of whether the action would proceed on a class wide basis for actual damages, or as an individual action for statutory damages, until the class certification stage); Super Glue Corp. v. Avis Rent A Car System, Inc., 132 A.D.2d 604, 606 (2d Dept 1987). Therefore, the trial courts finding that damages could not be stated at the pleading stage despite the availability of statutory damages and the First Departments failure to review this error merits this Court granting permission to appeal. POINT VII: THIS COURT SHOULD GRANT REVIEW TO ELUCIDATE ITS POWER TO REGULATE LAW SCHOOL MARKETING PURSUANT TO ITS POWERS UNDER JUDICIARY LAW 53 AND THE GENERAL BUSINESS LAW, A NOVEL LEGAL ISSUE OF GREAT PUBLIC IMPORTANCE

47

In recent years the legal academy has engaged in dubious marketing practices, something the First Department, the ABA, U.S Senators, and countless others has recognized. See Exhibit A (finding that Respondent published employment and salary statistics for former classes that likely left some consumers with an incomplete, if not false, impression of the schools job placement success, finding that respondent made misleading representations that give the impression that a full-time job is easily ascertainable when in fact it is not and finding that Respondents employment reporting disclosures was

unquestionably less than candid and incomplete). The First Department even suggested that Respondents marketing practices constitute violations of New Yorks Rules of Professional Conduct. Id. However, the First Department excused these transgressions and did not exert any authority over Respondent. The First Departments holding that there was deception without a remedy is untenable. Power of admission to or exclusion from the bar is within control of courts. In re Sugarman, 380 N.Y.S. 2d 12 (1st Dept., 1976), app den 39 N.Y. 2d 707. A necessary component of the Court systems power to control admission to the bar is regulating law schools through the states General Business Law. The regulation of law schools is an issue of pressing importance to the bench, the bar, and the public at large in light of the deception identified by the First Department. The legal profession in the State of New York needs leadership to resolve these
48

issues and maintain confidence in both the bench and the academy. Thus, this Court should grant this appeal to elucidate the Court systems powers pursuant to Judiciary Law 53, in conjunction with the General Business Law, to regulate the legal academy. CONCLUSION For the foregoing reasons, Appellants respectfully request that their motion be granted, that they be given permission to appeal to the Court of Appeals, and that this Court grant such other and further relief as may be just and proper. Dated: New York, New York February 5, 2013

-------------------------------Jesse Strauss STRAUSS LAW PLLC 305 Broadway, 9th Floor New York, New York 10007 (212) 822-1496 (tel.) (212) 822-1407 (fax.) jesse@strausslawpllc.com Counsel for Plaintiffs-AppellantsAppellants To: Michael J. Volpe, Esq. VENABLE LLP Rockefeller Center 1270 Avenue of the Americas, 24th Floor New York, NY 10020 (212) 307-5500 (tel.) (212) 307-5598 (fax) Counsel for Defendants-Respondents-Respondents
49

STATE OF NEW YORK COURT OF APPEALS -----------------------------------------------------------------X ALEXANDRA GOMEZ-JIMENEZ, SCOTT TIEDKE, KATHERINE COOPER, MATTHEW CRAWFORD, GEOFFREY CORISDEO, SOLINE McLAIN, RENEE RIVAS, GERGANA MITEVA, and CHLOE GILGAN, on behalf of themselves and all others similarly situated, Plaintiffs-Appellants-Appellants -againstNEW YORK LAW SCHOOL, and DOES 1-20, Defendants-RespondentsRespondents -----------------------------------------------------------------X

N.Y. County Clerks Index No. 652226/2011

CERT I F I CAT ION UNDER 22 N.Y.C.R.R. 130-1.1a

Pursuant to 22 N.Y.C.R.R. 130-1.1a, the undersigned, an attorney duly admitted to practice law before the Courts of the State of New York, certifies that, upon information and belief formed after reasonable inquiry under the circumstances, the contents of the annexed document(s) are not frivolous. Dated: New York, New York February 5, 2013

-------------------------------JESSE STRAUSS
50

51