Students Sue NY Law School for $200 Million

MANHATTAN (CN) - A $200 million class action claims the New York Law School misrepresents post-graduate opportunities for lawyers and subjects "the overwhelming majority" of its graduates to "years of indentured servitude" after "saddling them with tens of thousands of dollars in crushing, non-dischargeable debt that will take literally decades to pay off."

Lead plaintiffs Alexandra Gomez-Jimenez, Scott Tiedke and Katherine sued the law school in New York County Court.

It's not the first such recent complaint against a law school. A similar class action was filed in May against the Thomas Jefferson School of Law in San Diego.

And a class action with similar claims was filed Wednesday in Detroit Federal Court against the Thomas M. Cooley Law School.

The plaintiffs in the New York case accuse NY Law of "a systemic, ongoing fraud that is ubiquitous in the legal education industry and threatens to leave a generation of law students in dire financial straits."

The class claims: "New York Law's dean, Richard Matasar, actually publicly recognized this problem, when, during a program sponsored by the Association of American Law Schools, [he] acknowledged that 'we (law school deans) should be ashamed of ourselves. We own our students' outcomes. We took them. We took their money. ... And if they don't have a good outcome in life, we're exploiting them. It's our responsibility to own the outcomes of our institutions. If they're not doing well ... it's gotta be fixed. Or we should shut the damn place down. And that's a moral responsibility that we bear in the academy.'" (Parentheses in complaint, as brackets.)

The complaint continues: "However, far from heeding his own advice by taking 'ownership' of his students' outcomes, Mr. Matasar's school consigns the overwhelming majority of them to years of indentured servitude, saddling them with tens of thousands of dollars in crushing, non-dischargeable debt that will take literally decades to pay off. New York Law has done this while blatantly misrepresenting and manipulating its employment statistics to prospective students, employing the type of 'Enron-style' accounting techniques that would leave most for-profit companies facing the long barrel of a government investigation and the prospect of paying a substantial civil fine. These deceptions are perpetuated so as to prevent prospective students from realizing the obvious - that attending NYLS and forking over nearly $150,000 in tuition payments is a terrible investment which makes little economic sense and, most likely, will never pay off.

"Specifically, NYLS, through both its print and internet marketing materials, commits two basic written, uniform misrepresentations. First, the school during the class period claims that the overwhelming majority of its graduates - roughly between 90 and 95 percent - secure employment within nine months of graduation. However, the reality of the situation is that these seemingly robust numbers 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 or part-time in nature. Rather, if NYLS was to disclose the more pertinent employment statistic - i.e. those graduates who have secured full-time, permanent positions for which a JD degree is required or preferred the numbers would drop dramatically, and could be well below 50 percent, if not even lower.

"Second, NYLS grossly inflates its graduates' reported mean salaries, by calculating them based on a small, mostly self-selected subset of graduates who actually submit their salary information. To that end, if the Defendants were to disclose salary data based on a broad, statistically meaningful representation of its graduates, by including more graduates who have failed to secure full-time, permanent employment, the reported mean salaries would decline precipitously.

"Defendants' deceptions are all the more shocking considering that the school has functioned as a veritable 'JD-factory', enrolling in 2009 1,596 total students, an increase of 270 students from 2000. In 2009, at the height of the 'Great Recession' and while the legal industry was experiencing historic job cuts, NYLS enrolled its largest first-year class ever - 736 students - which was an astounding 30 percent increase from the previous year. As detailed in a recent New York Times exposé, these increases can largely be explained by the school's desire to maintain the AAA rating that Moody's had given the school's $135 million bond offering which was floated to finance the construction of a brand new 235,000-square-foot complex.

"Compounding problems, there is no place where prospective students can find NYLS's 'real' employment numbers. The school supplies the same dubious statistics to the U.S. News & World Report ('US News') and the American Bar Association ('ABA'), the two primary sources of information for law school employment data. Like NYLS, these sources count as 'employed' those who have secured employment in any capacity in any kind of job, no matter how unrelated to the legal field."

The students demand $200 million in damages for fraud, negligent misrepresentation, and violations of business law.

They are represented by David Anziska with Kurzon Strauss.

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